New York Postpones Transition of Pharmacy Benefit for Two Years

April 8, 2021


New York health care providers with significant Medicaid populations, such as federally-qualified health centers and hospitals, have been given a major reprieve from the imposition of the Medicaid pharmacy benefit transition from managed care (MMC) back to fee-for-service (FFS), which was scheduled to take effect on May 1, 2021.   On Tuesday, April 6th, New York’s Governor and state legislative leaders announced a two-year delay of the transition in the state budget negotiations.  The start date is now set at April 1, 2023, providing opponents of the transition with an opportunity to challenge the transition or find alternative means of cost-savings.

The delay will be of particular import to those who participate in the 340B Drug Pricing Program (the “340B Program”). In New York, 340B Program claims paid under FFS Medicaid are reimbursed at actual acquisition cost, whereas 340B Program claims paid under MMC are based on the pharmacy’s contract with the MMC plan.  The transition back to FFS was expected to significantly reduce the savings these providers realize through the 340B Program which would potentially impact the ability of these providers to continue providing necessary programs and services to their communities.

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