LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION Revision 1 April 5, 2011 TO: Honorable Jim Pitts, Chair, House Committee on Appropriations FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB1645 by Zerwas (Relating to efficiencies and cost-savings in the health and human services and other related regulatory agencies, including the state medical assistance and child health plan programs.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB1645, As Introduced: a positive impact of $297,145,515 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
Revision 1
April 5, 2011
Revision 1
Revision 1
TO: Honorable Jim Pitts, Chair, House Committee on Appropriations FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB1645 by Zerwas (Relating to efficiencies and cost-savings in the health and human services and other related regulatory agencies, including the state medical assistance and child health plan programs.), As Introduced
TO: Honorable Jim Pitts, Chair, House Committee on Appropriations
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: HB1645 by Zerwas (Relating to efficiencies and cost-savings in the health and human services and other related regulatory agencies, including the state medical assistance and child health plan programs.), As Introduced
Honorable Jim Pitts, Chair, House Committee on Appropriations
Honorable Jim Pitts, Chair, House Committee on Appropriations
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
HB1645 by Zerwas (Relating to efficiencies and cost-savings in the health and human services and other related regulatory agencies, including the state medical assistance and child health plan programs.), As Introduced
HB1645 by Zerwas (Relating to efficiencies and cost-savings in the health and human services and other related regulatory agencies, including the state medical assistance and child health plan programs.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1645, As Introduced: a positive impact of $297,145,515 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for HB1645, As Introduced: a positive impact of $297,145,515 through the biennium ending August 31, 2013.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2012 $100,321,386 2013 $196,824,129 2014 $197,121,284 2015 $197,121,284 2016 $197,121,284
2012 $100,321,386
2013 $196,824,129
2014 $197,121,284
2015 $197,121,284
2016 $197,121,284
All Funds, Five-Year Impact: Fiscal Year Probable Savings fromGeneral Revenue Fund1 Probable Savings fromFederal Funds555 2012 $100,321,386 $135,486,555 2013 $196,824,129 $260,075,721 2014 $197,121,284 $259,778,566 2015 $197,121,284 $259,778,566 2016 $197,121,284 $259,778,566
Fiscal Year Probable Savings fromGeneral Revenue Fund1 Probable Savings fromFederal Funds555 2012 $100,321,386 $135,486,555 2013 $196,824,129 $260,075,721 2014 $197,121,284 $259,778,566 2015 $197,121,284 $259,778,566 2016 $197,121,284 $259,778,566
2012 $100,321,386 $135,486,555
2013 $196,824,129 $260,075,721
2014 $197,121,284 $259,778,566
2015 $197,121,284 $259,778,566
2016 $197,121,284 $259,778,566
Fiscal Analysis
SECTION 2 of the bill requires the Health and Human Services Commission and other agencies responsible for the administration of Medicaid and the Childrens Health Insurance Program (CHIP) to identify efficiencies and reduce expenditures in these two programs through the following initiatives: (1) leveraging options for program flexibility and funding, including working with other states and the federal Department of Health and Human Services, to increase program efficiency, accountability, and sustainability; (2) implementing payment reform and quality-based payments; (3) increasing neonatal intensive care management; (4) aligning hospital rates in managed care closer to fee-for-service rates; (5) renegotiating more efficient contracts; (6) developing more appropriate emergency department hospital rates for non-emergent visits; (7) maximizing client cost-sharing; (8) maximizing federal matching funds through a statewide transportation broker or a federal waiver; (9) pursuing a federal waiver to allow the state to share in savings realized by the Medicare program resulting from state improvements in quality and efficiency for clients dually eligible for Medicare and Medicaid; (10) reducing costs for durable medical equipment and laboratory services; (11) optimizing federal matching funds; (12) increasing utilization management and review; (13) evaluating the consolidation of existing state health plans for childrens health; (14) reviewing the implications of continuing or eliminating certain optional services; (15) modifying hospital reimbursements; (16) promoting and expanding the use of technology; (17) increasing access to preventive primary care; (18) implementing an objective client assessment process; (19) maximizing efficiencies and cost-savings through the managed care model; (20) ensuring clients are being served in the most cost-effective Section 1915(c) waiver program appropriate for their needs; (21) streamlining the administration and delivery of services through Section 1915(c) waiver programs; (22) requiring clients of Section 1915(c) waiver programs to access attendant services through community-based entitlement programs; (23) requesting any necessary federal waiver or authorization; and (24) implementing additional initiatives identified by HHSC and other administering agencies. SECTION 3 of the bill repeals the prohibition on providing Medicaid using a health maintenance organization (HMO) in Cameron, Hidalgo, and Maverick counties.
