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COMMITTEE REPORT
April 3, 2002
H. 4507
Introduced by Reps. Quinn, Barfield, Barrett, Chellis, Cobb-Hunter, Delleney, Freeman, Hinson, Leach, Lucas, J.H. Neal, Neilson, Ott, Sandifer, Taylor, Vaughn, Wilder, A. Young, Bingham, Snow, Knotts, J.R. Smith, Martin, Thompson, Simrill, Riser, Coates, McGee, Littlejohn, Webb, Rodgers, Owens, Altman, Robinson, Campsen, G.M. Smith, Witherspoon, Fleming, Frye, Stille, Trotter, Huggins, Carnell, Hosey, Rice, Walker, Allison, Sinclair, Cato, White, Townsend, Law, Dantzler, Davenport, Talley, Edge, Loftis, Meacham-Richardson, Battle, Miller, Harvin, Rhoad, Bales, Lloyd, Bowers, Jennings, Coleman, Keegan, Kennedy, Askins, Scott and McLeod
S. Printed 4/3/02--H.
Read the first time January 15, 2002.
To whom was referred a Joint Resolution (H. 4507) suspending the two dollar and five cents reduction in the calculation of Medicaid prescription payment reimbursements, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass:
ROBERT W. HARRELL, JR. for Committee.
REVENUE IMPACT 1/
This joint resolution would increase State expenditures by $1,119,000 in the current fiscal year and $5,428,000 in FY 02-03.
Explanation
This joint resolution would return the dispensing fee to pharmacies for Medicaid pharmaceuticals to $4.05 from the $2.00 to which it was lowered by Medicaid Bulletin 01-06. The resolution's effect on expenditures depends on the number of transactions covered by the Medicaid pharmaceutical program. The growth rate in recipients from FY 99-00 to FY 00-01 was about 11% and is estimated by the Department of Health and Human Services to grow by 10.3% in FY 02-03. At the end of FY 00-01, however, the number of days' supply for each prescription was reduced so that recipients could get only one month's supply, rather than the three month's supply they had previously been able to get. This change increased the number of transactions per recipient. Using the number of recipients, adjusted for the new transactions per recipient, as a predictor of transactions produces an estimate of 1,979,987 transactions in the fourth quarter of FY 01-02, but this resolution specifies that the return to the $4.05 dispensing fee would apply to prescriptions filled after its effective date. Subtracting estimated prescriptions already in process of about 200,000 results in 1,779,000 transactions. Multiplying this number of transactions by a dispensing fee @ $4.05 yields about $7,207,000 and @ $2.00 yields about $3,559,000 The difference between the two figures is $3,648,000, the total estimated increase in dispensing fee payments, of which the State share is 30%; $3,648,000 * .3 = $1,119,000.
Applying the 10.3% rate of transaction growth to FY 02-03 results in an estimate of 8,636,000 transactions for that fiscal year. The resulting differential between the present $2.00 dispensing fee and a $4.05 fee would be about $17.7 million, of which the State's 30% share would be a $5,428,000.
Approved By:
William C. Gillespie
Board of Economic Advisors
1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.
SUSPENDING THE TWO DOLLAR AND FIVE CENTS REDUCTION IN THE CALCULATION OF MEDICAID PRESCRIPTION PAYMENT REIMBURSEMENTS PROVIDED BY THE SOUTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES IN MEDICAID BULLETIN PHARM 01-06.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The two dollar and five cents reduction in the prescription reimbursement payment methodology provided in item II of Medicaid Bulletin Pharm 01-06, published by the Department of Health and Human Services on November 7, 2001, is suspended effective with reimbursements paid for Medicaid prescriptions filled after the effective date of this joint resolution. The remaining provisions of the bulletin remain in effect.
SECTION 2. This joint resolution takes effect upon approval by the Governor.
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