LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 1, 2001
TO: Honorable Patricia Gray, Chair, House Committee On Public
Health
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1156 by Zaffirini (Relating to the state Medicaid
program.), As Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1156, As Engrossed: positive impact of $43,715,151 through the *
* biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $20,596,959 *
* 2003 23,118,192 *
* 2004 24,018,954 *
* 2005 21,111,166 *
* 2006 17,982,137 *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Savings/ Savings/ Savings/ Savings/ Number of *
* (Cost) from (Cost) from (Cost) from (Cost) from State *
* GR Match Federal GR Match Federal Employees *
* for Funds - for Funds - from FY 2001 *
* Medicaid Federal Medicaid Federal *
* 0758 (Medicaid) 0758 (Medicaid) *
* 0555 0555 *
* 2002 $16,412,500 $27,591,108 6.0 *
* $(17,254, $(27,098, *
* 238) 118) *
* 2003 19,105,808 31,628,565 6.0 *
* (37,117,125)(55,861,645) *
* 2004 22,700,466 37,062,139 6.0 *
* (39,836,957)(59,930,027) *
* 2005 22,700,466 37,100,989 6.0 *
* (42,770,569)(64,343,303) *
* 2006 22,700,466 37,140,368 6.0 *
* (45,925,775)(69,089,941) *
***********************************************************************
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*Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) *
* Year General Revenue Fund from General Revenue Fund *
* 0001 0001 *
* 2002 $19,609,900 $1,828,797 *
* 2003 39,219,799 1,909,710 *
* 2004 39,219,799 1,935,646 *
* 2005 39,219,799 1,961,470 *
* 2006 39,219,799 1,987,647 *
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Technology Impact
Section 3: The Department of Health (TDH) would require $71,500 per year
for claims processing fees performed by the National Heritage Insurance
Company.
Fiscal Analysis
The bill would revise Medicaid statutes. Bill sections are discussed
below.
Section 1 would direct TDH to provide for cost-sharing by recipients of
prescription drug benefits in a manner that ensures that recipients with
higher income levels are required to pay progressively higher percentages
of the costs of prescription drugs. The fiscal impact is discussed
under Methodology.
Section 2 would require that the allocation of any funds appropriated for
rate increases for physician services and outpatient hospital services
recognize and reward high volume providers, with an emphasis on providers
located in areas of the state where medical assistance payments are
particularly vital to the health care delivery system. It is estimated
this provision would not have a net impact fiscal impact to the state.
However, it would result in a different allocation of any funds
appropriated for rate increases.
Section 3 would require a Medicaid demonstration project (waiver) for a
period of seven years. The waiver would provide psychotropic medications
and related laboratory and medical services necessary to conform to a
prescribed medical regime for those medications. Eligible persons would
be those between the ages of 19 and 64, with incomes below 200% of the
federal poverty level, and have been diagnosed with a mental impairment,
including schizophrenia or bipolar disorder, that is expected to cause
the person to become a disabled individual as defined by federal law.
The bill would provide for 12 month continuous eligibility and
appropriate enrollment limits. The bill would allow for cost-sharing
payments by participants. The fiscal impact is discussed under
Methodology.
Section 4 would empower the Health and Human Services Commission (HHSC)
to transfer any portion of the Medicaid program from a health and human
services agency to the commission, subject to the approval of the
Medicaid Legislative Oversight Committee. The bill would establish the
committee to review and approve or reject any Medicaid transfer proposed
by HHSC. The committee would be composed of three members of the Senate
appointed by the Lieutenant Governor and three members of the House of
Representatives appointed by the Speaker. Section 4 would also direct
HHSC to develop and implement strategies to improve management of the
cost, quality, and use of services provided under the program. The
strategies could include the imposition of copayments for services and
the use of procurement initiatives such as selective contracting. TDH
and HHSC estimate that various procurement initiatives would result in
savings. See Methodology for details. The agencies did not estimate
savings that could result from copayments (other than copayments for
prescription medications).
Sections 7, 8, and 9 would direct HHSC to develop and provide a
consolidated Medicaid appropriations request, a comprehensive Medicaid
operating budget and quarterly Medicaid expenditure reports, and a
Medicaid reimbursement rates report.
Section 11 would transfer all funding, functions, employees, etc. of the
Department of Health (TDH) that are determined by the HHSC Commissioner
to be essential to the administration of the Medicaid program to HHSC.
The transfer would occur no later than January 1, 2002.
