LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 11, 2001
TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1156 by Zaffirini (Relating to the state Medicaid
program.), Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1156, Committee Report 1st House, Substituted: positive impact *
* of $8,046,096 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 $4,134,311 *
* 2003 3,911,785 *
* 2004 1,217,864 *
* 2005 (1,689,923) *
* 2006 (4,818,953) *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Revenue Savings/ Savings/ Savings/ Number of *
* Gain/(Loss) (Cost) from (Cost) from (Cost) from State *
* from GR Match General Federal Employees *
* General for Revenue Funds - from FY 2001 *
* Revenue Medicaid Fund Federal *
* Fund 0758 0001 0555 *
* 0001 *
* 2002 $1,778,649 $19,609,900 $2,690,319 6.0 *
* $(17,254, *
* 238) *
* 2003 1,809,111 39,219,799 2,722,731 6.0 *
* (37,117,125) *
* 2004 1,835,022 39,219,799 2,760,576 6.0 *
* (39,836,957) *
* 2005 1,860,847 39,219,799 2,799,425 6.0 *
* (42,770,569) *
* 2006 1,887,023 39,219,799 2,838,805 6.0 *
* (45,925,775) *
***********************************************************************
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* Federal Funds - Federal *
* 0555 *
* 2002 $(27,098,118) *
* 2003 (55,861,645) *
* 2004 (59,930,027) *
* 2005 (64,343,303) *
* 2006 (69,089,941) *
*****************************************************
Technology Impact
Section 2: 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 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 percent 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 3 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.
Sections 6 would direct HHSC to develop a consolidated Medicaid
appropriations request, with input from the Legislative Budget Board and
the Governor s Office of Budget and Planning. Updates to the request
would also be prepared.
Section 7 would direct HHSC to prepare a comprehensive Medicaid operating
budget and quarterly Medicaid expenditure reports, again with input from
the Legislative Budget Board and the Governor s Office of Budget and
Planning.
Section 9 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 12: The bill would take effect September 1, 2001. Sections 2, 8
and 12 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 below.
Methodology
Section 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 3 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.
The client contribution would be divided between the federal government
and the State. The federal share would total 60.2 percent in FY 2002,
60.08 percent in FY 2003, and 60.07 percent 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 2
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 60.2
percent in FY 2002, 60.08 percent in FY 2003, and 60.07 percent in each
subsequent year.
2. General Revenue savings in the table above 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 6 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. The potential increase in revenue related to copayments made by
waiver participants has not been estimated at this time due to the
absence of detailed assumptions regarding prescription usage.
6. 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.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 529 Health and Human Services Commission, 324
Texas Department of Human Services, 501 Texas
Department of Health, 655 TX Dept. of Mental
Health & Mental Retardation
LBB Staff: JK, SD, PP