Jan. 26, 2023

HB 1293 Sets FFS Payment Standard

for Managed Care Reimbursement


See HB 1293 Overview/Talking Points


A Dallas-area House member has taken aim at the growing underwater drug reimbursements that dominate Medicaid Managed Care in Texas with a bill that would require health plans and PBMs to use the higher reimbursement levels of Medicaid's Fee for Service (FFS) program.


HB 1293 by Rep. Toni Rose, D-Dallas, (right) would require health plans and their PBMs in Texas Medicaid Managed Care to reimburse network pharmacies for product cost using the NADAC standard (National Average Drug Acquisition Cost), which is based on actual purchasing data submitted by retail pharmacies. NADAC is the product cost standard for Medicaid FFS.


In Medicaid Managed Care, PBMs use proprietary price lists based on Average Wholesale Price (AWP) to reimburse pharmacies at less than acquisition cost for the drugs they dispense. A growing number of drugs are now dispensed at a financial loss. Unlike NADAC, AWP pricing is not a uniform, verifiable standard derived from actual purchase transactions.


Medicaid FFS pays a formula-based dispensing fee that averages $10.12. Managed care PBMs routinely pay Medicaid dispensing fees that range from $0 to less than $1.

What HB 1293 Does for Medicaid Patients & Pharmacies


HB 1293 would require Managed Care PBMs to pay Texas Medicaid pharmacies for product (medication) cost and dispensing fee at the same levels at which the state pays in the FFS Program (NADAC + $10.12). The bill also would require Texas Health and Human Services Commission (HHSC) to regularly study the retail cost of dispensing drugs in Texas and afterward adjust the Medicaid dispensing fee based on study results.


Other provisions require PBMs to update "drug reimbursement price information" for the Texas Vendor Drug Program at least every seven days and to set up and maintain a system that allows network pharmacies to appeal the reimbursement price of any drug.


The bill would make  reimbursement to Medicaid pharmacies more transparent through use of the easily accessed and verified NADAC pricing standard for medications instead of murky PBM formulas that are based on based on highly variable AWP pricing. 


Michael Wright, vice president of government affairs, said the growing reimbursement gap is a direct threat to patient welfare in the Texas Medicaid Program.


"This bill is about protecting the adequacy of the Medicaid pharmacy network and Medicaid patients' access to pharmacy care," Wright said. "As providers of vital vaccinations, COVID testing and other services, they are a critical part of the healthcare infrastructure in Texas. This especially true in rural and low-income areas, where they may be the only accessible provider."


Full Support by Texas Pharmacy Groups


American Pharmacies is working cooperatively with Texas Pharmacy Association, National Association of Chain Drug Stores and other groups in support of HB 1293.


"We are deeply indebted to Rep. Rose for her bill and look forward to working with other Texas pharmacy groups to get it passed," Wright said.