Honorable Dan Patrick, Lieutenant Governor, Senate Honorable Dennis Bonnen, Speaker of the House, House of Representatives
FROM:
John McGeady, Assistant Director Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:
SB1207 by Perry (Relating to the operation and administration of Medicaid, including the Medicaid managed care program and the medically dependent children (MDCP) waiver program.), Conference Committee Report
Estimated Two-year Net Impact to General Revenue Related Funds for SB1207, Conference Committee Report: a negative impact of ($7,407,004) 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. The agency is required to implement a provision of this Act only if the legislature appropriates money specifically for that purpose. If the legislature does not appropriate money specifically for that purpose, the agency may, but is not required to, implement a provision of this Act using other appropriations available for that purpose. Additional costs related to changes to managed care organization capitation rates as a result of changes to third party recoveries cannot be determined at this time.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020
($3,151,464)
2021
($4,255,540)
2022
($4,449,491)
2023
($4,591,927)
2024
($6,416,984)
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Probable Savings/(Cost) from GR Match For Medicaid 758
Probable Savings/(Cost) from Federal Funds 555
Probable Revenue Gain/(Loss) from General Revenue Fund 1
2020
($799,369)
($2,352,095)
($4,058,524)
$0
2021
($727,584)
($3,727,549)
($6,164,458)
$149,695
2022
($449,545)
($4,147,474)
($6,385,358)
$110,646
2023
($444,593)
($4,279,653)
($6,582,726)
$99,239
2024
($444,974)
($6,108,961)
($6,741,942)
$102,713
Fiscal Year
Probable Revenue Gain/(Loss) from Foundation School Fund 193
2020
$0
2021
$49,898
2022
$36,882
2023
$33,080
2024
$34,238
Fiscal Year
Change in Number of State Employees from FY 2019
2020
18.8
2021
19.1
2022
19.1
2023
19.1
2024
19.1
Fiscal Analysis
The bill would require the Health and Human Services Commission (HHSC) to contract with an external medical review organization to review the resolution of certain appeals of a managed care organization's (MCO's) adverse determination on the basis of medical necessity or an HHSC denial of eligibility based on medical or functional need when the recipient or applicant affirmatively requests an external medical review and would require HHSC to conduct annual surveys and focus groups through the external quality review organization (EQRO) and to calculate an MCO's performance on performance measures using available data if HHSC determines through the EQRO's initial report on the STAR Kids managed care program that additional data and research are necessary to improve the Medically Dependent Children waiver program (MDCP). The bill would require HHSC to submit a quarterly report about access to care for recipients in MDCP. The bill would also require HHSC to develop and maintain a list of services that are not traditionally covered by primary health benefit plans (PHBP) and that a Medicaid managed care organization (MCO) may approve without coordinating with the issuer of the PHBP and that could be resolved through third party liability resolution. The bill would require HHSC to provide certain information on a recipient's third party insurance, including benefits, limits, copayments, and coinsurance. The bill would require HHSC to develop and implement a process to allow a provider who primarily provides services to a recipient through PHBP coverage to receive Medicaid reimbursement for services ordered, referred, or prescribed regardless of whether the provider is enrolled as a Medicaid provider. The bill would take effect September 1, 2019.
Methodology
Based on estimates provided by HHSC, this analysis assumes that HHSC would require 18.5 FTEs in each fiscal year beginning in fiscal year 2020 to establish and maintain an escalation help line for MDCP and Deaf-Blind Multiple Disabilities (DBMD) waiver program recipients, 0.3 FTEs beginning in fiscal year 2021 to collect, analyze, and report on data required by provisions of the bill, and 0.3 FTEs for indirect administrative support. FTEs include 16.5 Program Specialist VII, 2.0 Manager V, 0.3 Research Specialist V, and 3.0 Texas Works Advisor I and 1.0 Texas Works Advisor II in fiscal year 2020 increasing to 5.0 Texas Works Advisor I, 1.0 Texas Works Advisor II, and 1.0 Texas Works Supervisor I in fiscal year 2021. Total FTE-related costs, including salaries and benefits, is assumed to be $2.6 million in All Funds, including $1.2 million in General Revenue, in fiscal year 2020 and $2.8 million in All Funds, including $1.2 million in General Revenue, in fiscal year 2021.
HHSC indicates that costs to contract with an external medical review organization would total $0.7 million in All Funds, including $0.4 million in General Revenue, in each fiscal year beginning in fiscal year 2020 based on an estimated $800 per case for review, and a volume of cases based on 50 percent of the number of clients with an appeal related to a medical necessity or eligibility case who request and complete the entire fair hearings process. HHSC estimates the increased costs for additional services from the external quality review organization would total $0.5 million in All Funds, including $0.2 million in General Revenue, in each fiscal year beginning in fiscal year 2020.
HHSC estimates costs of $0.1 million in All Funds, including $30,000 in General Revenue, for system modifications to Community Services Interest List (CSIL) and auxiliary technology services.
This analysis assumes a cost of $3.4 million in All Funds, including $1.3 million in General Revenue, in fiscal year 2020 and $7.0 million in All Funds, including $2.7 million in General Revenue in fiscal year 2021, increasing to $7.7 million in All Funds, including $3.0 million in General Revenue by fiscal year 2024, related to the requirement for MCOs to establish a process for reconsidering an adverse determination on a prior authorization request that resulted from the submission of insufficient or inadequate information, assuming an effective date of March 1, 2020.
The net increase in client services payments through managed care are assumed to result in an increase to insurance premium tax revenue, resulting in assumed increased collections of $0.2 million in fiscal year 2021, and $0.1 million in each fiscal year beginning in fiscal year 2022. Pursuant to Section 227.001(b), Insurance Code, 25 percent of the revenue is assumed to be deposited to the credit of the Foundation School Fund.
Technology
FTE-related technology costs are estimated to total $0.1 million in All Funds in each fiscal year beginning in fiscal year 2020. System modifications to Community Services Interest List (CSIL) and auxiliary technology services are estimated to total $0.1 million in All Funds, including $30,000 in General Revenue in fiscal year 2020.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.