State Update

Pharmacy Transition and 340B Implications

Since January, a major cause of concern for health centers across the state has been the potential loss of 340B savings - a consequence from the Administration’s decision to carve out the pharmacy benefit from Medi-Cal managed care and into Medi-Cal fee-for-service. If the Medi-Cal RX proposal moves forward, community health centers stand to lose as much as $150 million per year starting in 2021, which could result in the closures of pharmacies and health center sites, reductions in critical services to patients, and staff layoffs. Additionally, the carve out of the pharmacy benefit impacts the larger safety net including the public hospitals and health plans who also stand to lose millions of dollars.

Because this policy decision was proposed through an Executive Order, and not through legislation or a budget proposal, it presented a new challenge in how to engage with the Administration and the Legislature. There was actually nothing in the Governor’s Proposed January Budget or May Revise budget about the 340B program specifically (as there was in years past) or about the carve-out of the pharmacy benefit. Additionally, as the timing of the carve-out and transitioning the pharmacy benefit into FFS would not be immediate but in out years, it diminished the urgency in the legislature to resolve any issues or unintended consequences. Lastly, as this is Governor Newsom’s first year in office, legislators were hesitant to challenge or oppose the new Governor’s policy initiatives.

The political and policy dynamics of the proposal required a comprehensive strategy involving all of our impacted partners including the health plans, hospitals and health centers in a phased approach in order to protect the Medi-Cal program and the 340B resources health centers rely upon.

The first phase of advocacy was focused on educating the Legislature, the Administration and other stakeholders that the proposal had direct and negative consequences to health centers because it effectively eliminates the savings from 340B that health centers use to support access and care. It further included education on the potential losses of funding to the larger Medi-Cal program, and potential harm to patients.  As a result of the education campaign, the Administration made clear that there was no intention to harm health centers through the proposal and that health centers are seen as a valuable stakeholder in the delivery system, and that they want to work with health centers to find a solution.

The second phase of advocacy focused on ensuring there be a process to discuss, debate, and analyze the carve-out of pharmacy from Medi-Cal Managed Care and all the implications, including impacts to 340B. Due to the collective advocacy efforts pushed in large part by Advocates and health centers, the Legislature passed budget trailer bill language requiring a stakeholder process to vet the carve out proposal.  While the stakeholder meetings have commenced the state has made clear that they are moving forward with their proposal by releasing a draft RFP on August 5th and a final RFP on August 22nd.  The RFP solicits proposals for the takeover, operation, and eventual turnover of administration of the Medi-Cal FFS pharmacy services.

Following the release of the RFP, the education and advocacy campaign raising concerns and asking questions about the state’s proposal has taken the form of comment letters on the RFP, meetings with the legislature and the legislative analysists office, sign on letters from the legislature, discussions with the Administration and HHS Agency, and a media campaign with op-eds and calls with reporters. 

Recently the advocacy campaign has shifted to a “do no harm” to health centers and partners in the safety net. One important element has included a meeting health center leaders and staff from CPCA with DHCS to discuss the importance of 340B savings to health centers and how health centers use the resources. An outcome of this meeting was to agree to a data strategy so that health centers can show the state how 340B savings are captured and used at the health centers.

Advocates’ strategy is led and informed by our partners at the California Primary Care Association and the new Medi-Cal Pharmacy Workgroup, which was created by the CPCA Board of Directors in July. The strategy evolves weekly with the input of health center members.

Protecting and preserving the 340B resources is an advocacy marathon and will require all of our energy until we ensure no resources are lost, services are maintained and sites remain open.

2019 Legislative Priorities

This September, the California Legislature closed out year one of a two year session making critical decisions on legislation that will have long term impacts on the health and wellbeing of all Californians.  Governor Gavin Newsom has until October 13th to sign or veto bills passed in the final weeks of his first legislative session as Governor, including CaliforniaHealth+ Advocates’ sponsored legislation. 

CaliforniaHealth+ Advocates: Legislative Wrap Up

California Health+ Advocates, working with CPCA and other legislative partners, successfully moved three new bills through the legislative process.  This success reflects not only a strong health center voice in the Capitol, but an ongoing commitment from the legislature to California’s health centers. These bills include:

Senate Bill 66 (Atkins/ McGuire) Same Day Visits


Advocates cosponsored SB 66 along with the Steinberg Institute, California Association of Public Hospitals and Healthy Systems, and the Local Health Plans of California. Authored by Senate President pro Tempore Toni Atkins and Senator Mike McGuire, this bill will allow community health centers to bill Medi-Cal for two visits if a patient is provided mental health services on the same day they receive other medical services.

