LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 12, 1995 TO: Honorable John Smithee, Chair IN RE: House Bill No. 2766 Committee on Insurance By: Smithee, House of Representatives VandePutte Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 2766 (relating to fairness and choice to patients and providers under managed care health benefit plans; providing a penalty) 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 add the "Patient Protection Act" and to alter provisions relating to utilization review regulation. The bill would require health maintenance organizations (HMOs), insurance companies, hospital or medical service plans, or any entity providing managed care coverage to file a managed care plan for certification with the Department of Insurance. Implementation of the provisions of the bill would result in significant fiscal implications for the Department of Insurance. The Department estimates that 225 preferred provider organizations, 250 utilization review agents, 63 non-profit managed care entities and an unknown number of for-profit managed care entities would be required to file for certification each managed care plan offered. A new staff section would be needed to process the applications filings for certification. Revenue increases would result beginning in fiscal year 1997 from a proposed fee of $350 per filing. 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 to Department Number of State Insurance of Insurance Employees from Operating Operating FY 1995 Fund 036 Fund 036 GR Consolidated GR Consolidated 1996 $320,010 $0 6.0 1997 1,218,543 1,050,000 26.0 1998 1,020,046 700,000 24.0 1999 1,020,046 1,400,000 24.0 2000 1,020,046 1,225,000 24.0 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 Insurance, Department of Health LBB Staff: JK, RM, RR