LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
May 14, 1999
TO: Honorable Patricia Gray, Chair, House Committee on Public
Health
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1331 by Moncrief (relating to an assessment of the
effectiveness of Medicaid managed care contracts),
Committee Report 2nd House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1331, Committee Report 2nd House, Substituted: negative impact *
* of $(5,531,430) 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 $(1,414,217) *
* 2001 (4,117,213) *
* 2002 (1,214,217) *
* 2003 (1,214,217) *
* 2004 (1,214,217) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable (Cost) from General Probable (Cost) from Federal *
* Year Revenue Fund Funds *
* 0001 0555 *
* 2000 $(1,414,217) $(1,414,217) *
* 2001 (4,117,213) (5,824,150) *
* 2002 (1,214,217) (1,214,217) *
* 2003 (1,214,217) (1,214,217) *
* 2004 (1,214,217) (1,214,217) *
***************************************************************************
Fiscal Analysis
The bill would require annual external audits of all Medicaid contractors
which perform one or more administrative services in relation to the
Department of Health's operation as part of the State Medicaid Program,
such as claims processing, utilization review, client enrollment,
provider enrollment, quality monitoring or payment of claims. The bill
would require the Health and Human Services Commission (HHSC) to
evaluate and report to the legislature and Governor on the contractual
performance and related costs of each administrative entity that
contracts with HHSC for managed care services. The bill would require
the assessment to include an evaluation of the impact of managed care
delivery systems, including health maintenance organizations, prepaid
health plans, and primary care case management. The bill would require
HHSC to report its assessment to the Governor and certain legislative
officials and committees by November 1, 2000. The bill would impose a
moratorium for one year on implementation of Medicaid managed care
pilots.
Methodology
Health and Human Services Commission Costs:
1. It is assumed that HHSC would contract for the required assessment of
managed care contracts. Costs are estimated by HHSC to be $400,000 each
year for this requirement.
2. It is assumed that HHSC would review various issues related to the
operations of managed care pilot programs, duties of agencies, and other
aspects of the managed care system. It is assumed that the HHSC would
contract for these services in fiscal year 2000 for a total of $400,000.
3. These costs are assumed to be shared equally between the State and
Federal government.
Department of Health Costs:
1. It is assumed that TDH would contract with an independent auditor to
perform annual independent external financial and performance audits of
Medicaid contractors used by the department to operation components of
the Medicaid Program. Annual costs of $2.0 million are included and
assumed to be shared equally with the Federal Government.
2. It is assumed that the scheduled rollout of managed care in the
following service delivery areas would not occur in fiscal year 2001:
Hill Country, Bell/McLennan counties and Northwest Texas. The delay in
the rollout is anticipated to cost $2.9 million in General Revenue Funds
and $4.6 million in Federal Funds in fiscal year 2001.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 501 Department of Health, 529 Health and Human
Services Commission
LBB Staff: JK, TP, AZ