CDCAN REPORT #205-2011: Department of Health Care Services will submit proposal to Feds seeking "flexibility" in implementing 10% Medi-Cal Pharmacy cut

DEPARTMENT OF HEALTH CARE SERVICES WILL SUBMIT PROPOSAL TO FEDERAL GOVERNMENT SEEKING "FLEXIBILITY" IN IMPLEMENTING 10% MEDI-CAL PHARMACY CUT TO ADDRESS ACCESS TO CARE CONCERNS

Proposal Will Be Contained in Medicaid "State Plan Amendment" To Be Submitted By December 31st - Impact of Proposal On People With Disabilities, Mental health Needs, the Blind, and Seniors Uncertain  - Some Advocates Say Proposal Is In Response to Medi-Cal Pharmacy Lawsuit By Medicaid Defense Fund

SACRAMENTO, CA (CDCAN) [Last updated 12/20/2011 11:00 AM] - The Department of Health Care Services announced Friday (December 16th) that it will be submitting to the federal government by the end of this year a proposed change to California's Medicaid state plan that - if approved - would give the State "flexibility" to implement the 10% payment reduction to Medi-Cal pharmacy providers and certain Medi-Cal drug products to avoid reducing access for those services and drugs for people with disabilities, the blind, mental health needs and seniors that could violate certain federal Medicaid laws.

The announcement appeared in the California Regulatory Notice Register, Volume 50z issued December 16th and the public can make comments on that notice to the Department of Health Care Services (see below for contact information), though the department did not release the actual proposal it will send to the federal government.

The department indicated in the public notice that for certain specific Medi-Cal drug products, or for specific types of Medi-Cal pharmacy providers, or in specific geographic areas of the State, the 10% pharmacy reduction could "impede access to selected Medi–Cal drug benefits and possibly result in a violation of federal Medicaid requirements" and that it needed the "flexibility" to implement the pharmacy reduction to address those concerns.

According to the Department of Health Care Services, the federal Centers on Medicare and Medicaid Services informed the State that its October 27th approval for the 10% Medi-Cal provider rate cuts  does not provide the flexibility for the department to take any action other than to reduce all Medi-Cal provider (as listed in the October 27th approval) payments by 10%  including pharmacies.

Some disability and senior advocates say that the department's proposal is in direct response to the lawsuit filed by the Medicaid Defense Fund headed by 82 year old attorney Lynn Carman on behalf of several Medi-Cal pharmacy providers and Medi-Cal recipients and advocacy organizations. A hearing on that lawsuit was scheduled yesterday in a federal district court in Los Angeles (see separate CDCAN Report for details on that hearing later today).

10% Medi-Cal Pharmacy Cut Part of 2011-2012 State Budget

• The 10% reduction was authorized last March in AB 97, one of the several early budget related bills (called a "budget trailer bill") [the main budget bill was passed later in June]  that enacted sweeping cuts to health and human services, authorized the Brown Administration to seek approval from the federal government to implement a 10% reduction to most Medi-Cal providers in the state, effective June 1, 2011.
• On October 27, 2011 the federal Centers on Medicare and Medicaid Services (CMS), the federal agency that oversees nationwide both programs, approved California's proposal to implement the 10% cut and gave authority for the state to do so retroactively to the June 1, 2011 date.
• The Department of Health Care Services - the state agency that oversees the Medicaid program in California (called "Medi-Cal") - however said that approval by the federal government did not give it the needed "flexibility" to do the following in implementing the 10% reduction to pharmacy providers:
  • Reduce or adjust payment reductions by an amount that, when added up, does not exceed 10%
  • Retain the discretion or authority to not implement the particular payment reduction or adjustment and may adjust the payment  as necessary in order to achieve consistency with federal Medicaid requirements.
  • Include as adjustments, but not be limited to, payment adjustments for specific Medi-Cal drug products or for specific providers of drug products. 
• The Department of Health Care Services said that the proposed Medicaid state plan amendment (that will be submitted as SPA 11-038)that would provide the State with the "flexibility" to implement the 10% Medi-Cal pharmacy cuts came after "preliminary information" that the department reviewed including input from various pharmacy providers on the impact to access to specific providers and drugs, following the approval of the cut by the federal government on October 27th.
• The federal Centers on Medicare and Medicaid Services has up to 90 days to respond to the State's proposed amendment (if it requests additional information fromt the State, the 90 day clock is re-set).  If the federal government does not respond at all during the 90 days, a proposed state plan amendment is considered approved.

Impact to People With Disabilities, Mental Health Needs, Seniors

• Policymakers and advocates are in agreement that there  is a significant direct impact of the 10% Medi-Cal provider rate reductions - including those to pharmacies and certain drug products to people with disabilities (including developmental disabilities), mental health needs,  the blind, low income seniors and others in the Medi-Cal program.
• The impact of those reductions become greater when combined with the impact of other related cuts to health and human services - including those to developmental services, mental health, SSI/SSP (Supplemental Security Income/State Supplemental Payment grants), In-Home Supportive Services, elimination of the Adult Day Health Care Medi-Cal benefit and elimination of other Medi-Cal benefits (in 2009).
• Without seeing details of the actual proposed state plan amendment  or details on the Department of Health Care Services specifically intends to implement the Medi-Cal pharmacy provider rate reductions (and reductions for certain drug products), it is not clear yet on how - or whether - the State's proposal resolves concerns of access to Medi-Cal pharmacies and drugs by people with disabilities, mental health needs, the blind and seniors and low income families.

