The California Department of Health Care Services (DHCS) announced last week it will implement its postponed Medi-Cal Rx program in January 2022. The announcement came after DHCS accepted a Conflict Avoidance Plan submitted by the program’s vendor, Magellan Medicaid Administration (MMA), a subsidiary of Magellan Health, Inc.
The Medi-Cal Rx program — the result of a 2019 executive order from Gov. Gavin Newsom — was initially slated to be implemented on Jan. 1, 2021, but has hit several roadblocks. In January 2021, Centene Corporation announced its acquisition of Magellan, which the state had chosen as its vendor for Medi-Cal Rx services.
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This raised conflict of interest concerns for DHCS since Centene operates managed care plans and pharmacies that participate in Medi-Cal. After originally delaying implementation to April 1, 2021, DHCS delayed the start date indefinitely in February after receiving conflict avoidance protocols from Magellan.
After reviewing these protocols, DHCS deemed Magellan’s plan met the two main conflict avoidance requirements the department had identified: that MMA can’t share proprietary data on members with Centene and that Centene can’t be involved in prior authorization or claim approvals and payments to its six specialty pharmacies that participate in Medi-Cal.
The department also summarized the main features of the Conflict Avoidance Plan as follows:
- If Centene acquires Magellan, and for so long as Magellan is under contract to DHCS, the operations, staffing, information technology systems, and data of MMA will be kept completely separate from Centene’s health plan business line. This commitment is affirmed by Centene;
- A third-party monitor selected by DHCS will be in place to ensure this organizational separation is maintained; and
- DHCS will handle all aspects of claims processing and authorization for the Centene-owned pharmacies and MMA will incorporate such system-wide data as needed for DHCS to run analytics in support of quality assurance and program integrity for those claims. The DHCS work efforts will not result in State General Fund costs.
The plan will transition Medi-Cal pharmacy services from a managed care delivery system to a fee-for-service model. It includes approximately 94% of California’s pharmacies and aims to improve Medi-Cal beneficiaries’ access to pharmacy services by implementing a standardized, statewide delivery system.
The program will also enforce utilization management protocols to all outpatient drugs and allow the state to better negotiate supplemental drug rebates with manufacturers.