Colorado Legislative Council Staff



(replaces fiscal impact dated February 5, 1999)

Drafting Number:

Prime Sponsor(s):

LLS 99-0200

Rep. Morrison

Sen. Wham


Bill Status:

Fiscal Analyst:

March 2, 1999

House Appropriations

Will Meyer (866-4976)



Fiscal Impact Summary

FY 1999/2000

FY 2000/2001

State Revenues

Cash Fund



State Expenditures

Cash Fund



FTE Position Change

0.0 FTE

0.0 FTE

Other State Impact: None

Effective Date: July 1, 1999, with the implementation of the two-tiered internal review and the external review program becoming effective June 1, 2000

Appropriation Summary for FY 1999-2000: Department of Regulatory Agencies: $17,500 - Division of Insurance Cash Fund

Local Government Impact: None

Summary of Legislation

            This bill requires health coverage plans to provide external review processes, to notify the covered person of the availability of the process, and to pay the costs of such external reviews. Covered individuals will have access to the external review process only upon denial of coverage and completion of a two-tiered internal review process. The bill requires the Commissioner of Insurance, Division of Insurance, Department of Regulatory Agencies, to promulgate rules specifying the elements and timelines for the internal appeal procedure, including the review of appeals requiring expedited reviews. The bill, as amended by the House Health, Environment, Welfare and Institutions Committee, appropriates the necessary expenditures out of the Division of Insurance Cash Fund.

            In addition, the bill provides for certification of external review entities and requires the commissioner to promulgate rules necessary to certify them. The bill authorizes the commissioner to contract for the development of certification rules and for administration of the certification program. The bill exempts both the external review entity and the plan from damages arising from the determinations made, except for an act or omission of the external review entity that is made in bad faith or involves gross negligence.

State Expenditures

            The Division of Insurance will need to amend an existing regulation and promulgate a new regulation. This will have a minimal impact on the workload of the division. This increase in workload could be absorbed by current staff, but may require re-prioritizing existing workload.

            It is assumed that the development and operation of the external review program will be contracted for with a private vendor. Based on other states' experiences, when the exhaustion of internal appeal procedures is required prior to being able to access the external review process, few requests for external review are filed. It is estimated that it will cost $17,500 to contract for development of criteria and the certification process in FY 1999-00 and $11,250 to contract for the administration of on-going certification, external reviews, and reports in FY 2000-01.

            This bill will not have a fiscal impact on any other state agency or unit of local government.

State Appropriations

            This fiscal note implies that the Department of Regulatory Agencies, Division of Insurance, should be appropriated $17,500 out of the Division of Insurance Cash Fund in FY 1999-00.

Departments Contacted


            Regulatory Agencies              Personnel                    Health Care Policy and Financing