LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 17, 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.), Committee Report 2nd House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1156, Committee Report 2nd House, as amended: negative impact *
* of $(2,869,350) 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 $(8,086,569) *
* 2003 5,217,219 *
* 2004 44,707,968 *
* 2005 64,376,324 *
* 2006 67,721,184 *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year (Cost) to Savings to (Cost) to Savings to Number of *
* General General Federal Federal State *
* Revenue Revenue Funds Funds Employees *
* Fund Fund 0555 0555 from FY 2001 *
* 0001 0001 *
* 2002 $65,519,983 $69,475,045 8.0 *
* $(85,592, $(149,716, *
* 998) 119) *
* 2003 102,758,733 95,803,781 20.0 *
* (109,898, (205,050, *
* 164) 311) *
* 2004 152,278,469 170,353,670 23.0 *
* (120,426, (249,028, *
* 264) 510) *
* 2005 179,169,788 210,808,503 11.0 *
* (128,112, (261,553, *
* 557) 339) *
* 2006 189,957,474 227,037,311 9.0 *
* (135,966, (285,101, *
* 366) 866) *
***********************************************************************
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*Fiscal Probable (Cost) Probable Probable Probable *
* Year to Tobacco Savings to Savings to GR Savings to *
* Match for CHIP Tobacco Match for HIV Federal Funds *
* (Article II - for CHIP Services for HIV *
* Permanent (Article II - 8005 Services *
* Funds) Permanent 0555 *
* 8025 Funds) *
* 8025 *
* 2002 $0 $157,088 $361,548 $724,183 *
* 2003 (54,678) 481,574 361,548 724,183 *
* 2004 (54,678) 722,361 361,548 724,183 *
* 2005 0 963,148 361,548 724,183 *
* 2006 0 1,203,935 361,548 724,183 *
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*Fiscal Probable Revenue Gain to Probable (Cost) to All Local *
* Year General Revenue Fund Units of Government *
* 0001 *
* 2002 $11,467,810 $(13,995,094) *
* 2003 11,568,206 (12,007,187) *
* 2004 11,826,532 (12,010,195) *
* 2005 11,994,397 (12,010,195) *
* 2006 12,164,593 (12,010,195) *
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Technology Impact
Technology costs are related to Prescription Drug Provisions, Breast and
Cervical Cancer Waiver, Alien Eligibility, HIV Waiver, and Adult Waiver,
Women's Health Services Waiver, and Children of Migrant Workers.
Biennial costs would be $2,635,877 in General Revenue.
Fiscal Analysis
The bill would revise Medicaid statutes. Section 1 would eliminate the
three prescription drugs limit (a significant cost savings could result
upon the removal of this provision), provide for cost-sharing, and
provide for medical assistance to a person in need of treatment for
breast or cervical cancer. Section 2 would provide for Medicaid
eligibility for qualified aliens, pregnant lawfully present aliens, and
independent foster care adolescents. Section 3 would authorize the
contracting with certain public entities for eligibility determination
services. Section 4 would provide that a recipient of medical
assistance may select a nurse first assistant. Section 6 would expand
the Health Insurance Premium Payment Reimbursement Program and provide
for exception to enrollment period restriction. Section 7 would provide
for several Medicaid demonstration projects as follows: psychotropic
medications, HIV adults with income not more than 200% of poverty, and
women's health services. Section 8 would expand Program of
All-Inclusive Care for the Elderly (PACE). Section 9 would provide
strategy development to improve management of the Medicaid program and
streamline eligibility processes. Section 15 would provide for migrant
care network study. Section 25 would transfer administration of
Medicaid program from the TDH to HHSC. The bill would be effective
September 1, 2001.
Methodology
Section 1. (a) The average monthly number of recipients to receive
additional prescriptions under the Medicaid Vendor Drug program is
assumed to be 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 receive an
additional 1.01 prescriptions per month at a cost of $47.53 per
prescription per month. It is assumed cost and utilization levels would
remain constant. Approximately 20% of GR for the Vendor Drug program is
provided through manufacturer rebates. This increase would partially
offset the costs identified above. Costs for the biennium would be
$91,919,313 in General Revenue.
(b) It is estimated 187 women would be diagnosed per year with a cancer
type eligible for Medicaid coverage. It is assumed treatment and Medicaid
eligibility would average one year. Average monthly costs would include
premiums, medical transportation, and prescription drugs at a cost of
(respectively) $765.11, $1.62, and $50.00. Costs and utilization are
assumed to remain constant. An enhanced federal match is assumed,
totaling 72.14% in FY 2002, and 72.05% thereafter.
Section 2. (1) It is assumed the State Immigrant Health Insurance Program
(SIHIP) would experience a savings as certain recipients transfer to
Medicaid. A reduction is assumed in the average monthly number of SIHIP
recipients totaling 121 in FY 2002, 370 in FY 2003, 554 in FY 2004, 739
in FY 2005, and 924 in FY 2006. The average monthly savings per recipient
is assumed to be $108.58. Savings would accrue to tobacco settlement
receipts. It is assumed the following number of women would receive
prenatal care through a Medicaid waiver operated by TDH: 49 in FY 2002,
83 in FY 2003, 132 in FY 2004, 181 in FY 2005, and 229 in FY 2006 (It is
assumed these women would already be eligible for delivery services
through the Medicaid emergency care program). It is assumed prenatal
services would total $450 per woman per pregnancy.
