Cost-Benefit Analysis

In performing a cost-benefit analysis, each rulemaking entity must provide the information requested for the cost-benefit analysis to be considered a good faith effort.  The cost-benefit analysis must be submitted to the Office of Policy, Research and Regulatory Reform at least five (5) days before the administrative hearing on the proposed rule.  For all questions, please attach all underlying data that supports the statements or figures stated in this cost-benefit analysis.

Department:	Department of Regulatory Agencies (DORA)		Agency:	Office of Chiropractic Licensure	

CCR:	3 CCR 707-1		Date:	November 3, 2006	

Rule Title or Subject:	
Rule 27 – Pre-payment of chiropractic services	

Benefits of the Proposed Rule(s)/Amendment(s)

1.	Please provide the statutory authority, and detailed statements indicating the need for the proposed changes.  (This statement should include specific issues such as specific changes in statutes or the subject matter area, market failure, a compelling public need, risks to the health, safety or welfare of Coloradans, lack of efficient and effective performance of an important government function, or other specific problem(s) that are being addressed by the proposed rule(s).)  Please include the number of complaints you received (if any) that spurred you to take regulatory action.	
	The Board of Chiropractic Examiners has received approximately 12 complaints in the last year concerning chiropractic practices currently engaged in some form of pre-payment billing practice for future chiropractic treatment.  There were 80 complaints received in the last fiscal year, which means 15% of the complaints relate to this issue.  Moreover, these types of complaints are projected to increase since this form of billing practice is growing in popularity.  Rule 27 has been proposed in response to this growing concern with the intention of providing clear and proper guidelines to those chiropractors that are anticipating or currently engaged in pre-payment billing practices.  The current rules and statute are silent on this issue.  The Board believes that there is a compelling public need for Rule 27 because this type of billing practice increases the likelihood that a patient will pay, upfront, for treatment not rendered or not rendered completely by doctors of chiropractic and provides an opportunity to commit fraud on the public.  Rule 27 would ultimately lead to enhanced public protection by ensuring that patients have been offered a transparent review of a chiropractor’s billing practices involved in pre-payment billing for services.  Furthermore, Rule 27 provides an avenue for the patient to break away from a pre-payment billing contract without risking financial losses on the remainder of the treatment plan.	

2. 	Please list the top three benefits of the proposed regulation; explain how the proposed regulation results in the expected benefits; and if the proposed regulation reduces or eliminates the problem(s) listed above.	
	1.	The proposed rule provides clarity and parameters as to how a chiropractic doctor should engage in an unregulated and growing pre-payment billing environment.  
2.	The proposed rule prevents a group of practitioners currently engaged in or planning to engage in a form of pre-payment billing from potentially over-billing patients upfront for treatment that was to never be provided in the first place or was never provided or was only partially provided to the patient. 
3.	The proposed rulemaking provides public protection by ensuring the patient is clearly aware of all aspects of their billing contract before he or she agrees to enter into a pre-payment billing plan with a doctor of chiropractic and also ensures that the patient will be reimbursed in full any fees that are not utilized in the course of treatment.	

3.	What, in your estimation, would be the consequence of taking no action, thereby maintaining the status quo?	
	The status quo puts patients at risk of financial harm.  There would be continued uncertainty in the chiropractic community as to how to properly engage in pre-payment billing for chiropractic services, which will then increase the likelihood of patients incurring added costs upfront for treatment services not provided in full.	

4.	Please describe market-based alternatives or voluntary standards that you considered in place of the proposed regulation and state the reason(s) for not selecting those alternatives.  How many small businesses did you talk to about the proposed regulation?	
	Market-based alternatives or voluntary standards are currently in place, but are not adequate to protect patients as evidenced by the growing number of complaints pertaining to pre-payment billing policies.  To find a solution, the Board discussed the issue of pre-payment billing policies with two other professions involved in this type of practice.  The Board reached out to members of the licensed dental and legal communities, and with their assistance along with members of the licensed chiropractic community, developed Rule 27 as a means of standardizing the concept of pre-payment billing, adding transparency to the whole process, and facilitating improved financial communication between the doctors of chiropractic and the consumer.  The Board solicited feedback from a total of 8 dental, legal, and chiropractic offices involved in pre-payment billing.	

Impact of Proposed Rule(s)/Amendment(s)

5.	Please describe the government costs to be incurred because of the proposed regulation (Examples include collection; paperwork; filing; recordkeeping; audit, inspection and training costs, etc.), and state your estimates (in dollars) of the costs that will be incurred.	
	There are no government costs to be incurred as a result of this proposed regulation since the proposed rule is meant to provide clarity and guidance to the licensed chiropractic community as to how a chiropractic doctor should properly engage, for the safety of the general public, in the practice of pre-payment billing of chiropractic services.   	

