Last year, the California Department of Health Care Services (DHCS) announced changes in its drug reimbursement methodology by using the two-tier Professional Dispensing Fee and National Average Drug Acquisition Cost (NADAC) to calculate the new drug ingredient cost reimbursement. When NADAC does not exist, Wholesaler Acquisition Cost (WAC) + 0% would be used. (Related Blog Post). The DHCS estimates that the new reimbursement methodology will save over $72 million ($36 million in general fund).

Per the Covered Outpatient Drug Rule, the reimbursement methodology is effective April 1, 2017. However, the DHCS anticipates that it will take several months to update its system using the new methodology. The DHCS has announced that it plans to finalize the switch from AWP (prior used in California to calculate drug reimbursements) to NADAC in late 2018. It’s unclear whether the DHCS would retroactively adjust all the claims going back to April 1, 2017 and would demand that pharmacies pay the difference.

Many pharmacies already noticed a deep drop in drug reimbursements, especially with more expensive specialty drugs. We are currently discussing with the DHCS whether a carve-out of some specialty drugs is possible, but we need to understand whether access to care may potentially be implicated. Please reach me directly to discuss how the switch would affect your practice.