TAB Urges Legislature to Allow for Managed Care Health Plans to Fully Manage Medicaid Rx Benefit

AUSTIN—Pointing to significant taxpayer savings and more efficient care, the Texas Association of Business (TAB) today urged the Texas Legislature to allow for the transition of the Medicaid prescription drug benefit to private health plan management to occur as scheduled, despite efforts by the prescription drug lobby to delay the transition:

“Employers and citizens of Texas deserve to have the best access to health care throughout our state and to that end, TAB has long supported the successful transition of Texas Medicaid from the former fee-for-service model to the managed care approach, which has not only saved taxpayers billions of dollars, but also dramatically improved outcomes for Texas on Medicaid. At a time when health care costs are rising across the board and forcing Texas employers to make tough decisions, the Legislature would be wise to continue the transition to Medicaid managed care and allow health plans to fully manage the Medicaid prescription drug benefit. Texas health plans have demonstrated they have the time-tested tools and private market leverage to achieve significant savings while improving care, and their management of the drug benefit is sure to yield similar results.”

TAB supports allowing managed care organizations (MCOs) to use their own formularies and their own prior authorization for prescription drug coverage as part of the continued transition to Medicaid managed care from the former fee-for-service payment model.

New analysis by the Health and Human Services Commission finds that allowing MCOs to fully manage the prescription drug benefit in Medicaid will result in roughly $40 million in GR savings and $100 million in AF savings for Texas and taxpayers annually.


Because of the managed care model’s successful track record in improving patient outcomes while also achieving significant savings, in 2011 the Texas Legislature adopted the full expansion of managed care statewide. This included the integration of the prescription drug benefit through a step-process, with the final step scheduled for August of 2018.

However, PHARMA is asking the Legislature to delay this transition in order to protect the profits they currently earn from the existing structure, which favors costly brand-name drugs over generics. This delay puts Texas Medicaid patients and the quality of their care at risk, and also jeopardizes $100 million in savings for Texas taxpayers.


The Texas Association of Health Plans

The Texas Association of Health Plans (TAHP) is the statewide trade association representing private health insurers, health maintenance organizations, and other related health care entities operating in Texas. Our members provide health and supplemental benefits to Texans through employer-sponsored coverage, the individual insurance market, and public programs such as Medicare and Medicaid. TAHP advocates for public and private health care solutions that improve the affordability, access and accountability of health care for many Texans. As the voice for health plans in Texas, TAHP strives to increase public awareness about our members’ services, health care delivery benefits and contributions to communities across Texas.