LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 79TH LEGISLATIVE REGULAR SESSION
 
March 21, 2005

TO:
Honorable Jane Nelson, Chair, Senate Committee on Health & Human Services
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
SB873 by Nelson (Relating to a medical information telephone hotline pilot program under the medical assistance program.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for SB873, As Introduced: an impact of $0 through the biennium ending August 31, 2007.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2006 $0
2007 $0
2008 $0
2009 $0
2010 $0




Fiscal Year Probable (Cost) from
GENERAL REVENUE FUND
1 		Probable Savings from
GR MATCH FOR MEDICAID
758 		Probable Savings from
FEDERAL FUNDS
555
2006 ($450,000) $450,000 $694,456
2007 ($600,000) $600,000 $917,067
2008 ($600,000) $600,000 $917,067
2009 ($600,000) $600,000 $917,067
2010 ($600,000) $600,000 $917,067

Fiscal Analysis

The bill would require that by December 1, 2005, the Health and Human Services Commission (HHSC) must determine whether a Medicaid medical information telephone hotline pilot program is likely to result in net cost savings. The pilot program would have the following characteristics: a)  physicians, either licensed in Texas or another state, would be available by telephone to provide medical information for recipients; b) the pilot would include up to 100,000 Medicaid recipients in at least two counties; and c) at least 50 percent of the pilot participants must be in the Medicaid Health Maintenance Organization managed care model.

If HHSC determines the telephone hotline pilot program is likely to be cost effective, HHSC would be required to develop the pilot program, including selecting the pilot counties by January 1, 2006 and requesting proposals from vendors by February 1, 2006.

To be eligible for the pilot contract, a vendor must agree to the following terms: a) the value of the vendor's contract would be contingent on net cost savings; b) the vendor must use only physicians to provide medical information by telephone; and c) HHSC may terminate the contract after a reasonable period if the vendor's services do not result in net cost savings in the pilot area.

The bill would specify that participation of a physician in this pilot does not constitute the practice of medicine in Texas.

HHSC would provide a report by January 1, 2007 on the status of the pilot, whether HHSC was able to contract with a suitable vendor, the pilot's effect on emergency room visits, cost savings, and recommendations regarding expanding or revising the program.


Methodology

The HHSC assumes the following in projecting any costs or savings associated with the implementation of the bill:
1. The pilot would not be implemented unless it was determined to be cost effective.
2. It is assumed that Federal Participation would not be available; 100% General Revenue is assumed for vendor cost.  According to HHSC, information received from the Centers for Medicare and Medicaid Services and the state of South Carolina suggest that a federal participation would not occur.
3. The cost for a vendor contract assumes 5 physicians ($80,000 each) beginning in February 2006.      The telephone system would cost $200,000 and the initial start-up cost for the first year would be $50,000.  Therefore the total cost of the pilot would be $450,000 in General Revenue in FY2006 and $600,000 in subsequent years. 
4.  In order to be cost-effective, there would have to be $1,144,456 in Client Services Savings in FY2006 and $1,517,835 in FY 2007 in order to get state savings of $450,000 in FY2006 and $600,000 in FY2007, using the Medicaid client services matching rate.  Savings in subsequent years would have to total $1,519,067.  Insufficient data are available at the present to quantify those savings.

Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
529 Health and Human Services Commission
LBB Staff:
JOB, CL, KF