LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
March 31, 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.), As
Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2315, As Introduced: positive impact of $2,172,490 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. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(1,697,665) *
* 2001 3,870,155 *
* 2002 3,055,890 *
* 2003 2,519,890 *
* 2004 2,472,081 *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable (Cost) Probable (Cost) Probable Probable *
* Year from General from Federal Savings from Savings from *
* Revenue Fund Funds General Revenue Federal Funds *
* 0001 0555 Fund 0555 *
* 0001 *
* 2000 $(2,257,041) $(1,749,854) $559,376 $0 *
* 2001 (2,606,304) (2,189,562) 6,476,459 9,153,930 *
* 2002 (1,946,742) (1,530,000) 5,002,632 6,801,388 *
* 2003 (1,946,742) (1,530,000) 4,466,632 5,937,500 *
* 2004 (1,946,742) (1,530,000) 4,418,823 5,848,222 *
***************************************************************************
***************************************************************************
*Fiscal Probable (Cost) Probable (Cost) Probable Change in *
* Year from Texas from Employee Savings from Number of State *
* Department of Life Employee Life Employees from *
* Insurance 0973 0973 FY 1999 *
* Operating *
* Account/ *
* GR-Dedicated *
* 0036 *
* 2000 $(64,849) $(809,556) $0 23.0 *
* 2001 (58,809) (850,034) 152,613 23.0 *
* 2002 (58,809) (892,535) 160,244 23.0 *
* 2003 (58,809) (937,162) 168,256 23.0 *
* 2004 (58,809) (984,019) 176,669 23.0 *
***************************************************************************
Fiscal Analysis
The bill relates to the investigation and prosecution of fraud in a
number of benefit programs administered by the State. The bill would
affect several agencies, including the Employees Retirement System
(ERS), State Office of Risk Management (SORM), Department of Insurance
(TDI), 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
claimants/recipients of the health benefits.
Methodology
Employee Retirement System (ERS)
1. Costs vary between $800,000 to $984,000 each year and assume that 13
FTEs will be required to investigate and pursue fraudulent claims
identified by quarterly audits.
2. It is also assumed that ERS will contract with HHSC for fraud
detection classes.
3. ERS' estimate of savings is based upon the amount of overpayments
identified in a recent claims audit ($152,613 in year two to $176,669 in
year five).
State Office of Risk Management (SORM)
1. It is assumed that 9 FTEs will be required to assist in performing
periodic review of claims, investigation of claims/complaints and
creation of 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 Workers' Compensation Claim Fund
($559,376 per year)
Department of Insurance
TDI costs correspond to the hiring of one investigator to handle the
anticipated increase in fraud cases ($64,849 in 2000; $58,809 each
subsequent year).
Medicaid Related Estimates
1. Costs for information technology system adjustments will begin the
last quarter of fiscal year 2000. This assumption is based upon the
anticipation that the DHS System for Application, Verification,
Eligibility, Referral and Reporting (SAVERR) 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 ($1.0
million annually); testing of claims payment systems by TDH ($2.1 million
annually).
3. Administrative costs will be equally shared between the State and
federal government.
4. Savings estimates provided by the Comptroller of Public Accounts have
been adjusted to reflect the anticipated delay in automated system
adjustments and in recognition of new claims payment systems. These new
systems are anticipated to prevent inappropriate payments and more
readily access data for claim review and audit.
5. The savings relate to client services which will be shared with the
federal government (39 percent State; 61 percent federal).
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies:
LBB Staff: JK, TP, AZ