LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 25, 1997 TO: Honorable Hugo Berlanga, Chair IN RE: House Bill No. 1377, Committee Report 1st House, Substituted Committee on Public Health By: Maxey House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB1377 ( Relating to drug benefits available under certain health care programs administered by the Texas Department of Health.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB1377-Committee Report 1st House, Substituted Implementing the provisions of the bill would result in a net positive impact of $1,318,000 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis The bill would require the Texas Department of Health to combine the drug reimbursement portions of the Chronically Ill and Disabled Children's Services Program and the Kidney Health Care Program with the Medicaid Vendor Drug Program. The bill would create a dedication of the drug rebates for the purpose of the Kidney Health Care Program or the Chronically Ill and Disabled Children's Services Program. The bill would implement Texas Performance Review recommendation HHS 15 in Disturbing the Peace. Methodolgy Consolidating the reimbursement process would lead to the elimination of nine full-time equivalent positions. The savings are associated with the reduced positions and with capturing more Kidney Health Care and Chronically Ill and Disabled Children's Program claims under the Medicaid Program for federal reimbursement. Federal costs are associated with the capturing of more Kidney Health Care and Chronically Ill and Disabled Children's Program claims under Medicaid for federal reimbursement. Revenue gains identified below are associated with implementing a manufacturer drug rebate equal to that in the Medicaid program or 21 percent of drug ingredient costs. New costs identified below are associated with information resources systems modifications and operating costs and with one staff person to collect information for the drug rebate system in the short run. It is assumed that because federal funds in the Chronically Ill and Disabled Children's Program are block grant funds, all rebate revenue would accrue to general revenue. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Savings Probable (Cost) Probable Revenue Probable Change in Number from General from General Gain to General Savings/(Cost) of State Revenue Fund Revenue Fund Revenue Fund -- from Federal Funds Employees from Dedicated Rebates FY 1997 0001 0001 0001 0555 1998 $0 ($862,000) $1,059,000 $0 1.0 1998 359,863 (537,000) 1,298,137 (188,001) (4.5) 2000 718,726 (338,000) 1,184,274 (376,001) (9.0) 2001 718,726 (338,000) 1,184,274 (376,001) (9.0) 2002 718,726 (338,000) 1,184,274 (376,001) (9.0) Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $197,000 1999 1,121,000 2000 1,565,000 2001 1,565,000 2002 1,565,000 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Agencies: 501 Department of Health 304 Comptroller of Public Accounts 324 Department of Human Services LBB Staff: JK ,BB