Alliance of Community Health Centers Sues State to Preserve Benefits of the Federal 340B Drug Pricing Program

SACRAMENTO, Calif., Oct. 29, 2020 /PRNewswire/ -- The Community Health Center Alliance for Patient Access (CHCAPA) has filed suit in federal court contesting the state's plan to 'carve out' the pharmacy benefit from Medicaid managed care, thus preventing community health centers from benefiting from the Federal 340B Drug Pricing Program. The move would "strike a major financial blow" to health centers who form the front lines in providing health care to low-income communities, and are already reeling from the COVID-19 pandemic, and divert to the state funds Congress intended to help federally qualified health centers serve these communities. If this happens, "The front lines will be broken," the complaint states, threatening access to care for patients, the vast majority of whom live below the federal poverty line.

"The state's ill-conceived action threatens the ability of many community health centers to provide critical programs to uninsured and low-income families across the state," said Anthony White, President of the CHCAPA, a statewide organization of federally qualified health centers, serving 2.1 million patients. "It creates additional hardship for Medi-Cal patients who already face a daunting health care bureaucracy every day as they seek to access care."

The change will mean higher drug costs for the uninsured and will impact everything from access to specialists through telemedicine services to dental care to transportation assistance in rural areas where patients will be forced to travel hours by bus to reach health centers. Staff reductions and poorer patient outcomes will result.

Last year, Governor Newsom issued an executive order, to take effect Jan. 1, 2021, directing the Department of Health Care Services to transition all pharmacy services from Medi-Cal managed care to a fee-for-service system. Because of the State's failure to implement a non-managed care reimbursement system for federally qualified health centers that meets federal requirements, the transition effectively represents a bridge to nowhere, which could cause the collapse of programs provided by centers that rely on the pharmaceutical benefit. These may include vaccination, HIV/AIDS and Hepatitis C, among others. Under managed care, the centers  are able to purchase the drugs at a discount and negotiate market-rate payments from managed care plans. The savings generated, as intended by Congress when the program was enacted, are used to enable community health centers to stretch their resources and provide greater access to care for their patients.

The CHCAPA is asking the court to order the California Department of Health Care Services (DHCS ) to exclude health centers from the Medi-Cal pharmacy transition unless and until a valid reimbursement plan for federally qualified health centers is in place. The CHCAPA says the agency, in changing policy, did not comply with notice and comment requirements, made material misrepresentations and does not have in place any means for reimbursing heath centers for "actual and reasonable costs" of providing pharmacy services outside of Medi-Cal managed care, as required by federal law.

"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 of patients we are able to serve."

"Excluding our centers from the 340B Program will jeopardize patients' access to care, increase risk for health problems and raise 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."

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SOURCE Community Health Center Alliance for Patient Access