LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 2, 2001
TO: Honorable John T. Smithee, Chair, House Committee on
Insurance
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1862 by Eiland (Relating to the regulation and prompt
payment of health care providers under certain health
benefit plans.), Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1862, Committee Report 1st House, Substituted: positive impact *
* of $0 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 0 *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Revenue Change in Number of *
* Year Savings/(Cost) from Gain/(Loss) from State Employees from *
* Texas Department of Texas Department of FY 2001 *
* Insurance Operating Insurance Operating *
* Fund Account/ Fund Account/ *
* GR-Dedicated GR-Dedicated *
* 0036 0036 *
* 2002 $(161,560) $161,560 3.0 *
* 2003 (146,025) 146,025 3.0 *
* 2004 (146,025) 146,025 3.0 *
* 2005 (146,025) 146,025 3.0 *
* 2006 (146,025) 146,025 3.0 *
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Technology Impact
Additional computer hardware and software would be needed for the three
Full-time Equivalent Positions (FTEs) totaling $8,097 in fiscal year
2002.
Fiscal Analysis
The bill amends various sections of the Insurance Code. The provisions
of the bill would require HMOs to verify an enrollee's coverage and
benefits 24 hours a day, seven days a week, to any preferred
provider/physician who requests the verification before rendering
services. The bill would prohibit an HMO from denying payment for the
services rendered unless (1) the provider/physician receives written
notice of an error in verification before the service is performed or (2)
the denial was made under the provisions of the bill. The Texas
Department of Insurance (TDI) expects these provisions to cause an
increase in provider complaints for three reasons. First, more providers
would contract with HMOs because the bill alleviates many providers'
traditional concerns about managed care such as denials of claims and
definitions of medical necessity. Second, the new requirements to verify
coverage and provide written notice of any verification errors prior to
the enrollee receiving the treatment create specific grounds for
disagreements between providers and HMOs. Third, HMOs would find it
difficult to comply with the provisions of the bill, resulting in more
complaints regarding the failure to comply.
The bill takes effect September 1, 2001.
Methodology
TDI estimates that it will need three additional FTEs that would handle
an additional 3,014 physician and provider complaints per year. This is
based on the agency anticipating receiving a seventy percent increase
over the projected 6,150 complaints for fiscal year 2001 related to HMOs.
The needed three additional insurance complaint specialists are
estimated to handle approximately 860 complaints per year.
It is assumed that TDI would adjust its fees to cover the expected costs
of the implementation of the bill.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 327 Employees Retirement System, 454 Texas
Department of Insurance
LBB Staff: JK, JO, RT, DE