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