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