LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session April 28, 1997 TO: Honorable John T. Smithee, Chair IN RE: House Bill No. 2058, Committee Report 1st House, Substituted Committee on Insurance By: Delisi House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB2058 ( Relating to the certification, operation, powers, and duties of certain integrated health plans.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB2058-Committee Report 1st House, Substituted Implementing the provisions of the bill would result in a net impact of $0 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 the Insurance Code to allow the Commissioner of the Texas Department of Insurance (TDI) to issue a certificate of authority to a nonprofit health maintenance organization (HMO) which satisfies the bill's requirements for licensure as an integrated health plan (IHP). Article 20B.011 would require the Commissioner of TDI to issue a certificate of authority as an IHP to an eligible nonprofit HMO. Article 20B.013 would allow the Commissioner to revoke a certificate of authority. It is assumed that TDI would be required to regulate IHPs to ensure that the provisions of the bill are followed. To process the form filings and to handle the workload created by the regulation of IHPs, it is estimated that TDI would need to hire one Nurse V at a cost to TDI General Revenue Dedicated Fund 036 of $54,531 in FY 1998 and $49,385 in FYs 1999 though 2002. Revenue from the original certificate of authority filing and from subsequent evidence of coverage and information only filings by IHPs would result in a revenue gain to TDI General Revenue Dedicated Fund 036 of $22,500 in FY 1998 and $7,500 in FYs 1999 through 2002. Methodolgy Costs and revenues are based in the following assumptions: (1) TDI would be responsible for the regulation of IHPs. (2) TDI would need to establish appropriate standards relating to quality assurance of IHPs and administrative rules to implement this bill. (3) TDI estimates that there would be three new applications for certificates of authority as IHPs. At a cost of $7,500 each, TDI General Revenue Dedicated Fund 036 would experience a revenue gain of $22,500 in FY 1998. (4) In FYs 1999 though 2001, TDI estimates that the three IHPs would file a total of 20 evidence of coverage form filings and 10 information only form filings per year. Each IHP would pay to TDI $100 per evidence of coverage filing and $50 per information only filing. Total revenue gain to TDI General Revenue Dedicated Fund 036 would be $7,500 per year. 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 Probable Revenue Change in Number Savings/(Cost) Gain/(Loss) from of State from Texas Texas Department Employees from Department of of Insurance FY 1997 Insurance Operating Operating Account/ Account/ GR-Dedicated GR-Dedicated 0036 0036 1998 ($54,531) $22,500 1.0 1998 (49,385) 7,500 1.0 2000 (49,385) 7,500 1.0 2001 (49,385) 7,500 1.0 2002 (49,385) 7,500 1.0 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 $0 1999 0 2000 0 2001 0 2002 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: Agencies: LBB Staff: JK ,TH ,BK