LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 20, 1999
TO: Honorable Patricia Gray, Chair, House Committee on Public
Health
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2896 by Coleman (relating to the administration and
operation of the state Medicaid program), Committee
Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2896, Committee Report 1st House, Substituted: negative impact *
* of $(18,053,782) 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 $(8,512,271) *
* 2001 (9,541,511) *
* 2002 (5,731,545) *
* 2003 (5,166,716) *
* 2004 (4,839,936) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable (Cost) from Probable (Cost) from Change in Number of *
* Year Matching General Matching Medicaid State Employees from *
* Revenue Fund for Federal Funds FY 1999 *
* Medicaid 0555 *
* 0001 *
* 2000 $(8,512,271) $(12,697,839) 1.0 *
* 2001 (9,541,511) (14,798,640) 1.0 *
* 2002 (5,731,545) (8,713,165) 1.0 *
* 2003 (5,166,716) (7,875,021) 1.0 *
* 2004 (4,839,936) (7,304,989) 0.5 *
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Technology Impact
The System for Application, Eligibility, Resources and Referral (SAVERR)
at the Department of Human Services would need to be adapted to
implement the provisions of the bill. This system is not yet Year 2000
compliant.
Fiscal Analysis
Provisions of the bill identified as having fiscal implications include:
1. Section 1 would require the Health and Human Services Commission
(HHSC) to evaluate and report biennally to the Legislature and Governor
regarding contractual performance and related costs of each
administrative entity that contracts with HHSC to operate the state
Medicaid program.
2. Section 6 would require HHSC to contract with a private entity to
review proposed contracts with managed care organizations to provide
services for Medicaid eligible recipients.
3. Section 10 would require the development and implementation of a
pilot program in a single county which would simplify the process for
eligibility determination and enrollment into managed care plans. The
bill would require the use of continuous eligibility processes and
elimination of resource requirements. HHSC would be required to evaluate
the net financial impact on Medicaid costs, impact on health outcomes
and other Medicaid-related issues.
4. Section 11 would require a moratorium on implementation of manged
care pilot programs during fiscal year 2001 and require HHSC to review
and report on various components of managed care pilot programs, premium
rates and other aspects of managed care delivery systems.
5. Section 12 would require the establishment of a Medicaid managed care
committee. Reimbursement for travel and other committe related expenses
would require authority in the General Appropriations Act.
Methodology
Health and Human Services Commission Costs:
1. It is assumed that a total increase of one full-time equivalent
position would be required to coordinate the requirements of the bill.
Estimates include travel, initial office set-up and other operating
costs.
2. It is assumed that HHSC would contract for professional services
related to reporting and evaluation requirements of the bill. These
contracts would cost range from $925,000 to $1,125,000 annually with
higher costs incurred in year one of a given biennium.
3. Costs would be equally shared by the state and federal government.
Department of Human Services Costs:
1. Programming and maintenance costs for the SAVERR system are included
in the estimates. These costs are estimated to total $1.7 million in
fiscal year 2000 and $115,000 each subsequent year.
2. Costs would be equally share by the state and federal government.
Department of Health Costs:
1. Section 11 of the bill would require that monies received by the
state as profit sharing be deposited into the General Revenue Fund for
the purpose of funding Medicaid outreach and education activities.
Currently these monies would be expended to support Medicaid client
services costs. The redirection of these monies is estimated to cost
$0.8 million in General Funds and $1.4 million in Federal Funds each year
based upon the state's experience in fiscal year 1997. No cost
estimates have been included for additional clients that may become
eligible as a result of the outreach activities; thus, costs to implement
this provision of the bill may be understated.
2. The required moratorium on additional managed care sites in fiscal
year 2001 is anticipated to cost $2.9 million in General Revenue Funds
and $4.6 million in Federal Funds because it is assumed to stop the
scheduled managed care rollout in Abilene, Wichita Falls and Waco.
3. Cost estimates for a pilot to test continuous eligibility and
deletion of resource testing are based upon the managed care experience
in Travis County. Using data from this area, it is assumed that the
caseload would increase by 25 percent due to continuous eligibility.
These estimates are adjusted to incorporate assumed overall Medicaid
caseload trends but costs are held constant. The All Funds impact of
this provision is estimated to be $16.1 million in 2000; $13.5 million in
2001; $10.9 million in 2002; $9.7 million in 2003; $8.7 million in 2004.
4. Costs for TDH are assumed to be shared with the federal government:
39 percent state and 61 percent federal.
NOTE: Possible savings in expenditures for the provision of eligibility
determination for the pilot to test continous eligibility and possible
increases in caseloads and Medicaid expenditures related to outreach
efforts are not included in these estimates.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 517 Commission on Alcohol and Drug Abuse, 529
Health and Human Services Commission, 655 Texas
Department of Mental Health and Mental Retardation,
501 Department of Health, 324 Department of
Human Services
LBB Staff: JK, TH, AZ