Alliance of Community Health Centers Sues State, Seeks to Halt Plan to Exclude Them from Federal 340B Drug Pricing Program

SACRAMENTO, Dec. 30, 2021 /PRNewswire/ -- The Community Health Center Alliance for Patient Access (CHCAPA) renewed its suit in federal court today contesting the state's Medi-Cal Rx plan and is seeking a temporary restraining order to halt implementation of the plan scheduled for January 1, 2022.

The request for an emergency order was made necessary by last-minute agency action taken yesterday, which confirmed that Medi-Cal Rx could and would indeed "go live" on January 1, 2022, rendering the case ready for judicial review. Ten individual health centers joined the complaint and TRO motion.

Medi-Cal Rx, which would drain hundreds of millions of dollars from community health centers, "turns the Medi-Cal reimbursement program for pharmacy benefits on its head. No longer will Medi-Cal managed care plans and Federally Qualified Health Centers (FQHCs) be able to manage and track patient medication usage and compliance and no longer will FQHCs be able to benefit from the savings created by prescribing drugs through the 340B discounted drug program ('340B Program') as Congress intended. Any such savings will now go directly to the State instead," the complaint states.

If allowed to be implemented, Medi-Cal Rx will 'carve out' the pharmacy benefit for community health centers from the Federal 340B Drug Pricing Program. The move would strike a major financial blow to health centers already reeling from the Covid-19 pandemic and divert to the state funds Congress intended to help federally qualified health centers provide more services. If this happens, CHCAPA believes it will threaten access to care for patients, the vast majority of whom live below the federal poverty line and have significant additional barriers to care.

"Through Medi-Cal Rx, the State skims off the cream but leaves FQHCs with the administrative burden of compliance, and their patients stranded," said Anthony White, President of CHCAPA, a statewide organization of federally qualified health care centers. "The state's ill-conceived action threatens the survival of many community health centers that provide quality care to low-income communities across the state. It creates additional hardship for Medi-Cal patients who already face a daunting health care bureaucracy every day as they seek to access care."

In 2019, Governor Newsom issued an executive order directing the Department of Health Care Services to transition all pharmacy services from Medi-Cal managed care to a fee-for-service benefit. The plan, now known as Medi-Cal Rx, excludes federally qualified health centers from the 340B drug discount program, which requires drug manufacturers to offer significant discounts to authorized Medi-Cal service providers. These providers can then negotiate market-rate payments from managed care plans.

FQHCs 340B savings fund programs that are vital to the health of the individuals served and the community overall. 340B savings help fund important programs that keep California healthy. As noted by Colleena Curtis, President and CEO of United Health Centers of the San Joaquin Valley, "After Medi-Cal Rx, when all of UHC's pharmacies are operating at a loss, UHC will likely shut down its 10 pharmacies permanently, laying off about 46 employees. In addition, patient services and programs such as having a call center, referral center, case management, enrollment services, care coordinators, and patient transportation services are at risk of being significantly reduced or eliminated."

"Medi-Cal patients depend on us for access to comprehensive primary and preventive health care," said Leslie Abasta-Cummings, CEO of Livingston Community Health, which operates six health centers in the Central Valley. "This new system will have a devastating effect. It will force us to reduce the level of care we provide and the number patients we are able to serve."

"Excluding our centers from the 340B Program will jeopardize patients' access to care issues and increase risk for health problems and increased costs," said Ronald E. Castle, CEO at Community Health Centers of the Central Coast, Inc., where he oversees 30 health centers and seven mobile dental and medical units. "The impact of this pharmacy transition is frightening and devastating to the health outcomes of our patients." Forty-seven percent of his centers' patients are at or below the federal poverty line.

SOURCE Community Health Center Alliance for Patient Access