The Annual Performance Report for the Prescription Drug Rebate Program, submitted by the
Health and Human Services Commission (HHSC), details the outstanding prescription drug rebate balances for the Texas Medicaid Program, Children's Health Insurance Program (CHIP),
Department of State Health Services’ (DSHS) Kidney Health Care (KHC) Program, and DSHS’
Children with Special Health Care Needs (CSHCN) Services Program. This report is required by the HB 1 (82R) Rider 24 and must include rebate principal and interest outstanding, age of receivables, and annual collection rates. It must also specify amounts billed, dollar value of pricing and utilization adjustments, and dollars collected.

Rebate collections are reported on an accrual basis and are based on the calendar quarter in which the claims were originally paid and are subject to change because rebate programs allow retroactive adjustments to pricing and utilization data. For calendar years 2007 through 2012, for all programs, HHSC invoiced $6,596,995,535 and collected $6,521,508,657 in principal and $386,746 in interest – a collection rate of 98.86 percent.

The Affordable Care Act (ACA) initiated the Quarterly Rebate Offset Amount (QROA), which increased the minimum federal Medicaid OBRA ’90 rebate amount paid by drug manufacturers. All of the increased revenues collected due to these changes will be remitted to the CMS through a quarterly rebate offset process. For this period, the QROA amount was $251,171,666. The ACA requires drug manufacturers to pay rebates for drugs dispensed to Medicaid clients who receive care from Medicaid managed care organizations (MCOs) and allows Medicaid to collect supplemental rebates on these encounters. 

S.B. 7, 82nd Legislature, First Called Session, 2011, directed HHSC to include pharmacy benefits in the array of services provided by MCOs and required MCOs to comply with HHSC’s Medicaid and CHIP formularies and Medicaid PDL. Therefore, the report includes separate rebate collection reports for managed care and fee-for-service.

View the full report .