LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
March 29, 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 Medicaid program.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2896, As Introduced: positive impact of $843,828 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 $283,558 *
* 2001 560,270 *
* 2002 560,270 *
* 2003 560,270 *
* 2004 560,270 *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Savings/(Cost) Revenue Revenue *
* from General from Federal Gain/(Loss) Gain/(Loss) *
* Revenue Fund Funds from General from Federal *
* 0001 0555 Revenue Fund Funds *
* 0001 0555 *
* 2000 $(450,000) $(450,000) $733,558 $1,169,315 *
* 2001 (175,000) (175,000) 735,270 1,167,603 *
* 2002 (175,000) (175,000) 735,270 1,167,603 *
* 2003 (175,000) (175,000) 735,270 1,167,603 *
* 2004 (175,000) (175,000) 735,270 1,167,603 *
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Fiscal Analysis
Provisions of the bill identified by agencies to have a fiscal impact
are:
1. Contracting with an external entity to review proposed contracts
between managed care plans and the Health and Human Services Commission
(Section 4). Section 5 would require the Health and Human Services
Commission to evaluate and report on performance measures of all managed
care plans and other contractors who participate in support of the
Medicaid managed care program. Section 7 would require HHSC to review
various issues relating to managed care and submit a report to the
Seventy-seventh Legislature.
2. HHSC would be required to modify the current arrangement for profit
sharing between the state and managed care plans. The new arrangement
would be for the plans to retain the first three percent of annual
profit, the plans would share evenly with the state any annual profit
generated above three percent and below ten percent, and the plans would
return to the state all annual profit generated above ten percent.
In addition, other provisions could have a fiscal impact. Section 3
would require that managed care organizations provide patient education
and referral through a 24 hour hotline. It is possible that increased
costs associated with this provision could be reflected in increased
premiums paid by the state.
Section 6 requires HHSC to develop and implement an expedited process for
determining eligibility and enrolling pregnant women into Medicaid and
ensuring immediate access to prenatal services. To the extent that this
provision would increase the access to or utilization of services above
current levels, this provision could result in increased costs to the
state.
Methodology
1. HHSC assumes the provisions of the bill relating to review and
evaluation of various aspects of the Medicaid managed care program would
cost a total of $900,000 in 2000 and $350,000 per year in subsequent
years. These costs would be 50 percent federal funds and 50 percent
general revenue funds.
2. According to the Department of Health, the provisions of the bill
relating to profit sharing would result in increased revenue to the
state. Based on fiscal year 1997 profits reported to the department,
the department calculated what would have been the split between the
state and managed care plans if the new methodology had been applied.
The difference between the state's then share of fifty percent and the
new methodology would be assumed to result in a total increase in profit
share to the state and federal government of $1.9 million per year.
These increases in revenue would be shared between the state (39
percent) and federal government (61 percent).
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
LBB Staff: JK, TP, AZ, KF