The Texas Vendor Drug Program provides statewide access to covered outpatient drugs for people enrolled in:

  • Medicaid
  • the Children’s Health Insurance Program (CHIP)
  • the Children with Special Health Care Needs (CSHCN) Services program
  • the Healthy Texas Women (HTW) Program
  • the Kidney Health Care (KHC) Program

Pharmacy providers must enroll with HHSC through the Provider Enrollment and Management System (PEMS) before providing any outpatient pharmacy prescription services. A pharmacy must enroll prior to participation in managed care.

All traditional Medicaid outpatient prescription claims are processed through a real-time, point-of-sale system using the National Council for Prescription Drug Programs telecommunication standard format. All claim submission requirements are available in the Pharmacy Provider Procedure Manual. Payment is posted weekly. Pharmacy providers can also use our electronic eligibility verification tools to obtain prescription benefit information and managed care health plan coverage. The claim system undergoes regularly-scheduled weekly maintenance. Notification of extended or expanded maintenance periods will be sent to pharmacy providers. Not receiving our notices? The pharmacy should ensure its enrollment information is current and report any changes. HHSC is available to assist pharmacy providers with claim submissions and information regarding program policies and procedures.

Clinician-administered Drugs

Clinician-administered drugs or biologicals, also known as physician-administered drugs, are injectable medications given in an office or outpatient clinic setting when oral medications are not appropriate and may be reimbursable as a medical benefit through Texas Medicaid. Newly-released Healthcare Common Procedure Coding System (HCPCS) codes for CADs are reviewed by Texas Medicaid throughout the year. If a CAD is determined to be an appropriate benefit for Medicaid, then the HCPCS code is presented at a rate hearing as part of the process to become a benefit. CADs may become a benefit prior to issuance of a HCPCS code. In this instance, the CAD may be listed on the Texas NDC-to-HCPCS Crosswalk with an unclassified HCPCS code. VDP manages the CAD benefit and crosswalk. The fee schedule for CADs is also available.


The cost for drug prescriptions in the Texas Medicaid program is shared by the federal government and the state. In order for the state to receive federal funds assistance for prescription claims, all drugs prescribed must be produced by a drug manufacturer participating in the Centers for Medicare & Medicaid Services 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. HHSC oversees the collection of these rebates from drug manufacturers, and participates in the following federal and state drug rebate programs:

  • Medicaid
  • Supplemental Medicaid
  • CHIP
  • CSHCN Services Program
  • HTW Program
  • KHC Program