LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 28, 1999 TO: Honorable Patricia Gray, Chair, House Committee on Public Health FROM: John Keel, Director, Legislative Budget Board IN RE: SB1585 by Zaffirini (Relating to the use of competitive bidding for certain functions and components of the Medicaid vendor drug program.), As Engrossed ************************************************************************** * No significant fiscal implication to the State is anticipated. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** The bill would require the Department of Health, in consultation with the State Council on Competitive Government, to seek competitive bids for the claims processing function of the vendor drug program. The department would only be allowed to award a contract if the department and Council on Competitive Government determine that the provision of services under the contract would be more cost effective and the time to process claims would be the same as or faster than having employees of the department continue to process claims. The Department of Human Services assesses a $1.7 million annual All Funds cost in association with this bill on the basis that, if the vendor drug program were outsourced, other programs using the Department of Human Services mainframe would be assessed the vendor drug program's current share of mainframe costs. However, it is assumed that a review of the cost effectiveness of any potential outsourced contract would take the Department of Human Services' mainframe costs into consideration and the state would not award a contract that would result in an increased cost of $1.7 million per year overall for the state. Source Agencies: 501 Department of Health, 324 Department of Human Services LBB Staff: JK, TP, KF