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:
  
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*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