SECTION 2 of the bill requires the Health and Human Services Commission and other agencies responsible for the administration of Medicaid and the Childrens Health Insurance Program (CHIP) to identify efficiencies and reduce expenditures in these two programs through the following initiatives: (1) leveraging options for program flexibility and funding, including working with other states and the federal Department of Health and Human Services, to increase program efficiency, accountability, and sustainability; (2) implementing payment reform and quality-based payments; (3) increasing neonatal intensive care management; (4) aligning hospital rates in managed care closer to fee-for-service rates; (5) renegotiating more efficient contracts; (6) developing more appropriate emergency department hospital rates for non-emergent visits; (7) maximizing client cost-sharing; (8) maximizing federal matching funds through a statewide transportation broker or a federal waiver; (9) pursuing a federal waiver to allow the state to share in savings realized by the Medicare program resulting from state improvements in quality and efficiency for clients dually eligible for Medicare and Medicaid; (10) reducing costs for durable medical equipment and laboratory services; (11) optimizing federal matching funds; (12) increasing utilization management and review; (13) evaluating the consolidation of existing state health plans for childrens health; (14) reviewing the implications of continuing or eliminating certain optional services; (15) modifying hospital reimbursements; (16) promoting and expanding the use of technology; (17) increasing access to preventive primary care; (18) implementing an objective client assessment process; (19) maximizing efficiencies and cost-savings through the managed care model; (20) ensuring clients are being served in the most cost-effective Section 1915(c) waiver program appropriate for their needs; (21) streamlining the administration and delivery of services through Section 1915(c) waiver programs; (22) requiring clients of Section 1915(c) waiver programs to access attendant services through community-based entitlement programs; (23) requesting any necessary federal waiver or authorization; and (24) implementing additional initiatives identified by HHSC and other administering agencies.
SECTION 3 of the bill repeals the prohibition on providing Medicaid using a health maintenance organization (HMO) in Cameron, Hidalgo, and Maverick counties.
Methodology
SECTION 2: Savings to General Revenue Funds and Federal Funds would likely be significant but cannot be determined at this time; actual savings, and any associated costs of implementation, would depend upon specific initiatives that were implemented. SECTION 3 would implement a recommendation in the report "Repeal the Prohibition of Health Maintenance Organizations in Medicaid in South Texas" in the Legislative Budget Board's Government Effectiveness and Efficiency Report, submitted to the Eighty-second Texas Legislature, 2011. There would be no direct fiscal impact from repealing the prohibition; however, it is assumed that repealing the prohibition would result in HHSC implementing an HMO model of care throughout south Texas (13 counties, including the three where it is currently prohibited). According to HHSC, implementation of both the STAR and STAR+Plus delivery models could be expected in March of 2012, resulting in a net savings of $235.8 million in fiscal year 2012 and $456.9 million in fiscal year 2013 and subsequent years; these savings include client services and administrative savings. Expanding managed care would also result in an increase to premium tax revenue, not reflected in the total savings amounts. HHSC estimates additional premium tax revenue of $40.7 million beginning in fiscal year 2013.
SECTION 2: Savings to General Revenue Funds and Federal Funds would likely be significant but cannot be determined at this time; actual savings, and any associated costs of implementation, would depend upon specific initiatives that were implemented.
SECTION 3 would implement a recommendation in the report "Repeal the Prohibition of Health Maintenance Organizations in Medicaid in South Texas" in the Legislative Budget Board's Government Effectiveness and Efficiency Report, submitted to the Eighty-second Texas Legislature, 2011. There would be no direct fiscal impact from repealing the prohibition; however, it is assumed that repealing the prohibition would result in HHSC implementing an HMO model of care throughout south Texas (13 counties, including the three where it is currently prohibited). According to HHSC, implementation of both the STAR and STAR+Plus delivery models could be expected in March of 2012, resulting in a net savings of $235.8 million in fiscal year 2012 and $456.9 million in fiscal year 2013 and subsequent years; these savings include client services and administrative savings. Expanding managed care would also result in an increase to premium tax revenue, not reflected in the total savings amounts. HHSC estimates additional premium tax revenue of $40.7 million beginning in fiscal year 2013.
Local Government Impact
The fiscal implications of the bill cannot be determined at this time.
Source Agencies: 529 Health and Human Services Commission
529 Health and Human Services Commission
LBB Staff: JOB, CL, LR, KK, MB
JOB, CL, LR, KK, MB