LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 14, 2001 TO: Honorable Bill Ratliff, Lieutenant Governor, Senate FROM: John Keel, Director, Legislative Budget Board IN RE: SB789 by Moncrief (Relating to the regulation and reimbursement of telemedicine medical services.), As Passed 2nd House ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB789, As Passed 2nd House: negative impact of $(4,045,687) * * 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 $(936,106) * * 2003 (3,109,581) * * 2004 (4,948,627) * * 2005 (5,342,515) * * 2006 (5,305,694) * **************************************************** 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 GR Match from Federal Employees from * * for Medicaid for Title XXI Funds - Federal FY 2001 * * 0758 (CHIP) 0555 * * 8010 * * 2002 $(807,030) $(129,076) $(1,464,546) 1.0 * * 2003 (2,844,467) (265,114) (4,566,639) 0.5 * * 2004 (4,683,513) (265,114) (7,045,159) 0.0 * * 2005 (5,077,401) (265,114) (7,574,992) 0.0 * * 2006 (5,040,580) (265,114) (7,540,554) 0.0 * *************************************************************************** Technology Impact See details under Methodology. Fiscal Analysis The bill would amend telemedicine and other statutes. Section 1 would require the Health and Human Services Commission (HHSC) to require by rule that all State Medicaid-operating agencies provide Medicaid reimbursement for telemedicine medical services. Section 1 of the bill would also require HHSC to establish "telehealth" pilot programs. It is assumed pilots would be established for both the Medicaid and Children's Health Insurance Program (CHIP) programs. Section 4 would require CHIP providers to provide telehealth services. HHSC estimates no fiscal impact. Section 17 would establish a home telemedicine pilot program. Client services expenses are noted under Methodology. TDH estimates that required home telemonitoring system equipment would be provided by participating home health agencies at no expense to the Medicaid program. Section 18 would establish a jail diversion pilot program for persons with mental illness. The Department of Mental Health and Mental Retardation (MHMR) estimates no fiscal impact to the State. Section 19 would establish a teledentistry pilot program. It is assumed the pilot would expire December 31, 2002. Methodology Section 1: Provision of Telemedicine Services to Medicaid Recipients The following estimate relates only to services to be provided through the Department of Health (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. TDH estimates the bill would impact the Medicaid program in the following ways: an estimated cost related to rural providers totaling $51,268 in FY 2002, $863,046 in FY 2003, $1,867,358 in FY 2004, $2,080,424 in FY 2005, and $2,084,068 in FY 2006; an estimated cost related to urban providers totaling $161,570 in FY 2002, $2,039,926 in FY 2003, $4,216,210 in FY 2004, $4,678,143 in FY 2005, and $4,678,143 in FY 2006; an estimated cost related to computer imaging and assessment and referral totaling $85,184 in FY 2002, $1,091,884 in FY 2003, $ 2,263,718 in FY 2004, $2,512,440 in FY 2005, and $2,516,842 in FY 2006. 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. Telehealth Pilot--Medicaid and CHIP It is assumed federal approval would allow for March 2002 implementation. It is assumed 600 TDH clients per month per year would receive telehealth services. Telehealth services would cost $110 per month and include the following: education by video, education by a health professional, and supplemental consultations. 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. 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. This expense would be shared equally by the federal government and the State. The same client and cost assumptions would apply to the CHIP program, however, the federal match for client services would total 72.14% in FY 2002, and 72.05% in each subsequent year. Section 17: 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. It is assumed the pilot applies only to TDH. If additional Medicaid-operating agencies were affected, additional costs would result. Section 19: It is assumed that the provision of teledentistry dental services is intended to apply only to participants in the pilot program. A broader provision of teledentistry dental services to Medicaid clients would result in additional costs. It is assumed the pilot would begin September 1, 2001, and end one year later. It is assumed that 1,000 school children would receive pilot program services at a cost of $222 per child. The federal share of client benefits services would total 60.20%. It is assumed the provision regarding a program administrator would require one additional FTE position in FY 2002 (and .5 of an FTE position in FY 2003). It is also assumed the eight members of the advisory committee would travel four times in FY 2002, and one time in FY 2003, at a cost per trip per member of $400. Administrative expenses would be divided equally between Federal Funds and General Revenue Match for Medicaid. Local Government Impact Section 18: MHMR estimates no fiscal impact to local units of government. Source Agencies: 655 TX Dept. of Mental Health & Mental Retardation, 501 Texas Department of Health LBB Staff: JK, HD, PP