PREPARED BY: Mikayla Findlay
LB 138 DATE PREPARED: January 24, 2025
PHONE: 402-471-0062
Revision: 00
FISCAL NOTE
LEGISLATIVE FISCAL ANALYST ESTIMATE
ESTIMATE OF FISCAL IMPACT – STATE AGENCIES (See narrative for political subdivision estimates)
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS See below See below
Any Fiscal Notes received from state agencies and political subdivisions are attached f ollowing the Legislative Fiscal Analyst Estimate.
This bill amends provisions related to pharmacy dispensing fee paid under Medicaid. Beginning July 1, 2026, a tiered pharmacy
dispensing fee schedule would be established. The highest t ier would be composed of independent pharmacies (as established in LB
204 in 2024), all other pharmacies filling fewer than 30,000 prescriptions annually, and pharmacies that are the only enrolled Medicaid
pharmacy within a 30- mile radius receiving a dispensing fee of $10.38 per prescription. The second tier, composed of pharmacies filling
between 30,000 to 69 ,999 prescriptions annually, would receive a dispensing fee of $9.51 per prescription. The third tier , composed of
pharmacies filling at least 70,000 prescriptions annually, would receive a dispensing fee of $8.30 per prescription.
The Department of Health and Human Services, DHHS, citing data obtained from the Na tional Provider Registry administered by
federal HHS, indicates no MCO, Managed Care Org anization, pharmacies fill more than 30,000 prescriptions per year per pharmacy.
As such, DHHS assumes all prescriptions filled on behalf of Medicaid clients would be subject to the first tier dispensing fee of $10.38.
DHHS applied the count of dispensing fees paid to pharmacies in FY24 and analyzed the cost differential between the average
dispensing fee paid of $4.2668 and the new rate of $10.38. T he estimated aid expenditure is approximately $10,451,707 million more
than the $7,273,212 expended on dispensing fees for non- independent pharmacies in FY24.
The assumption that no pharmacies that fill Medicaid clients’ prescriptions fill more than 30,000 prescriptions per year seems
unreasonable. Within Neb. Rev. Stat. § 68-9,111, “independent pharmacy” means any pharmacy as defined in § 71-425 that owns six
or fewer pharmacies. It is unclear if the definition of pharmacy for the purposes of subsection 5 of the proposed legislation means
pharmacy location or pharmacy group by ownership. There is also lack of clarity as to if refills count in the count of prescriptions. An
alternative estimate of fiscal impact is presented below which assumes equal distribution of dispensing between the three tiers:
Count of dispensing
fees
New Dispensing Fee
Amount expended on
dispensing fee
Tier 1 568,201 $10.38 $5,897,926
Tier 2 568,201 $9.51 $5,403,592
Tier 3 568,201 $8.30 $4,716,068
The total of dispensing fee, assuming equal distribution by pharmacy size as defined by number of prescriptions dispen sed annually, is
$16,017,586, which is a $8,744,374 increase over FY24. This estimate does not account for the provision for rural pharmacies. There is
no basis to disagree with the DHHS assumption of fund mix of 61.81% federal funds which is based on a blended Federal Medical
Assistance Percentage and account for increased federal participation for Medicaid Expansion population. Using this fund mix and the
alternative estimate of aid expen diture, the general fund impact would be $3,339,477 and federal fund $5,404,898 per year.
Additionally, the bill has administrative costs. The bill require s DHHS to complete a cost -of-dispensing survey to recommend dispensing
fees to ensure fair and adequate reimbursement for such services to the Clerk of the Legislature no later than July 1 2026 . The cost of
this report would be incurred in FY25 to meet the deadline. The agency estimates the cost of the report to amount to $100,000, 50% of
which would be covered by feder al funds as a Medicaid administration provision. Additional administrative cos ts include updates to
MMIS which the agency can absorb within current appropriations .
ADMINISTRATIVE SERVICES STATE BUDGET DIVISION: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 138 AM: AGENCY/POLT. SUB: Nebraska Dept of Health & Human Services
REVIEWED BY: Ann Linneman DATE: 1 -24-2025 PHONE: (402) 471-4180
COMMENTS: Concur with the Nebraska Department of Health & Human Services assessment of fiscal impact.
