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:  HB2469  by Chavez (Relating to rates and expenditures
               under the Medicaid and state child health plan program in
               strategic investment areas.), As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB2469, As Introduced:  negative impact of $(294,609,311) 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                       $(142,550,090)  *
          *       2003                        (152,059,221)  *
          *       2004                        (159,601,362)  *
          *       2005                        (167,562,302)  *
          *       2006                        (175,921,289)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
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*Fiscal        Probable             Probable             Probable        *
* Year    Savings/(Cost) from  Savings/(Cost) from  Savings/(Cost) from  *
*          Tobacco Match for      GR Match for        Federal Funds -    *
*         CHIP (Article II -        Medicaid              Federal        *
*          Permanent Funds)           0758                 0555          *
*                8025                                                    *
*  2002          $(10,078,926)       $(132,471,164)       $(225,861,967) *
*  2003           (11,082,570)        (140,976,651)        (240,700,498) *
*  2004           (11,618,050)        (147,983,312)        (252,608,065) *
*  2005           (12,180,304)        (155,381,998)        (265,150,850) *
*  2006           (12,770,671)        (163,150,618)        (278,359,685) *
**************************************************************************
  
Fiscal Analysis
  
The bill would require the Health and Human Services Commissioner appoint
an advisory committee to develop a strategic plan for eliminating the
disparities between strategic investment areas and other areas of the
state in the Medicaid and Children's Health Insurance Program (CHIP).
Disparities are to be eliminated in the following areas:  1) managed
care capitation rates; 2) fee-for-service reimbursements for inpatient
and outpatient hospital services and professional services; 3) total
professional services expenditures per Medicaid recipient or per child
enrolled in the child health program.  With advice from the committee,
the Health and Human Services Commission (HHSC) shall equalize rates and
expenditures and provide physician incentives.
  
  
Methodology
  
The fiscal impact, provided by the Department of Health (TDH), was based
on work done by TDH for the Border Rate Work Group Report, December 20,
2000. Strategic Investment area counties are defined under state law by
the Comptroller and are counties that must meet one of three criteria:
higher than state average unemployment rate and lower than average per
capita income rate, a federal urban enterprise community designation, or
a population of less than 50,000.  A sixteen percent overall increase in
reimbursements was assumed, as well as a 10 percent increase for
professional services for both Medicaid and the Children's Health
Insurance Program.
  
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   529   Health and Human Services Commission, 501
                   Texas Department of Health
LBB Staff:         JK, HD, AJ, KF