Section 16: The bill would take effect September 1, 2001. Some bill
sections would take effect immediately if the Act received a vote of
two-thirds of all members elected to each house. This fiscal analysis
assumes that all sections of the bill would be effective September 1,
2001. An earlier effective date could increase the savings and costs
reflected in the estimate.
Methodology
Section 1
1. TDH assumes the following: Copayments would be required of the Aged,
Disabled and Blind population residing in the community; the affected
number of clients would total 248,276 in FY 2002, 251,769 in FY 2003,
255,311 in FY 2004, 258,904 in FY 2005, and 262,546 in FY 2006; clients
would pay on average fifty cents per prescription per month; each client
would receive three prescriptions per month per year; client
contributions would total $4,468,968 in FY 2002, $4,531,842 in FY 2003,
$4,595,598 in FY 2004, $4,660,272 in FY 2005, and $4,725,828 in FY 2006.
2. The client contribution would be divided between the federal
government and the State. The federal share would total 60.20% in FY
2002, 60.08% in FY 2003, and 60.07% in each subsequent year. The federal
share is reflected as a savings. The State share is reflected as a
revenue gain to General Revenue, as it is assumed these funds would be
deposited to the General Revenue Fund.
Section 3
1. It is assumed that no more than 21,000 total clients would be served
in the medications waiver. It is also assumed that benefits are limited
but the participants are not subject to the monthly three prescription
limit under the Medicaid program. The average cost for services is
assumed to be $3,821 per month, as found in the waiver application to
HCFA dated October 2000. Estimates assume the inclusion of clients with
schizophrenia and bipolar disorders. Inclusion of clients with other
disorders could increase or decrease expenditures, provided the number of
clients to be served did not change. The federal share would total
60.20% in FY 2002, 60.08% in FY 2003, and 60.07% in each subsequent year.
2. General Revenue (001) savings would result from no longer serving
12,697 clients in General Revenue funded programs at the Department of
Mental Health and Mental Retardation (MHMR). It is assumed that these
clients would be served in the new waiver program.
3. MHMR would need an additional six FTEs at an average cost of $64,832.
Average costs include salaries, benefits, and operating expenses.
4. There is an assumption of a six month phase-in period for FY 2002.
5. An increase in General Revenue (001) is assumed as follows: clients
would pay on average fifty cents per prescription per month; each client
would receive two prescriptions per month per year. The client
contribution would be divided between the federal government and the
State (as indicated under Section 1).
6. It is assumed that 6.5% of clients with schizophrenia and bipolar
disorders served by MHMR become eligible for Supplemental Security Income
(SSI) and full Medicaid coverage one year after initially receiving
treatment. It is further assumed that this percentage of the waiver
clients will avoid SSI/full Medicaid coverage, resulting in a savings to
the Medicaid program. Specifically, it is assumed that 681 waiver
clients in FY 2003 and 1,363 waiver clients in each subsequent year will
avoid full Medicaid coverage. The average monthly cost (savings) per
disabled client is estimated to be $825.05. Savings would be divided
between the federal government and the State. The federal share would
total 60.20% in FY 2002, 60.08% in FY 2003, and 60.07% in each subsequent
year.
7. The Department of Human Services (DHS) assumes eligibility
determination would be conducted through the use of existing resources at
MHMR and local entities, therefore, no costs have been assumed related
to DHS.
Section 4
1. TDH and HHSC estimate that selected contracting with hospitals would
result in a 2.5% savings per year, totaling in All Funds $30,904,523 in
FY 2002, $30,811,623 in FY 2003, $32,556,975 in each subsequent year.
TDH and HHSC estimate that a statewide competitive procurement for
Durable Medical Equipment would result in a 10% savings per year totaling
$9,170,854 in FY 2002, $9,143,287 in FY 2003, and $9,641,873 in each
subsequent year. TDH and HHSC estimate that a statewide competitive
procurement for vision care would result in a 10% savings per year
totaling $1,162,060 in FY 2002, $1,158,567 in FY 2003, and $1,158,277 in
each subsequent year.
2. Savings would be divided between the federal government and the
State. The federal share would total 60.20% in FY 2002, 60.08% in FY
2003, and 60.07% in each subsequent year.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 324 Texas Department of Human Services, 501 Texas
Department of Health, 529 Health and Human Services
Commission, 655 TX Dept. of Mental Health & Mental
Retardation
LBB Staff: JK, HD, PP