LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 27, 1999 TO: Honorable John Smithee, Chair, House Committee on Insurance FROM: John Keel, Director, Legislative Budget Board IN RE: HB3603 by Thompson (relating to the control of insurance fraud), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3603, Committee Report 1st House, Substituted: 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 Probable Savings/(Cost) from Change in Number of State * * Year Texas Department of Insurance Employees from FY 1999 * * Operating Account/ GR-Dedicated * * 0036 * * 2000 $(1,513,446) 24.0 * * 2001 (1,369,136) 24.0 * * 2002 (1,369,136) 24.0 * * 2003 (1,369,136) 24.0 * * 2004 (1,369,136) 24.0 * *************************************************************************** Fiscal Analysis The bill would amend the Insurance Code to require certain insurers to establish Insurer Anti-Fraud Special Investigative Units and to submit anti-fraud investigative plans and reports to the Insurance Fraud Unit of the Texas Department of Insurance (TDI) on a scheduled basis. The Insurance Fraud Unit would be required to receive, review, and investigate all reports submitted pursuant to insurer's anti-fraud plans. The bill would also require TDI's Insurance Fraud Unit to report to the commissioner each year the number of cases completed along with recommendations for new regulatory and statutory responses to fraudulent activities. The bill would take effect September 1, 1999. Methodology TDI estimates the need for an additional 24 FTEs and associated operating costs to investigate 900 health care fraud reports per year, based on an average of one complaint per insurer. Additional equipment costs are included in fiscal year 2000 for program start-up. Source Agencies: 454 Department of Insurance LBB Staff: JK, TH, RT, DP