LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session April 6, 1999 TO: Honorable Judith Zaffirini, Chair, Senate Committee on Human Services 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 Introduced ************************************************************************** * 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 than having employees of the department continue to process claims. The Department of Health estimates a cost associated with this bill based on the assumption that a consulting contract would be needed in order to gather information, assist in writing and evaluation of Requests for Proposal, and assist in the evaluation of components of the vendor drug program that could be competitively bid. However, it is assumed that these functions could be absorbed by the department within existing resources. 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: LBB Staff: JK, TP, KF