Mike Lee gesturing in a meeting
Mike Lee (center) of Evergreen Health says the unexplained inclusion of $9 million in supplemental aid for Ryan White clinics in New York state interim budget legislation "just shows the chaos" of New York's transfer of Medicaid managed care drug benefits to Medicaid fee for service.

New York State Allots $9 Million in Relief for RWCs Hurt by Medicaid Drug Benefit Transfer but No Funding So Far For Other 340B Entities

The New York legislature on Monday passed a short-term state funding bill with $9 million in supplemental aid for Ryan White clinics that are losing 340B revenue due to the April 1 transfer of the state’s Medicaid managed care drug benefits to Medicaid fee for service.

Under Medicaid managed care, providers can bill plans for 340B acquired drugs at negotiated rates above purchase costs. Under Medicaid FFS, they must bill at acquisition cost.

The stop-gap funding measure keeps state employees paid as negotiations on the state’s fiscal year 2023-24 budget between New York Gov. Kathy Hochul (D) and state Assembly and Senate leaders were extended for another week.

The state health department on its website on Tuesday invited RWCs to complete an online survey by 4:00 p.m. on May 2 to determine if they are eligible for the funding. The survey seeks “information related to your organization’s ability to bill Medicaid directly, your organization’s operating budget, and 340B-related information for your organization.”

“Funding for this project is contingent on the availability of state funds and the number of eligible applicants that respond to the advertisement,” the health department notice said. “Available funding to support this initiative will be limited to the amount(s) appropriated in the enacted state fiscal year budgets for this purpose. The anticipated contract term is October 1, 2023–September 30, 2028. The resulting contract will be a cost reimbursable contract. This advertisement is not a guarantee or promise of funding. The department reserves the right to withdraw this solicitation and/or issue a competitive procurement for this project if the number of interested and eligible parties exceed that which can be reasonably accommodated by available funds.”

The bill passed on Monday included no supplemental funding for community health centers or other 340B covered entities that will lose 340B revenue due to the Medicaid drug benefit transfer.

“Shows the Chaos and Unprepardness”

“Nobody had any conversations with us about this $9 million dollars, it just sort of showed up in the [bill’s] language,” said Mike Lee, vice president and chief operating officer of Buffalo-based federally qualified health center and HIV/AIDS care provider Evergreen Health. “We’re not sure who put it in there, and we’re not sure if and when anybody will see [the money]. It just shows the chaos and the unpreparedness.”

Lee said attempts to schedule a meeting with state officials have thus far been unsuccessful after a planned meeting was canceled just days before the drug benefits transfer was implemented. 

The Hochul administration said its FY 2024 proposed budget would commit $705 million dollars “to ensure 340B health care providers that received critical funding through their pharmacy programs aren’t negatively impacted by the transition”—$30 million in state Medicaid funding for RWCs, $250 million in state and federal Medicaid funding for FQHCs, and $425 million in state and federal Medicaid funding for hospitals.

“There’s been absolutely no communication about the FQHC funds,” Lee said. The initial $9 million outlay for RWCs appears to be the beginning of an unworkable piecemeal approach, he said.  

“It would be negligence on our part to operate any sort of program like this where we’re just piecing together funding,” he said. “We have to have some sort of stability, we can’t just take $9 million dollars this week, and a couple million the next.”

“The money would be given to the RWCs via a reimbursement-based grant and the contract would start in October,” Lee said. “And centers have to submit claims receipts in order to access the money, which would likely push it to December at the earliest.”

“340B resources [in managed care] are predictable and stable, you have the funds, so you can use them to respond to patient needs, [rather than] respond to needs, submit a receipt and hope you get paid,” Lee said.

Lee said RWCs and FQHCs still have hope that the administration will accept an alternative to the Medicaid drug benefit transfer. Contained in the state Senate’s proposed budget, the compromise would move Medicaid drug benefits back to managed care, create a single state Medicaid drug formulary, and ensure that pharmacists get fees under managed care comparable to those under FFS. The state Assembly’s budget proposed would simply reverse the drug benefit transfer.

Evergreen Health and Heritage Health and Housing, an FQHC based in Harlem, filed suit in state court in March to reverse the transfer. Organizers of the Buffalo Pride Parade in March rejected a request from Hochul and her administration to participate in the event in her hometown. Evergreen Health is one of the primary sponsors of the parade.

Contributor | + posts