LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 30, 1997
TO: Honorable Bob Bullock Honorable James E. "Pete" Laney
Lieutenant Governor Speaker of the House
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB30 ( Relating
to fraud and improper payments under the state Medicaid program
and other welfare programs and to the creation of a criminal
offense; providing penalties.) this office has detemined the
following:
Biennial Net Impact to General Revenue Funds by SB30-Conference Committee Report
Implementing the provisions of the bill would result in a net
positive impact of $48,184,723 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.
The bill would implement Texas Performance Review
(TPR) recommendations on fraud issues in "Disturbing the Peace:
The Challenge of Change in Texas Government."
Fiscal Analysis
Two estimates are contained in this fiscal note. The first
is discussed in text and represents estimates by TPR as laid
out in Disturbing the Peace: The Challenge of Change in State
Government for Fraud Issues 1 through 11 and 16. The second
set of costs and savings is displayed in the fiscal note boxes
and reflects estimates based upon input from the agencies affected
by the provisions of the bill. The major difference between
the estimates relates to the implementation of the FR1 (neural
network system) and the estimates of savings which would result.
The components of the bill that would involve estimates
of savings and costs include:
1) Sections 1.01, 1.05, 1.08,
1.09, and 1.10 which partially implement TPR recommendation
FR16 which would require increased collection efforts for the
food stamp and Temporary Assistance for Needy Families (TANF)
program. Section 1.02 would allow the Department of Human Services
to use earned federal funds derived from recovery of welfare
benefits granted as a result of fraud for the prevention of
fraud.
2) Sections 1.03 and 1.04 which would partially implement
TPR recommendation FR3 by increasing the federal matching funds
for certain Medicaid reimbursable services.
3) Sections
1.06 and 1.07 which would implement TPR recommendations FR1
and partially implement FR6. These provisions relate to the
coordination of referrals in order to increase the amount of
money recovered from fraudulent and other inappropriate claims
payments. Transfer of staff from the Department of Health and
Department of Human Services to the Health and Human Services
Commission is included in these provisions. The estimates assume
increased use of a neural network system.
4) Sections 2.01,
2.02, and 2.08 which would implement TPR recommendation FR2
and relate to the non-emergency ambulance services and durable
medical equipment in the Medicaid program.
5) Sections
2.03, 2.04, 2.05, 2.06, and 2.07 which would implement TPR recommendation
FR4 by requiring surety bonds, criminal background checks, revisions
to the Medicaid provider contract, and an on-site review pilot
of certain applicants seeking to become Medicaid providers.
6) Section 2.09 would partially implement TPR recommendation
FR3 by reducing reimbursement code manipulation through the
use of an automated system.
Methodolgy
The TPR estimates reflect their analysis as laid out in Disturbing
the Peace: The Challenge of Change in State Government for
Fraud Issues 1 through 11 and 16. General Revenue savings as
estimated by the Comptroller of Public Accounts are: $28,684,000
in 1998; $51,247,000 in 1999; $75,183,000 in 2000; $86,145,000
in 2001; and $97,584,000 in 2002. Federal fund savings as estimated
by the Comptroller of Public Accounts are: $39,653,000 in 1998;
$78,679,000 in 1999; $119,825,000 in 2000; $138,753,000 in 2001;
and $158,584,000 in 2002. The 1998-99 biennial savings to the
General Revenue Fund as estimated by TPR related to implementation
of the provisions of the bill would be $79,931,000.
The fiscal
impact estimates (in the boxes below) include the following:
1) General Revenue costs of $62,500 are included to allow
the Department of Criminal Justice to adapt its computer systems
as required in Section 531.108.
2) Annual enforcement costs
(GR) of $5,499 related to the provisions of the bill are included
for the Board of Medical Examiners (and 0.1 FTE).
3) Costs
related to revocation of licenses are included for the Department
of Public Safety. It is assumed that 3 FTEs will be added to
provide this function. Cost to Fund 6 in the first year is
$270,662 and $105,478 each year thereafter.
4) Costs for
implementing the audit responsibilities and financial examinations
by the Department of Insurance are estimated to be $107,105
in the first year and $97,754 each year thereafter. Two FTEs
will be added: Certified Financial Examiner and Insurance Technician
IV. The costs of this bill would be recovered by Overhead Assessment
and Examination billings. Because these amounts are creditable
toward premium taxes due, there will be a reduction in the amount
of premium taxes that would be deposited into the General Revenue
Fund beginning in 1999 and each year thereafter.