6.	Please provide the number and types of entities or small businesses that will be required to comply with the proposed rule(s).  Please provide the source of data used (i.e., program data, NAICS code statistics, etc.).	
	The Board believes that roughly 5-10 percent of the licensed chiropractors in Colorado are currently involved with pre-payment billing.  This is an estimate provided by the Board based on their contact with roughly 50 local chiropractors who had appeared before a prior rulemaking hearing in 2004 to discuss Rule 26, which was in regards to record keeping, outcome based care, and treatment tied to functional gain.  During that discussion, it became apparent to the Board that these chiropractors were involved in some sort of pre-payment billing practice.	

7.	Does the proposed regulation create barriers to entry (i.e., licensing, permit or educational requirements)?  If so, please describe those barriers and why those barriers are necessary. 	
	No, the proposed regulation does not create barriers to entry since it does not address licensure or reinstatement requirements. 	

8.	Explain the additional requirements with which small business owners will have to comply (i.e., will they need to purchase new equipment or software to meet the requirement(s); are there training costs; are there new disclosure/filing requirements they will have to provide to the state; are there transactional costs, paperwork costs, recordkeeping, etc.).  Please state your estimates (in dollars) of the compliance costs by types listed.	
	There is a potential for minimal administrative costs associated with training and book keeping to be incurred by a doctor of chiropractic who is currently engaged in pre-payment billing of chiropractic services that fall outside of the guidelines established in Rule 27, and as a result, would be required to bring their practice into compliance.  There is also a potential for minimal banking costs associated with the creation of separate accounts in response to this proposed regulation.  However, based on a brief survey of banking practices, most banks would in fact provide this service free of charge.	

9.	Please state whether the proposed regulation contains different requirements for different sized entities or different geographic regions, and explain why this is, or is not, necessary.  (For example, an audit fee (as a percentage of assets) for a bank examination is lower based upon a higher level of assets due to marginal cost savings and water usage is more restricted in geographic regions with less water storage or supplies because demand far outpaces supply.)	
	The proposed regulation does not contain different requirements for different sized chiropractic practices or chiropractic practices located in different geographic regions. 	

10.	Please describe your understanding of the ability of small business owners to implement changes required by the proposed regulation, and state the average estimated cost of implementation.  (For example, if a proposed rule required all business in a particular sector to utilize a specific software application, a small business owner may have a difficult time implementing the software if the software is expensive to purchase or if their existing computers are not able to run the software.)	
	Doctors of chiropractic who are currently engaged in aspects of pre-payment billing of chiropractic services that fall outside of the guidelines established in Rule 27 may incur minimal training, book keeping, and banking costs as they work to bring their practice in compliance with Rule 27.  However, these practitioners should still be able to utilize the same book keeping practices to comply with this rule.  Changes would then have to be made in their utilization of their current software in order to comply with Rule 27, which would be minimal.   	

11.	Please state if the proposed regulation will force the cessation of business by any existing businesses, and the impact the cessation will have on the economy including but not limited to the number of employees losing their jobs, the economic losses by the businesses and the estimated economic ripple the cessation will have on suppliers, consumers or buyers. 	
	Rule 27 will only force the cessation of business by any existing doctor of chiropractic who is currently engaged in aspects of pre-payment billing of chiropractic services that fall outside of the guidelines established in Rule 27 and who is unwilling to bring his or her practice in compliance with Rule 27.  The impact of cessation will have a minimal effect on the economy since a majority of chiropractic practices do not engage in this type of billing and those that do will be able to easily transition their practices so that they are in compliance with Rule 27 without having to cut back their services or close down their offices.  	

12.	Does the proposed regulation restrict consumer choice (i.e., availability of goods or services; price increases; etc.)?  If so, please describe those restrictions. 	
	No, this proposed regulation does not restrict consumer choice.  If anything, this regulation provides the consumer with added protection against the possibility of unnecessary billing and provides the consumer with additional information before making the choice of entering into a pre-payment billing arrangement.	

13.	Please state the estimated impact (in dollars) the proposed regulation will have on sales, employment or tax revenue.	
	The proposed regulation is not expected to have a negative impact on the sales, employment or tax revenue for any chiropractic practice in the state of Colorado.  On the contrary, this language should increase the revenue generated by doctors of chiropractic involved in pre-payment billing by bolstering consumer confidence in the financial and professional relationship that they are expected to enter into when seeking treatment at a chiropractic office.  Consumer confidence and trust in the treating chiropractor would increase due to a better understanding of how their fees will be utilized and since they will also be provided with an option to stop treatment at any time without having to worry about losing the unused portion of their pre-paid fees.  	

14.	Please identify all other small business sector(s) that the proposed regulation(s) may impact, and state the estimated financial impact the proposed regulation will have on each small business sector.  	
	Other small business sectors should not be impacted due to this proposed regulation since it affects and pertains only to licensed doctors of chiropractic currently engaged in or planning to engage in the practice of pre-payment billing of chiropractic services in Colorado.	

Thank you for your time and effort.