Over the past couple of weeks, the state’s 2018-2019 budget has taken center stage as the price of oil continues to stay well below expected levels. Speaker Joe Straus highlighted this in a letter to Chairman Otto and members of the House Appropriations Committee last week.  “Texas is fortunate to enjoy an economy that is, overall, performing ahead of most states, and in many regards, the nation as a whole … However, we also need to heed the warning signs we are seeing from the economy and the impact it will have on writing the next state budget.” Straus said.

Straus’ comments to the House Appropriations committee outline what is most likely going to be a very difficult budgeting session. The state continues to grapple with an ever-growing population; a state foster care system embroiled in controversy; a looming Texas Supreme Court decision on the state’s school financing system; and hundreds of other issues important to Texans across the state.

While the significant population growth is indicative of and largely a result of our state’s thriving economy, it also adds a significant strain to our state’s infrastructure and to the services the state provides, ranging from education to Medicaid (as a side note these two combined, represent nearly 75% of the state’s budget).  

Facing a difficult budgeting session will be nothing new for the Texas legislature. In 2011, the state faced a $15 billion dollar shortfall from the previous budget biennium. That shortfall shaped the entire legislative session and resulted in one of biggest changes to pharmacy within Medicaid. Fortunately, current projections have not suggested a repeat of the 2011 session. Yet…

The state has always benefited from a strong energy sector, but significant ebbs and flows are often seen in that area. In boom years, Texas has benefited from strong tax revenues from the oil industry while bust years see budgeting challenges. Thankfully today, the Texas economy is not singularly dependent on the energy sector and is benefiting from a much broader and diverse economy, as we have seen numerous other industries open and flourish in Texas.

As in sessions past, there are no easy answers ahead to how the state will or should fund state operations. There will inevitably be many interested parties hoping to shape the state budget, in doing so assuring the funding of their programs or projects, pharmacy will be no different as we continue to push for improved Medicaid reimbursement both within the shrinking fee-for-service and those administered by the MCOs. Over the coming months, state leaders, budgets writers and lobbyist alike will be watching the price per barrel of oil closely, because for better or worse it will play a large part in shaping the upcoming session.

Last week TPA staff met with HHSC Vendor Drug Program (VDP) staff and other pharmacy stakeholders in the agency's quarterly stakeholder meeting. Andy Vasquez and VDP staff shared important changes ahead. Key discussion items included:

• Provider Re-enrollment
• DUR Board
• Fee-For-Service Reimbursement

Provider Re-enrollment

As many of you are aware, the Affordable Care Act requires HHSC to re-enroll all Medicaid providers. Pharmacies that wish to continue as Medicaid providers must submit their application by June 17^th in order to guarantee re-enrollment by the September 24, 2016 deadline. The VDP will continue to accept applications after June 17^th, but will not guarantee that the re-enrollment will be completed by the September deadline. Those not completed by the deadline will have their claims denied.

Currently VDP has received 3,734 of 4,938 pharmacy applications. This breaks down to 85 percent of chain pharmacies and 65 percent of independent pharmacies having submitted their applications. As the deadline approaches, VDP will continue to reach out to those pharmacies that have not submitted their applications.  Have you submitted your application? Check your status Here!

*Important note - Federal law requires HHSC to perform provider integrity checks on a monthly basis.

DUR Board

Members of the Drug Utilization Review (DUR) Board have now been announced! Included in those members is TPA member “Gene” Adams.The newly combined Pharmaceutical & Therapeutics Committee and DUR Board is hosting its first meeting today.

Fee-For-Service Reimbursement

Effective June 1, HHSC will change the reimbursement methodology for those under the Fee-For-Service program. Under the new reimbursement methodology, pharmacies will receive a professional dispensing fee of $7.93 + (1.96 per cent of ingredient cost) per claim.  It is important to note that the ingredient cost will reflect the type of pharmacy (Retail, Long term care (LTC), and Specialty) as follows:

• Retail – NADAC, or (WAC -2 per cent) if no NADAC present.
• LTC – (NADAC -2.4 per cent), or WAC -3.4 per cent) if no NADAC present.
• Specialty – (NADAC – 1.7 per cent) or (WAC – 8 per cent) if no NADAC present.