LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 8, 1997
TO: Honorable Harvey Hilderbran, Chair IN RE: Senate Bill No. 534, Committee Report 2nd House, Substituted
Committee on Human Services By: Harris
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB534 ( Relating
to the collection of claims for recovery of money under subrogation
and third-party reimbursement rights arising from medical payments
by health and human services agencies.) this office has detemined
the following:
Biennial Net Impact to General Revenue Funds by SB534-Committee Report 2nd House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $1,551,000 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 require the Health and Human
Services Commission to enter into a contract under which the
contractor would be authorized on behalf of the Commission or
a health and human services (hhs) agency to recover money under
a subrogation or third-party reimbursement right held by the
Commission or hhs agency arising from payment of medical expenses.
The bill would allow the contractor to be compensated based
on a percentage of the amount of money recovered. The bill
would require that certain provisions are included in the contract.
In
the event that the Commission cannot identify a contractor willing
to contract on reasonable terms, the Commission would not be
required to enter into a contract but would be required to develop
and implement alternative policies to ensure the collection
of money under a subrogation or third-party reimbursement right.
Another state agency other than a hhs agency may contract with
the Commission.
The bill would allow a hospital provider
to recover from a third party any funds to which the Commission
or a hhs agency has a right of recovery under Section 32.033
of the Human Resources Code.
Not later than February 1, 1998,
the Health and Human Services Commission would be required to
enter into an initial contract or implement alternative policies.
Not later than September 1, 1998, the Health and Human Services
Commission would be required to deliver a report to the Governor,
Lieutenant Governor, Speaker of the House of Representatives,
and clerks of standing committees for the house and senate with
jurisdiction over human services.
Fiscal Analysis
The bill would implement the Texas Performance Review recommendation
HHS 23 in Disturbing the Peace: The Challenge of Change in
Texas Government.
Methodolgy
The bill would result in savings from increased identification
and follow-up of subrogation cases. The Health and Human Services
Commission and hhs agencies should be able to implement the
provisions of the bill with existing staff and resources.
According
to the Comptroller of Public Accounts, the state's average Medicaid
collection from third-party reimbursements of accident cases
is about $5,500 per case, based on a sample of 18 cases reviewed
from January 1996 to June 1996. Through July 1996, 651 cases
had been identified that involved accidents in which the person
at fault had no liability insurance. A collection rate of $2,000
per case would allow the state to recover $200,000 if at least
100 cases were identified. The Comptroller estimates that this
rate of recovery each month would save the state $1.6 million
over the next biennium.
Because of the potential for legal
challenges related to the provision allowing hospital providers
to recover funds from third parties, it is assumed that this
provision has no fiscal implications. The U.S. Court of Appeals
for the Seventh Circuit ruled that the third party recovery
allowed by the bill conflicts with federal Medicaid law. (Evanston
Hospital V. Hauck, et al. No. 92-3551, July 30, 1993 1 F3d
540).
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
Savings/(Cost) Savings/(Cost)
from General from Federal Funds
Revenue Fund
0001 0555
1998 $517,000 $843,000
1998 1,034,000 1,686,000
2000 1,034,000 1,686,000
2001 1,034,000 1,686,000
2002 1,034,000 1,686,000
Net Impact on General Revenue Related Funds:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $517,000
1999 1,034,000
2000 1,034,000
2001 1,034,000
2002 1,034,000
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
No significant fiscal implication to units of local government
is anticipated.
Source: Agencies:
304 Comptroller of Public Accounts
324 Department of Human Services
330 Rehabilitation Commission
405 Department of Public Safety
517 Commission on Alcohol and Drug Abuse
655 Texas Department of Mental Health and Mental Retardation
665 Juvenile Probation Commission
LBB Staff: JK ,BB