LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 14, 2001 TO: Honorable Patricia Gray, Chair, House Committee on Public Health FROM: John Keel, Director, Legislative Budget Board IN RE: HB1615 by Maxey (Relating to the regulation and reimbursement of telemedicine medical services.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1615, As Introduced: negative impact of $(34,849,910) through * * the biennium ending August 31, 2003. * * * * 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 * * 2002 $(11,468,725) * * 2003 (23,381,185) * * 2004 (23,732,438) * * 2005 (24,130,848) * * 2006 (23,773,689) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Probable Probable Change in * * Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Number of State * * from GR Match from Federal from Employees from * * for Medicaid Funds - Federal Telecommunicat- FY 2001 * * 0758 0555 ions * * Infrastructure * * Fund * * 0345 * * 2002 $(11,468,725) $(17,312,740) $(54,317) 3.0 * * 2003 (23,381,185) (351,260,551) (42,317) 3.0 * * 2004 (23,732,438) (35,663,172) (42,317) 3.0 * * 2005 (24,130,848) (36,262,533) (42,317) 3.0 * * 2006 (23,773,689) (35,747,296) (42,317) 3.0 * *************************************************************************** Fiscal Analysis The bill would amend current telemedicine statutes. Section 3 would require the Health and Human Services Commission (HHSC) to require by rule that all state Medicaid-operating agencies provide Medicaid reimbursement for telemedicine services. Restrictions related to the type of facility that may participate would be removed. HHSC would also be responsible for monitoring and regulating the use of telemedicine services, in consultation with the Board of Medical Examiners. Section 4 directs health care providers for the Children's Health Insurance Program (CHIP) to provide telemedicine services. Section 13 would require the Telecommunications Infrastructure Fund Board (TIFB) to establish an assistance program to provide education and facilitate access to funds. Section 5 of the bill would require the Department of Health (TDH) to establish a Home Telemedicine Pilot Program under which certain Medicaid recipients with a chronic illness would receive home health services through telemedicine in addition to other home health care services for which the recipients are eligible. Under the pilot, the agency could provide a participant with the following home health telemedicine services: education regarding self-care and preventive health, monitoring for compliance with medication requirements, monitoring vital signs, counseling and social support, and other services. Additionally, the bill would require the agency to provide: telemedicine equipment (other than a telephone line and telephone) that is necessary for receipt of home health care telemedicine services at no cost to the recipient for the duration of services, personal training and written instructions in the use and maintenance of telemedicine equipment, frequent monitoring regarding the quality of services and a participant's satisfaction with services, and a report to the Legislature regarding the program December 1, 2004. The bill would take effect September 1, 2001 and expire September 1, 2005. Methodology Provision of Telemedicine Services to Medicaid Recipients The following estimate relates only to services to be provided through TDH. Potentially, the bill could require additional services be funded at the Department of Human Services (DHS) and other agencies. If additional Medicaid-operating agencies were affected, additional costs would result. It is assumed 25% of the total Medicaid population served by TDH would receive telemedicine services. The average number of recipients per year would total 462,452 in FY 2002, 470486 in FY 2003, 478,658 in FY 2004, and 486973 in FY 2005, and 495432 in FY 2006. Each client would receive two telemedicine services in FY 2002 (to allow for a March 2002 implementation) and four telemedicine services per year for each subsequent year. The per service cost would total $30. The federal share of client services expenses would total 60.20% in FY 2002, 60.08% in FY 2003, and 60.07% in each subsequent year. Provision of Telemedicine Services to CHIP Recipients The HHSC has not estimated an increased cost to the CHIP program related to the required provision of telemedicine services. However, as with the Medicaid program, providing telemedicine services in the CHIP program could require an additional General Revenue appropriation. Monitoring and Regulation of Telemedicine Providers/Services The HHSC estimates two FTEs would be required. Annual salaries would total 37,322 and 19,452 respectively. Fringe benefits would total 28.28% of salary. One-time set up costs totaling $12,000 per FTE are assumed for FY 2002. This expense would be shared equally by the federal government and the state. Development and Administration of an Assistance Program It is estimated the TIFB would require one additional FTE, with an annual salary of 32,988 per year. Fringe benefits would total 28.28% of salary. One-time set up costs totaling $12,000 are assumed for FY 2002. Expenses would be funded through the Telecommunication Infrastructure Fund (345). While the bill would implement a new education and grant program, TIFB has assumed that no increase in funded is required. However, the agency indicates the average grant award may need to be reduced or the number of grants may need to be reduced. Home Telemedicine Pilot Program It is assumed federal approval would allow for March 2002 implementation. It is assumed 600 TDH clients per month per year would receive telemedicine services. Telemedicine services would cost $250 per month and include the following: education by video, education by a health professional, counseling related to depression, monitoring of medication compliance and vital signs, and supplemental consultations. A contract related to collection and analysis of data, including an assessment of client satisfaction, would total $37,500 in FY 2002 and $87,500 for each subsequent year. The federal share of client services expenses would total 60.20% in FY 2002, 60.08% in FY 2003, and 60.07% in each subsequent year. This expense would be shared equally by the federal government and the State. Additional costs could result from the provision of telemedicine equipment. However, these costs have not been estimated. Likewise, potential improvements in the health status of waiver participants and an associated savings in traditional health care costs have not been estimated. It is assumed the pilot applies only to TDH. If additional Medicaid-operating agencies were affected, additional costs would result. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 503 Texas State Board of Medical Examiners, 367 Telecommunications Infrastructure Fund Board, 529 Health and Human Services Commission, 324 Texas Department of Human Services, 720 The University of Texas System, 304 Comptroller of Public Accounts, 501 Texas Department of Health LBB Staff: JK, HD, PP