LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
February 25, 1997
TO: Honorable Hugo Berlanga, Chair IN RE: House Bill No. 820
Committee on Public Health By: Cuellar
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB820 ( Relating
to civil actions to recover fraudulent Medicaid claims.) this
office has detemined the following:
Biennial Net Impact to General Revenue Funds by HB820-As Introduced FN Revision 1
Implementing the provisions of the bill would result in a net
negative impact of $(735,391) to General Revenue Related Funds
through the biennium ending August 31, 1999.
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal Analysis
This bill would amend Chapter 36 of the Texas Human Resources
Code, the Medicaid Fraud Prevention Act, which prohibits fraudulent
conduct with regard to the Texas Medicaid program. A private
party would be allowed to bring suit on behalf of the State
of Texas for violations of Chapter 36. The person filing the
private lawsuit would be required to serve a copy of the petition
on the State of Texas, and within the next 60 days the Attorney
General may investigate the allegations and intervene and proceed
with the action or decline to take over the action. If the
State decides not to proceed with the action, the private plaintiff
would have the right to continue the action.
Under this bill,
the State could either prosecute under Chapter 36 or pursue
administrative remedies, in which case the private plaintiff
could proceed with its lawsuit. If the State proceeds with
the action, the private party would be entitled to from ten
percent to 25 percent of any recovery. If the State does not
proceed with the lawsuit, the private plaintiff could receive
an amount that the court decides is reasonable, but not less
than 25 percent or not more than 30 percent of the total recovery.
The
bill would also amend Chapter 531, Government Code, by adding
Subchapter C, which would allow the Texas Health and Human Services
Commission to grant an award to a person who reports Medicaid
fraud if the disclosure results in the recovery of an overcharge
or in the termination of fraud. The amount of the award would
be at least ten percent of the savings to the State. The award
by the Commission would be paid from money appropriated to the
Commission, and additional money would not be appropriated to
the Commission for the purpose of paying the award.
The bill
would take effect September 1, 1997.
Methodolgy
The bill's fiscal impact to the Office of the Attorney General
involves the creation of a private lawsuit for conduct declared
unlawful under Chapter 36, Human Resources Code. The Attorney
General would be required to investigate and evaluate the merits
of every notice of private lawsuit filed and to prosecute those
lawsuits in which the Attorney General decides to intervene.
It is estimated that there could be a substantial number of
such actions filed because of the financial incentives in the
bill for private citizens and that this bill would require the
Office of the Attorney General to add one Assistant Attorney
General IV, plus three other new employees, including an investigator,
a legal assistant, and a legal secretary.
It is estimated
that the bill would result in costs to The Office of the Attorney
General of $376,762 in fiscal year 1998, and $358,629 in subsequent
years. The difference in these amounts reflects a one-time
purchase of capital equipment in the first year.
The bill
allows the Attorney General not to proceed under Chapter 36,
in which case other agencies could pursue administrative remedies,
possibly requiring new personnel, including investigators, attorneys
and support staff to investigate allegations of Medicaid fraud,
assess administrative penalties, conduct administrative hearings,
and adjudicate appeals.
The Attorney General is allowed to
recover court costs, attorneys' fees and investigative costs
under the Appropriations Act, which could result in an offsetting
amount of appropriated receipts recovered by the Attorney General.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable Change in Number
Savings/(Cost) of State
from General Employees from
Revenue Fund FY 1997
0001
1998 ($376,762) 4.0
1998 (358,629) 4.0
2000 (358,629) 4.0
2001 (358,629) 4.0
2002 (358,629) 4.0
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 ($376,762)
1999 (358,629)
2000 (358,629)
2001 (358,629)
2002 (358,629)
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: Agencies: 304 Comptroller of Public Accounts
302 Office of the Attorney General
529 Health and Human Services Commission
LBB Staff: JK ,BB ,JC