LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 9, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB440 by Madla (Relating to the regulation of certain
health benefit plans.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB440, As Introduced: 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 $(102,781) $102,781 2.0 *
* 2003 (92,424) 92,424 2.0 *
* 2004 (92,424) 92,424 2.0 *
* 2005 (92,424) 92,424 2.0 *
* 2006 (92,424) 92,424 2.0 *
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Technology Impact
Computers and software for the additional two Full-time Equivalent
Positions totaling $5,398 in fiscal year 2002.
Fiscal Analysis
The bill amends and adds a new Subchapter to the Insurance Code. The
provisions would require preferred provider carriers and Health
Maintenance Organizations (HMOs) to verify coverage and benefits to a
preferred provider or network provider, if requested, of an enrollee
before the physician or provider renders covered services. It would also
prohibit a preferred provider carrier or an HMO from denying payment for
the services rendered unless the physician or provider receives a written
notice of an error in verification prior to performing the treatment.
And the provisions of the bill would prohibit preferred provider carriers
and HMOs from requiring the use of a dispute resolution procedure that
violates the new law.
The effective date of the bill is September 1, 2001.
Methodology
TDI estimates that it would require two additional FTEs. TDI estimates
that the provisions in the bill will increase physician and provider
complaints by 40 percent over fiscal year 2001 which would be
approximately 1,720 more complaints per year. Because each complaint
specialist handles 860 complaints per year, the additional workload would
require two 2 additional Insurance Specialist III FTEs. The complaints
workload would stay at the higher level as physicians and providers move
in and out of contracts.
TDI expects an increase in provider complaints for two 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. TDI is also anticipating
the bill would result in a significant increase in claims costs to
carriers which will be passed on to consumers in higher premium rates.
Second, the new contract provisions create specific grounds for
disagreements between providers and HMOs.
It is assumed that the agency would adjust its fees to cover the cost of
implementing the bill.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 512 Texas State Board of Podiatric Medical
Examiners, 454 Texas Department of Insurance
LBB Staff: JK, JO, RT, DE