5. Regulatory Review Cost Estimation

If regulations impose administrative costs on private entities, such as the time needed to read and interpret this IFC, we should estimate the cost associated with regulatory review. There is uncertainty involved with accurately quantifying the number of entities that will review the IFC. However, for the purposes of this IFC we assume that on average, each of the 44 affected jurisdictions will have two contractors per State to review this IFC. This average assumes that some State Medicaid agencies may use the same contractor, others may use multiple contractors to address the various provisions within this IFC, and some State Medicaid agencies may perform the review in-house. We also assume that each of the affected managed care plans (estimated to be 417 managed care plans) will review the IFC. Lastly, we assume that an average of two advocacy or interest group representatives from each State will review this IFC. In total, we estimate that 593 entities (88 State Contractors + 417 Managed Care Plans + 88 Advocacy and Interest Groups) will review this IFC. We acknowledge that this assumption may understate or overstate the costs of reviewing this IFC.

Using the wage information from BLS for medical and health service managers (Code 11-9111), we estimate that the cost of reviewing this IFC is $113.42 per hour, including overhead and fringe benefits ( https://www.bls.gov/oes/current/oes_nat.htm ). Assuming the average reading speed of 250 words per minute, we estimate that it would take approximately 3.1 hours for staff to review half of this IFC ([93,000 words × 0.5]/250 words per minute/60 minutes per hour). For each entity that reviews the rule, the estimated cost is $351.60 (3.1 hours × $113.42). Therefore, we estimate that the total cost of reviewing this regulation is $208,498.80 ($351.60 per individual review × 593 reviewers).