LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 24, 1995



 TO:     Honorable Harvey Hilderbran, Chair     IN RE:  House Bill No. 3118
         Committee on Human Services                    By: Coleman, Maxey
         House of Representatives
         Austin, Texas







FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
3118 (Relating to the amendment of Subtitle B, Title 4, Health
and Safety Code, by adding Chapter 251 to read as follows:
          Chapter 251. Intermediate Care Facilities for the Mentally       
          Retarded (ICF/MR)) 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.                                                     
                                                                           
          This bill repeals parts of Chapter 242 of the Health and Safety  
          Code relating to the ICF/MR program and creates a new chapter    
          specifically to govern the licensing of ICF's/MR.                
                                                                           
          The bill would require all facilities to obtain a license, which 
          is an expansion of the current licensing requirement to include  
          state operated facilities and community MHMR center affiliated   
          facilities (which are currently exempted).  Penalties associated 
          with administrative violations have been revised to exclude      
          active treatment penalties and penalties for QMRP supervisions of
          the program.  Penalties for threats to health or safety have been
          retained.  The bill develops an independent trust fund for ICF/MR
          facilities; however, it does not provide a mechanism to establish
          the revenue source for this new fund. Unencumbered funds over    
          $100,000 would be transferred from the trust fund to the general 
          revenue fund at the end of each fiscal year.                     
                                                                           
          The most significant fiscal impact concerning this bill involves 
          the lack of a plan for limiting the number of licensed ICF/MR    
                                                                           
                                                                           
                                                                           

facilities such as the Long-Term Care Plan. By implicitly 
requiring the issuance of a license to any applicants that "meet
the requirements established under this chapter" without respect
to expansion limits set in the Plan on Long-Term Care for Persons
with Mental Retardation or Related Conditions places the state in
a precarious fiscal position regarding the cost controls of the
ICF/MR program. Growth under uncontrolled conditions could
preclude strategic program planning. The fiscal impact is based
on an estimated 50 new ICF's/MR per year, which has been the
historical growth rate.

The bill's requirement for all facilities to obtain a license
represents an increase in costs to the Department of Mental
Health and Mental Retardation (MHMR) and participating Community
Mental Health and Mental Retardation Centers.

A provision is made for the Texas Department of Human Services
(TDHS) to maintain a central registry of cases involving abuse
and neglect in ICF/MR facilities.  This information is already
included in a larger database.  Separating and separately
maintaining the information for ICF's/MR would result in
increased costs to TDHS.







The provision regarding two unannounced visits per licensing year
would increase cost to TDHS. Currently the number of ICF-MR
survey and certification visits is limited to two unannounced
visits per licensing cycle (average of one per year). The fiscal
implication of the bill is based on the cost of the required
second visit. The impact is based on a cost per survey of $2550
multiplied by an estimated 864 MR facilities. The cost of the
second visit must be paid for with 100% state funds, since it is
a state and not a federal requirement.

The development of an independent trust fund for ICF/MR
facilities provides no mechanism to support this trust fund
through license fees and penalties.  The lessening of areas
subject to penalties would result in a reduction of revenue
related to penalties. Information necessary to predict the fiscal
impact of this is not available.  It is assumed that TDHS would
absorb the cost of establishing the trust fund.

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 
          Year       of  General      of  Federal Funds 
                  Revenue Fund 001           555        
                                                        
          1996            $4,469,370          $3,798,600
          1997             6,790,895           7,476,000
                                                        
          1998             9,152,620          11,113,200
                                                        
          1999            11,447,145          14,817,600
          2000            13,741,670          18,522,000
                                                        
                                                        
                                                        
       Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.

The fiscal implication to  units of local government cannot be
determined.


Source:   Texas Department of Mental Health and Mental
Retardation,
                         Texas Department of Human Services,
Health and Human Services Commission
          LBB Staff: JK, GT, DF