LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION March 29, 2011 TO: Honorable Lois W. Kolkhorst, Chair, House Committee on Public Health FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB3744 by Gonzales, Veronica (Relating to the reimbursement methodology used for certain services provided to Medicaid recipients.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB3744, As Introduced: a negative impact of ($648,700) 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
March 29, 2011
TO: Honorable Lois W. Kolkhorst, Chair, House Committee on Public Health FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB3744 by Gonzales, Veronica (Relating to the reimbursement methodology used for certain services provided to Medicaid recipients.), As Introduced
TO: Honorable Lois W. Kolkhorst, Chair, House Committee on Public Health
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: HB3744 by Gonzales, Veronica (Relating to the reimbursement methodology used for certain services provided to Medicaid recipients.), As Introduced
Honorable Lois W. Kolkhorst, Chair, House Committee on Public Health
Honorable Lois W. Kolkhorst, Chair, House Committee on Public Health
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
HB3744 by Gonzales, Veronica (Relating to the reimbursement methodology used for certain services provided to Medicaid recipients.), As Introduced
HB3744 by Gonzales, Veronica (Relating to the reimbursement methodology used for certain services provided to Medicaid recipients.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3744, As Introduced: a negative impact of ($648,700) 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 HB3744, As Introduced: a negative impact of ($648,700) 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 ($648,700) 2013 $0 2014 $0 2015 $0 2016 $0
2012 ($648,700)
2013 $0
2014 $0
2015 $0
2016 $0
All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGR Match For Medicaid758 Probable Savings/(Cost) fromFederal Funds555 2012 ($648,700) ($5,631,300) 2013 $0 $0 2014 $0 $0 2015 $0 $0 2016 $0 $0
Fiscal Year Probable Savings/(Cost) fromGR Match For Medicaid758 Probable Savings/(Cost) fromFederal Funds555 2012 ($648,700) ($5,631,300) 2013 $0 $0 2014 $0 $0 2015 $0 $0 2016 $0 $0
2012 ($648,700) ($5,631,300)
2013 $0 $0
2014 $0 $0
2015 $0 $0
2016 $0 $0
Fiscal Analysis
The bill would require the Health and Human Services Commission (HHSC) to convert the reimbursement methodology used under the Medicaid program to an all-patient refined diagnosis-related groups (APR-DRG) methodology and adjust rates to hospitals to ensure equitable reimbursement for inpatient services as soon as is practicable after the effective date of the Act. HHSC would be required to establish a hospital value-based purchasing program that includes quality standards. The bill would permit HHSC to reduce a hospitals reimbursement rates or award a hospital additional funding based on performance. The bill would set limits on reimbursement rate reductions and prohibit rate reductions prior to September 1, 2012. The bill would require any relevant state agency to request any necessary waivers or preauthorizations from a federal agency prior to the implementation of the Act and would delay implementation until the waiver or authorization is granted.
Methodology
HHSC assumes implementation activities including preparing an amendment to the Medicaid state plan, obtaining necessary federal approvals, promulgating rules, completing systems changes, hiring/training of staff, and conducting outreach can be accomplished by September 1, 2012. According to HHSC, conversion to the APR-DRG reimbursement methodology would include a one-time automation cost of $648,700 in General Revenue Funds ($6.3 million in All Funds) in fiscal year 2012. Initial development costs are assumed to qualify for 90 percent federal participation and system changes for implementation are assumed to qualify for 75 percent federal participation. Because the bill permits HHSC to use money saved as a result of the reimbursement rate reductions to award hospitals that meet or make progress meeting the quality standards, HHSC assumes adjustments in payment would be accomplished within existing client services costs. Some payment adjustments would result in an increase in payment and some in a decrease in payment.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 529 Health and Human Services Commission
529 Health and Human Services Commission
LBB Staff: JOB, CL, JI, LL, LR
JOB, CL, JI, LL, LR