Medi-Cal Rx Issues New 340B Claim Submission Requirements

By Janice Suchyta and Annie Lee

DHCS initially announced new Medi-Cal and Medi-Cal Rx billing requirements tied to the federal HRSA 340B Rebate Model Pilot Program that were scheduled to take effect January 1, 2026.  However, on December 30, 2025, DHCS later issued an “Important Update” stating that implementation is blocked until further notice due to a preliminary injunction issued by the U.S. District Court in Maine that halts HRSA’s implementation of the pilot program in California.  Even with implementation currently paused, covered entities and their contract pharmacy partners should treat this as a near-term readiness item because the pause could lift on short notice depending on litigation and agency updates

DHCS’s announcements are operationally significant for all covered entities, including hospitals, FQHCs, and contract pharmacy networks because the federal pilot model changes the “front-end discount” mechanics for selected drugs—i.e., the covered entity may purchase at (or closer to) WAC and later receive a manufacturer rebate down to the 340B level. DHCS’s Medi-Cal billing approach is designed to align Medi-Cal reimbursement with the post-rebate net cost and to mitigate duplicate discount risk.

Readiness Planning

HRSA has indicated the rebate model pilot is applicable to selected covered outpatient drugs, including physician- or clinic-administered drugs (not just retail pharmacy). Hospitals shoud evaluate:

• Where the drug is billed (pharmacy benefit vs medical benefit) and whether Medi-Cal Rx vs. medical claims workflows apply.
• Charge capture and timing: delayed submission requirements can affect cash flow, AR aging, and month-end accruals.
• 340B replenishment and accumulator logic: if claims are delayed, replenishment timing and split-billing reconciliation may shift.

For covered entities using contract pharmacies (and split-billing/TPA platforms), the DHCS guidance is operationally disruptive because it can require:

• Holding claims (or holding certain claim submissions) until rebates are received for specific drugs.
• Tight coordination among the covered entity, the contract pharmacy, TPA/split-billing vendor, and (where applicable) medical billing teams to ensure the “right claim, right timing, right net cost.”
• Contract updates to allocate responsibility for delayed submission mechanics, reversals/resubmissions, audit support, and cash-flow impacts if/when implementation resumes.

Recommended Action Steps

Both HRSA and DHCS have published the following readiness recommendations for 340B Rebate Model.

A. Governance & inventory

1. Identify exposure: Build a list of NDCs/medications likely to fall within the HRSA pilot scope and map them to billing pathways (Medi-Cal Rx vs medical).
2. Assign ownership: Designate a cross-functional lead team (pharmacy, revenue cycle, compliance, 340B program, IT/TPA).

B. Operational readiness for delayed submission and net cost logic

1. System capability assessment: Confirm whether your pharmacy/medical billing platforms (and TPAs) can delay claim submission and later submit accurately once rebate status is known.
2. Cash-flow modeling: Hospitals should model AR impact if claims are delayed, including any downstream effects on contract pharmacy settlement timing.

C. Contract pharmacy and vendor management

1. Update contract pharmacy/TPA playbooks: Define (a) who flags pilot drugs, (b) who holds/queues claims, (c) who documents rebate receipt, and (d) how reversals/resubmissions are handled.
2. Amend agreements (if needed): Add provisions on delayed submission responsibilities, audit cooperation, dispute handling, and financial reconciliation once implementation restarts.

D. Compliance documentation

1. Policy updates: Update internal 340B/Medi-Cal billing policies to reflect DHCS guidance—and include a “paused pending injunction” status with monitoring triggers.
2. Training & monitoring: Train pharmacy and billing teams; implement a monitoring process for DHCS/Medi-Cal Rx updates and rapid operational “go/no-go” decisions.

Conclusion

While DHCS has paused implementation of Medi-Cal’s new 340B billing requirements pending litigation, the shift toward a rebate-based 340B reimbursement framework presents a material compliance and operational issue for hospitals, FQHCs, and contract pharmacy networks. When implementation resumes, DHCS may expect rapid compliance, leaving little room for remediation.

Covered entities that are not preparing now risk improper Medi-Cal billing, cash-flow disruption, contract pharmacy misalignment, audit exposure, and potential recoupments, particularly where delayed claim submission, net acquisition cost reporting, and multi-vendor coordination are required.

Proactive planning allows organizations to assess exposure, align billing and contract pharmacy operations, update policies and agreements, and establish defensible compliance processes before enforcement timelines are reactivated.

For guidance on readiness planning, compliance risk assessment, or contract pharmacy strategy related to Medi-Cal and the 340B Rebate Model, please contact Janice Suchyta.

This communication is not intended to create or constitute, nor does it create or constitute, an attorney-client or any other legal relationship. No statement in this communication constitutes legal advice nor should any communication herein be construed, relied upon, or interpreted as legal advice. This communication is for general information purposes only regarding recent legal developments of interest, and is not a substitute for legal counsel on any subject matter. No reader should act or refrain from acting on the basis of any information included herein without seeking appropriate legal advice on the particular facts and circumstances affecting that reader. For more information, visit www.buchalter.com.