TEXT OF PUBLIC NOTICE  IN CALIFORNIA REGULATORY NOTICE REGISTER

The following appeared as a public notice in the December 16th edition (Volume 50-Z) of the California Regulatory Notice Register regarding the 10% Medi-Cal pharmacy reduction (CDCAN defined certain acronyms below for clarification and are noted in brackets [ ]):

DEPARTMENT OF HEALTH CARE SERVICES  PROPOSAL TO ADJUST PROVIDER PAYMENT REDUCTIONS FOR SELECTED MEDI–CAL DRUG PRODUCT PAYMENTS

Assembly Bill (AB) 97, Section 93.5 of the Statutes of 2011 authorized the Department of Health Care Services (DHCS) to implement payment reductions for Medi–Cal outpatient services up to 10 percent, in the aggregate, for dates of service on or after June 1, 2011.
The statute authorizes DHCS [Department of Health Care Services] to implement the reductions only to the extent that DHCS determines that the reduced payments that result from the reductions comply with applicable federal Medicaid requirements, including 42 United States Code section 1396a(a)(30)(A) and that federal financial participation will be available.
On October 27, 2011, the Centers for Medicare and Medicaid Services (CMS) approved State Plan Amendment 11–009, which provides for 10 percent provider payment reductions, effective June 1, 2011.
SPA 11–009 also states that DHCS will monitor the effect of the payment reductions in accordance with its monitoring plan entitled, “Monitoring Access to Medi–Cal Covered Healthcare Services,” but it does not specifically state:
1) the payment reductions shall be reduced by an amount that does not exceed 10 percent on an aggregate basis, or 2) the State Agency retains the discretion to not implement the particular payment reduction or adjustment and may adjust the payment as necessary in order to achieve consistency with federal Medicaid requirements, or 3) these adjustments include, but are
not limited to, payment adjustments for specific drug products or for specific providers of drug products.
Based on preliminary information, as well as input from pharmacy providers received subsequent to CMS’s approval of the 10 percent payment reduction, DHCS believes that for selected specific drug products, or for specific types of providers, or in specific geographic areas, such a reduction may impede access to selected Medi–Cal drug benefits and possibly result in a violation of federal Medicaid requirements.
CMS [the federal Centers on Medicare and Medicaid Services] has informed DHCS that the State Plan language as recently approved does not provide the flexibility for DHCS to take any action other than to reduce all pharmacy provider payments by 10 percent. A State Plan Amendment is required to incorporate language that will provide DHCS the flexibility to adjust payments in a manner that will result in an aggregate savings of no more than 10 percent while providing access consistent with federal Medicaid requirements.

Description of SPA [Medicaid or Medi-Cal State Plan Amendment]:
DHCS [Department of Health Care Services] intends to submit a SPA on or before December 31, 2011, that will give DHCS the flexibility to 1) reduce or adjust payment reductions by an amount that does not exceed 10 percent on an aggregate basis, 2) retain the discretion to not implement the particular payment reduction or adjustment and may adjust the payment as necessary in order to achieve consistency with federal Medicaid requirements, and 3) include as adjustments, but not be limited to, payment adjustments for specific drug products or for specific providers of drug products.
DHCS estimates that the payment adjustments made pursuant to this State Plan Amendment will increase State General Fund expenditures.
The amount of increase is unknown as it is dependent on future events that cannot be predicted. Any increase will not exceed the projected [State] General Fund savings from drug product payments created by the 10 percent payment reduction.
PUBLIC REVIEW AND COMMENTS
The California statutes discussed above are available for public review at local county welfare offices throughout the State. Written comments (or requests for copies of the statutes and/or copies of the written comments) may be submitted to:
Mailing Address via U.S. Postal Office:
California Department of Health Care Services
Pharmacy Benefits Division
(Attn: K Henry)
MS 4604
P.O. Box 997417
Sacramento, CA 95899–7417

Mailing Address for Courier Deliveries ONLY
(UPS, FedEX, Golden State Overnight, etc):
(Attn: K Henry)
1501 Capitol Avenue
Suite 71.5131, MS 4604
Sacramento, CA 95814–5005
By Email:
Pharbene@dhcs.ca.gov
By FAX: (916) 552–9563
All comments should include the author’s name, organization or affiliation, phone number and Provider ID number if appropriate.

UPCOMING CDCAN REPORTS AND ALERTS TODAY:

• Passing of Jana Overbo, Disability Rights Advocate
• Update on Medi-Cal provider lawsuits
• Update on Developmental Services cuts, changes (regional centers and developmental centers)
• Update on federal issues impacting people with disabilities, mental health needs, the blind, seniors