Stakeholders react to Medi-Cal Rx delay

The Department of Health Care Services (DHCS) announced in February it was delaying the April 1, 2021, start date for Medi-Cal Rx indefinitely. The Department cited “the need to review new conflict avoidance protocols submitted by Magellan Health” as the cause for the delay.

In January 2019, Gov. Gavin Newsom issued an executive order that directed DHCS to transition all Medi-Cal pharmacy services from managed care to fee for service. The goal was to standardize the Medi-Cal pharmacy benefit statewide and under a single delivery system. The original start date was slated for January 1, 2021, but was later postponed to April 1.

The recently announced delay is related to the need to review areas of potential conflicts of interest with Magellan Health, the project’s contracted vendor.


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In January of this year, Centene Corporation announced its plans to acquire Magellan Health. Centene operates two Medi-Cal plans: Health Net and California Health and Wellness, as well as two other non-Medi-Cal brands in California. The two Medi-Cal plans serve just under 4 million beneficiaries.

In its announcement, DHCS said:

“This transaction was unexpected and requires additional time for exploration of acceptable conflict avoidance protocols to ensure that there will be acceptable firewalls between the corporate entities to protect the pharmacy claims data of all Medi-Cal beneficiaries, and to protect other proprietary information.” 

One source who we spoke to on the condition of anonymity told us that in the original project vendor RFP, there were clear standards stipulating the types of relationships allowed between the selected vendor and managed care plans, health care providers, and pharmaceutical companies that contract with the Medi-Cal program. They suggested that delaying the timeline would ensure these standards are met. 

“The question for us is making sure that whoever is receiving this information is able to adhere to those state standards and be an independent party rather than have any stake in the game.”

They also expressed concern that the state may be rushing the transition, which they say would compromise adequate communication to beneficiaries and vulnerable populations. 

Another source told us that to prepare for the start date of the Medi-Cal Rx transition, health plans have been required to send in “copious amounts of data” so that Magellan can build their system. Following DHCS’s postponement announcement, they said some health plans have stopped sending in the monthly data related to the program.

“You’ll find that plans have stopped sending in the monthly data files that were going in to build the experience-base for the Magellan database…If you look at what the health plans are doing writ large, why would they be sending data to a competitor if they’re not convinced that the state believes the conflict of interest protocols are effective?”

A source familiar with the concerns of one managed care plan in the state said they are worried about the specific data that could be available to Centene and the competitive advantage it might give Centene’s Medi-Cal plans. 

They highlighted data such as utilization patterns, membership data, and pricing information as areas where conflicts of interests could arise. They say they are particularly concerned about the potential for a competitive advantage in the upcoming Medi-Cal RFP process.

Regardless of what comes of the conflict-of-interest protocol review, we were told by multiple individuals that there is broad consensus among health plans that coverage should not be disrupted for the rest of the year. They say the best move would be to postpone the Medi-Cal Rx start date to January 1, 2022.

DHCS says it plans to provide further information on the transition in May.