As report by CPhA
last month
, CMS recently finalized the Average Manufacturer Price-based Federal Upper Limit Final Rule ("
Final Rule
"), which changes how pharmacies are paid in Medi-Cal fee-for-service. Key provisions of the Final Rule take effect in two stages, in
April 2016
and
April 2017
, as follows:
- Changes that took effect in April 2016 implement the AMP-based FULs, which reduce the drug ingredient reimbursement pharmacies receive for most multi-source (i.e., generic) drugs.
- Changes that will take effect in April 2017 implement average acquisition cost-based reimbursement for all other drugs, which reduces payments for most single-source (i.e., brand name) drugs.
Both of these changes will significantly cut Medi-Cal drug reimbursement to pharmacies. In order to prevent overall pharmacy reimbursement rates from falling into the negative as a result of these changes, CMS will also require Medi-Cal to update the dispensing fee to reflect the actual cost of dispensing. However, the dispensing fee is not required to be adjusted until the second phase of these changes, in April 2017. This means pharmacies will receive significantly reduced reimbursement for generic drugs (over 71% of Medi-Cal drugs dispensed)
for a full year without any corresponding update to the dispensing fee.
The state estimates that this one-year "gap" will cost pharmacies throughout California up to $260 million.
CPhA and the National Association of Chain Drug Stores (NACDS) have been meeting with state legislators and Budget Committee members to share the
inherent unfairness of this one-year period where drug cost reimbursements are reduced without a corresponding professional dispensing fee adjustment
. CPhA is pleased to report that this advocacy has gained traction and as a result of our efforts the Senate Budget Committee recommended that our proposed solution be further explored.
CPhA and NACDS have proposed a $3.56 dispensing fee "supplement" to be paid in addition to the existing dispensing fee for drugs subject to the FUL. This temporary solution will prevent pharmacies from dispensing medications at a loss until the state makes a long-term update to the dispensing fee.
This proposal now sits in the hands of the Budget Conference Committee, which is a small group of legislators charged with vetting the numerous budget committee recommendations and ultimately deciding what will go forward to the Governor for inclusion in the state budget.
Now is the time for ALL pharmacists and pharmacies to contact their legislators and explain why pharmacies should not be forced to take this cut, which is on top of the Medi-Cal 10% cuts. Ask your legislators to urge their party leadership to support a fix to the pharmacy fee gap in the budget.
CPhA has made this easy by using our online advocacy outreach tool. Simply click here
to easily send a message to your legislators urging support for this effort.
Time is of the essence as budget conference committee begins meeting June 1st
to negotiate the items in the budget reports.
