LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 27, 1995



 TO:     Honorable Harvey Hilderbran, Chair     IN RE: Committee Substitute
         Committee on Human Services                            for House
         House of Representatives               Bill No. 2644
         Austin, Texas









FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
2644 (relating to licensing and Medicaid certification
requirements for certain nursing facilities and related penalties
and dispute resolution) 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 provides for the Department of Human Services to
implement rules that "except to the extent necessary to implement
rights granted to an elderly individual under Chapter 102, ...
may not be different from the standards imposed by federal law."

In addition, the bill applies to any dispute between an
institution licensed under Chapter 242, Health and Safety Code,
and the Department of Human Services relating to:

*  renewal of a license under Section 242.003;
*  suspension or revocation of a license or closing of a license
under Section 242.061;
* assessment of a civil penalty under Section 242.065;
* assessment of a monetary penalty under Section 242.066; or
* assessment of a penalty as described by Section 31.021(k),
Human Resources Code.

The bill also provides for an affected institution to select    




binding arbitration as an alternative to contested case hearing 
or judicial proceeding relating to the assessment of a civil
penalty.  The department shall pay the cost of the arbitration if
the department elects the arbitration.  If the institution elects
the arbitration, the cost of the arbitration shall be equally
shared by the Department of Human Services and the institution
electing arbitration.  The arbitration rules are to be adopted by
the chief administrative law judge of the State Office of
Administrative Hearings and arbitration proceedings are to be
conducted in accordance with the adopted rules.

The provisions of the bill take effect September 1, 1995 and
applies only to a dispute described by Section 242.251, Health
and Safety Code, as added by this Act, with respect to which
formal proceedings are commenced on or after January 1, 1996.

The Department of Human Services (DHS) has assumed that
approximately 162 institutions will choose arbitration as an
alternative to contested case hearing or judicial proceeding
relating to the assessment of a civil penalty for FY 96, 165
institutions in FY 97, 172 institutions in FY 98, 179
institutions in FY 99, and 188 institutions in Fiscal Year 2000.

DHS has also assumed that the travel and operating costs per
arbitration would be $2,591.  The incremental increases in the
cost of arbitration are consistent with that of the increase in
licensed nursing and personal care institutions.

The State Office of Administrative Hearings' fiscal impact is
based upon the estimated number of cases, as identified by DHS to
referred for arbitration.

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 Cost Out   Probable Cost Out 
             Year      of  General       of  GR Match For   of  Federal Funds 
                     Revenue Fund 001        Medicaid              555        
                                                                              
                                                                              
          1996                $234,980             $72,258            $132,219
          1997                 235,102              73,597             134,667
                                                                              
          1998                 244,405              76,719             140,379
                                                                              
          1999                 253,705              79,841             146,094
          2000                 265,665              83,856             153,438
                                                                              
                                                                              
                                                                              
            Fiscal     Change in    
             Year   Number of State 
                     Employees from 
                        FY 1995     
                                    
          1996                    .0
          1997                    .0
                                    
          1998                    .0
                                    
          1999                    .0
          2000                    .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:   Department of Human Services
          LBB Staff: JK, MU, DF