Colorado Legislative Council Staff



(replaces fiscal impact dated February 9, 1999)

Drafting Number:

Prime Sponsor(s):

LLS 99-0396

Sen. Linkhart



Bill Status:

Fiscal Analyst:

March 30, 1999

Senate Appropriations

Janis Baron (303-866-3523)



Fiscal Impact Summary

FY 1999/2000

FY 2000-01

FY 2001/2002

State Revenues

Cash Fund Exempt

Gifts, Grants and Donations

State Expenditures

General Fund

Federal Fund

Cash Fund Exempt


$ 422,204



$ 661,544



FTE Position Change

0.0 FTE

0.0 FTE

0.0 FTE

Other State Impact: None

Effective Date: July 1, 1999

Appropriation Summary for FY 1999-2000: None Required

Local Government Impact: None


NOTE: The fiscal note is revised to reflect the bill as amended by the Senate HEWI Committee, February 18, 1999, and a different methodology used to estimate the cost of the pilot program.

Summary of Legislation

            The bill as amended by the Senate HEWI Committee, February 18, 1999, establishes a pilot program to provide Medicaid eligibility for persons diagnosed with HIV whose assets or income exceed current limitations. The program shall be limited to 100 eligible persons with a chronic illness. The bill's provisions relative to the pilot program include:


               requires the Department of Health Care Policy and Financing (DHCPF) to apply for federal waivers for the program;

               authorizes DHCPF to expand, by rule, the program to other types of chronic illnesses if it can be shown that the program is cost effective;

               as amended, requires that eligible persons pay a premium established by the Medical Services Board;

               as amended, requires that eligible persons receive covered services from a managed care organization;

               authorizes DHCPF to seek and accept gifts, grants, and donations from any private entity to implement the program and study its cost effectiveness, any moneys collected shall be transmitted to the newly created Chronic Illness Fund;

               moneys in the Fund shall be available to DHCPF without the need for appropriation by the General Assembly in amounts not to exceed the fund balance for the sole purpose of implementing and studying the program;

               requires the department to submit a report on the program to the Joint Budget Committee no later than October 1, 2001; and

               repeals the program July 1, 2002.


State Expenditures

            Department of Health Care Policy and Financing — will require $875,759 in funding for FY 2000-01, and $1,323,089 in FY 2001-02 to implement the pilot program. In addition to program costs of $729,446 in FY 2000-01, DHCPF will incur one-time computer programming costs of $95,100 to its Client-Oriented Information Network (COIN) and its Medicaid Management Information Systems (MMIS).

            COIN — 450 hrs. of programming at $72 per hour = $32,400

            MMIS — 550 hrs. of programming at $114 per hour = $62,700

            DHCPF will design a waiver program targeting persons with HIV and AIDS who are not now Medicaid eligible and whose income is less than 185 percent of the federal poverty level. The department indicates that it will not require added moneys associated with the waiver application process. The Kaiser Family Foundation is funding efforts in a number of states (Florida, Maine, Massachusetts, Wisconsin), including Colorado, in support of this program. The Foundation is providing financial support to Lewin and Associates to compile the information required in the federal waiver submission. Development and approval of the federal waiver is expected to take 12 - 18 months. [NOTE: It is not known if the federal Health Care Financing Administration will approve a waiver for this population which excludes inpatient coverage.]

            The department estimates that there are over 600 persons in Colorado without access to complete drug therapies for HIV and AIDS; this pilot program, once fully implemented, would serve 100 persons. Program costs are based on the following assumptions:


               enrollment will average 50 clients in year one, 75 clients in year two, and 100 clients in year three;

               15% of the clients will have third-party insurance, thus, Medicaid's costs for these clients will be limited to $2,000 per client per year;

               all clients will be required to cost share $30/month or $360/year;

               all clients will be enrolled in an HMO for pharmacy and other primary care received — the cost is 95% of the fee-for-service (long-term care and inpatient coverage are excluded from the benefit package);

               clients will continue to receive inpatient care through the Colorado Indigent Care Program; and

               an annual inflation rate of 3% per year.

            Although there may be Medicaid savings realized in delaying eligibility under SSI disability criteria for AIDS clients, there is no estimate of cost savings at this time.

            Department of Human Services — will require $51,213 in FY 2000-01 and $76,820 in FY 2001-02 for mental health benefits to clients in the pilot program. The average mental health capitation cost is estimated at $1,024.26 per client per year for both fiscal years. Moneys for mental health benefits are appropriated in DHCPF and transferred to DHS to provide mental health services.

TABLE 1 — Summary of Costs Under SB 99-98

 Chronic Illness Pilot Program Costs



Wgt. Avg.



95% for



FY 2000-01

50 Clients


FY 2001-02

75 Clients







Less Third Party Payments



Less Client Premiums






Systems Changes in DHCPF — COIN and MMIS



DHS — Mental Health Services







        *   The weighted average capitation rate groups HIV and AIDS diagnoses into one diagnostic cost category. The risk adjustment ratio used is the ratio of the categorical AIDS disability status payments score to the categorical statewide fee for service disability status payments.

State Appropriations

            No appropriation is required in FY 1999-00.

Departments Contacted

            Health Care Policy and Financing