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