LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 17, 2001 TO: Honorable Patricia Gray, Chair, House Committee on Public Health FROM: John Keel, Director, Legislative Budget Board IN RE: SB1156 by Zaffirini (Relating to the state Medicaid program.), Committee Report 2nd House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1156, Committee Report 2nd House, as amended: negative impact * * of $(2,869,350) 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 $(8,086,569) * * 2003 5,217,219 * * 2004 44,707,968 * * 2005 64,376,324 * * 2006 67,721,184 * **************************************************** All Funds, Five-Year Impact: *********************************************************************** *Fiscal Probable Probable Probable Probable Change in * * Year (Cost) to Savings to (Cost) to Savings to Number of * * General General Federal Federal State * * Revenue Revenue Funds Funds Employees * * Fund Fund 0555 0555 from FY 2001 * * 0001 0001 * * 2002 $65,519,983 $69,475,045 8.0 * * $(85,592, $(149,716, * * 998) 119) * * 2003 102,758,733 95,803,781 20.0 * * (109,898, (205,050, * * 164) 311) * * 2004 152,278,469 170,353,670 23.0 * * (120,426, (249,028, * * 264) 510) * * 2005 179,169,788 210,808,503 11.0 * * (128,112, (261,553, * * 557) 339) * * 2006 189,957,474 227,037,311 9.0 * * (135,966, (285,101, * * 366) 866) * *********************************************************************** *************************************************************************** *Fiscal Probable (Cost) Probable Probable Probable * * Year to Tobacco Savings to Savings to GR Savings to * * Match for CHIP Tobacco Match for HIV Federal Funds * * (Article II - for CHIP Services for HIV * * Permanent (Article II - 8005 Services * * Funds) Permanent 0555 * * 8025 Funds) * * 8025 * * 2002 $0 $157,088 $361,548 $724,183 * * 2003 (54,678) 481,574 361,548 724,183 * * 2004 (54,678) 722,361 361,548 724,183 * * 2005 0 963,148 361,548 724,183 * * 2006 0 1,203,935 361,548 724,183 * *************************************************************************** *************************************************************************** *Fiscal Probable Revenue Gain to Probable (Cost) to All Local * * Year General Revenue Fund Units of Government * * 0001 * * 2002 $11,467,810 $(13,995,094) * * 2003 11,568,206 (12,007,187) * * 2004 11,826,532 (12,010,195) * * 2005 11,994,397 (12,010,195) * * 2006 12,164,593 (12,010,195) * *************************************************************************** Technology Impact Technology costs are related to Prescription Drug Provisions, Breast and Cervical Cancer Waiver, Alien Eligibility, HIV Waiver, and Adult Waiver, Women's Health Services Waiver, and Children of Migrant Workers. Biennial costs would be $2,635,877 in General Revenue. Fiscal Analysis The bill would revise Medicaid statutes. Section 1 would eliminate the three prescription drugs limit (a significant cost savings could result upon the removal of this provision), provide for cost-sharing, and provide for medical assistance to a person in need of treatment for breast or cervical cancer. Section 2 would provide for Medicaid eligibility for qualified aliens, pregnant lawfully present aliens, and independent foster care adolescents. Section 3 would authorize the contracting with certain public entities for eligibility determination services. Section 4 would provide that a recipient of medical assistance may select a nurse first assistant. Section 6 would expand the Health Insurance Premium Payment Reimbursement Program and provide for exception to enrollment period restriction. Section 7 would provide for several Medicaid demonstration projects as follows: psychotropic medications, HIV adults with income not more than 200% of poverty, and women's health services. Section 8 would expand Program of All-Inclusive Care for the Elderly (PACE). Section 9 would provide strategy development to improve management of the Medicaid program and streamline eligibility processes. Section 15 would provide for migrant care network study. Section 25 would transfer administration of Medicaid program from the TDH to HHSC. The bill would be effective September 1, 2001. Methodology Section 1. (a) The average monthly number of recipients to receive additional prescriptions under the Medicaid