LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session March 29, 1999 TO: Honorable John Smithee, Chair, House Committee on Insurance FROM: John Keel, Director, Legislative Budget Board IN RE: HB2883 by Bailey (Relating to contracts between certain health care providers and certain health benefit plans.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2883, As Introduced: impact of $0 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 $0 * * 2001 0 * * 2002 0 * * 2003 0 * * 2004 0 * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * Employee Life, Accident, and * * Health Insurance and Benefits * * Trust Account * * 0973 * * 2000 $(57,400,000) * * 2001 (62,900,000) * * 2002 (67,200,000) * * 2003 (74,000,000) * * 2004 (78,900,000) * ***************************************************** Fiscal Analysis The bill would add requirements relating to both Health Maintenance Organizations (HMO) and preferred provider contracts (such as inclusion of fee schedules, changes in fee schedules, assignment of contracts, submission of claim information, denial of claim after eligibility has been confirmed, definition of medical necessity, disclosure of multiple procedure payments, carrier's interference with providing durable medical equipment, automatic renewal of contracts, and binding arbitration). The Employees Retirement System (ERS) estimates the bill would apply to all health plans administered by ERS. The bill would be effective September 1, 1999. Methodology The bill would provide thirteen specific requirements for PPO and HMO contracts. ERS estimates the provisions providing a less rigorous definition of medical necessity, and prohibiting limitations on the extent of medical services and use of durable medical equipment would lead to increased claims costs. The cost increase estimated by ERS could require an increase in the state's contribution for employees' health care coverage. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: LBB Staff: JK, TH, RT, DP