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The 2021-22 Budget: LAO Preliminary Comments on the Governor s Major May Revision Behavioral Health Proposals

LAO Preliminary Comments on the Governor’s Major May Revision Behavioral Health Proposals The Governor’s 2021‑22 May Revision includes several proposals related to behavioral health. In the following sections, we provide our preliminary comments on the major May Revision behavioral health proposals, which consist of (1) the package of proposals targeted at children and youth that are together grouped under the Children and Youth Behavioral Health Initiative and (2) the May Revision augmentations to the Governor’s January behavioral health continuum infrastructure proposal. We note that these comments reflect our understanding of the major May Revision behavioral health proposals as of Monday, May 24. We may provide additional analyses to the Legislature as feasible when additional information becomes available.

Medi-Cal Pharmacy Benefits Transferring to Fee-For-Service

Monday, January 11, 2021 DHCS”) will be transitioning all Medi-Cal pharmacy benefits from managed care to fee-for-service (“ FFS”).  This new system to administer FFS pharmacy benefits is being called “Medi-Cal Rx” and was developed by DHCS in response California Governor Gavin Newsom’s January 7, 2019 executive order (the “ Order”), which instructed DHCS to transition all Medi-Cal pharmacy benefits to FFS by January 1, 2021.  The rationale behind the Order is to combat rising prices for prescription drugs by increasing the State’s bargaining power in negotiating prescription drug prices with pharmaceutical companies.  The date of transition was subsequently pushed back to April 1, 2021 so currently no pharmacy managed care benefits have been impacted.

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