HBA-MPM H.B. 3681 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3681
By: Isett
Public Health
3/29/1999
Introduced



BACKGROUND AND PURPOSE 

The Texas Department of Health (TDH) administers the state's Medicaid
Vendor Program, which serves approximately two million Texas Medicaid
recipients through more than 3,800 state pharmacies.  Pharmacies' claims
under this program are processed through an automated system operated by
the Texas Department of Human Services.  This claim processing must compete
with other transactions overseen by the Texas Department of Human Services.

The comptroller of public accounts recently determined that 38 states other
than Texas outsource the processing of Medicaid prescription drug claims.
In California, the cost of an outsourced arrangement is nine cents per
claim. By contrast, TDH estimates its transactions cost about 10.6 cents
per transaction for the 1998 fiscal year. 

H.B. 3681 requires TDH to seek competitive bids for the claims processing
functions of the vendor drug program. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter B, Chapter 32, Human Resources Code, by
adding Section 32.0461, as follows: 

Section 32.0461.  VENDOR DRUG PROGRAM; COMPETITIVE BIDDING. (a)  Requires
the Texas Department of Health (TDH), in consultation and coordination with
the State Council on Competitive Government (council), to seek competitive
bids for the claims processing function of the vendor drug program.
Authorizes TDH and the Texas Department of Human Services to submit a bid
proposal under this section in the same manner as a private entity. 

(b)  Requires TDH to mandate any person seeking to contract for services
under this section to comply with competitive bidding procedures adopted by
TDH. 

(c)  Authorizes TDH to award a contract under this section to another
person only if the commission and the council determine that the provision
of services under that contract would be more cost effective than having
commission employees continue to process claims. 

(d)  Requires TDH, in conjunction with the council, to evaluate other
components and functions of the vendor drug program that could be provided
more effectively through competitive bidding. 

SECTION 2.  Effective date:  September 1, 1999.

SECTION 3.  Emergency clause.