LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 29, 1997
TO: Honorable Hugo Berlanga, Chair IN RE: Senate Bill No. 30, Committee Report 2nd House, Substituted
Committee on Public Health By: Zaffirini
House
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; to the creation of private cause
of action for false claims for certain government payments;
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-Committee Report 2nd House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $11,448,184 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 FR1 through FR11 and FR16 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. The bill would require HHSC to deposit the state's
share of money collected under the provisions of the bill into
a new, dedicated account in the State Treasury. (NOTE: According
to the Comptroller of Public Accounts, the creation and/or continuation
of dedicated accounts in the General Revenue Fund could further
restrict the legislature's ability to appropriate revenues for
general operating purposes.) 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, revenue gains increase
as compared to the introduced bill. With this transfer and
the requirement that all monies collected be deposited in a
dedicated account, overpayments recouped by the operating agencies
that were available for Medicaid expenditure are now unavailable
for reinvestment into client services. Gains to General Revenue
dedicated account (and savings to Federal Funds) are included.
The GR dedicated gains 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.
These estimates assume growth in state employees to implement
the provisions of the bill. The number of full-time equivalent
positions and cost estimates have been lowered subsequent to
the issuance of a very similar fiscal note for House Bill 2127
due to additional information and analysis. With this additional
analysis, there are 12.3 fewer FTEs in 1998; 9.5 fewer FTEs
in 1999; and 12.5 fewer FTES each year thereafter than estimated
in the House Bill 2127 fiscal note, as introduced, on March
19. In addition, general revenue costs have been lowered by
$989,632 for the 1998-99 biennium and $493,680 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 (Note: A new column for the dedicated
general revenue account has been added which has the effect
of lowering the savings to the General Revenue Fund. However,
overall savings have increased.):
Five Year Impact:
Fiscal Year Probable (Cost) Probable Savings Probable (Cost) Probable Change in Number
from General from General from Federal Funds Savings
from of State
Revenue Fund Revenue Fund Federal Funds Employees from
FY 1997
0001 0001 0555 0555
1998 ($2,592,119) $8,164,402 ($7,779,232) $35,546,160 35.2
1998 (2,960,636) 8,943,642 (8,187,804) 39,186,266 63.5
2000 (2,737,913) 5,071,050 (4,544,863) 40,572,004 69.1
2001 (2,737,913) 5,071,050 (4,544,863) 41,818,004 69.1
2002 (2,737,913) 5,071,050 (4,544,863) 41,818,004 69.1
Fiscal Year Probable Revenue Probable (Cost) Probable Revenue Probable (Cost)
(Loss) from from Texas Gain from Texas from State
General Revenue Department of Department of Highway Fund
Fund Insurance 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)
Fiscal Year Probable Revenue
Gain/(Loss) from
New - GR Dedicated
NEW-DED
1998 $17,945,351
1999 18,791,188
2000 19,604,000
2001 20,358,000
2002 20,358,000
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 $5,572,283
1999 5,875,901
2000 2,235,383
2001 2,235,383
2002 2,235,383
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. Local governments would also have
the same responsibility as the Office of the Attorney General
to investigate and file on false claims. The bill would have
an impact on local governments to the extent that it would add
new responsibilities not currently undertaken by local governments.
It is possible that local governments would have some monetary
exposure with regard to the whistleblower provisions of the
bill.
Source: Agencies: 529 Health and Human Services Commission
324 Department of Human Services
302 Office of the Attorney General
503 Board of Medical Examiners
304 Comptroller of Public Accounts
501 Department of Health
LBB Staff: JK ,BB ,AZ