Alliance of Community Health Centers Seeks Restraining Order Against the State to Protect Benefits of Federal Drug Pricing Program
The Temporary Restraining Order would prevent the California Department of Health Care Services from removing the pharmacy benefit from Medi-Cal managed care, undermining the Federal 340B program, to achieve negligible savings to the state.
SACRAMENTO—NOV. 10—The Community Health Center Alliance for Patient Access (CHCAPA) has asked a federal court to issue a temporary restraining order (TRO) preventing the state from removing the pharmacy benefit from Medi-Cal managed care, an action that would primarily harm federally qualified health centers (FQHCs) and result in “irreparable harm” to community health centers and their patients.
The request for the TRO, filed late yesterday, was accompanied by declarations from leaders of six health centers and an elected official describing the harm to health centers and their patients unless the pharmacy benefit carve-out is barred.
The California Department of Health Care Services’ (DHCS) ‘carve out’ plan will prevent community health centers from benefiting from the Federal 340B Drug Pricing Program. The state projects that DHCS’s action will save the State about 2.5% of its budget for Medi-Cal pharmacy costs, while depriving FQHCs of critical funding to provide services to the underinsured and uninsured patient populations hardest hit by the pandemic.
Community health centers are on the front line of the fight against the pandemic and form the “backbone” of the healthcare safety-net system for millions of low-income Californians. The Alliance initiated its suit against DHCS in federal court on Oct. 29.
“It’s imperative that the state be prevented from taking actions that will jeopardize the health of millions of Californians,” said Anthony White, President of the CHCAPA, a statewide organization of federally qualified health centers, serving 2.1 million patients. “We need a solution that will ensure that the drug discount savings remain with community health centers, not the state.”
In a declaration in support of the restraining order, Assemblymember Adam Gray, whose district includes Merced County and parts of Stanislaus County, stated:
“Revenue losses borne by the system of FQHCs will result in a further reduction in access to care for the medically underserved patients in my District…The 340B Drug Program is one way that FQHCs stretch already limited resources and expand patient care.”
Last year, Governor Newsom issued an executive order, to take effect Jan. 1, 2021, directing DHCS to transition all pharmacy services from Medi-Cal managed care to a fee-for-service system. Because of the COVID-19 pandemic, DHCS has sought federal approval to delay other major changes to the Medi-Cal program until the end of 2021. However, the department insists on pressing forward with the carve out of the pharmacy benefit from Medi-Cal managed care. The state’s failure to implement a non-managed care reimbursement system for federally qualified health centers that meet federal requirements could force an end to critical programs, including vaccinations, HIV/AIDS and Hepatitis C, among others.
Under managed care, the centers are able to purchase the drugs at a discount and negotiate market-rate payments from managed care plans. The savings generated, as intended by Congress when the program was enacted, are used to enable community health centers to provide greater access to care for their patients.
The CHCAPA claims that the state’s policy action did not comply with notice and comment requirements, made material misrepresentations regarding the proposed changes, and does not have in place a means for reimbursing heath centers for providing pharmacy services outside of Medi-Cal managed care, as required by federal law. The Alliance said the TRO is justified because it is likely to succeed in court on the merits of these claims.
Here’s what Community Health Center leaders say about the state action:
Leslie Abasta-Cummings, CEO of Livingston Community Health, which operates six health centers in the Central Valley: “Medi-Cal patients depend on us for access to comprehensive primary and preventive health care. This new system will have a devastating effect. It will force us to reduce the level of care we provide and the number of patients we are able to serve.”
Fran Butler-Cohen, CEO of Family Health Centers of San Diego, which operates 47 service sites across San Diego County: “The consequences of the Governor’s actions will severely impact the most vulnerable in California, which is why we’ve united as a coalition and requested the court intervene to stop the state from taking vital resources out of California’s disadvantaged communities. That the state would consider this action during this incredibly challenging time is perplexing.”
C. Dean Germano, CEO of Shasta Community Health Center, which provides care to 40,000 patients: “Access to affordable medications and to services such as telemedicine sub-specialty care would be a major set-back in our mostly rural underserved region. The loss of access capacity would be felt throughout the community.”
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