| TO: | Honorable Jane Nelson, Chair, Senate Committee on Health & Human Services |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | SB418 by Nelson (Relating to the regulation and prompt payment of health care providers under certain health benefit plans; providing penalties.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2004 | ($462,931) |
| 2005 | ($446,387) |
| 2006 | ($446,387) |
| 2007 | ($446,387) |
| 2008 | ($446,387) |
| Fiscal Year | Probable Savings/(Cost) fromGENERAL REVENUE FUND 1 |
Probable Savings/(Cost) fromDEPT INS OPERATING ACCT 36 |
Probable Revenue Gain/(Loss) fromDEPT INS OPERATING ACCT 36 |
Probable Savings/(Cost) fromFEDERAL FUNDS 555 |
|---|---|---|---|---|
| 2004 | ($462,931) | ($314,402) | $314,402 | ($250,000) |
| 2005 | ($446,387) | ($195,001) | $195,001 | ($250,000) |
| 2006 | ($446,387) | ($195,001) | $195,001 | ($250,000) |
| 2007 | ($446,387) | ($195,001) | $195,001 | ($250,000) |
| 2008 | ($446,387) | ($195,001) | $195,001 | ($250,000) |
| Fiscal Year | Change in Number of State Employees from FY 2003 |
|---|---|
| 2004 | 8.3 |
| 2005 | 6.8 |
| 2006 | 6.8 |
| 2007 | 6.8 |
| 2008 | 6.8 |
The bill would amend various Articles of the Texas Insurance Code and Texas Health Maintenance Organization Act. The provisions of the bill relate to the timely payment of claims to physicians and other health care providers by insurers and Health Maintenance Organizations (HMO).
The bill would establish prompt and over-payment provisions on clean claim forms and require that an insurer's coding guidelines be made available to providers. The bill would prohibit a Preferred Provider Benefit Plan (PPBP) issuer or an HMO from denying payment for the services rendered unless (1) the provider/physician misstated the nature of the services or (2) the services authorized were not rendered or (3) the services were to be provided to an individual that was not a plan enrollee at a particular point in time. Provisions of the bill would clarify preauthorization, verification of eligibility, and coordination of payment procedures and penalties for violations thereof. The bill would require insurers to have a toll-free number and appropriate personnel from 6 am to 6 pm weekdays and 9 to noon on holidays, Saturday, and Sunday for preauthorization and verification of eligibility for payment.
The bill would give the Attorney General new authority to sue a physician or provider who has failed to repay an insurer, and authority to sue to enjoin a physician or provider who has improperly used or disclosed information received by the physician.
This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house. If this Act does not receive the vote necessary for immediate effect, it takes effect September 1, 2003.
The Texas Department of Insurance (TDI) estimates that the bill would increase provider complaints by 20 percent over fiscal year 2002 or by 1,487 per year. Each complaint specialist handles approximately 860 complaints per year, so TDI assumes the added workload would require an increase in staffing of three FTE's in fiscal year 2004 and two FTE's in fiscal year 2005 and subsequent years. To implement the bill, the agency assumes legal staff would need to assist the Life and Health program in the extensive repeal and amendment of existing rules, as well as in the development of new rules. Legal staff would also be required to handle enforcement actions against insurers resulting from violations of the statute. The agency estimates implementation of the bill would require two Attorney IV FTEs for fiscal year 2004, and one and one-half Attorney IV FTEs for fiscal years 2005-08 to perform the rulemaking functions, respond to inquiries, provide support to the technical advisory committee, and to handle contested case hearings resulting form violations of the statute. TDI estimates a cost of $314,402 in fiscal year 2004 and $195,001 in fiscal year 2005 and subsequent years to GR-Dedicated Fund 36, the Texas Department of Insurance Operating Fund Account.
TDI estimates a gain to GR- Dedicated Fund 36 from an increase of filing fees of $6,000 in fiscal year 2004. It is anticipated that the agency will increase the Insurance Maintenance Tax to offset any cost to GR- Dedicated Fund 36 that is not covered by an increase in fees.
The Office of the Attorney General assumes one rules challenge of moderate difficulty, two enforcement actions of moderate difficulty, and one enforcement action of high difficulty over 5 years against Health Maintenance Organizations or Preferred Provider Organizations because of the explicit enhanced enforcement authority provided to the agency in the bill. This assumption is based on the agency's past involvement in prompt pay issues, their likely continuation, and the bill's grant of enforcement authority to the agency. Implementation of the bill would require an additional 3.25 FTE's, a cost of $212,931 in fiscal year 2004 and $196,387 in fiscal year 2005 and subsequent years to General Revenue.
The Medicaid claims processing agent is currently available through a toll-free number for prior authorization request and eligibility determination from 7:30 a.m. to 5 p.m., Monday through Friday. Provisions of the bill would require an increase in the amount of time this service is provided. The Health and Human Servives Commission estimates the additional administrative cost at $500,000 each year ($250,000 in General Revenue and $250,000 in Federal Funds) for increased contractor staff, phone lines and equipment, and overtime.
It is assumed that the impact to the State's main health insurance programs, the Employee's Retirement System and the Teacher's Retirement System, is not significant relative to the amounts appropriated to these agencies.
It is assumed that due to complexity of the bill, full implementation would not occur until September 1, 2003, regardless of its effective date.
| Source Agencies: | 302 Office Of The Attorney General, 327 Employees Retirement System, 359 Office Of Public Insurance Counsel, 360 State Office Of Administrative Hearings, 454 Department Of Insurance, 529 Health And Human Services Commission
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| LBB Staff: | JK, JO, EB, BL
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