Mandated Benefits Review - Senate Bill 1183 - Council Cost Estimates

Utilizing information submitted, Council staff was able to estimate a minimum cost of the infertility benefit proposed in SB 1183. Other information was submitted which demonstrated further additional cost, but without enough specificity to enable staff to make a more precise estimate.

To determine a gross estimate of cost, Council staff utilized the documented figures for cost and utilization of assisted reproductive technology (ART) procedures. Assisted reproductive technologies are not currently covered in the majority of health insurance policies. Cost figures for less expensive treatment such as intrauterine insemination (IUI) and treatment with fertility drugs are available, but utilization figures are not available. Many of these services are provided by general practitioners and OB/GYNs and are not reported to any type of state-wide registry. These services are also more likely than assisted reproductive technology procedures to be already covered by insurance plans. It was determined that the coverage of assisted reproductive technology procedures would have the most significant impact on cost.

Though Council cost estimates are based on available utilization figures for assisted reproductive technology, it must be emphasized that all infertility treatments, including those not yet developed (and whose costs are not known) are covered by the mandate in Senate Bill 1183.

It is the Council's interpretation that SB 1183 would cover Medicaid recipients because it applies to all HMOs. (The Department of Public Welfare projects that 100% of Medicaid recipients will be covered by Medicaid HMOs by March 31, 2000.)

According to the Pennsylvania IVF Registry, there were 2,641 assisted reproductive technology (ART) cycles performed in 1995 (the most recent year for which data are available). The Society for Assisted Reproductive Technology notes that between 1994 and 1995, the number of cycles reported to the Registry increased by 19.3%. Since it is probable that utilization has continued to rise, it should be noted that Council's estimates based on 1995 figures are likely to be low.

The majority of the 2,641 assisted reproductive technology procedures were in vitro fertilization (IVF). Applying national gamete intrafallopian transfer (GIFT) and zygote intrafallopian transfer (ZIFT) percentages to this number (6% and 2% respectively) results in an estimate of 2,430 in vitro fertilization cycles, 183 gamete intrafallopian transfer cycles and 61 zygote intrafallopian transfer procedures performed in Pennsylvania in 1995.

According to submissions Council received relating to cost, the cost of in vitro fertilization ranges between $8,000 and $10,000, gamete intrafallopian transfer (GIFT) ranges between $8,000 and $13,000, and zygote intrafallopian transfer (ZIFT) ranges between $10,000 and $13,000. For the purpose of this analysis, an estimate of $9,000 was used for in vitro fertilization, $10,500 was used for GIFT, and $11,500 was used for ZIFT. In addition, for 11% of these procedures, intracytoplasmic sperm injection (ICSI) was used, adding an additional $2,000 to each procedure. Using these figures, approximately $24,720,000 was spent in 1995 on assisted reproductive technology (ART) services by Pennsylvania women.

Information has been submitted that suggests that utilization would rise substantially if insurance coverage were mandated. This assertion is supported by examining utilization figures from Massachusetts, where comprehensive insurance coverage for infertility services is mandated. In a five year span from the time of the mandate's passage, assisted reproductive technology utilization in Massachusetts rose to a level that was approximately 5 times higher than that of the rest of the Unites States and Canada.

There is no assurance that Pennsylvania's utilization would follow exactly the same path as in Massachusetts. Nevertheless, the experience in Massachusetts certainly indicates that an increase in utilization can be expected. If utilization doubled as a result of SB 1183, approximately $49,440,000 would be spent on assisted reproductive technology services in a year. If utilization did in fact mirror the increase in Massachusetts, this number could go as high as $123,600,000. Because this estimate is based on number of cycles performed in a year rather than number of covered lives, it is not possible to gauge how many of these cycles would be performed on women covered by ERISA exempt policies. It can be assumed that some portion of this cost would apply to ERISA exempt policies.

Examined another way, we found that the lower cost of $49 million was a reasonable estimate. Although Senate Bill 1183 does not specifically limit benefits to any particular age group, Council staff assumed the benefits would be utilized by women in their childbearing years, generally considered to be 16-44 years of age. According to the latest census figures, the number of Pennsylvania women in this age group is 2,498,316. Subtracting the uninsured population (and assuming that 50% of privately insured women in this age group are covered by ERISA exempt policies) leaves 1,231,828 women affected by the mandate (100% of the Medicaid population of women in this age group are assumed to be effected). The William Mercer, Inc. report states that in Massachusetts, where infertility benefits are mandated, 0.2% of women receive assisted reproductive technology services in a given year. Applying this statistic to the eligible women results in an estimate of 2,463 Pennsylvania women receiving assisted reproductive technology services. According to an article submitted by Highmark, in vitro fertilization patients undertake two in vitro fertilization cycles on average. If each of these women received an average of 2 cycles of in vitro fertilization costing $9,000, with 11% receiving intracytoplasmic sperm injection costing an extra $2,000, the total cost would be $44,340,120.

One must keep in mind that this figure includes only estimates for assisted reproductive technologies. The adoption of SB 1183 would also mandate coverage for fertility drugs, and artificial insemination as well. These drugs can cost anywhere from $200 to $3,000 per month, depending on the type of drug used. Women often use fertility drugs for periods of a year or two until they are either successful or try another method. Intrauterine artificial insemination is relatively inexpensive, between $250 and $350.

Because insufficient information was submitted to calculate the percentage of these other treatments already covered in Pennsylvania, it was not possible to estimate the additional cost of fertility drugs and artificial insemination coverage. We emphasize that the $44-49 million can be considered a minimum figure and does not reflect costs for drugs, intrauterine insemination, or other treatments. Furthermore, should utilization reflect the growth experienced in Massachusetts, this minimum figure could go as high as $123 million.

An additional cost to be considered is the cost that will result from a higher incidence of multiple births. A secondary consequence of assisted reproductive technology is a higher rate of multiple birth gestation. The Centers for Disease Control and Prevention reported that in 1995, 37% of assisted reproductive technology births were multiple births, compared with 2% of births in the general population. Multiple births are associated with a higher rate of neonatal complications and with more stays in neonatal intensive care units than are single births, which has an exponential impact on health care costs.

Supporters point out that tubal surgeries have decreased by 50% since the introduction of in vitro fertilization in 1981. This is because assisted reproductive technologies have a higher success rate than tubal surgery. However, because tubal surgery is used to treat a medical condition (diseased fallopian tubes), it is more likely to be covered by most health insurance. As a result, a number of women elect to have this surgery rather than an assisted reproductive technology for which they would have to pay out-of-pocket. Mandating coverage of assisted reproductive technology would encourage more woman to take this route rather than tubal surgery. Since tubal surgery is more expensive than assisted reproductive technology ($10,000 to $15,000 for tubal surgery, $8,000 to $13,000 for assisted reproductive technology), supporters point out that this may result in a savings. Again, information received was not specific enough to determine the possible savings.