LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 7, 1997
TO: Honorable Judith Zaffirini, Chair IN RE: Senate Bill No. 30, Committee Report 1st House, Substituted
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 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 1st House, Substituted
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 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. 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. 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.
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.
[Please
note that a number of agencies had not responded to the fiscal
note request for this committee substitute by the time of its
writing.]
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 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) $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
(Cost)
(Loss) from from Texas Gain to 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)
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. 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: 362 Texas Lottery Commission
696 Department of Criminal Justice
304 Comptroller of Public Accounts
405 Department of Public Safety
302 Office of the Attorney General
454 Department of Insurance
655 Texas Department of Mental Health and Mental Retardation
LBB Staff: JK ,BB ,AZ