LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION April 10, 2025 TO: Honorable Gary VanDeaver, Chair, House Committee on Public Health FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB18 by VanDeaver (Relating to the establishment and administration of certain programs and services providing health care services to rural counties.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for HB18, Committee Report 1st House, Substituted: a negative impact of ($48,748,795) through the biennium ending August 31, 2027. 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 toGeneral Revenue Related Funds2026($24,602,724)2027($24,146,071)2028($22,164,400)2029($22,226,666)2030($22,291,165)All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Savings/(Cost) fromGR Match For Medicaid758 Probable Savings/(Cost) fromFederal Funds555 Probable Revenue Gain/(Loss) fromGeneral Revenue Fund12026($9,177,434)($15,878,844)($23,533,376)$340,1662027($9,200,103)($16,094,069)($23,852,669)$861,0762028($6,701,846)($16,156,497)($23,945,485)$520,4572029($6,703,285)($16,220,104)($24,040,131)$522,5422030($6,704,786)($16,284,979)($24,136,643)$523,950Fiscal Year Probable Revenue Gain/(Loss) fromFoundation School Fund193 Change in Number of State Employees from FY 20252026$113,38810.52027$287,02510.52028$173,48610.52029$174,18110.52030$174,65010.5 Fiscal AnalysisThis bill amends the Government Code to add requirements for the Rural Hospital Strategic Plan; codifies the State Office of Rural Hospital Financing; establishes the Texas Rural Hospital Officers Academy; codifies the existing grant programs for rural hospitals; and creates an add-on payment for rural hospitals that have a department of obstetrics and gynecology; codifies the Medicaid definition of a rural hospital; requires the Health and Human Services Commission (HHSC) to regularly update certain reimbursement rates for rural hospitals participating in Medicaid based on the most recent cost information; expands the Pediatric Tele-connectivity Grant Program to rural hospitals; Additionally, this bill amends the Health and Safety Code to establish the Rural Pediatric Mental Health Care Access Program and repeals certain provisions related to the Pediatric Tele-connectivity Grant Program. This bill would be effective immediately if it receives a vote of two-thirds of all the members elected to each house, otherwise the bill would be effective September 1, 2025.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 89TH LEGISLATIVE REGULAR SESSION
April 10, 2025
TO: Honorable Gary VanDeaver, Chair, House Committee on Public Health FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB18 by VanDeaver (Relating to the establishment and administration of certain programs and services providing health care services to rural counties.), Committee Report 1st House, Substituted
TO: Honorable Gary VanDeaver, Chair, House Committee on Public Health
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB18 by VanDeaver (Relating to the establishment and administration of certain programs and services providing health care services to rural counties.), Committee Report 1st House, Substituted
Honorable Gary VanDeaver, Chair, House Committee on Public Health
Honorable Gary VanDeaver, Chair, House Committee on Public Health
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB18 by VanDeaver (Relating to the establishment and administration of certain programs and services providing health care services to rural counties.), Committee Report 1st House, Substituted
HB18 by VanDeaver (Relating to the establishment and administration of certain programs and services providing health care services to rural counties.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB18, Committee Report 1st House, Substituted: a negative impact of ($48,748,795) through the biennium ending August 31, 2027. 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 HB18, Committee Report 1st House, Substituted: a negative impact of ($48,748,795) through the biennium ending August 31, 2027. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
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:
2026 ($24,602,724)
2027 ($24,146,071)
2028 ($22,164,400)
2029 ($22,226,666)
2030 ($22,291,165)
All Funds, Five-Year Impact:
2026 ($9,177,434) ($15,878,844) ($23,533,376) $340,166
2027 ($9,200,103) ($16,094,069) ($23,852,669) $861,076
2028 ($6,701,846) ($16,156,497) ($23,945,485) $520,457
2029 ($6,703,285) ($16,220,104) ($24,040,131) $522,542
2030 ($6,704,786) ($16,284,979) ($24,136,643) $523,950
2026 $113,388 10.5
2027 $287,025 10.5
2028 $173,486 10.5
2029 $174,181 10.5
2030 $174,650 10.5
Fiscal Analysis
This bill amends the Government Code to add requirements for the Rural Hospital Strategic Plan; codifies the State Office of Rural Hospital Financing; establishes the Texas Rural Hospital Officers Academy; codifies the existing grant programs for rural hospitals; and creates an add-on payment for rural hospitals that have a department of obstetrics and gynecology; codifies the Medicaid definition of a rural hospital; requires the Health and Human Services Commission (HHSC) to regularly update certain reimbursement rates for rural hospitals participating in Medicaid based on the most recent cost information; expands the Pediatric Tele-connectivity Grant Program to rural hospitals; Additionally, this bill amends the Health and Safety Code to establish the Rural Pediatric Mental Health Care Access Program and repeals certain provisions related to the Pediatric Tele-connectivity Grant Program. This bill would be effective immediately if it receives a vote of two-thirds of all the members elected to each house, otherwise the bill would be effective September 1, 2025.
