On Aug. 17, the Department of Health Care Services (DHCS) and its Medi-Cal Rx contractor Magellan posted an updated provider bulletin notifying pharmacy providers of its plan to recommence pharmacy outpatient drug retroactive fee-for-service (FFS) claims adjustments with dates of service from May 2017 through February 2019.
Claims will be reprocessed under the following schedule:
This adjustment is required pursuant to the February 2016 Centers for Medicare & Medicaid Services rule on covered outpatient drugs. As a result of the rule, under the federally approved State Plan Amendment 17-002, DHCS changed the outpatient drug pricing methodology based on the actual acquisition cost, effective April 2017. The methodology was not implemented prospectively until February 2019; however, DHCS is still required to implement the policy for FFS claims going back to April 2017. While DHCS had originally initiated these retroactive adjustments in May 2019, this effort was paused.
DHCS and Magellan also released an updated frequently asked questions document to provide additional information on the retroactive pharmacy claim adjustment process. A few highlights that are important to note:
- For most providers this should not result in a negative financial impact. Assembly Bill 179 (Statutes of 2022), allowed DHCS to forgo the continued recoupment of overpayments for independent pharmacies. An independent pharmacy is defined as a pharmacy owned by a person or entity who owns no more than 74 pharmacies in California.
- Providers will see a significant volume of retroactive claim adjustments via their California Medicaid Management Information System (MMIS) Fiscal Intermediary’s Remittance Advice Details (RAD) — also known as the 835 file — available through the Medi-Cal Provider Portal. The 835 files will contain the details of all the claims adjusted and the total adjustment. These adjustments will appear with RAD code 0812: Covered Outpatient Drug Retroactive Payment Adjustment. No paper RADs will be mailed and can only be accessed via the Medi-Cal Provider Portal.
- These adjustments may generate an accounts receivable with DHCS. However, once all adjustments have been completed and reconciled DHCS and Magellan will send a letter informing independent pharmacies of the forgiveness. These letters are anticipated to be mailed in the first quarter of 2024.
- This adjustment process does not impact Medi-Cal managed care claims, only FFS claims during this time period. It is important to note that this time period was prior to the Medi-Cal Rx pharmacy carve-out, which began in January 2022.