This bill garnered the attention of the Secretary of Health and Human Services Agency, Mark Ghaly, who has been committed to expanding behavioral health access and utilizing health centers as a place for that expansion.  Secretary Ghaly initiated a conversation with our partners at the California Primary Care Association to help better understand what financial supports are needed, beyond same day billing, to support the expansion of behavioral health access in health centers. The conversations made it clear that if SB 66 were to move to the Governor’s desk as a mechanism to bill PPS for a mental health visit on the same day as a medical visit, the bill would be vetoed. The author and sponsors could not reach agreement on a different model in time to move the bill. The bill author elected to hold SB 66 in order to continue discussions on how to ensure health centers can deliver and be paid to expand mental health services.


Assembly Bill 899 (Wood) Streamlining Expansion of Primary Care Facilities


Advocates cosponsored AB 899 with the Health Alliance of Northern California, North Coast Clinics Network, and the Redwood Community Health Coalition. Authored by Assembly member Jim Wood, AB 899 would maximize the ability of community health centers to expand access to health care for all Californians, by giving them the option to utilize an existing outpatient clinic or previously licensed primary care clinic to meet the growing demand for services. We have been working closely with Assembly member Wood throughout the legislative session who has shown tremendous leadership in ushering this bill through the legislative process. 


Assembly Bill 1494 (Aguiar-Curry) Declared Emergencies


Advocates cosponsored AB 1494 with the Redwood Community Health Coalition. Authored by Assemblywoman Cecilia Aguiar-Curry, is the critical next step to ensure that communities continue to receive timely access to care when disaster strikes by guaranteeing that CHCs can continue to provide, and be reimbursed for, services for their patients that have been impacted by a declared emergency.  Last year, AB 2576 (Aguiar‐Curry), signed by Governor Jerry Brown in 2018, was a critical first step to ensure that communities continue to receive timely access to care when disaster strikes. However, challenges remain for CHCs who wish to offer services outside of their actual health center location during an emergency and AB 1494 aims to address this issue. We are grateful to Assembly member Aguiar-Curry for her ongoing support for community health centers.


Additional Bills of Interest

In the first year of the legislative session (2019-20), there have been a number of bills that impact community health centers and our patients in a positive way. Working with our broad array of partners including CPCA, the regional consortia, and health care stakeholders (providers and consumers), Advocates also supported the following bills throughout the legislative session:

  • Senate Bill 29 (Durazo)/ Assembly Bill 4 (Bonta/Chiu/Santiago) Win #Health4All: This bill would expand access to Medi-Cal benefits to all Californians, regardless of immigration status.

  • Senate Bill 175 (Pan) / Assembly Bill 414 (Bonta): This bill would create an Individual Mandate to replace the federal version which was repealed along with the federal tax code overhaul. Funds would support subsidies for severely low-income Californians.

  • Senate Bill 65 (Pan) CA / Assembly Bill 174 (Wood): This bill would create the Affordable Care Access Plus Program to provide financial subsidies to low-income Californians at or below 600% FPL.

  • Senate Bill 154 (Pan) Medi-Cal restorative dental services: AB 154 allows for the application of, and reimbursement for, silver diamine fluoride to treat dental cavities.

  • Assembly Bill 138 (Bloom) California Community Health Fund: AB 138 will create a fee or tax on the distribution of sugar and sweetened beverages.

  • Assembly Bill 341 (Maienschein) CalHEERS- Application for CalFresh: AB 341 will streamline the CalFresh application process by ensuring that the California Healthcare Eligibility, Enrollment, and Retention System (CalHEERS) transfers an individual’s application to the county for processing of a qualified CalFresh application. 

  • Senate Bill 361 (Mitchell) Medi-Cal - Health Home Program: SB 361 will amend the Health Homes Program to remove the two-year budget neutrality clause and create more defined goals for the program.

  • Assembly Bill 515 (Mathis) Medi-Cal Overpayments: FQHCs and RHCs: AB 515 will lower the interest rate that a community health center can be charged in the case of an overpayment by the state.  The rate would be based on the surplus money invest fund or 3% per annum, whichever is lower.

  • Assembly Bill 715 (Wood) Medi-Cal Program for Aged and Disabled Persons: AB 715 aims to increase the income eligibility for the Aged, Blind, and Disabled Federal Poverty Level from 100%, plus standards, to 138% FPL. This increase would expand Medi-Cal eligibility for these individuals.

  • Assembly Bill 769 (Smith) FQHCs and RHCs - Licensed professional clinical counselor (LPCC): AB 769 seeks to expand the number of Medi-Cal reimbursement eligible providers for FQHCs/RHCs. The addition of LPCCs would trigger a PPS rate adjustment.

  • Assembly Bill 770 (Garcia) FQHCs: AB 770 seeks to make changes to the FQHC PPS rate process including adjustments to per-visit rates, scope of services changes, time frames for adjustment requests, incentive payments, and appeals processes.

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