LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION May 10, 2023 TO: Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB1283 by Oliverson (Relating to prescription drug formularies applicable to the Medicaid managed care program.), As Engrossed The fiscal implications of the bill cannot be determined due to the uncertainty of how the expiration of certain requirements related to prescription drug formularies will affect pharmacy costs and Vendor Drug Rebates, but the impact would likely result in a significant revenue gain. The bill would change the expiration date on certain requirements pertaining to Medicaid managed care organizations employing the state's vendor drug program formulary, preferred drug list, and prior authorization procedures to August 31, 2033. As a result, managed care organizations (MCO) will not assume control of their own formulary or preferred drug list (PDL) and the state will continue to pay for pharmacy costs, but also maintain revenue from Vendor Drug Rebates until that date. According to the Health and Human Services Commission (HHSC) gross pharmacy costs are estimated to be higher as a result of maintaining state control. However, HHSC and the Comptroller of Public Accounts estimate that maintaining state control would likely result in a significant gain relative to the Comptroller's Vendor Drug Rebates estimate in the Biennial Revenue Estimate, resulting in an overall significant revenue increase compared to MCOs assuming control and developing a separate formulary and PDL. Due to the uncertainty in how revenue would shift under MCO control, the revenue impact cannot be determined at this time. Local Government ImpactNo fiscal implication to units of local government is anticipated. Source Agencies: b > td > 304 Comptroller of Public Accounts, 529 Health and Human Services Commission LBB Staff: b > td > JMc, NPe, ER, CST
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
May 10, 2023
TO: Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: HB1283 by Oliverson (Relating to prescription drug formularies applicable to the Medicaid managed care program.), As Engrossed
TO: Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: HB1283 by Oliverson (Relating to prescription drug formularies applicable to the Medicaid managed care program.), As Engrossed
Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
HB1283 by Oliverson (Relating to prescription drug formularies applicable to the Medicaid managed care program.), As Engrossed
HB1283 by Oliverson (Relating to prescription drug formularies applicable to the Medicaid managed care program.), As Engrossed
The fiscal implications of the bill cannot be determined due to the uncertainty of how the expiration of certain requirements related to prescription drug formularies will affect pharmacy costs and Vendor Drug Rebates, but the impact would likely result in a significant revenue gain.
The fiscal implications of the bill cannot be determined due to the uncertainty of how the expiration of certain requirements related to prescription drug formularies will affect pharmacy costs and Vendor Drug Rebates, but the impact would likely result in a significant revenue gain.
The bill would change the expiration date on certain requirements pertaining to Medicaid managed care organizations employing the state's vendor drug program formulary, preferred drug list, and prior authorization procedures to August 31, 2033. As a result, managed care organizations (MCO) will not assume control of their own formulary or preferred drug list (PDL) and the state will continue to pay for pharmacy costs, but also maintain revenue from Vendor Drug Rebates until that date. According to the Health and Human Services Commission (HHSC) gross pharmacy costs are estimated to be higher as a result of maintaining state control. However, HHSC and the Comptroller of Public Accounts estimate that maintaining state control would likely result in a significant gain relative to the Comptroller's Vendor Drug Rebates estimate in the Biennial Revenue Estimate, resulting in an overall significant revenue increase compared to MCOs assuming control and developing a separate formulary and PDL. Due to the uncertainty in how revenue would shift under MCO control, the revenue impact cannot be determined at this time.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: b > td > 304 Comptroller of Public Accounts, 529 Health and Human Services Commission
304 Comptroller of Public Accounts, 529 Health and Human Services Commission
LBB Staff: b > td > JMc, NPe, ER, CST
JMc, NPe, ER, CST