March 15, 2022
NY Daily News
By Donna Tempesta and Mark Malahosky
At the beginning of the year, California handed over the reins for its Medicaid prescription drug program to a single company: Magellan Health. In the weeks and months since, chaos has reigned, and low-income patients are paying the price.
Call center volumes are off the hook. Patients are going days, sometimes weeks, without medications, and doctors are issuing dire warnings that it’s only a matter of time before someone dies as a result. It’s a situation that no state would want to willingly replicate. And yet, if we refuse to learn from California’s mistakes, New York is doomed to repeat them, unleashing the same mess on its own pandemic-strained health-care system and putting vulnerable patients at risk in the process.
It doesn’t have to be this way. Gov. Hochul has the opportunity to use this year’s budget to undo one of her predecessor’s most damaging, unnecessary and potentially counterproductive legacies. If she wants to avoid the chaos in California, she should cancel the pharmacy benefit carve-out proposed and championed by the former Cuomo administration.
The benefit is a core part of the 340B program established by Congress in 1992 to enhance and improve care for marginalized populations served by safety-net providers. Discounts on prescription drugs are provided directly by drug manufacturers as a condition of their participation in the Medicaid program, and the savings are used to finance essential services that insurance companies do not cover. That includes housing aid, free prescription drugs and food assistance for low-income individuals.
This is a time-tested method for providing critical patient care without using federal tax dollars.
The law requires that 100% of the savings generated by 340B are reinvested in patient care patient care and services that benefit patients. Organizations that rely on this recurring revenue stream include hospitals in low-to-moderate income communities and Federally Qualified Health Centers. Many of the 2.3 million patients served by these providers annually have been historically excluded from equitable, high-quality, affordable health care, housing and overall economic stability.
In 2020, facing a budget deficit, former Gov. Cuomo’s Medicaid Redesign Team II proposed carving prescription drug benefits out of the Medicaid program and directing the savings directly into state coffers instead of the designated safety-net providers. This plan was cruel and unnecessary at the time, with the relatively modest revenue stream the state would realize dwarfing the significant disruption safety-net facilities and patients would experience upon its implementation. It would be downright reckless now.
The world has changed dramatically since the Cuomo carve-out was first proposed. First, and quite significantly, the budget gap has been erased. In fact, New York now has budget surplus, providing what Hochul deemed a “once-in-a-generation” opportunity to spur New York’s post-pandemic growth and recovery.
Just as important, the pandemic left the state’s health-care system overburdened, understaffed and thoroughly burned out. Throughout the crisis, community health centers provided essential services to those in need, especially as state officials pleaded with people to avoid emergency rooms and hospitals that were struggling to care for COVID patients. Safety-net facilities are an integral part of this system and need support in order to continue providing care.
Just like New York, California was initially motivated by budgetary constraints to change its Medicaid pharmacy benefit. By operating under a single entity, California hoped that it would increase the state’s bargaining power to negotiate prescription drug prices with pharmaceutical companies. But the exact opposite occurred, and the results have been an unmitigated disaster.
Fortunately, community health advocates in New York were able to delay the implementation of the Cuomo carve-out until April 2023. Hochul now has the chance to permanently cancel the ill-conceived plan before it brings the California chaos to the Empire State.
Tempesta is vice president and Northern bureau chief for the AIDS Healthcare Foundation, a Los Angeles-based nonprofit. Malahosky is vice president of pharmacy services at Trillium Health, a Community Health Center in Rochester, N.Y.
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