By J. Lyn Carl, GalleryWatch.com
Austin, TX –
"Limited progress" has been shown by the Health and Human Services Commission (HHSC) regarding implementation of recommendations from a 2003 State Audit Report on the Children's Health Insurance Program (CHIP), according to a follow-up audit report released Friday.
In his letter to the Legislative Audit Committee, State Auditor John Keel notes that there has been no substantial change in HHSC's approach to CHIP drug rebates since the State Auditor recommended that HHSC require drug manufacturers who provide drugs for the CHIP program to pay the state rebates on those drugs. Instead, he notes, HHSC continues to allow rebates by those manufacturers to be on a voluntary basis. The agency also has not created a preferred drug list (PDL) required by HB 2292 from the 78th Regular Session.
Keel's letter and the report notes that drugs on a PDL are much more likely to be purchased and dispensed, it would give drug manufacturers an incentive to be on the list, which would require them to pay rebates to the state.
HHSC Commissioner Albert Hawkins said in response that although the rebates are still voluntary, the agency solicited rebates from those not doing so voluntarily. He said as a result 42 manufacturers signed rebate agreements, and HHSC has collected $650,000 in rebates from them.
Regarding PDLs, Hawkins said the agency focused on the Medicaid PDL rather than the CHIP PDL during its first year, because the Medicaid PDL is expected to generate more than 98 percent of Texas' PDL savings. The CHIP issue was on the agenda for the agency's Pharmaceutical and Therapeutics Committee meetings in both August and November 2004. However, he noted the committee deferred action on the issue because they "requested further information to support their ability to make the most clinically appropriate PDL recommendation for the unique pediatric population served through CHIP."
The audit report, said Keel, notes that the information HHSC provided to show compliance with HB 2292 "does not include evidence that it has performed a review of utilization trends and clinical outcomes, and it does not include a review of the effect of the Commission's managing the CHIP drug benefit."
Keel also notes that HHSC has not strengthened its CHIP contracts by adding provisions from the 2003 Auditor's recommendations, including the following:
- Amending the CHIP contracts to limit the time drug labelers have to adjust drug pricing data
- Adding a provision to its contracts with drug labelers that would allow it to verify the accuracy of the drug labeler's pricing data.
The audit follow-up also notes that HHSC has not sufficiently monitored the cost-effectiveness of the CHIP drug program.
Keel does point out that the agency has improved its efforts to verify the accuracy of CHIP HMO data used to make program decision and has begun retaining support documentation for premium rate changes, although it has not documented the retention process for this data.
The report itself shows that HHSC has "substantially" implemented only two of the six recommendations on which the state auditors followed up from the 2003 report.
In response to the State Auditor's Office follow-up, HHSC Commissioner Albert Hawkins said the agency "has initiated significant activity" in all areas addressed in the 2003 audit report, adding the agency "is continuing its efforts to fully address these issues."
Hawkins said the agency has "made progress" in increasing CHIP drug rebates through the Preferred Drug List development process, has complied with the requirements of Riders 15 and 34 from the General Appropriations Act from the 78th Regular Session and HB 2292 from that session, and has in place business processes requiring and documenting "systematic analysis of major policy changes prior to implementation."
For more coverage of the health care crisis in Texas, visit KERA's Life in the Balance page.