In 2016, CMS published its Final Rule regarding Medicaid drug reimbursements for covered outpatient drugs. Under the Rule, each state Medicaid agency was required to adopt an actual acquisition cost (AAC) methodology for outpatient prescription drug reimbursement. To satisfy this requirement, California adopted CMS’s National Average Drug Acquisition Cost (NADAC) as the basis for AAC for drug ingredient reimbursement.
Per the Final Rule, the new reimbursement methodology became effective on April 1, 2017. California, however, did not update its claims processing system until much later (February 2019). As a result, the Department of Health Care Services (DHCS) plans to make retroactive adjustments (a.k.a. chargebacks) for impacted claims with dates of service from April 1, 2017 through the implementation date.
The implementation date, however, keeps changing. Originally, the DHCS announced the chargebacks in February 2019. But in May 2019, California pharmacies filed a lawsuit against the DHCS alleging irreparable harm to pharmacies and “a looming public health crisis” due to this new reimbursement methodology. Pending a hearing on the pharmacies’ injunction, the DHCS agreed to postpone the implementation of the chargebacks.
In October 2019, however, the DHCS informed California pharmacies of soon-to-be implemented chargebacks. As of today, the DHCS has not commenced the chargebacks. The California Pharmacists Association representing pharmacies in the underlying legal action recently announced that the DHCS is scheduled to resume the chargeback on February 13, 2020. It is unclear whether the DHCS will further delay the recoupment.