LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 8, 1997
TO: Honorable John T. Smithee, Chair IN RE: Senate Bill No. 386, Committee Report 2nd House, Substituted
Committee on Insurance By: Sibley/et al.
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB386 ( Relating
to health care liability claims.) this office has detemined
the following:
Biennial Net Impact to General Revenue Funds by SB386-Committee Report 2nd House, Substituted FN Revision 1
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
Committee Amendment 1 and amendments to Committee Amendment
1 would amend the senate engrossed version of Senate Bill 386
to include provisions which allow for the appeal of an adverse
determination by a utilization review agent to an independent
review organization (IRO). Section 8 of Committee Amendment
1 would add Article 21.58C to the Insurance Code which would
require the Texas Department of Insurance (TDI) to:
(1) Promulgate
standards and rules for the certification, selection, operation,
suspension and revocation of certification of IROs;
(2) Designate
annually each organization that meets the standards as an IRO;
(3)
Provide ongoing oversight of the IRO to ensure compliance with
this article.
According to TDI, these new responsibilities
would require TDI to hire two new FTEs, one lawyer and one administrative
technician. Total cost to TDI General Revenue Dedicated Fund
036 would be $102,865 in FY 1998 and $91,243 in each fiscal
year thereafter.
Methodolgy
Potential costs of Committee Amendment 1 are based on the following
assumptions:
(1) According to TDI, because the IRO system
would be entirely new, the rulemaking process would require
input from many sources and would be very time consuming. The
proposed patient protection rules drew over 200 comments and
a similar response for rules governing IROs is expected.
(2)
As of September 1996 there were 4,328,882 persons in Texas enrolled
in HMOs. To estimate the potential workload for TDI under the
provisions of Committee Amendment 1, if only 1% requested review
by an IRO, there would be 880 referrals to TDI every week.
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 Change in Number
Savings/(Cost) of State
from Texas Employees from
Department of FY 1997
Insurance
Operating
Account/
GR-Dedicated
0036
1998 ($102,865) 2.0
1998 (91,243) 2.0
2000 (91,243) 2.0
2001 (91,243) 2.0
2002 (91,243) 2.0
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 $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: 454 Department of Insurance
LBB Staff: JK ,TH ,BK