LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 12, 1999
TO: Honorable Patricia Gray, Chair, House Committee on Public
Health
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2315 by Maxey (Relating to the investigation and
prosecution of fraud in certain benefit programs operated
by the state; providing administrative penalties),
Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2315, Committee Report 1st House, Substituted: positive impact *
* of $6,421,388 through the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(557,665) *
* 2001 6,979,053 *
* 2002 13,279,341 *
* 2003 11,465,966 *
* 2004 11,278,562 *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year (Cost) from (Cost) from Savings Savings Number of *
* General Federal from from State *
* Revenue Funds General Federal Employees *
* Fund 0555 Revenue Funds from FY 1999 *
* 0001 Fund 0555 *
* 0001 *
* 2000 $(609,854) $559,376 $0 9.0 *
* $(1,117,041) *
* 2001 (2,028,804) (1,612,062) 9,007,857 13,416,119 9.0 *
* 2002 (1,556,742) (1,140,000) 14,836,083 22,671,293 9.0 *
* 2003 (1,556,742) (1,140,000) 13,022,708 19,791,668 9.0 *
* 2004 (1,556,742) (1,140,000) 12,835,304 19,494,072 9.0 *
***********************************************************************
Technology Impact
The bill would require adaptations to the current System for Application,
Verification, Eligibility, Referral and Reporting (SAVERR) at the
Department of Human Services. Because this system is not yet Year 2000
compliant, it is anticipated that the adaptations to the SAVERR system
will begin in the last quarter of fiscal year 2000. The bill would
require modifications to the current medical profile and tape matches,
as well as require a redesign of the medical identification card. Total
costs related to the system changes are estimated to be $1.8 million (50
percent State).
Fiscal Analysis
The bill relates to the investigation and prosecution of fraud in certain
programs administered by the State. The bill would affect several
agencies, including the State Office of Risk Management (SORM), Health
and Human Services Commission (HHSC), Department of Health (TDH) and
Department of Human Services (DHS). The bill would require the agencies
to implement certain provisions that would result in additional review
of medical benefit claims, health care providers and recipients of
health benefits.
Methodology
State Office of Risk Management (SORM)
1. It is assumed that 9 FTEs will be required to assist in performing
periodic review of claims, investigating claims/complaints and creating
an administrative penalty system ($507,187 in year one; $416,742 in
subsequent years).
2. Savings estimated by SORM equate to approximately two percent of the
medical benefit expenditures from the Worker's Compensation Claim Fund
($559,376 per year).
Note: The bill would require the Comptroller of Public Accounts to
deposit administrative penalties in an amount not to exceed $200,000 per
biennium in a new, dedicated GR Account - State Workers' Compensation, to
be used for the detection and prosecution of fraud. SORM was not able
to provide an estimate of revenue generation at this time but notes that
costs would exceed $200,000 for the biennium as included above in #1.
Medicaid Related Estimates
1. Costs for information technology system adjustments will begin in the
last quarter of fiscal year 2000. This assumption is based upon the
anticipation that the DHS SAVERR system will not be Year 2000 compliant
until late in calendar year 1999.
2. Contracted services will be required for programming the SAVERR
system and redesign of the Medicaid identification form by DHS ($1.8
million); phone and/or on-site verification of benefits by HHSC ($0.8
million annually); and testing of claims payment systems by TDH ($1.1
million in 2001 and $1.5 million each subsequent year). These
administrative costs will be equally shared between the State and federal
government.
3. Savings estimates provided by the Comptroller of Public Accounts have
been adjusted to reflect the anticipated delay in automated system
adjustments. Savings would begin in the middle of fiscal year 2001.
Under current operations, if overpayments are identified by the National
Heritage Insurance Company on behalf of the Department of Health, the
State receives these refunds through premium credits and shares them with
the federal government.
4. The savings relate to client services payments which will be shared
with the federal government (39 percent State; 61 percent federal).
Note: The State currently accepts eligibility determination by the
federal Social Security Administration (SSA) for Supplemental Security
Income (SSI) eligible individuals as conferring Medicaid eligibility in
Texas. It may be necessary for the State to renegotiate or alter its
current arrangement with SSA in order to implement the provisions of the
bill.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 501 Department of Health, 304 Comptroller of
Public Accounts, 324 Department of Human Services,
479 State Office of Risk Management, 529 Health
and Human Services Commission
LBB Staff: JK, TP, AZ