Austin, Texas
Revision 1
April 1, 2019

Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
John McGeady, Assistant Director     Sarah Keyton, Assistant Director
Legislative Budget Board
SB1140 by Watson (Relating to an independent medical review of certain determinations by the Health and Human Services Commission or a Medicaid managed care organization.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for SB1140, As Introduced: a negative impact of ($763,180) through the biennium ending August 31, 2021.

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
2020 ($539,090)
2021 ($224,090)
2022 ($224,090)
2023 ($224,090)
2024 ($224,090)

Fiscal Year Probable Savings/(Cost) from
GR Match For Medicaid
Probable Savings/(Cost) from
Federal Funds
2020 ($539,090) ($539,090)
2021 ($224,090) ($224,090)
2022 ($224,090) ($224,090)
2023 ($224,090) ($224,090)
2024 ($224,090) ($224,090)

Fiscal Analysis

The bill would require the Health and Human Services Commission (HHSC) to contract with at least three third party arbiters to resolve appeals of HHSC or a managed care organization (MCO) adverse benefit determinations or reduction in or denial of health care services on the basis of medical necessity. The bill would require that a third party arbiter establish and maintain an Internet portal through which a recipient may track the status and final disposition of an appeal, educate recipients and employees of MCOs regarding appeals processes, and review denial data to identify trends. The bill would also require the Executive Commissioner of HHSC to adopt necessary rules to implement the provisions of the bill. The bill would take effect September 1, 2019.


Based on estimates provided by HHSC, this analysis assumes a volume of cases based on a 50 percent uptake rate from the current number of clients with an appeal related to a medical necessity case who request and complete the HHSC fair hearings process. HHSC estimates costs of $800 per case for review and additional costs of $210,000 in All Funds in fiscal year 2020 for each third party arbiter for additional functions required of a third party arbiter by provisions of the bill. This analysis assumes federal matching funds for Medicaid administration at a 50 percent matching rate and assumes that third party review would be optional for the client and the current volume of appeals would not change based on the provisions of the bill.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.

Source Agencies:
529 Health and Human Services Commission
LBB Staff: