LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 1, 1997
TO: Honorable Judith Zaffirini, Chair IN RE: Senate Bill No. 30
Committee on Health & Human Services By: Zaffirini
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 programs and to the creation of a criminal offense
relating to Medicaid fraud; providing penalties.) this office
has detemined the following:
Biennial Net Impact to General Revenue Funds by SB30-As Introduced
Implementing the provisions of the bill would result in a net
positive impact of $27,486,799 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 FR10 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 10 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, 1.04, 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.
2) Sections 1.02 and 1.03 which would partially
implement TPR recommendation FR3 by increasing the federal matching
funds for certain Medicaid reimbursable services. Although
the bill addresses payment for some Medicare Part A services,
there are recent court challenges to this practice in some states.
Thus, no savings from this practice are included in these estimates.
3) Sections 1.05, 1.06, 1.07, and 1.11 which would implement
TPR recommendations FR1 and partially implement FR6 and FR8.
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. 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 2.09 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, 2.07, and 2.08 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 2.10 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 10 and 16. Please note that the TPR
estimates of savings were revised downward to reflect updated
information related to litigation in other states regarding
Medicare/Medicaid reimbursement for Part A. 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. Savings/Gains
to General Revenue (and Federal Funds) are also included. The
GR portion of the savings include $7.6 million in 1998; $8.4
million in 1999; $9.3 million in 2000; and $10.0 million each
year thereafter. [Updated FTEs/cost estimates 3/26/97.]
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.
[Updated information received 3/24/97.]
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; development of an embassy interface;
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. [Estimates updated
3/27/97 for FTEs and costs.]
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:
Five Year Impact:
Fiscal Year Probable (Cost) Probable Savings Probable (Cost) Probable Savings Change in Number
from General from General from Federal Funds from Federal Funds of State
Revenue Fund Revenue Fund Employees from
FY 1997
0001 0001 0555 0555
1998 ($2,592,119) $15,760,791 ($7,779,232) $18,424,295 35.2
1998 (2,960,636) 17,385,868 (8,187,804) 22,084,401 63.5
2000 (2,737,913) 14,326,088 (4,544,863) 23,470,139 69.1
2001 (2,737,913) 15,080,088 (4,544,863) 24,716,139 69.1
2002 (2,737,913) 15,080,088 (4,544,863) 24,716,139 69.1
Fiscal Year Probable Revenue Probable (Cost) Probable Revenue Probable
(Loss) from from Texas Gain to Texas Savings/(Cost)
General Revenue Department of Department of from State
Fund Insurance Insurance Highway Fund
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:
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 $13,168,672
1999 14,318,127
2000 11,490,421
2001 12,244,421
2002 12,244,421
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.
Source: Agencies: 302 Office of the Attorney General
324 Department of Human Services
655 Texas Department of Mental Health and Mental Retardation
405 Department of Public Safety
529 Health and Human Services Commission
304 Comptroller of Public Accounts
454 Department of Insurance
362 Texas Lottery Commission
696 Department of Criminal Justice
501 Department of Health
503 Board of Medical Examiners
LBB Staff: JK ,BB ,AZ