Drug Rebate Programs

Did you know that approximately 36 percent of the Vendor Drug Program's budget is funded by rebates paid by pharmaceutical manufacturers?

In order for Vendor Drug to receive federal funds for prescription claims, the drug must be made by a drug manufacturer that participates in the Centers for Medicare & Medicaid Services (CMS) drug rebate program. In return for having their drugs covered by state Medicaid programs, the manufacturer agrees to pay rebates according to their state and federal contracts.

CHIP Drug Rebate Program

The 76th Texas Legislature directed the Health and Human Services Commission (HHSC) to develop a program under the federally authorized State Children's Health Insurance Program (CHIP) (Title XXI of the federal Social Security Act, 42 U.S.C. §§ 1391aa-1397jj). CHIP is an optional program designed to provide affordable insurance to low- to middle-income families with uninsured children.

Utilization for CHIP is invoiced in two parts, based on the funding sources for the program. The largest portion of the CHIP utilization is jointly funded (state and federal participation). A much smaller portion of the CHIP utilization is for the state-only funded portion of CHIP, which covers legal immigrants that are not yet eligible for the jointly funded portion of the program.

Manufacturers wishing to participate in the CHIP rebate program should complete and sign the CHIP Drug Rebate Agreement and return two originals to Provider Synergies, LLC. Please refer questions regarding the CHIP rebate program to the Texas Contract Manager at (513) 774-8500. Signed contracts should be returned to:

Texas Contract Manager
Provider Synergies, L.L.C.
10100 Alliance Rd, Ste 201
Cincinnati, OH  45242

KHC/CSHCN Rebate Programs

Texas Health and Safety Code §§12.025 requires HHSC to establish a voluntary drug rebate program for all drug manufacturers whose products are covered by Kidney Health Care (KHC) and Children with Special Health Care Needs (CSHCN) Services Program. The 77th Texas Legislature General Appropriations Act, TDH Rider 38, authorized KHC and CSHCN to receive and use all rebate monies for client services, and to establish a preference for products from manufacturers who have signed rebate agreements with the program. KHC and CSHCN are committed to ensuring a 100 percent participation rate because of increased drug costs that have significantly impacted program budgets.

The Kidney Health Care program provides wrap-around Part D coverage for eligible clients. CMS has classified this program as a State Pharmaceutical Assistance Plan (SPAP). Manufacturers wishing to participate may download the KHC rebate agreement or CSHCN rebate agreement, complete and sign, and return two copies of each contract. Returned agreements should be addressed to:

Antoine Nelson
TMHP-Pharmacy Rebate Operations
12365A Riata Trace Parkway
Austin, TX  78727

Rebate Contracts that Require Manufacturer Pricing

If a rebate agreement requires drug manufacturers to provide pricing data to the state on a quarterly basis, the pricing data should be submitted to:

Antoine Nelson
TMHP-Pharmacy Rebate Operations
12365A Riata Trace Parkway
Austin, TX  78727

Or

Antoine.Nelson@tmhp.com and vdprebates@hhsc.state.tx.us

Manufacturer refunds

Drug manufacturers: when issuing a payment for drug rebate invoices, please include the invoice number as found on the invoice.  All payments should be sent to the following address:

Regular Mail:

Health and Human Services
Commission

Attn: ARTS, VDP Drug Rebates
P. O. Box 149055
Austin, Texas 78714-9055

Overnight Mail:

Health and Human Services Commission

Attn: ARTS, VDP Drug Rebates
1106 Clayton Lane, Ste. 240-E
Austin, Texas 78723

Disputing the Metric Decimal Quantity

Each calendar quarter, Vendor Drug summarizes all of the paid claims data by National Drug Code (NDC) number and bills the drug companies for their products. The drug company pays the invoice but may have questions about Texas' reported utilization. If this occurs, the rebate auditors provided by Vendor Drug's rebate administrator will review the claim level data for that specific NDC.

When the decimal is omitted, or the quantity rounded up to the next whole number, the drug manufacturer disputes the claim. If a manufacturer disputes a claim, the rebate auditors will contact the dispensing pharmacy for clarification. If the pharmacy has made an error, and the service date of the claim is within the 90 day filing period, the pharmacy can reverse the original claim and resubmit the corrected claim. If the claim is over 90 days, the rebate auditors will ask Vendor Drug to reverse the claim and resubmit it with the correct information.

Some of the common reasons claims are disputed include:

• The quantity claimed does not match the package size (14.5-grams claimed and the NDC is for a 17-gram inhaler);
• Excess quantity: this can be valid, a key punch error, or the pharmacy was billing using the wrong unit of measure (entered 300 in the quantity and the price is for 30)
• Low reimbursement: this can be because of Maximum Allowable Cost (MAC) pricing, key punch errors, or billing in the wrong unit of measure.

Please verify the units that are being submitted to Vendor Drug are accurate for the claim and product being submitted.

• Texas Vendor Drug Formulary Information
• Pharmacy contracting information