LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 26, 1995 TO: Honorable David Sibley, Chair IN RE: Senate Bill No. 628 Committee on Economic Development By: Madla Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on Senate Bill No. 628 (relating to access to pharmaceutical services through certain managed care health plans) this office has determined the following: The bill would amend state law so that managed care plans are prohibited from entering into contracts that prevent a participant from selecting a pharmacy of the participant's choice. Also, a managed care plan would not be able to limit the quantity or dosage supply of pharmaceuticals; however, a managed care plan may allow the participant's physician to prescribe drugs in a quantity or dosage supply that the physician determines appropriate and that is compliance with state and federal law. The bill may significantly affect the ability of the managed care plans under contract with the Employees Retirement System, the University of Texas System, and the Texas A&M University System to provide prescription drug discounts. The University of Texas System group insurance program staff have indicated that "providers in networks are willing to give sizable discounts because they believe that additional business will be directed to them as a member of the network. If any pharmacy is allowed in the network, there will no longer be the anticipation of receiving additional business due to being a member of the network. Consequently, discounts given by pharmacies will decrease." The overall fiscal implication to the three insurance programs for state employees cited above cannot be determined. The University of Texas System anticipates a cost in health plan premiums to the state of $257,000 in FY1996 increasing to $1,216,000 in FY2000 with similar fiscal implications thereafter. The overall fiscal implication to the State or units of local government cannot be determined. Source: Teacher Retirement System , The University of Texas System, Texas A&M System, Employees Retirement System LBB Staff: JK, RN, RR