Despite warnings that the health of the state’s 14 million Medi-Cal beneficiaries would be threatened, on Jan. 1, the California Department of Health Care Services (DHCS) implemented Medi-Cal Rx, the questionable fee-for-service program that stripped pharmacy benefits from health plans and handed Medi-Cal prescription drug purchasing and distribution to a private, for-profit company. Now, a month into the new program, there are reports that thousands of Medi-Cal patients have been left without their medications for days or even weeks. Physicians are concerned that someone is going to die as a result of this flawed system. Remember, these are individuals in an already underfunded Medi-Cal system, and they are the same people who were disproportionately impacted by the COVID-19 pandemic.
As a former State Assembly member, I am appalled that DHCS moved forward with Medi-Cal Rx. Last November, I offered public comment expressing concerns about the system, versions of which had already failed in 10 other states. Those states expected cost savings, like those promised with Medi-Cal Rx, but they did not materialize. And in 2019, the Menges Group released a report that showed Medi-Cal pharmacy expenditures would jump more than 19 percent if California adopted a carve-out model.
There were so many red flags, and yet the state had no problem taking a high-stakes gamble, with the health of more than a third of its residents on the line. DHCS handed its pharmacy benefits contract to Magellan Health, a for-profit company owned by health plan Centene, even though the department had specifically prohibited health plans from bidding when it requested proposals. What should have been especially troubling to the state is that Centene recently paid more than $1 billion dollars to settle claims of dishonest dealings with Medicaid systems in other states.
There is another reason why Medi-Cal Rx is flawed. When the state pulled Medi-Cal pharmacy benefits from the health plans providing them, it threatened the care coordination that these plans have been striving to improve. This directly contradicted the goal of the state’s recently launched CalAIM, the initiative to improve Medi-Cal through a “more consistent and seamless system,” as it says on the DHCS website. The new report indicates that patients are not receiving the medications that their physicians believe are medically necessary. The medications were supposed to be grandfathered into the new system for 180 days, but apparently that hasn’t happened for some. When patients are able to get through to someone at Medi-Cal Rx and get a code to reverse the denial, some pharmacies won’t accept the code. So much for care coordination.
DHCS is calling the problems unacceptable. But what is really unacceptable is that the department proceeded with its Medi-Cal Rx plans despite repeated warnings that pulling pharmacy benefits away from health plans and going into business with a private, for-profit company was a mistake.
It’s a mistake that took other states that experimented with the system two to three years to reverse. You have to wonder if anyone died because of those experiments. And you have to hope that none die here in California.
But why are we even taking the risk? Is it perhaps because it is for the poorest of residents that the state was willing to take that gamble?
Hector De La Torre is a former California State Assembly member.