TO: | Honorable Bill Callegari, Chair, House Committee on Government Reform |
FROM: | John S. O'Brien, Director, Legislative Budget Board |
IN RE: | HB1613 by Gattis (Relating to the delivery of prescription drugs for certain state health plans by mail order; providing an administrative penalty.), As Introduced |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2008 | $0 |
2009 | $10,190,154 |
2010 | $11,197,320 |
2011 | $12,322,977 |
2012 | $13,507,878 |
Fiscal Year | Probable Savings from GENERAL REVENUE FUND 1 |
Probable Savings from GR DEDICATED ACCOUNTS 994 |
Probable Savings from OTHER SPECIAL STATE FUNDS 998 |
Probable Savings from STATE HIGHWAY FUND 6 |
---|---|---|---|---|
2008 | $0 | $0 | $0 | $0 |
2009 | $10,190,154 | $531,423 | $53,366 | $2,368,469 |
2010 | $11,197,320 | $583,947 | $58,640 | $2,602,562 |
2011 | $12,322,977 | $642,651 | $64,535 | $2,864,195 |
2012 | $13,507,878 | $704,444 | $70,741 | $3,139,599 |
Fiscal Year | Probable Savings from FEDERAL FUNDS 555 |
---|---|
2008 | $0 |
2009 | $2,252,308 |
2010 | $2,474,920 |
2011 | $2,723,722 |
2012 | $2,985,618 |
The bill would amend the Insurance Code to prohibit a health benefit plan administered by the Employees Retirement System (ERS) or Teacher Retirement System (TRS) from discriminating between mail order and retail pharmacies. The bill would require the Texas Department of Insurance (TDI) to investigate any compaints received regarding conduct regulated by the bill.
The bill would take effect September 1, 2007, and would only apply to a health benefit plan that is delivered, issued for delivery, or renewed on or after January 1, 2008.
This analysis assumes that the bill would result in the terms and conditions applied to retail pharmacies being restructured to align with the terms and conditions in place for mail order pharmacies.
Under these assumptions, it is assumed the health plan administered by ERS would realize savings in the amounts reflected in the tables above. However, ERS indicates this may result in a significant reduction in the retail pharmacy network because of the lowered reimbursement rate.
Under these assumptions, it is assumed that TRS would realize savings of $14 million in fiscal year 2008 and $17 million in fiscal year 2009 in the TRS-Care plan, and savings of $14 million in fiscal year 2008 and $15 million in fiscal year 2009 in the TRS-ActiveCare plan. However, TRS indicates that mail order volume has a direct relationship with current favorable contract terms for the plans and if mail order volume were to drop significantly, the plans may incur additional administrative costs and less favorable discount rates and rebates.
Based on the analysis of TDI, it is assumed duties and responsibilities associated with investigating complaints under the provisions of the bill could be accomplished by utilizing existing resources.
Source Agencies: | 323 Teacher Retirement System, 327 Employees Retirement System, 454 Department of Insurance
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LBB Staff: | JOB, MN, MW, SK
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