Methodology
This analysis assumes the Health and Human Services Commission (HHSC) would require $22,216,112 from the General Revenue Fund ($45,636,100 from All Funds) and 10.5 full-time-equivalents (FTEs) in fiscal year 2026 and $21,933,096 from the General Revenue Fund ($46,646,841 from All Funds) and 10.5 FTEs in fiscal year 2027 to implement the provisions of the bill, which include establishing the Texas Rural Hospital Officers Academy, an add-on payment for Medicaid services related to obstetrics and gynecological services provided in rural hospitals, and establishing the Rural Pediatric Mental Health Care Access Program.Included in the amounts above are assumed FTE costs totaling $2,025,535 from the General Revenue Fund ($2,295,485 from All Funds) and 10.5 FTEs in fiscal year 2026 and $1,944,873 from the General Revenue Fund ($2,196,616 from All Funds) and 10.5 FTEs in fiscal year 2027. This includes $83,223 from the General Revenue Fund ($101,787 from All Funds) in fiscal year 2026 for one-time costs related to the implementation of provisions of this bill.This analysis also assumes HHSC would require $4,918,123 from the General Revenue Fund ($4,918,123 from All Funds) in fiscal year 2026 and $5,003,583 from the General Revenue Fund ($5,003,583 from All Funds) starting in fiscal year 2027 to establish and initiate Texas Rural Hospital Officers Academy.Additionally, this analysis assumes HHSC would require $15,612,620 from the General Revenue Fund ($38,876,046 from All Funds) in fiscal year 2026 and $15,845,716 from the General Revenue Fund ($39,446,642 from All Funds) in fiscal year 2027 to establish and implement an add-on payment for rural hospitals that have a department of obstetrics and gynecology and to regularly update certain reimbursement rates for rural hospitals participating in Medicaid based on the most recent cost information. In determining this add-on payment, the agency assumed an approximately two percent (2%) increase applied to all rural hospital inpatient and outpatient services, overall. According to the agency, this is the same approach used for other add-on payments within the Medicaid program.This analysis assumes these costs would be partially offset by an estimated $340,166 to the General Revenue Fund in fiscal year 2026 and an estimated $861,076 to the General Revenue Fund in fiscal year 2027 from client services payments through managed care that are assumed to result in an increase to the General Revenue Fund from insurance premium tax revenue and revenue adjusted for assumed timing of payments and prepayments, all of which results in increased revenue collections. Pursuant to Section 227.001(b), Insurance Code, 25 percent of the revenue collection is assumed to be deposited to the credit of the Foundation School Fund ($113,388 in fiscal year 2026 and $287,025 in fiscal year 2027).While the bill establishes various grant programs for Texas rural hospitals, there is insufficient information available to determine the full costs of those programs; therefore, this analysis does not contemplate the costs associated with the actual grants but does include cost estimates for the administration of those grants.According to the Texas Child Mental Health Care Consortium, the Consortium would require $2,500,000 from the General Revenue Fund ($2,500,000 from All Funds) each fiscal year in the 2026-27 biennium to make necessary changes to the existing electronic data system and to add additional providers for expanded services relating to implementing the provisions of this bill.
While the bill establishes various grant programs for Texas rural hospitals, there is insufficient information available to determine the full costs of those programs; therefore, this analysis does not contemplate the costs associated with the actual grants but does include cost estimates for the administration of those grants.According to the Texas Child Mental Health Care Consortium, the Consortium would require $2,500,000 from the General Revenue Fund ($2,500,000 from All Funds) each fiscal year in the 2026-27 biennium to make necessary changes to the existing electronic data system and to add additional providers for expanded services relating to implementing the provisions of this bill.
According to the Texas Child Mental Health Care Consortium, the Consortium would require $2,500,000 from the General Revenue Fund ($2,500,000 from All Funds) each fiscal year in the 2026-27 biennium to make necessary changes to the existing electronic data system and to add additional providers for expanded services relating to implementing the provisions of this bill.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 529 Health and Human Services Commission, 537 State Health Services, Department of, 710 Texas A&M University System Administrative and General Offices, 719 Texas State Technical College System Administration, 720 The University of Texas System Administration, 768 Texas Tech University System Administration, 769 University of North Texas System Administration, 783 University of Houston System Administration
304 Comptroller of Public Accounts, 529 Health and Human Services Commission, 537 State Health Services, Department of, 710 Texas A&M University System Administrative and General Offices, 719 Texas State Technical College System Administration, 720 The University of Texas System Administration, 768 Texas Tech University System Administration, 769 University of North Texas System Administration, 783 University of Houston System Administration
LBB Staff: b > td > JMc, NPe, ER, LBl, NV
JMc, NPe, ER, LBl, NV