Vendor Drug program is assumed to be 248,276 in FY 2002, 251,769 in FY 2003, 255,311 in FY 2004, 258,904 in FY 2005, and 262,546 in FY 2006. Clients would receive an additional 1.01 prescriptions per month at a cost of $47.53 per prescription per month. It is assumed cost and utilization levels would remain constant. Approximately 20% of GR for the Vendor Drug program is provided through manufacturer rebates. This increase would partially offset the costs identified above. Costs for the biennium would be $91,919,313 in General Revenue. (b) It is estimated 187 women would be diagnosed per year with a cancer type eligible for Medicaid coverage. It is assumed treatment and Medicaid eligibility would average one year. Average monthly costs would include premiums, medical transportation, and prescription drugs at a cost of (respectively) $765.11, $1.62, and $50.00. Costs and utilization are assumed to remain constant. An enhanced federal match is assumed, totaling 72.14% in FY 2002, and 72.05% thereafter. Section 2. (1) It is assumed the State Immigrant Health Insurance Program (SIHIP) would experience a savings as certain recipients transfer to Medicaid. A reduction is assumed in the average monthly number of SIHIP recipients totaling 121 in FY 2002, 370 in FY 2003, 554 in FY 2004, 739 in FY 2005, and 924 in FY 2006. The average monthly savings per recipient is assumed to be $108.58. Savings would accrue to tobacco settlement receipts. It is assumed the following number of women would receive prenatal care through a Medicaid waiver operated by TDH: 49 in FY 2002, 83 in FY 2003, 132 in FY 2004, 181 in FY 2005, and 229 in FY 2006 (It is assumed these women would already be eligible for delivery services through the Medicaid emergency care program). It is assumed prenatal services would total $450 per woman per pregnancy. (2) It is assumed this provision applies to individuals age 19 and 20 who were in foster care on their 18th birthday. PRS estimates 849 individuals were in foster care on their 18th birthday during FY 2001 and assumes an annual increase by 2% through FY 2006. It is assumed individuals will attain the age of 18 in equal increments throughout the year with 1/12th celebrating their birthday in September and each month thereafter. It is assumed 50% of the individuals who reach 18 years of age during FYs 2000 and 2001 will enroll in Medicaid when they reach the age of 19 and continue their enrollment through age 21 years. And, 80% of the individuals aged 18 during FYs 2002 to 2006 will enroll at age 19 and continue through age 20. The average monthly cost per individual is estimated to be $153.77 for FY 2002, $168.89 for FY 2003, $185.09 for FY 2004, $203.00 for FY 2005, and $222.80 for FY 2006. There would be no significant fiscal impact to DHS. Section 3. Costs are based on agency estimates. TDH estimates a 5% Medicaid enrollment and uses premium costs for TANF adults. Section 4. Board of Nurse Examiners (BNE) estimates it will need two additional FTEs. It is assumed the BNE would adjust fees to cover the cost of implementing the bill. Section 6. It is assumed beginning March 2002, there would be 200 new Medicaid families in the program and thereafter, participation would increase by 10% per month until there are 5,000 new Medicaid families. TDH estimates the annual Medicaid cost savings per family to be $3,668. The average monthly premium cost would be $134 per family, not including an administrative fee of $29 per family per month. Section 7. (1) Medications Waiver - It is assumed no more than 21,000 total clients would be served. It is also assumed that benefits are limited, but the participants are not subject to the Medicaid monthly three prescription limit. The average cost for services is estimated to be $3,821 per month. Estimates assume the inclusion of clients with schizophrenia and bipolar disorders. GR savings would result from no longer serving 12,697 clients at MHMR. These clients would be served in the new waiver program. MHMR would need an additional six FTEs at an average cost of $64,832. A six month implementation period is assumed. It is also assumed 6.5% of clients with schizophrenia and bipolar disorders served by MHMR become eligible for Supplemental Security Income (SSI) and full Medicaid coverage one year after