Subject: DHCS Pharmacy Update - 10% Payment Reductions
Date: Wed, 8 Jan 2014 17:34:03 +0000

DHCS Implements Aspects of Pharmacy Medi-Cal Cuts


Earlier today the Department of Health Care Services issued a statement outlining the first steps of implementation for the Medi-Cal pharmacy provider reimbursement cuts. The announcement comes six months after CPhA raised concerns over the implementation process in letters sent to CMS here andhere. CPhA will evaluate the DHCS implementation details announced today and may submit further comments to CMS. 



Please see the following DHCS statement and related links for additional information:


Assembly Bill 97 (Chapter 3, Statutes of 2011) requires the Department of Health Care Services (DHCS) to implement payment reductions up to ten percent to most categories of services in the Medi-Cal program, including pharmacy.  DHCS received federal approval for the implementation of ten percent pharmacy payment reductions, effective June 1, 2011.  The implementation of the prospective payment reductions is scheduled to take place on or after February 7, 2014.

On March 30, 2012, DHCS submitted State Plan Amendment (SPA) 12-014, which is still pending approval with CMS.  If approved, SPA 12-014 will give DHCS the authority to exempt specific drug products and/or categories of drugs, or specific pharmacy providers from the AB 97 ten percent payment reductions effective March 31, 2012.  The following link provides information and updates for stakeholders on the implementation of the ten percent pharmacy payment reductions, the status of SPA 12-014, the process for requesting exemption(s), as well as other updates to the 10% reduction and/or exemptions. Link


Today's update:

  • Provides a list of drugs DHCS has proposed to exempt from the 10% reductions under SPA 12-014,
  • Outlines the criteria and process providers will use to propose additional drugs that the Department may have overlooked.
  • Lists address and fax information, as well as a dedicated email address to which all proposed additions should be

This update reflects proactive measures implemented by DHCS.  The DHCS goal is to be as prepared as possible to quickly implement whatever CMS will allow via the final approved language of the SPA.  The ultimate productivity of this effort is dependent upon the approval of SPA 12-014. Unfortunately CMS has not provided that as of yet. 


While a News Flash will also be posted to the Medi-Cal website and a Medi-Cal Subscription Service update will go out to all who subscribe to the Pharmacy updates, your assistance in getting this information out to the Medi-Cal pharmacy provider community is greatly appreciated.  For specific questions, please contact Mike Wofford  Thank you in advance for your time and assistance.