SRC-JFA H.B. 1377 75(R)   BILL ANALYSIS


Senate Research Center   H.B. 1377
By: Maxey (Moncrief)
Economic Development
5-17-97
Engrossed


DIGEST 

Currently, the Texas Department of Health (department) administers the
Vendor Drug, Chronically Ill and Disabled Children's Services, and Kidney
Health Care Programs that reimburse clients for medication.  According to
the 1996 Texas Performance Review Report, consolidation of these programs
could save the state approximately $1.3 million during the next biennium.
This bill would require clients to exhaust Medicaid drug benefits before
receiving reimbursement under these programs.  Additionally, this bill
would require the department to develop a drug manufacturer rebate
program.   
  
PURPOSE

As proposed, H.B. 1377 requires clients to exhaust Medicaid drug benefits
before receiving reimbursement under these programs.  This bill requires
the Department of Health to develop a drug manufacturer rebate program.   

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Department of Health in SECTION 2
(Section 12.020(f), Health and Safety Code) of this bill.   

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 32B, Human Resources Code, by adding Section
32.0311, as follows: 

Sec. 32.0311.  DRUG REIMBURSEMENT UNDER CERTAIN PROGRAMS.  Requires the
Department of Health (department) to require a recipient of medical
assistance to exhaust drug benefits available under the medical assistance
program before reimbursing the recipient, pharmacist, or other health care
provider for drugs purchased by or on behalf of the recipient under the
Kidney Health Care Program or the Chronically Ill and Disabled Children's
Services Program.   

SECTION 2. Amends Chapter 12B, Health and Safety Code, by adding Section
12.020, as follows: 

Sec. 12.020.  DRUG REBATES.  (a)  Requires the department to develop a
drug manufacturer rebate program for drugs purchased by or on behalf of a
client of the Kidney Health Care Program or the Chronically Ill and
Disabled Children's Services Program. Requires the department to seek
rebates in amounts established under the Medicaid drug manufacturer rebate
program for drugs covered by Medicaid that are purchased by or on behalf
of clients of the Kidney Health Care Program or the Chronically Ill and
Disabled Children's Services Program who are not eligible for Medicaid.
Requires the department to consult with drug manufacturers to develop
rebate amounts for drugs not covered by Medicaid that are purchased by or
behalf of clients of the Kidney Health Care Program or the Chronically Ill
and Disabled Children's Services Program.  Prohibits the average
percentage savings from rebates for these drugs from being less than the
average percentage savings from drug rebates under the Medicaid drug
manufacturer rebate program.  Provides that the department is not required
to seek a rebate or develop a rebate amount for a drug purchased at a
price that is lower than the price after rebate of the drug under the
Medicaid  drug manufacturer rebate program.  Authorizes amounts recovered
by the department under the drug rebate program established under this
section to be appropriated only for the Kidney Health Care Program or the
Chronically Ill and Disabled Children's Services Program. Authorizes the
department, by rule, to require all drug manufactures to participate in
the rebate program as a condition of reimbursement for the manufacturers'
drugs under the Kidney Health Care Program and the Chronically Ill and
Disabled Children's Services Program.   

SECTION 3. Amends Chapter 35, Health and Safety Code, by adding Section
35.0041, as follows: 

Sec. 35.0041.  REIMBURSEMENT FOR HEMOPHILIA FACTOR.  Requires the
department to set the reimbursement rate for hemophilia factor claims made
under this chapter at the price set for hemophilia factor under 42 U.S.C.
Section 256b, plus any additional amount the department determines
reasonable as a dispensing fee.  

SECTION 4. (a)  Requires the department, to the extent authorized by
federal law, to consolidate with the Medicaid Vendor Program the drug
benefits components of the Kidney Health Care Program and the Chronically
Ill and Disabled Children's Services Program.   

(b)  Requires the department, except as provided by Subsection (c) or
other law, to use the Medicaid Vendor Drug Program's claims processing and
program monitoring procedures, pharmacy network, and reimbursement rates
for the consolidated program.  Require the department to use the Medicaid
Vendor Drug Program's prior authorization and dispute resolution
procedures and approval criteria for the consolidated program to the
extent that use of these procedures and criteria is consistent with
funding and policy considerations of the Kidney Health Care Program and
the Chronically Ill and Disabled Children's Services Program.  

(c)  Requires the department to develop reimbursement rates for drugs
purchased by or on behalf of a client of the Kidney Health Care Program or
the Chronically Ill and Disabled Children's Services Program that are not
included in the Medicaid Vendor Drug Program's list of reimbursable drugs. 

(d)  Requires the department to update its computer system to facilitate
the consolidation.  

SECTION 5. (a)  Requires the department to implement the drug manufacturer
rebate program required by Section 12.020, Health and Safety Code, as
added by this Act, by September 1, 1997. 

(b)  Requires the department to complete the implementation of the
consolidated program required by Section 4 of this Act by March 1, 1999.  

SECTION 6. Emergency clause.
  Effective date: upon passage.