After 14 Months, California’s Health Centers Receive Relief for Pharmacy Transition

Posted: March 30, 2023


The funding helps recoup, but does not completely make up for, lost resources; health centers call for meaningful Medi-Cal funding reform

LOS ANGELES – March 30, 2023 – After over a year of delays, this month California’s community health centers finally began receiving funds from the State’s Supplemental Payment Pool (SPP), a fund developed to partially offset losses resulting from the transition to Governor Gavin Newsom’s Medi-Cal Rx program. In the year ahead we urge the state to meaningfully address Medi-Cal funding to ensure a more sustainable and equitable system of care for more than 1 in 3 Californians.

In January 2019 the governor proposed Medi-Cal Rx, the transition of the Medi-Cal pharmacy benefit out of managed care to the fee-for-service delivery system. The transition, which took effect in January 2022, caused health centers to lose an estimated $150-200 million annually due to lost discounts on pharmaceuticals under the prior managed care structure. Those lost funds had previously been used to backfill patient services and supports that are not adequately reimbursed by Medi-Cal.

In recognition of these losses, in 2020 the governor and the legislature allocated ongoing funds in the state budget to help mitigate the financial harm to the health center delivery system for Medi-Cal beneficiaries. While Medi-Cal Rx took effect in January 2022, health centers received their first payments from this new fund on March 13, 2023 – 14 months later.

Health centers have been working closely with the state administration, working to ensure that patients can still access their medications throughout the program’s bumpy implementation. All the while, health centers have been left short hundreds of millions in critically needed funding, while trying to piece together budget strategies to maintain the programs previously supported by pharmaceutical discounts.

Health centers are grateful that SPP funding is now flowing, which will help recoup – but not completely make up for – lost resources. Fourteen months, however, is too long of a wait and the safety net cannot continue to withstand this level of financial uncertainty and persistent reimbursement shortfalls. We look forward to working with the administration to create Medi-Cal funding solutions that will ensure a more sustainable and equitable system of care for the 15 million people that rely on Medi-Cal for their health care needs.


THE COMMUNITY CLINIC ASSOCIATION OF LOS ANGELES COUNTY (CCALAC) is the largest regional association of community health centers in California. CCALAC’s 65 members provide comprehensive care to over 1.7 million patients throughout LA County. Founded in 1994, CCALAC and its members share a common mission of supporting and expanding access to quality comprehensive care for every individual. For more information about CCALAC, visit or call (213) 201-6500.

Contact: Taryn Burks – Communications Specialist, | (213) 201-6529.

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