Transition (Carve-Out) of Pharmacy Benefit from Managed Care to Fee-For-Service (FFS)

All Stakeholder: Implementation Update and Strategy

  • Presentation also available in Portable Document Format (PDF)
August 17, 2020


  • Transitioning pharmacy services from Managed Care to fee-for-service (FFS) will, among other things, do the following:
    • Provide the State with full visibility into prescription drug costs.
    • Centralize and leverage negotiation power.
    • Provide a single drug formulary with standardized utilization management protocols.
    • Address the growth of the 340B program and associated reductions in State rebate revenue.

NYS DOH will lead and provide all interest stakeholders with updates, facilitate a Q&A session, and incorporate feedback into the workplan as needed.


  • First meeting held
  • Remaining meetings scheduled

All Stakeholders: Monthly

NYS DOH will lead working sessions with Medicaid Managed Care Plans (and other subject matter experts as needed) to address specific topics and issues related to the transition, facilitate a Q&A session, and incorporate feedback into the workplan as needed.


  • First and second meetings held
    1. Roles & Responsibilities and Scope of Benefits
    2. Data Sharing

Technical Workgroup: Bi-weekly

Provide non-binding recommendations by October 1, 2020 regarding the reimbursement of 340B claims.


  • First meeting held
  • Remaining meetings scheduled

340B Advisory Group: Meeting 1 - 8/5/2020
Meeting 2 - 8/26/2020
Meeting 3 - 9/16/2020

Key Deliverables and Timeline Update

Deliverable(s) Target Date
Complete Work Plan and Establish State Transition Team and 340B Advisory Group June 2020 ✔
Recurring Workgroup Calls with Health Plans and All Stakeholders begin July 2020 ✔
Frequently Asked Questions Posted to the NYS DOH Website August 2020* ✔
Finalize NYS DOH/Managed Care Plan Roles and Scope of Benefits September 2020
Notice of 1115 Waiver Amendment December 2020
Finalize State/Health Plan Data Sharing Requirements October 2020
Recommendations from 340B Advisory Group October 2020
Changes Made to Model Contract October 2020
Transition Analysis Conducted (e.g., Formulary, DME, OTC Comparisons), Changes Made To Smooth Transition and Transition Strategy Finalized November 2020
Required System Changes Identified and Implemented December 2020
340B Related State Plan Amendment (SPA) Submitted December 2020
Initial Special Edition Medicaid Update Published December 2020
Systems Stress Testing Performed January 2021
Member and Provider Notifications Sent and Second Special Edition Medicaid Update Published February 2021
Customer Service Staff Hired and Trained February 2021
Make Required Changes to Common Benefit Identification Card (CBIC), Carrier or Notice March 2021
1115 Waiver Amendment and SPA Approved by CMS March 2021
Go Live: Daily Calls with Stakeholders (through 4/30/2021 or Beyond as Needed) April 2021

*Initial FAQs posted and will be regularly updated as project progresses

Website Update

  • A new webpagehas been created that provides stakeholders with information on resources and materials, as well as stakeholder engagement for the transition of the Medicaid pharmacy benefit from Managed Care to fee-for-service.
  • Website updates will be communicated via the MRT listserv. Sign-up instructions for the listserv can be found on the website
  • Frequently Asked Questions (FAQs) have been posted to the new NYS DOH webpage dedicated to the Pharmacy Transition
  • The FAQs will be updated as the project progresses
  • The FAQs cover the following topic areas:
    • General
    • 1115 Medicaid Redesign Team (MRT) Waiver
    • 340B
    • Managed Care Plans (MCPs)
    • Formulary Management and Drug Utilization Review (DUR)
    • Stakeholder Engagement
    • Scope of Benefits
    • Member Impact
    • Provider Impact
    • Fee-For-Service (FFS) Claims Processing & Operations

Resources and materials will be updated and clarified based on stakeholder feedback

  • Scope of Benefits:
    • Provides an inventory of NY Medicaid’s outpatient pharmacy benefit, and whether the benefit is subject to the carve-out.
      • Medicaid managed care plans will continue to be responsible for:
        • Practitioner administered drugs when billed as a medical or institutional claim, and;
        • Vaccines and COVID-19 specimen collection when billed as a medical or institutional claim.
      • All other outpatient pharmacy benefits will be subject to the carve-out.
  • Roles & Responsibilities
    • Provides a high-level overview of the post-transition roles and responsibilities for the Office of Health Insurance Programs (OHIP), the existing FFS Medicaid Contractors, and contracted managed care plan partners, as of April 1, 2021.

Information regarding the transition of the pharmacy benefit from Managed Care to FFS will be posted at the above website.

Email: – Please write Carve-Out in the subject line

MRT LISTSERV: /health_care/medicaid/redesign/listserv.htm

Please enter your question within the chat feature of the WebEx Event meeting.