LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 31, 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 SB382 ( relating
to the regulation of health maintenance organizations.) this
office has detemined the following:
Biennial Net Impact to General Revenue Funds by SB382-Conference Committee Report
Implementing the provisions of the bill would result in a net
impact of $0 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.
Fiscal Analysis
The bill provides authority for a Health Maintenance Organization
(HMO) licensed under the Texas HMO Act to offer a limited health
care service plan as defined by the bill. This bill allows
the Commissioner of the Texas Department of Insurance (TDI)
to determine whether or not an HMO provides basic, single, or
limited health care services and to issue a certificate of authority
accordingly.
TDI estimates that there would be 37 applications
for limited health care service plan certificates of authority.
To administer these certificates, TDI would need to hire three
additional FTEs: two Insurance Technician IIIs and a Nurse V.
The two Technicians would: handle the increased form filings
created by the increased number of applications for certificate
of authority, assist with licensing and monitor the solvency
of these entities. In the event that TDI would continue to
conduct quality assurance examinations, the Nurse V would be
needed to handle the workload created by the 37 new HMOs requiring
an examination. Additionally an increase in travel funds would
be needed to conduct the examinations of the 37 new HMOs, including
qualifying exams, service area expansion site visits, complaint
exams, and triennial quality of care examinations. Triennial
quality of care examinations would start in fiscal year 2001,
and would require contracted out for physician consulting time
totaling $177,600 per year. Total costs for salaries, benefits,
overhead, travel, and physician consultant fees would be: $164,890
for fiscal year 1998, $149,452 for fiscal years 1999 and 2000,
and $327,052 for fiscal years 2001 and 2002.
This bill would
create revenue gains for TDI as follows: $277,500 in fiscal
year 1998 for 37 initial license requests, and $69,375 in all
fiscal years thereafter, for evidence of coverage filings and
information only filings.
Methodolgy
TDI estimates that there would be 37 applications for certificates
of authority: 25 mental health/chemical dependency entities
would be required to submit applications under the provisions
of this bill and 12 hospitals, physician entities and long-term
care facilities have expressed an interest in becoming licensed
to provide a limited health care plan.
TDI estimates that
the 37 initial license requests would cost $7,500 per application;
TDI also estimated that each HMO would submit an estimated
22.5 form filings subsequent to issuance of the initial license
- 15 evidence of coverage filings ($100 per filing) and 7.5
information only filings ($50 per filing).
For fiscal years
2001 and 2002, TDI estimates that there would be a decrease
in the demand for qualifying exams and service area expansion
site visits and an increase in the demand for triennial examinations.
Consulting time for the triennial examinations would be $4,800
per exam, totaling $177,600 per year.
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 Revenue Change in Number
Savings/(Cost) Gain/(Loss) from of State
from Texas Texas Department Employees from
Department of of Insurance FY 1997
Insurance Operating
Operating Account/
Account/ GR-Dedicated
GR-Dedicated
0036 0036
1998 ($164,890) $277,500 3.0
1998 (149,452) 69,375 3.0
2000 (149,452) 69,375 3.0
2001 (327,052) 69,375 3.0
2002 (327,052) 69,375 3.0
Net Impact on General Revenue Related Funds:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $0
1999 0
2000 0
2001 0
2002 0
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:
LBB Staff: JK ,TH