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Medi-Cal Rx Overview

Originally published on April 24, 2020 and updated on May 27, 2020

On January 7, 2019, Governor Gavin Newsom issued Executive Order N-01-19 (EO-N-01-19) for achieving cost-savings for drug purchases made by the state. A key component of EO-N-01-19 requires the Department of Health Care Services (DHCS) transition all Medi-Cal pharmacy services from Managed Care (MC) to fee-for-service (FFS) by January 1, 2021. The Medi-Cal pharmacy benefits and services administered by DHCS in the FFS delivery system is collectively referred to as “Medi-Cal Rx”.

Transitioning pharmacy services from MC to FFS will, among other things:

  • Standardize the Medi-Cal pharmacy benefit state wide, under one delivery system.
  • Improve access to pharmacy services with a pharmacy network that includes the vast majority of the state’s pharmacies (94%) and is generally more expansive than individual Medi-Cal managed care plan pharmacy networks.
  • Apply state wide utilization management protocols to all outpatient drugs, as appropriate.
  • Strengthen California’s ability to negotiate state supplemental drug rebates with drug manufacturers as the largest Medicaid program in the state with approximately 13 million beneficiaries.

Medi-Cal Rx will include all pharmacy services billed as a pharmacy claim, including but not limited to, outpatient drugs (prescription and over-the counter), including Physician Administered Drugs or PADs; enteral nutrition products; and medical supplies. For FFS claiming, pharmacy services are billed using the NCPDP D.0 & 1.2 (v.5010) electronic standards, the online Real Time Internet Pharmacy (RTIP) claim submission system, or the paper pharmacy claim forms (Forms 30-1 and 30-1C, as well as Forms 30-4 and 30-4C for compound drug claiming).

Medi-Cal Rx will not include pharmacy services billed as a medical (professional) or institutional claim. For FFS claiming, medical and institutional services are billed using the ASC X12N 837 v.5010 (professional or institutional), the online Internet Professional Claim Submission (IPCS) System, or the CMS-1500 (medical/professional) or UB-04 (institutional) paper claim forms.

Medi-Cal Rx will not change:

  • The scope of the existing Medi-Cal pharmacy benefit.
  • Provision of pharmacy services as part of a bundled/all-inclusive billing structure in an inpatient or long-term care setting, regardless of delivery system.
  • Existing Medi-Cal managed care pharmacy carve-outs (e.g., blood factor, HIV/AIDS drugs, antipsychotics, or drugs used to treat substance use disorder). These are already carved out from most Medi-Cal managed care plans (MCPs) and, as of January 1, 2021, will be carved out of all MCPs.
  • The State Fair Hearing process.

Medi-Cal Rx will impact all Medi-Cal MCPs, including AIDS Healthcare Foundation. Medi-Cal Rx will not apply to Programs of All-Inclusive Care for the Elderly (PACE), Senior Care Action Network (SCAN), and Cal MediConnect health plans.

Medi-Cal Rx Administrative Services Contract Award

On December 12, 2019, DHCS announced an administrative services contract award to Magellan Medicaid Administration, Inc. The contract was effective December 20, 2019 and since this time, DHCS and the Medi-Cal Rx contractor, Magellan, have been focused on transition and implementation activities.

Pharmacy Transition Policy

To assist Medi-Cal beneficiaries, pharmacies and providers with the initial transition, DHCS has established a pharmacy transition policy. The intent of this pharmacy transition policy is to:

  • Ensure Medi-Cal beneficiaries with existing prescriptions with or without previously approved prior authorization (PAs) from their applicable Medi-Cal MCPs but for prescriptions that would require PA in Medi-Cal fee-for-service (FFS), will have continued coverage through “grandfathering” and look-back system logic, except where patient safety concerns exist. Beneficiaries will have sufficient time during this one-time, transition period to work with their doctors to submit a PA future forward based upon medical necessity or, alternatively, to decide whether it is preferable to switch to another Medi-Cal covered drug with no PA requirements.

  • Allow pharmacy providers, physician prescribers, and others to become better acclimated to Medi-Cal Rx processes, including those drugs that do and do not require PA, and facilitate prescribing and treatment decisions for their Medi-Cal beneficiaries going forward.

Details of the pharmacy transition policy and process will be sent to Medi-Cal MCPs, pharmacies, and providers in the coming months.

Stakeholder Engagement

DHCS has revamped their approach to Medi-Cal Rx stakeholder engagement. This includes the following:

  • Medi-Cal Rx Public Forum.
  • Medi-Cal Rx Advisory Workgroup.
  • Dedicated Managed Care Workgroup for Medi-Cal Managed Care Plan partners.
  • Meetings and forums, including but not limited to the Medi-Cal Drug Utilization Review Board, Medical Directors’ Meeting, Pharmacy Directors Meeting, CA Children’s Services Advisory Group, and consultations with tribal health programs.

As the Medi-Cal Rx contractor, Magellan is also participating in these hosted events, meetings, and forums, as appropriate.

In the coming months, providers, beneficiaries and other key stakeholders will see other engagement modalities deployed as Magellan begins targeted messaging and announces transition based changes.

Resources

Pending Magellan’s launch of the new Medi-Cal Rx web portal in June 2020, providers and interested stakeholders are urged to visit DHCS’ dedicated Medi-Cal Rx website: Medi-Cal Rx: Transition.

DHCS invites stakeholders to submit questions and/or comments regarding Medi-Cal Rx via email to RxCarveOut@dhcs.ca.gov.