In an urgent letter to the California legislative budget leadership, PCDC urges the California legislature to delay the Medi-Cal pharmacy transition included in the state budget proposal.
Governor Gavin Newsom’s 2020-2021 budget proposal directs the Department of Health Care Services (DHCS) to transition all pharmacy services for Medi-Cal managed care to Fee For Service (FFS) by January 2021, which could effectively end the savings received through the 340B Drug Discount Program and ultimately limit services and access for California’s low-income, vulnerable communities.
“In the throes of the COVID-19 pandemic, California’s 340B providers, who exclusively serve the state’s most vulnerable patients, should be able to focus on what they do best: providing essential, quality care to underserved and at-risk populations,” says PCDC’s Patrick Kwan, Senior Director of Advocacy and Communications.
A survey conducted by the California Primary Care Association (CPCA) found community health centers could lose as much as $150 million in 340B saving, which could result in the closures of pharmacies and community health center sites, reductions in critical services to patients, and staff layoffs.
Read the full letter below.
The Honorable Holly Mitchell, Chair
Senate Budget and Fiscal Review Committee
The Honorable Phil Ting, Chair
Assembly Budget Committee
The Honorable Richard Pan, Chair
Senate Budget Subcommittee on Health and Human Services
The Honorable Dr. Joaquin Arambula, Chair
Assembly Budget Subcommittee on Health and Human Services
RE: Delay Budget Proposal to Carve Out Pharmacy Benefit from Medi-Cal Managed Care
Dear Legislative Budget Leadership,
The Primary Care Development Corporation (PCDC) is a national nonprofit organization and a U.S. Treasury-certified community development financial institution (CDFI) dedicated to creating healthier, more equitable communities by building, expanding, and strengthening primary care. We are writing to urgently ask that the legislature delay the Medi-Cal pharmacy transition included in the state budget proposal.
PCDC has financed and enhanced health care facilities and practices in more than three-quarters of Senate Districts (77%; 31 of 40) and half of Assembly Districts (53%; 43 of 80). As one of the Golden State’s leading nonprofit lenders, we have leveraged close to $200 million in affordable and flexible financing in low-income communities, increased capacity to add over 300,000 medical visits, and trained more than 2,000 health care providers to increase and improve the delivery of primary care and other vital health services.
The Governor’s 2020-2021 budget proposal directs the Department of Health Care Services (DHCS) to transition all pharmacy services for Medi-Cal managed care to Fee For Service (FFS) by January 2021, which could effectively end the savings received through the 340B program and ultimately limit services and access for California’s low-income, vulnerable communities. While PCDC shares in Governor Newsom’s vision to transform the health care system and promote accessible health care for all, we are gravely concerned about the unintended implications of the proposal.
As a mission-driven lender with a history of expanding and enhancing quality primary care in low-income communities, we are acutely aware of how health centers and safety net providers rely on the 340B discount program to sustain and invest in access to care for hard to reach and underserved patients. Today, in the throes of the COVID-19 pandemic, California’s 340B providers, who exclusively serve the state’s most vulnerable patients, should be able to focus on what they do best: providing essential, quality care to underserved and at-risk populations.
Community health centers are projected to lose as much as $150 million in 340B savings as a result of this policy. Amid this pandemic, limiting the 340B program will have harmful downstream effects on the already hard-hit communities they serve. Repercussions are also economic: worse health outcomes correlate with exits from the workforce, whether temporary or permanent. In addition, downsizing or shuttering community health centers and critical access hospitals can have significant negative effects on an area’s fiscal health.
While the overall goal of lowering drug costs is critically important, the impact of transitioning the pharmacy benefit to FFS on 340B covered entities and the communities they serve will be catastrophic. We urge you to delay this proposal as we look to the coming years and months of extended health emergency when access to these institutions will be more vital than ever.
Thank you for your consideration of PCDC recommendations.
Sincerely,
Primary Care Development Corporation (PCDC)
Patrick Kwan, Senior Director of Advocacy and Communications
(212) 437-3927 | pkwan@pcdc.org
