Calif. Court Rejects Pharmacies’ Medi-Cal Rate Challenge
On Monday, a California appeals court in a 3-0 ruling said that managed health care plans in the state do not have to consider how much pharmacies pay to obtain prescription drugs when setting their reimbursement rates for Medi-Cal, the San Francisco Chronicle reports. Medi-Cal is California's Medicaid program.
Federal law requires plans to set rates high enough to provide "quality care" and "adequate ... access" for prescription medications, according to the Chronicle.
A 1997 ruling by the Ninth U.S. Circuit Court of Appeals in San Francisco ordered states to consider health care providers' costs when setting Medi-Cal reimbursement rates. However, the First District Court of Appeal of California in May 2013 overturned that ruling, saying regulators can guarantee access and care quality in various ways and do not have to take into account providers' costs.
In response, pharmacies in several northern California counties challenged the Medi-Cal rates set by their managed care network, Partnership HealthPlan of California.
The pharmacies said Partnership's Medi-Cal reimbursement rates were less than the cost of acquiring the prescription medications and caused the pharmacies to lose money. An attorney for the pharmacies said the low rates discourage pharmacies from serving Medi-Cal beneficiaries and has caused two pharmacies to go out of business.
Details of the Ruling
According to the ruling by the First District Court of Appeals on Monday, managed care plans are not required to consider pharmacies' costs of obtaining prescription medications when determining Medi-Cal reimbursements.
Justice Kathleen Banke said the May 2013 ninth circuit court ruling eliminated the grounds for pharmacies in the state to challenge health plans' reimbursement rates. However, Banke noted that the case was impeded by a lack of participation from state and federal officials.
Lynn Carman, a lawyer with the Medicaid Defense Fund, said he will ask the state Supreme Court to take up the case.
Carman said, "When pharmacies can't dispense medicine because they're not paid enough, patients can't get their medicine."
However, Douglas Cumming, a lawyer for Partnership HealthPlan of California, said, "There are plenty of other pharmacies that seem happy to do business with" managed care networks. He noted that the pharmacies involved in the case did not demonstrate how the rates set by Partnership affected Medi-Cal beneficiaries' access to medications (Egelko, San Francisco Chronicle, 3/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.