(2) It is assumed this provision applies to individuals age 19 and 20 who
were in foster care on their 18th birthday. PRS estimates 849
individuals were in foster care on their 18th birthday during FY 2001 and
assumes an annual increase by 2% through FY 2006. It is assumed
individuals will attain the age of 18 in equal increments throughout the
year with 1/12th celebrating their birthday in September and each month
thereafter. It is assumed 50% of the individuals who reach 18 years of
age during FYs 2000 and 2001 will enroll in Medicaid when they reach the
age of 19 and continue their enrollment through age 21 years. And, 80% of
the individuals aged 18 during FYs 2002 to 2006 will enroll at age 19
and continue through age 20. The average monthly cost per individual is
estimated to be $153.77 for FY 2002, $168.89 for FY 2003, $185.09 for FY
2004, $203.00 for FY 2005, and $222.80 for FY 2006. There would be no
significant fiscal impact to DHS.
Section 3. Costs are based on agency estimates. TDH estimates a 5%
Medicaid enrollment and uses premium costs for TANF adults. Section 4.
Board of Nurse Examiners (BNE) estimates it will need two additional
FTEs. It is assumed the BNE would adjust fees to cover the cost of
implementing the bill. Section 6. It is assumed beginning March 2002,
there would be 200 new Medicaid families in the program and thereafter,
participation would increase by 10% per month until there are 5,000 new
Medicaid families. TDH estimates the annual Medicaid cost savings per
family to be $3,668. The average monthly premium cost would be $134 per
family, not including an administrative fee of $29 per family per month.
Section 7. (1) Medications Waiver - It is assumed no more than 21,000
total clients would be served. It is also assumed that benefits are
limited, but the participants are not subject to the Medicaid monthly
three prescription limit. The average cost for services is estimated to
be $3,821 per month. Estimates assume the inclusion of clients with
schizophrenia and bipolar disorders. GR savings would result from no
longer serving 12,697 clients at MHMR. These clients would be served in
the new waiver program. MHMR would need an additional six FTEs at an
average cost of $64,832. A six month implementation period is assumed.
It is also assumed 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 this percentage of the waiver clients
will avoid SSI/full Medicaid coverage, resulting in a savings to
Medicaid. It is assumed 681 waiver clients in FY 2003, and 1,363 waiver
clients in each subsequent year will avoid full Medicaid coverage. The
average monthly cost per disabled client is estimated to be $825.05. DHS
assumes eligibility determination would be conducted through the use of
existing resources.
(2) HIV Waiver - based on the TDH estimates, it is assumed 2700 clients
will participate in the project and the annual cost of outpatient
services would be $4,306 per client. The cost of a hospitalization stay
for a person with AIDS or HIV is $10,555. 15% of the participants will
require 1.8 hospitalization stays per year. The AIDS Drug Assistance
Program (ADAP) already funds anti-retroviral drug treatments for the
majority of these clients, thus there would be no significant impact to
this program. There would be a savings to the HIV program that provides
grants to local entities and other providers. 80% of these clients would
be eligible for the demonstration project for a cost savings of
$1,085,731, composed of State and federal funds. It is assumed the
maintenance of effort requirement for the HIV Care Formula Grant would be
satisfied.
(3) Adult Waiver - it is assumed the demonstration project would be
approved through the Medicaid waiver process and federal funds would be
available. It is also assumed that inclusion of county indigent health
programs as potential entities making matching funds available would not
result in an increase in GR expended funds for the county indigent health
care program. TDH assumes 2000 clients would participate in the project.
The same mix of risk groups that presently constitute the Medicaid
program is assumed for the pilot. The following premium costs are
assumed: Aged $223.93, Disabled/Blind $825.08, TANF Adults $252.56,
Pregnant Women $586.20, and Medically Needy $847.20. Implementation is
assumed to be September 1, 2001. Reimbursement for travel and related
expenses for the advisory committee would have to be authorized in the
General Appropriations Act.
(4) Women's Health Care Services Demonstration Project - it is assumed
the average monthly number of recipients served by Medicaid would
increase by 170,328 in FY 2003, 401,888 in FY 2004, 414,108 in FY 2005,
and 509,908 in FY 2006 for new waiver clients. The average monthly cost
per client is estimated to be $163.60. The federal share is assumed to be
90%. TDH assumes births would be averted due to clients receiving waiver
services. The number of births averted would total 1,378 in FY 2003,
7,753 in FY 2004, 13,353 in FY 2005, and 15,876 in FY 2006. The annual
savings assumed per averted birth totals $10,254.71, resulting in an
annual savings totaling $14,130,990 in FY 2003, $79,504,767 in FY 2004,
$136,931,142 in FY 2005, and $162,803,776 in FY 2006. It is assumed
additional eligibility workers at DHS will be required, totaling 12 in FY
2003, 15 in FY 2003, and declining in subsequent years. The annual cost
per worker is estimated to total $34,979.
Section 8. Savings are based on estimates from the e-Texas recommendation
(HHS 21) of the Comptroller of Public Accounts. Section 9. Savings are
based on the assumption that HHSC develops and implements all strategies
included in the bill. Savings are based on estimates from the
Legislative Medicaid Workgroup Report. Section 15. Fiscal implications
relate to migrant care pilot project. It is assumed the benefit cost
would be $114.23 per month per child for 200 children, for CHIP. For
Medicaid, the benefit cost would be $145.81 per month per child for 500
children. The pilot would not be implemented until FY 2003. The study
could be absorbed within existing resources. It is assumed the
participants in the migrant care network would work outside of the State
for nine months per year.
Local Government Impact
See table above for impact to local governments.
Source Agencies: 324 Texas Department of Human Services, 454 Texas
Department of Insurance, 501 Texas Department of
Health, 529 Health and Human Services Commission,
530 Department of Protective and Regulatory
Services, 655 TX Dept. of Mental Health & Mental
Retardation
LBB Staff: JK, HD, AJ, PP, SW