LB (1) 138 FISCAL NOTE 2025
ESTIMATE PROVIDED BY STATE AGENCY OR POLITICAL SUBDIVISION
State Agency or Political Subdivision Name:(2) Department of Health and Human Services
Prepared by: (3) John Meals Date Prepared 1-24-25 Phone: (5) 471-6719
FY 2025-2026 FY 2026-2027
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS $50,000 $3,991,716
CASH FUNDS
FEDERAL FUNDS $50,000 $6,459,991
OTHER FUNDS
TOTAL FUNDS $100,000 $0 $10,451,707 $0
Return by date specified or 72 hours prior to public hearing, whichever is earlier.
Explanation of Estimate:
LB138 requires that the reimbursement of the dispensing fee for independent pharmacies equal $10.38 per
prescription effective July 1, 2026. LB204 with amendments from 2024 established this same rate for
independent pharmacies. There is no additional fiscal impact for independent pharmacies as a result of LB138.
LB138 also defines a tiered dispensing fee schedule for all other pharmacies, including mail order pharmacies
to be effective July 1, 2026. This tiered schedule includes an exception for any pharmacy, which is not a mail
order pharmacy, which is the only enrolled pharmacy within a 30- mile radius from another pharmacy . The
below tiered schedule is based on annual pharmacy dispensing volume and the defined exception.
Annual Prescription Volume (for
non-independent pharmacies) Dispensing Fee
Less than 30k $10.38
30k to less than 70k $9.51
Equal to or greater than 70k $8.30
Only pharmacy within a 30-mile
radius (excluding mail order) $10.38
LB138 sets a standard rate for fee-for-service (FFS) and Managed Care Organizations (MCOs) , which do not
have any pharmacies at this time that fill more than 30,000 prescriptions per year per pharmacy identified by
the National Provider Identifier (NPI). There is no estimated increase in fees for FFS as a result of LB138. The
MCO dispensing fees are negotiated between the MCO and the individual pharmacy or chain, which is
allowable per MCO contracts. MCOs currently pay professional dispensing fees in accordance with the type of
pharmacy; MCOs pay different fees for independent, chain, specialty, and long- term care pharmacies. As a
result of LB138, the estimated annual cost to increase all MCO dispensing fees, excluding for independent
pharmacies, from the current fees to the fees established in this bill is $10,451,707 ($6,459,991 Federal Funds
and $3,991,716 General Funds) . The blended FMAP of 61.81% is based on an estimated 80/20 split for
regular FMAP (54.76%) vs expansion newly (90.00%). This increase will be passed along to the state in the
form of capitation payments.
Total number of dispensing
fees paid to pharmacies
(excluding independent
pharmacies) in SFY24
Total dollar amount of dispensing fees paid to
pharmacies (excluding
independent pharmacies) in
SFY24 @ $4.2668
Projected total dollar amount of dispensing fees paid to pharmacies
(excluding independent
pharmacies) at rates
established in LB138
Projected fiscal impact to
increase dispensing fees
to pharmacies (excluding
independent pharmacies)
per LB138
1,704,603 $7,273,212 $17,724,919 $10,451,707
This bill requires the completion of a cost-of-dispensing survey by July 1, 2026. The Department of Health and
Human Services (DHHS) would utilize a third -party vendor to conduct this survey, at an estimated cost of
$100,000 ($50,000 Federal Funds and $50,000 General Funds).
Updates to the dispensing fees, and other technical work, in the Medicaid Management Information System
(MMIS) would be needed. The estimated cost for this work is a one-time cost of $3,920. LB138 also requires
DHHS to submit a report to the Clerk of the Legislature by July 1, 2026. This report needs to provide
recommendations for adjusting pharmacy dispensing fees annually to ensure fair and adequate reimbursement
for all pharmacies participating in the medical assistance program. Expenses related to the time and effort of
the MMIS updates, and the required report would be absorbed by DHHS.
MAJOR OBJECTS OF EXPENDITURE
PERSONAL SERVICES:
NUMBER OF POSITIONS 2025-2026 2026-2027
POSITION TITLE 26-26 26-27 EXPENDITURES EXPENDITURES
Benefits...............................................................................................................................
Operating............................................................................................................................
$100,000
Travel..................................................................................................................................
Capital Outlay.....................................................................................................................
Aid......................................................................................................................................
$10,451,707
Capital Improvements.........................................................................................................
TOTAL............................................................................................................
$100,000 $10,451,707