| TO: | Honorable Robert Duncan, Chair, Senate Committee on State Affairs |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | SB888 by Nelson (Relating to establishing a pill splitting program to reduce health plan costs for certain public employees.), Committee Report 1st House, Substituted |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2010 | $226,249 |
| 2011 | $452,498 |
| 2012 | $452,498 |
| 2013 | $452,498 |
| 2014 | $452,498 |
| Fiscal Year | Probable Savings/(Cost) from General Revenue Fund 1 |
Probable Savings/(Cost) from GR Dedicated Accounts 994 |
Probable Savings/(Cost) from Federal Funds 555 |
Probable Savings/(Cost) from Other Special State Funds 998 |
|---|---|---|---|---|
| 2010 | $226,249 | $10,481 | $35,984 | $28,473 |
| 2011 | $452,498 | $20,962 | $71,968 | $56,946 |
| 2012 | $452,498 | $20,962 | $71,968 | $56,946 |
| 2013 | $452,498 | $20,962 | $71,968 | $56,946 |
| 2014 | $452,498 | $20,962 | $71,968 | $56,946 |
The bill would implement a recommendation in the Legislative Budget Board (LBB) Government Effectiveness and Efficiency Report entitled, "Establish Pill-Splitting Programs to Contain State Employee Health Plan Costs and Reduce Out-of-pocket Expenses."
The bill would amend the Insurance Code to require the state employee health plans (Employees Retirement System, Teacher Retirement System, UT System, and Texas A&M) to create a voluntary pill-splitting program with a pharmacy co-pay reduction as a participation incentive. Each system would be required to develop and periodically update a list of eligible medications. Annual reporting to the LBB and the governor regarding program design, eligible drugs, participation, and cost savings would be required. The first report would be due no later than September 1, 2011.
The bill would also create a Pill Splitting Advisory Committee at the Board of Pharmacy. The advisory committee would develop and make available to the boards of the state health plans a list of prescription pills eligible for pill splitting. The advisory committee would also develop and distribute to program participants information about how to safely and effectively split an eligible prescription pill, which individuals would be suited to participate in the program, and ways to enroll and participate in the program.
The bill would require individuals who choose to participate in the program to obtain a prescription for an authorized pill from their physician before participation.
The bill would take effect September 1, 2009, or immediately with two-thirds vote of all members.
General Revenue Fund savings to all plans are estimated to be $678,747 for the 2010-2011 biennium. These savings were calculated by LBB staff based on a review of clinical studies and programs in other states which identified 31 medications that appropriate users could safely split to achieve savings. In fiscal year 2007 over 350,000 state employees used these medications. The fiscal impact estimate assumes a participation rate of 7.5 percent for the first year of a pill-splitting program and 15 percent each year thereafter. These participation rates are slightly lower than those experienced by similar programs in other states.
Additional benefits to state employees, in the form of 50 percent reductions in pharmacy co-pay amounts, could exceed $1 million annually. Lesser co-pay reductions would still result in savings to state employees.
The affected state health plans reported that they could implement this recommendation using existing resources.
| Source Agencies: | 515 Board of Pharmacy, 323 Teacher Retirement System, 327 Employees Retirement System, 710 Texas A&M University System Administrative and General Offices, 720 The University of Texas System Administration
|
| LBB Staff: | JOB, KJG, JI, BH
|