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Saturday, January 22, 2022

Clinics say California’s new Medicaid drug program will force them to cut services

Sacramento, Calif. — California’s sweeping new program to buy prescription drugs for its nearly 14 million Medicaid patients has worried health clinics that say they will lose money and have to cut services.

Governor Gavin Newsom acknowledged Monday that some clinics that serve the poorest Californians will lose funding, and he included $105 million for them in the state capital’s proposed 2022-23 state budget.

But Allocation Clinic officials say they need to keep critical health care services funded in some needy areas of California. Federally Qualified Health Centers of California, which operates more than 1,000 clinics across the state, sued in federal court to exempt them from the program, but on Monday a judge granted temporary relief as the lawsuit proceeded. declined their request.

“People are being laid off; services are being cut,” said Anthony White, president of the Community Health Center Alliance for Patient Access, a statewide organization of federally qualified health centers. going to reduce.”

The drug program, known as Medi-Cal Rx, began on January 1 and is one of Newsom’s major health care initiatives. It takes responsibility for prescription drug coverage in the state’s Medicaid program away from managed-care plans and places it in the hands of the state contractor.

On his first day in office in 2019, Newsom promised the overhaul would provide better health care for patients and generate “substantial annual savings” as the state negotiates lower prices as one of the largest drug buyers in the country.

California Department of Finance director Kelly Martin Bosler said the Newsom administration estimates the state will save $414 million in the 2022-23 budget year, and nearly twice that amount in the next one.

However, California health clinics could lose up to $200 million in drug reimbursements, White estimates, money they are using to care for patients with asthma, HIV and other chronic health problems. Reimbursement amounts are a major revenue stream for clinics, but they rely primarily on federal grants for their funding, in addition to some patient revenue and private donations.

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The issue is what the clinics got through a federal prescription drug savings program called “340B.” The 340B program requires drug manufacturers participating in Medicaid to offer deep discounts to certain providers of care for underserved and uninsured people, including health clinics. In return, health centers should use that money to expand health care services.

Beginning January 1, California began purchasing prescription drugs for all of its low-income and disabled residents enrolled in Medi-Cal, the nation’s largest Medicaid program. Since the state expects larger discounts on drugs than about two dozen Medi-Cal managed-care insurance plans, clinics are expected to receive less than $340B in funding.

Michelle Bass, director of the state’s Department of Health Care Services, said the $105 million Newsom had earmarked for health clinics in its budget proposal to offset their losses. Responding to the clinic’s lawsuit.

“Plaintiff has no right to continued profit from the sale of 340B drugs,” she wrote.

Funding offered by Newsom is not guaranteed. Indeed, it is now under the annual budget negotiation process. The legislature has until June 15 to negotiate with Newsom and adopt a deal. The state budget for 2022-23 will be effective from July 1.

Mark Galley, secretary of the state’s Health and Human Services Agency, said the administration is working with the clinics and is open to further discussions.

“We’re always happy to sit down and try to understand what the situation is like today,” Alley said.

California Healthline’s Angela Hart contributed to this report.

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

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