Alternative Payment Option for Pharmacy Retroactive Payment Adjustments

October 21, 2019

Pursuant to California’s State Plan Amendment 17-002, as approved by the Centers for Medicare and Medicaid Services (CMS) on August 25, 2017, the Department of Health Care Services (DHCS) implemented a new fee-for-service reimbursement methodology for covered outpatient drugs on February 23, 2019. As was discussed during a statewide pharmacy stakeholder engagement on March 26, 2019, DHCS is operating under a federal mandate and must make retroactive rate adjustments for claims with dates of service between April 1, 2017 (policy effective date), and February 23, 2019 (system implementation date).

Medi-Cal Pharmacy Providers experiencing hardship as a result of the retroactive adjustments may apply for an alternative payment arrangement through the Third Party Liability and Recovery Division (TPLRD), prior to the recommencement of retroactive payment adjustments in February 2020. All fee-for-service Medi-Cal pharmacy providers who submitted pharmacy claims from April 1, 2017, through February 23, 2019, and that have outstanding balances due to DHCS over $1,500, are eligible to submit an application with required documentation (as delineated below) to TPLRD to be considered for an alternative payment arrangement.


Providers may estimate their total liability outstanding to DHCS by identifying the amount offset from the initial recoupment and multiplying that amount by 22 (the number of remaining months of claims from the retroactive period).

An online form for alternative payment arrangement applications will be open from October 28, 2019, through November 22, 2019. The online form will close on November 22, 2019. Applications will not be accepted after that time. Chain pharmacies must complete individual forms specific to each NPI for which they are seeking this arrangement.

The online form will be available starting October 28, 2019 at: under the subheading “Latest News” using the link entitled “Alternative Payment Arrangement Option”.

All applicants must submit the following information via the online form:

  • Total Annual Revenue for 2017, 2018 and Total Revenue for the first six months of 2019 (January 1, 2019 – June 30, 2019)
  • Total Annual Cost of Goods Sold for 2017, 2018 and Total Cost of Goods Sold for the first six months of 2019 (January 1, 2019 – June 30, 2019)
  • Total Annual Expenses for 2017, 2018 and the Total Expenses for the first six months of 2019 (January 1, 2019 – June 30, 2019)
  • Bank statements for the most recent three months
  • Federal Income Tax Returns for 2017 and 2018

Medi-Cal pharmacy providers will receive additional information regarding this alternative payment arrangement via a mailer, to be sent to the provider mailing address on file in mid-October.

Providers may refer to the Pharmacy Reimbursement Project web page of the DHCS website for additional information regarding this project.

If providers need additional information regarding the alternative payment arrangement process, they may refer to the FAQ page of the Medi-Cal website.  If, after reviewing the FAQs, providers still have questions related to the TPLRD alternative repayment agreement, they may submit their questions online to TPLRD via the Provider Overpayments Program web page, or providers may call TPLRD at (916) 713-8222 for assistance. For other questions regarding retroactive payment adjustments, providers may contact the Medi-Cal Telephone Service Center at 1-800-541-5555 (outside of California, providers may call 916-636-1980).