LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 21, 2001 TO: Honorable Patricia Gray, Chair, House Committee on Public Health FROM: John Keel, Director, Legislative Budget Board IN RE: HB703 by Maxey (Relating to prescription drug coverage under the state Medicaid program.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB703, As Introduced: negative impact of $(91,919,313) through * * the biennium ending August 31, 2003. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(45,583,449) * * 2003 (46,335,864) * * 2004 (46,999,258) * * 2005 (47,660,433) * * 2006 (48,330,626) * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Probable Probable Revenue * * Year Savings/(Cost) from Savings/(Cost) from Gain/(Loss) from * * GR Match for Federal Funds - Vendor Drug Rebates * * Medicaid Federal (State Share) * * 0758 0555 0706 * * 2002 $(56,968,061) $(86,144,705) $11,384,612 * * 2003 (57,915,455) (87,154,502) 11,579,591 * * 2004 (58,744,697) (88,365,677) 11,745,439 * * 2005 (59,571,166) (89,609,004) 11,910,733 * * 2006 (60,408,907) (90,869,287) 12,078,281 * ************************************************************************** Technology Impact One-time automation costs are assumed for the Department of Human Services (DHS): 500 hours at $110 per hour. Transaction processing costs totaling $35,000 per year are assumed for the Department of Health (TDH). The federal share of administrative expenses would total 50%. Fiscal Analysis The bill would prohibit TDH from limiting the number of medications prescribed to a recipient of prescription drug benefits under the medical assistance program. Methodology 1. The average monthly number of recipients to receive additional prescriptions under the Medicaid Vendor Drug program is assumed to total 248,276 in FY 2002, 251,769 in FY 2003, 255,311 in FY 2004, 258,904 in FY 2005, and 262,546 in FY 2006. Clients would receive an additional 1.01 prescriptions per month at a cost of $47.53 per prescription per month. It is assumed cost and utilization levels would remain constant. The federal share of client services would be 60.20% in FY 2002, 60.08% in FY 2004, and 60.07% in each subsequent year. 2. Approximately 20% of the General Revenue for the Vendor Drug program is provided through manufacturer rebates. An increase in program costs would in turn increase revenue (Vendor Drug Rebates). This increase would partially offset the costs identified above. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 529 Health and Human Services Commission, 324 Texas Department of Human Services, 501 Texas Department of Health LBB Staff: JK, HD, PP