TO: | Honorable Robert Duncan, Chair, Senate Committee on State Affairs |
FROM: | John S. O'Brien, Director, Legislative Budget Board |
IN RE: | SB1582 by Van de Putte (Relating to payment of claims to pharmacies and pharmacists.), Committee Report 1st House, Substituted |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2008 | ($221,635) |
2009 | ($214,335) |
2010 | ($214,335) |
2011 | ($214,335) |
2012 | ($214,335) |
Fiscal Year | Probable Savings/(Cost) from DEPT INS OPERATING ACCT 36 |
Probable Revenue Gain/(Loss) from DEPT INS OPERATING ACCT 36 |
Probable Savings/(Cost) from GENERAL REVENUE FUND 1 |
Change in Number of State Employees from FY 2007 |
---|---|---|---|---|
2008 | ($901,987) | $901,987 | ($221,635) | 19.5 |
2009 | ($819,043) | $819,043 | ($214,335) | 19.5 |
2010 | ($819,043) | $819,043 | ($214,335) | 19.5 |
2011 | ($819,043) | $819,043 | ($214,335) | 19.5 |
2012 | ($819,043) | $819,043 | ($214,335) | 19.5 |
The bill would amend the Insurance Code relating to the payment of claims to pharmacies and pharmacists by health maintenance organizations and pharmacy benefit managers. The bill would require the Department of Insurance (TDI) to investigate complaints made by pharmacies and pharmacists providing that a health maintenance organization or pharmacy benefit manager was not in compliance with the provisions of the bill. The bill would entitle a health maintenance organization or pharmacy benefit manager and a complainant to a hearing conducted by the State Office of Administrative Hearings (SOAH) regarding the results of TDI's investigation.
The bill would take effect September 1, 2007.
Currently, TDI penalizes insurers for prompt pay violations only if the insurer fails to maintain a 98% on-time, clean claim payment percentage. The bill would allow penalties for each pharmacy claim that was not timely paid. Based on carrier reports from 2006 TDI estimates the bill would result in 10,000 complaints being filed with each fiscal year. It is assumed that 98 percent of these cases would take an average of 5 hours each while 2 percent would be more complex, taking an average of 30 hours each to resolve. It is assumed TDI would incur costs to handle investigations and administrative actions. These costs would include salaries for 17.5 FTEs, five and one-half Attorney III, ten Investigator II, and two Legal Secretary II, in the amount of $610,679 with associated benefit costs of $172,761 each fiscal year. Other operating costs, including travel, training, and telephone costs would be $35,603 each fiscal year and there would be a one-time equipment cost in fiscal year 2008 of $82,944.
Based on the analysis of the TDI, it is assumed that there would be a one-time revenue gain of $1,850 in the General Revenue-Dedicated Account Fund 36 in fiscal year 2008 because the bill would result in 37 filings, each accompanied by a $50 filing fee. Since TDI is required to generate revenues equivalent to its costs of operation under current law, this analysis assumes that all costs incurred in excess of revenues generated would be paid for from General Revenue - Dedicated Fund 36 from either existing fund balances or insurance maintenance tax revenue.
There would be a technology impact of $25,992 in fiscal year 2008 for computer hardware and software.
Source Agencies: | 360 State Office of Administrative Hearings, 454 Department of Insurance, 515 Board of Pharmacy
|
LBB Staff: | JOB, KJG, MW, AH
|