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State Begins To Collect Back Payments From Pharmacies Over Medi-Cal Cuts

State officials last week started to collect the so-called “clawback” money from pharmacies — money the state wants to recoup from payments made during the time a 10% rate reduction was held up in court.

In 2011, California lawmakers agreed to cut Medi-Cal provider rates by 10%, and for 18 months that law was on hold while the courts deliberated its legality. When the judicial decision went the state’s way in June 2013, that 10% reduction was imposed in stages — but the state also felt it was due the money from that 10% reduction when it was unimplemented law during that 18-month court wrangle.

State officials call it “recoupment,” and began the process Aug. 28 of charging pharmacy providers for that money.

According to the Department of Health Care Services, the recoupment affects about 6,100 pharmacy providers in California.

The rollout for collection will take place over the next 16 to 18 weeks, said Norman Williams, deputy director of public affairs for DHCS.

Williams said pharmacy services are one of the last provider types to be billed for recoupment.

An additional 34 provider types, including optometrists, podiatrists and psychologists, were previously subject to retroactive recoupment …,” Williams wrote in an email.

There is one remaining provider type to be billed after the pharmacy effort is done, he said: “Skilled nursing facilities that are distinct parts of general acute care hospitals — Level B (DP/NF-B) — will also be subject to a retroactive recoupment of the payment reduction,” Williams wrote.

That recoupment is planned for April 2016. 

After pharmacy services and SNF units, Williams said, that recoupment process will end. A number of providers were exempted from the clawback.

The Legislature in 2011 passed AB 97, which had sprung from budget negotiations and was authored by the Assembly Committee on the Budget. It called for a 10% Medi-Cal provider payment rate reduction, and was slated to go into effect Jan. 1, 2012 before lawsuits halted its implementation.

“The DP/NF-B recoupment will complete the current scheduled remaining AB 97 retroactive recoupments,” Williams wrote.

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