HBA-MPM C.S.H.B. 3681 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3681 By: Isett Public Health 3/4/6/1999 Committee Report (Substituted) 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. C.S.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, and the time to process claims under the contract would be the same as or faster that it would take department employees to process them. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3681 differs from the original bill in SECTION 1, (proposed Section 32.0461(c), Human Resources Code), to add the stipulation that the Texas Department of Health (TDH) may award a contract under this section to another person if it is determined that the time to process claims under the contract would be the same as, or faster than, having department employees process the claims. The substitute also deletes proposed Subdivision (d) of the original bill, which required TDH, in conjunction with the State Council on Competitive Government, to evaluate other components and functions of the vendor drug program that could be provided more effectively through use of competitive bidding.