initially receiving treatment. It is further assumed this percentage of the waiver clients will avoid SSI/full Medicaid coverage, resulting in a savings to Medicaid. It is assumed 681 waiver clients in FY 2003, and 1,363 waiver clients in each subsequent year will avoid full Medicaid coverage. The average monthly cost per disabled client is estimated to be $825.05. DHS assumes eligibility determination would be conducted through the use of existing resources. (2) HIV Waiver - based on the TDH estimates, it is assumed 2700 clients will participate in the project and the annual cost of outpatient services would be $4,306 per client. The cost of a hospitalization stay for a person with AIDS or HIV is $10,555. 15% of the participants will require 1.8 hospitalization stays per year. The AIDS Drug Assistance Program (ADAP) already funds anti-retroviral drug treatments for the majority of these clients, thus there would be no significant impact to this program. There would be a savings to the HIV program that provides grants to local entities and other providers. 80% of these clients would be eligible for the demonstration project for a cost savings of $1,085,731, composed of State and federal funds. It is assumed the maintenance of effort requirement for the HIV Care Formula Grant would be satisfied. (3) Adult Waiver - it is assumed the demonstration project would be approved through the Medicaid waiver process and federal funds would be available. It is also assumed that inclusion of county indigent health programs as potential entities making matching funds available would not result in an increase in GR expended funds for the county indigent health care program. TDH assumes 2000 clients would participate in the project. The same mix of risk groups that presently constitute the Medicaid program is assumed for the pilot. The following premium costs are assumed: Aged $223.93, Disabled/Blind $825.08, TANF Adults $252.56, Pregnant Women $586.20, and Medically Needy $847.20. Implementation is assumed to be September 1, 2001. Reimbursement for travel and related expenses for the advisory committee would have to be authorized in the General Appropriations Act. (4) Women's Health Care Services Demonstration Project - it is assumed the average monthly number of recipients served by Medicaid would increase by 170,328 in FY 2003, 401,888 in FY 2004, 414,108 in FY 2005, and 509,908 in FY 2006 for new waiver clients. The average monthly cost per client is estimated to be $163.60. The federal share is assumed to be 90%. TDH assumes births would be averted due to clients receiving waiver services. The number of births averted would total 1,378 in FY 2003, 7,753 in FY 2004, 13,353 in FY 2005, and 15,876 in FY 2006. The annual savings assumed per averted birth totals $10,254.71, resulting in an annual savings totaling $14,130,990 in FY 2003, $79,504,767 in FY 2004, $136,931,142 in FY 2005, and $162,803,776 in FY 2006. It is assumed additional eligibility workers at DHS will be required, totaling 12 in FY 2003, 15 in FY 2003, and declining in subsequent years. The annual cost per worker is estimated to total $34,979. Section 8. Savings are based on estimates from the e-Texas recommendation (HHS 21) of the Comptroller of Public Accounts. Section 9. Savings are based on the assumption that HHSC develops and implements all strategies included in the bill. Savings are based on estimates from the Legislative Medicaid Workgroup Report. Section 15. Fiscal implications relate to migrant care pilot project. It is assumed the benefit cost would be $114.23 per month per child for 200 children, for CHIP. For Medicaid, the benefit cost would be $145.81 per month per child for 500 children. The pilot would not be implemented until FY 2003. The study could be absorbed within existing resources. It is assumed the participants in the migrant care network would work outside of the State for nine months per year. Local Government Impact See table above for impact to local governments. Source Agencies: 324 Texas Department of Human Services, 454 Texas Department of Insurance, 501 Texas Department of Health, 529 Health and Human Services Commission, 530 Department of Protective and Regulatory Services, 655 TX Dept. of Mental Health & Mental Retardation LBB Staff: JK, HD, AJ, PP, SW