LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 20, 2001
  
  
          TO:  Honorable Mike Moncrief, Chair, Senate Committee on
               Health & Human Services
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1053  by Shapleigh (Relating to rates and expenditures
               under the Medicaid and state child health plan program in
               the Texas-Mexico border region.), Committee Report 1st
               House, Substituted
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB1053, Committee Report 1st House, Substituted:  negative impact     *
*  of $(118,370,545) 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                        $(57,302,090)  *
          *       2003                         (61,068,455)  *
          *       2004                         (64,024,120)  *
          *       2005                         (67,206,317)  *
          *       2006                         (70,547,625)  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
**************************************************************************
*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           $(5,250,022)        $(52,052,068)        $(92,319,489) *
*  2003            (5,515,419)         (55,553,036)         (97,787,214) *
*  2004            (5,772,542)         (58,251,578)        (102,549,238) *
*  2005            (6,042,520)         (61,163,797)        (107,628,112) *
*  2006            (6,325,998)         (64,221,627)        (112,960,930) *
**************************************************************************
  
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 Texas-Mexico border areas and other areas of the
state in the Children's Health Insurance Program (CHIP) and Medicaid.
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 Medicaid
rates and expenditures for those clients 19 years of age and younger and
provide physician incentives.

The HHSC would be required to contract with a public university to:
measure changes in the number of Medicaid and CHIP providers in the
border counties between September 1, 2001 and August 31, 2004 and the
effects on consumer access and utilization, determine the effects of the
changes in rates and expenditures, and submit a report to the Legislature
by December 1, 2004.

Reimbursement for travel and related expenses for the advisory committee
would require authorization in the General Appropriations Act.
  
  
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. A sixteen percent overall increase in reimbursements was assumed,
as well as a 10 percent increase for professional services for both the
Children's Health Insurance Program and Medicaid programs.

The HHSC could incur additional operating costs relating to operations of
the program and the contract with the public university for the study.
  
  
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