LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 11, 2001
TO: Honorable Mike Moncrief, Chair, Senate Committee on
Health & Human Services
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1152 by Van de Putte (Relating to establishing the Tex
Rx plan.), Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1152, Committee Report 1st House, Substituted: negative impact *
* of $(11,452,089) 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 $(1,217,000) *
* 2003 (10,235,089) *
* 2004 (16,600,683) *
* 2005 (22,884,619) *
* 2006 (23,131,777) *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Savings/ Savings/ Revenue Revenue Number of *
* (Cost) from (Cost) from Gain/(Loss) Gain/(Loss) State *
* GR Match Federal from from Vendor Employees *
* for Funds - General Drug from FY 2001 *
* Medicaid Federal Revenue Rebates *
* 0758 0555 Fund (State *
* 0001 Share) *
* 0706 *
* 2002 $0 $0 0.0 *
* $(1,217,000)$(1,217,000) *
* 2003 5,381,942 4,177,248 42.0 *
* (19,794,279)(30,256,775) *
* 2004 8,670,907 6,747,180 73.0 *
* (32,018,770)(48,718,938) *
* 2005 11,959,872 9,306,455 101.0 *
* (44,150,946)(67,185,660) *
* 2006 12,109,370 9,422,785 102.0 *
* (44,663,932)(67,986,579) *
***********************************************************************
Technology Impact
The technology impact is detailed under Methodology--Administrative
Expenses.
Fiscal Analysis
The bill would establish the "Tex Rx" plan, requiring the Department of
Health (TDH) to provide prescription drug benefits an individual who is a
state resident and (1) is not eligible for medical assistance
(Medicaid), (2) is eligible to participate in the Medicare program, (3)
is not covered by a Medicare supplement policy that provides for
prescription drugs, and (4) has a net family income that is at or below
200% of the federal poverty level. The bill states that the Tex Rx plan
is not an entitlement.
The bill would authorize TDH to consolidate or coordinate administration
of the plan with the Medicaid Vendor Drug program. The bill would also
authorize TDH to negotiate discounts and manufacturer rebates, and to
require an enrollee in the plan to pay a copayment or similar charge.
The bill would prohibit TDH from implementing the plan before "federal
and state resources become available for the plan.
The bill would also require TDH to reimburse pharmacies for providing
medication therapy services to patients. TDH estimates no fiscal impact
for this provision.
**The President's budget proposal would provide a prescription drug
benefit for certain Medicare recipients. The federal contribution would
vary according to individual or family income, however, the President's
proposal and other federal drug benefit proposals are pending in
Congress. Since the creation of a new federal program and the
appropriation of federal funding for such a program is uncertain, it is
assumed that implementation of the Tex Rx plan would be accomplished
through an expansion of the existing Medicaid program. This scenario
would comply with Senate Bill 1152's requirement that implementation of
the plan is contingent upon the availability of "federal matching
money."**
Methodology
It is assumed that the federal government would approve a Medicaid waiver
providing for only prescription drug benefits for the new client
population. It is assumed that automation and planning expenses would
occur in FY 2002, with client benefits beginning in FY 2003. It is
assumed that the Tex Rx plan would not be implemented in the absence of
federal matching funds. Otherwise, the cost to the state would increase
significantly.
Client Benefits Expenses
It is assumed the following number of average monthly recipients would
participate in the Tex Rx plan: 36,000 in FY 2003, 58,000 in FY 2004,
80,000 in FY 2005, and 81,000 in FY 2006. It is assumed recipients would
receive 1.67 prescriptions per month per year at an average monthly cost
per prescription per client of $74.60. Cost and utilization levels are
assumed to remain constant. It is assumed 10% of the cost of drugs would
be paid through recipient copayments. The remaining expense related to
client benefits would be shared by the federal government and State. The
federal share would total 60.08% in FY 2003, and 60.07% in each
subsequent year.
Administrative Expenses
One-time programming changes at the Department of Human Services (DHS)
would include 2,434 hours at an hourly cost of $110 for a total of
$2,434,000. It is assumed DHS would perform eligibility determination
for Tex Rx plan recipients. The additional number of required staff is
estimated to total 42 in FY 2003, 73 in FY 2004, 101 in FY 2005, and 102
in FY 2006. Annual salary and fringe benefits per FTE would total
$35,918. Additionally, a start up cost totaling $2,500 per FTE is
assumed for each new FTE each year. It is assumed that administrative
expenses would be shared equally by the federal government and the State.
Revenue
Of the General Revenue Match expended for client benefits, it is assumed
that approximately 22% would be recovered in the form of manufacturer
rebates. This would result in a gain to General Revenue totaling
$4,177,248 in FY 2003, $6,747,180 in FY 2004, $9,306,455 in FY 2005, and
$9,422,785 in FY 2006. It is assumed recipient copayments would not be
used to draw down matching federal funds, but rather be deposited to the
General Revenue Fund. This would result in a revenue gain totaling
$5,381,942 in FY 2003, $8,670,907 in FY 2004, $11,959,872 in FY 2005,
and $12,109,370 in FY 2006.
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