LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
February 25, 1997
TO: Honorable Judith Zaffirini, Chair IN RE: Senate Bill No. 190
Committee on Health & Human Services By: Zaffirini/et al.
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB190 ( Relating
to the regulation of nursing homes and similar facilities; providing
penalties.) this office has detemined the following:
Biennial Net Impact to General Revenue Funds by SB190-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(9,238,633) 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 amend Chapter 242 of the Health
and Safety Code relating to the regulation of convalescent and
nursing homes and related institutions. It would substantially
revise the state licensing law governing the operation of these
facilities in Texas, and significantly alter the regulatory
responsibilities of the Texas Department of Human Services.
Fiscal Analysis
The bill would amend Section 242.032 to require the Texas Department
of Human Services to consider the background and qualifications
of a wide range of individuals when reviewing license applications,
including the applicant; the applicant's partners, officers,
directors, and managing employees; persons who control the applicant
or institution; and persons who own or control the owner of
the physical plant. It would require each applicant to file
a sworn affidavit of satisfactory compliance history over the
past ten years for each of these individuals. It would also
amend Section 242.034 to permit the Board of Human Services
by rule to establish a background examination fee to defray
the department's expenses. It is assumed that implementation
of these provisions would have no significant fiscal impact.
The
bill would amend Section 242.1225 to require employees of convalescent
and nursing homes and related institutions to report suspected
violations of state law, rules and standards, and federal law
and regulations. It would also require employees to report
unsanitary or unsatisfactory conditions. It is assumed that
implementation of these provisions would significantly increase
the workload of the department.
The bill would amend Section
242.126 to require the Texas Department of Human Services to
begin an investigation of abuse or neglect within two hours
when there is an allegation of imminent danger, a recent death
due to alleged conduct, or emergency room treatment or hospitalization
due to alleged conduct. The bill would require the department
to begin an investigation of abuse or neglect before the end
of the next working day when these conditions do not exist.
Each investigation must include an unannounced visit that involves
activities such as interviews and a personal inspection of the
evidence. The department must also complete an initial status
report within two working days, and prepare a written investigation
report no later than the fifth working day after the investigation
is complete and no later than 45 days after the initial status
report is complete. It is assumed that implementation of these
provisions would significantly increase the workload of the
department.
The bill would amend Section 242.061(a) to establish
new grounds for license denial, suspension, or revocation.
These include violating the licensing statute, rules, standards,
or orders; making a false statement of a material fact; refusing
the department access to inspect books, records, files, or any
portion of the premises; willfully interfering with the work
of departmental representatives, and failing to pay a penalty
assessed by the department within 10 days after it becomes final.
The
bill would amend Section 242.066 to permit the Texas Department
of Human Services to assess an administrative penalty for any
of the violations noted above. It would also permit the department
to assess the administrative penalty against the applicant or
license holder; the applicant or license holder's partner, officer,
director, or managing employee; and the person who controls
the institution. The administrative penalty for certain violations,
such as violating the rights of a resident, would be limited
to no more than $1,000 per day. The maximum administrative
penalty for other violations would increase from $10,000 to
$25,000 per day.
The bill would amend Subchapter C to permit
an institution to avoid paying the administrative penalty by
correcting certain violations within 60 days. It would also
permit the department to assess an administrative penalty up
to $75,000 per day when there is a subsequent violation and
the institution has failed to maintain the correction for at
least 12 months.
The bill would amend Section 242.070 to
permit the Commissioner of Human Services to require a person
to use any portion of the administrative penalty to ameliorate
a violation or to improve services, in lieu of ordering payment
of the administrative penalty.
The department collected about
$194,000 from administrative penalties in 1995, and $65,000
in 1996. It is assumed that implementation of the administrative
penalty provisions would have no significant fiscal impact because
most institutions would correct their violations within 60 days,
and the Commissioner of Human Services could require violators
to use their administrative penalty money to correct violations
or to improve services.
The bill would amend Section 242.065(a)
to allow the imposition of a civil penalty when state licensing
standards are violated. It would also increase the maximum
amount for a civil penalty from $10,000 to $25,000 per day.
It is assumed that implementation of these provisions would
have no significant fiscal impact.
Finally, the bill would
amend Section 32.021 of the Human Resources Code to require
the department to institute a reimbursement system to compensate
nursing facilities for the fair rental value of their investment
in property. It is assumed that implementation of this provision
would have a significant fiscal impact.
Methodolgy
The Texas Department of Human Services reports that 6,338 incident
reports were filed by employees of convalescent and nursing
homes and related institutions in 1996. It is assumed that
implementation of the bill's amendments to Section 242.1225
would cause 17,662 additional incident reports to be filed each
year, and that 21% of these reports would require an on-site
investigation. The department would need to hire additional
state office staff to process the incoming reports, and additional
regional office staff to conduct the on-site investigations.
The
Texas Department of Human Services reports that 2,691 complaints
alleging serious abuse or neglect were filed in 1996. Implementation
of the bill's amendments to Section 242.126 would not change
the number of complaints filed annually. However, it is assumed
that nurse-investigators would respond to each complaint by
making an on-site visit within two hours of receiving the complaint.
The department would need to hire additional regional office
staff to conduct these on-site investigations.
The bill's
provisions relating to incident reports and abuse or neglect
complaints would take effect on January 1, 1998. First year
costs have been reduced to reflect a partial year operation.
It
is assumed that the requirement to compensate nursing facilities
for the fair rental value of their investment in property would
cost $5,000,000 annually.
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 Change in Number
Savings/(Cost) Savings/(Cost) of State
from General from Federal Funds Employees from
Revenue Fund FY 1997
0001 0555
1998 ($4,512,950) ($4,512,950) 103.0
1998 (4,725,683) (4,725,683) 103.0
2000 (4,708,683) (4,708,683) 103.0
2001 (4,708,683) (4,708,683) 103.0
2002 (4,708,683) (4,708,683) 103.0
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 ($4,512,950)
1999 (4,725,683)
2000 (4,708,683)
2001 (4,708,683)
2002 (4,708,683)
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: 501 Department of Health
304 Comptroller of Public Accounts
530 Department of Protective and Regulatory Services
324 Department of Human Services
LBB Staff: JK ,BB ,NM