LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session May 3, 1995 TO: Honorable John Smithee, Chair IN RE: Committee Substitute Committee on Insurance for House of Representatives House Bill Austin, Texas No. 1194 FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 1194 (relating to the establishment, certification, organization, and regulation of dental provider organizations and dental provider plans) this office has determined the following: The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The bill would amend the Insurance Code to regulate dental preferred provider organizations and dental preferred provider plans. Under current law, preferred provider organizations and plans are unregulated by any state authority. The bill would require the Department of Insurance to issue certificates of authority for dental preferred provider organizations and plans and the bill specifies maximum filing fees for the associated applications, reports and schedules. Implementation of the provisions of the bill would require additional resources for new Department of Insurance responsibilities, including adoption of new policy rules, licensing and certification for authority to do business, and financial solvency examinations and monitoring. Revenue gains resulting from implementation of the bill cannot be estimated accurately because the number of dental preferred provider organizations that would apply for and receive certification is not known. However, the Department anticipates that the related fees would be set, as provided by the bill, to cover costs of administering the program with the possible exception of first year start up costs. Cost and revenue projections are based on an assumption that at least 50 preferred provider organizations would receive program certification. The probable fiscal implication of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Fiscal Probable Cost Out Probable Revenue Change in Year of Department of Gain Number of State Insurance to Department of Employees from Operating Insurance FY 1995 Fund 036 Operating GR Consolidated Fund 036 GR Consolidated 1996 $197,328 $200,000 3.5 1997 148,946 175,000 3.0 1998 148,946 175,000 3.0 1999 148,946 175,000 3.0 2000 148,946 175,000 3.0 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Comptroller of Public Accounts, Department of Insurance, State Board of Dental Examiners LBB Staff: JK, RM, RR