30 Mar NY RX CARVE-OUT FACES REPEAL AND LAWSUIT
To reduce pharmaceutical drug costs and increase Medicaid transparency, New York’s Governor, Kathy Hochul, and the New York Medicaid Redesign Team announced earlier in the year that the state would carve-out the pharmacy benefit from the Medicaid program. After being postponed for two years, the carve-out is set to go into effect on April 1. However, lawmakers in the New York State Senate repealed the change in the one-house budget resolution this month.
Since the state’s announcement to switch to a fee-for-service model, there has been an ongoing clash in between providers and pharmacists. Both groups are concerned about the state’s vulnerable populations but disagree on how to serve them most efficiently. The lawmakers behind the repeal fear that the carve-out will interfere with the delivery of benefits, specifically at a time when the state will be executing eligibility redeterminations. On the other hand, advocates view it as an opportunity to simplify the Medicaid program.
Assembly Speaker Carl Heastie is among the legislators responsible for the repeal. He fears the carve-outs impact on entities that serve the states most vulnerable populations. Heastie is looking to protect 340b provisions that safety net providers rely on.
Pharmacists in support of the transition feel that the move is long overdue. They believe the transition will improve program transparency and help expand access for program beneficiaries by providing more choice in who fills their prescriptions.
In addition to the repeal, a legal challenge opposing the carve-out also started recently. Shortly after the one-house budget resolution was passed, safety-net providers Evergreen Health and Heritage Health and Housing filed a lawsuit against the New York State Department of Health to prevent the April 1st carve-out. According to the suit, the state’s decision is discriminatory and violates the ACA.
In recent months, New York’s decision to move from a managed care model to a fee-for-service model has been a significant source of contention. While the carve-out is set to begin on April 1st, it now faces a repeal effort from the New York State Senate and a lawsuit from providers. It’s not clear how the carve-out will be affected at this point, but given the repeal, suit, and upcoming eligibility redeterminations, there are undoubtedly several issues for the state to resolve.