LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 2, 1997
TO: Honorable David Sibley, Chair IN RE: Senate Bill No. 976
Committee on Economic Development By: Madla
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB976 ( Relating
to managed care plans issued by managed care organizations under
Medicare risk-sharing contracts; imposing administrative penalties.)
this office has detemined the following:
Biennial Net Impact to General Revenue Funds by SB976-As Introduced
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
This bill would amend the Texas Insurance Code by adding Article
21.52(G) which would establish pre-enrollment requirements for
organizations which issue managed care plans under Medicare
risk-sharing contracts. This bill would apply to all HMOs approved
to offer a managed care plan on a risk-sharing basis.
Section
3 of the bill would require managed care organizations to provide
certain pre-enrollment information to prospective enrollees.
The Commissioner of the Texas Department of Insurance (TDI)
would prescribe the form in which this would be done. According
to TDI, as authorized by Section 20A.32(a)(F) of the Texas Insurance
Code, TDI would require each HMO to file a copy of the form
to be used at a cost of $100 each. Accordingly, there would
be a one time revenue gain to General Revenue Dedicated Fund
036 of $1,200 in FY 1998.
Section 6 of the bill would require
TDI to provide an ombudsman to assist Medicare recipients enrolled
in a managed care plan and to ensure that managed care organizations
subject to this Article are in compliance. This would require
the addition of one FTE, at a cost of $51,478 in FY 1998 and
$46,332 in FYs 1999 though 2002 to General Revenue Dedicated
Fund 036.
Methodolgy
Cost and revenue gain to General Revenue Dedicated Fund 036
were estimated using the following assumptions:
(1) There
are approximately 210,000 Medicare recipients enrolled in managed
care plans. Not all would require the services of the ombudsman
and of those who do, requests for ombudsman services would be
staggered; and,
(2) The $1,200 revenue gain to General Revenue
Dedicated Fund 036 is based on the fact that there are currently
12 HMOs approved to offer managed care plans on a risk-sharing
basis. It is assumed that TDI would charge $100 per form filed
by these HMOs, the maximum allowed by the Texas Insurance Code.
This would be a one-time filing and, therefore, a one-time
revenue gain.
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 ($51,478) $1,200 1.0
1998 (46,332) 1.0
2000 (46,332) 1.0
2001 (46,332) 1.0
2002 (46,332) 1.0
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.
Source: Agencies:
LBB Staff: JK ,TH ,BK