As has been published in previous Medi-Cal Updates, the Department of Health Care Services (DHCS) temporarily suspended retroactive pharmacy claim adjustments in 2019. DHCS is resuming these retroactive pharmacy claim adjustments beginning in February 2021.
The Centers for Medicare & Medicaid Services (CMS) published its final rule on covered outpatient drugs (CODs) on February 1, 2016. Under the final rule, each state Medicaid agency was required to adopt a methodology based on actual acquisition cost (AAC) for CODs. As was published in previous Medi-Cal Updates, pursuant to California’s State Plan Amendment 17-002 approved by The CMS on August 25, 2017, DHCS implemented a new fee-for-service reimbursement methodology for CODs to comply with the final rule. The associated system changes went into effect on February 23, 2019.
CMS required that DHCS make retroactive adjustments for impacted claims with dates of service from the policy effective date of April 1, 2017, through the implementation date of February 23, 2019. DHCS processed the first iteration of these adjustments (claims with dates of service in the month of April 2017) in May 2019, and then paused further adjustments. In the fall of 2019, DHCS contacted all Medi-Cal Pharmacy providers to notify them of an alternative payment arrangement (APA) for remaining adjustments. Providers could register for this option via an online application that was available from October 28, 2019, through November 22, 2019. Providers approved for the APA were notified of the approval by DHCS and will have their remaining adjustments processed differently from the normal recoupment process, and their recoupment will start beginning with the February 11, 2021, warrant date.
For non-APA providers, DHCS will resume retroactive adjustments beginning with the February 19, 2021, warrant date, for the remaining impacted claims with dates of service from May 1, 2017, through February 23, 2019. These adjustments will appear on Remittance Advice Details (RAD) forms beginning February 2021, with RAD code 0812: Covered Outpatient Drug Retroactive Payment Adjustment. The California Medicaid Management Information System (MMIS) Fiscal Intermediary will adjust the affected claims until the full assumption of operations of Medi-Cal Rx, at which time remaining accounts receivables will be transferred to Medi-Cal Rx for continuation of recoupments.
The recoveries are authorized under the provisions of Welfare and Institutions Code (W&I Code), Sections 14176 and 14177, and California Code of Regulations (CCR), Title 22, Section 51458.1(a)(1). In addition, the W&I Code sections authorize DHCS to enter into repayment agreements with providers or offset overpayments against amounts due. If the total warrant amount is not sufficient to offset the recovery, the negative balance will be converted to an accounts receivable transaction and subtracted from future Medi-Cal reimbursements.
Please refer to the updated Frequently Asked Questions on the Medi-Cal Website for additional information.