CONCERNS OVER CA’s Rx CARVE OUT

Rx Carve Out Syrtis Solutions Medicaid California

11 Sep CONCERNS OVER CA’s Rx CARVE OUT

California’s Governor, Gavin Newsom, signed an executive order at the beginning of the year to move all pharmacy services for Medi-Cal from managed care to a FFS model. The consolidated purchasing power would leverage the state’s population size to negotiate drug prices with pharmaceutical manufacturing companies. Private payers and insurers would also be eligible to participate in the public system and negotiate prices.

The state’s plan to take control of the pharmacy benefits for all of Medi-Cal’s beneficiaries has been controversial. There are concerns over its potential impact on MCOs, PBMs, pharmacies and the coordination of care. At the moment, California’s pharmacy benefit for Medicaid managed care is administered by ten separate PBMs. They are responsible for 90% of the state’s Medicaid beneficiaries.

L.A. Care CEO, John Baackes, believes that the carve out will make coordinating care more difficult. He stated, “I think one of the advantages of a managed Medi-Cal plan like ours is that for people who are in very difficult circumstances health-wise, we do provide an element of care management that’s important and if there’s an element of the benefit that we don’t control, then it’s awkward.”

Additionally, critics are worried about the impact that the pharmacy benefit carve out could have on pharmacies. While purchasing in bulk directly from manufacturers could drive down prices, it’s unclear as to how drugs will be dispensed and how local pharmacies will maintain profitability.