5) Health
and Human Services Commission costs are included for acquisition
of neural network technology and assume that a 75/25 federal
match will be available for that technology. Additional HHSC
staff to support Medicaid fraud investigations are included
in these estimates and assume a phase-in before fully operational:
16.1 FTEs in 1998; 30.4 FTEs in 1999 and 36 FTEs each year
thereafter. Costs related to a hotline, general operations,
equipment and travel are included. The estimates assume costs
(with approximately 62% funded with federal dollars) of $3.7
million in 1998; $4.3 million in 1999; and $4.8 million each
year thereafter. Due to the transfer of utilization review staff
from existing Medicaid operating agencies, HHSC's estimates
of general revenue savings are increased as compared to the
introduced bill. Their estimates also assume that the overpayments
recouped by the operating agencies (DHS and TDH) that are currently
available reinvestment into client services as Medicaid expenditures
are considered as savings to the program. The Commission's
estimates of GR savings include $17.9 million in 1998; $18.8
million in 1999; $19.6 million in 2000; and $20.4 million each
year thereafter.
6) The fiscal implications associated
with litigation and investigation workloads for the Office of
the Attorney General are assumed to be absorbed within existing
resources. In addition, it is assumed that the OAG will coordinate
with HHSC in order to establish Memoranda of Understanding to
enforce the provisions the bill.
7) Cost estimates related
to the Department of Human Services relate to collection of
overissued financial food stamp benefits and include: development
of electronic interfaces with the Lottery Commission, additional
staff to work the cases; edit of existing systems and hiring
of temporary staff to man the telephone collection program;
addition of a WATS line; electronic interfaces with DPS and
Parks & Wildlife for suspension of driver and hunting licenses;
study of expedited food stamp delivery; study of wage garnishment
and property lien; and tracking of cases turned over to private
collection agents. Costs (with 50% funded with federal dollars)
total $1.2 million in 1998; $1.4 million in 1999; and $1.4 million
each year thereafter. Savings/gains to General Revenue due
to increased collections are estimated to be approximately $258,000
in 1998 and $1.1 million each year thereafter. Staff increases
include 14 FTEs in 1998 and 28 FTEs each year thereafter.
8) Costs related to the Department of Health correspond to
provider training related to billing procedures for durable
medical equipment, travel, postage, printed materials and consultant
costs (majority of the costs). Total costs are estimated to
be $5.4 million in 1998; $5.3 million in 1999; and $1.1 million
each year thereafter. Of these costs, approximately 10% are
from General Revenue in the first two years and 18% each year
thereafter. Savings/gain to the General Revenue Fund total
$7.9 million in 1998 and 1999 with $4.0 million each year thereafter.
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 Probable Probable Change in Number
Savings/(Cost) Savings/(Cost) Savings/(Cost) Savings/(Cost) of State
from General from General from Federal Funds from Federal Funds Employees from
Revenue Fund Revenue Fund FY 1997
0001 0001 0555 0555
1998 ($2,592,119) $26,109,753 ($7,779,232) $35,546,160 35.2
1998 (2,960,636) 27,734,830 (8,187,804) 39,186,266 63.5
2000 (2,737,913) 24,675,050 (4,544,863) 40,572,004 69.1
2001 (2,737,913) 25,429,050 (4,544,863) 41,818,004 69.1
2002 (2,737,913) 25,429,050 (4,544,863) 41,818,004 69.1
Fiscal Year Probable Revenue Probable Probable Revenue Probable
Gain/(Loss) from Savings/(Cost) Gain/(Loss) from Savings/(Cost)
General Revenue from Texas Texas Department from State
Fund Department of of Insurance Highway Fund
Insurance Operating
Operating Account/
Account/ GR-Dedicated
GR-Dedicated
0001 0036 0036 0006
1998 $0 ($107,105) $107,105 ($270,662)
1999 (107,105) (97,754) 97,754 (105,478)
2000 (97,754) (97,754) 97,754 (105,478)
2001 (97,754) (97,754) 97,754 (105,478)
2002 (97,754) (97,754) 97,754 (105,478)
Net Impact on General Revenue Related Funds:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $23,517,634
1999 24,667,089
2000 21,839,383
2001 22,593,383
2002 22,593,383
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
There may be an impact on local courts resulting from judicial
review of license suspensions and an increased tracking of fraud
cases by county prosecutors. In addition, local governments
providing Medicaid services could experience increased review
with the intensified Medicaid fraud and recoupment efforts.
The bill would have an impact on local governments to the extent
that it would add new responsibilities not currently undertaken
by local governments.
Source: Agencies:
302 Office of the Attorney General
304 Comptroller of Public Accounts
324 Department of Human Services
501 Department of Health
529 Health and Human Services Commission
LBB Staff: JK ,BB ,AZ