SACRAMENTO — California’s sweeping new program to purchase pharmaceuticals for its almost 14 million Medicaid sufferers has alarmed well being clinics that say they may lose cash and have to reduce providers.

Gov. Gavin Newsom acknowledged Monday that some clinics, which serve the poorest Californians, would lose funding, and he included $105 million for them within the 2022-23 proposed state price range he unveiled within the state capital. 

However the allocation falls far wanting what clinic officers say they want to maintain crucial well being care providers funded in a few of California’s neediest areas. California’s federally certified well being facilities, which function greater than 1,000 clinics throughout the state, have filed a lawsuit in federal court docket to exempt them from this system, however a choose on Monday denied their request for a brief reprieve whereas the lawsuit proceeds.

“Individuals are going to be laid off; providers are going to be reduce,” stated Anthony White, president of the Community Health Center Alliance for Patient Access, a statewide group of federally certified well being facilities. “It’s going to lower entry for our sufferers.”

The drug program, generally known as Medi-Cal Rx, debuted Jan. 1 and is considered one of Newsom’s key well being care initiatives. It takes the duty for prescription drug protection within the state’s Medicaid program away from managed-care plans and places it into the palms of a state contractor.

On his first day in workplace in 2019, Newsom promised the overhaul would ship higher well being take care of sufferers and generate “substantial annual savings” as a result of the state would negotiate decrease costs as one of many largest drug purchasers within the nation. 

The Newsom administration anticipates the state will save $414 million within the 2022-23 price range 12 months and almost two occasions that quantity within the subsequent one, stated Keely Martin Bosler, director of the California Division of Finance. 

California’s well being clinics, nonetheless, might lose up to $200 million a 12 months in drug reimbursements, White estimated, cash they’ve been utilizing to take care of sufferers with bronchial asthma, HIV and different power well being issues. The reimbursement cash is a key income stream for clinics, however they rely totally on federal grants for his or her funding, as well as to some affected person income and personal donations.

At subject is cash the clinics have acquired via a federal prescription drug financial savings program generally known as “340B.” The 340B program requires drug producers collaborating in Medicaid to provide deep reductions to sure suppliers that take care of underserved and uninsured folks, together with well being clinics. The well being facilities, in flip, should use that cash to increase well being care providers. 

Starting Jan. 1, California began shopping for pharmaceuticals for all its low-income and disabled residents enrolled in Medi-Cal, the nation’s largest Medicaid program. As a result of the state expects to get larger reductions on medication than the roughly two dozen Medi-Cal managed-care insurance coverage did, clinics anticipate to obtain much less 340B cash. 

The $105 million Newsom earmarked for well being clinics in his price range proposal to offset their losses was not meant to absolutely exchange them, stated Michelle Baass, director of the state Division of Well being Care Services, which administers Medi-Cal, in the state’s Jan. 5 response to the clinics’ lawsuit.

“Plaintiffs haven’t any entitlement to continued earnings from promoting marked up 340B medication,” she wrote.

The funding Newsom proposed isn’t assured. Certainly, it’s now topic to the annual price range negotiation course of. The legislature has till June 15 to negotiate with Newsom and undertake a deal. The 2022-23 state price range takes impact July 1. 

Mark Ghaly, secretary of the state’s Well being and Human Services Company, stated the administration has been working with clinics and is open to additional discussions.

“We’re all the time glad to sit down and take a look at to perceive what the circumstances are right this moment,” Ghaly stated. 

California Healthline’s Angela Hart contributed to this report.

Samantha Younger: [email protected], @youngsamantha