Prescription drug costs for California’s massive Medicaid program were draining the state budget, so in 2019 Gov. Gavin Newsom asked the private sector for help. The new Medicaid drug program debuted this January, with a private company in charge. But it was woefully unprepared, and thousands of low-income Californians were left without critical medications for weeks, some waiting on hold for hours when they called to get help.

But according to the report by California Health Line, what happened in the two years between the contract award and the start of the program is a case study in what can go wrong when government outsources core functions to the private sector.

California awarded the Medi-Cal Rx program to a unit of Magellan Health, a company with expertise in pharmacy benefits and mental health. But Magellan was then gobbled up by industry giant Centene, worth roughly $50 billion, which was looking to expand its mental health portfolio.

Centene was already a big player in state Medicaid drug programs – but one with a questionable record. The company was accused by six states of overbilling their Medicaid programs for prescription drugs and pharmacy services and settled to the tune of $264.4 million. Three other states made similar allegations and have settled with the company, but the amounts have not been disclosed. Centene, in resolving the civil actions, denied any wrongdoing.

In his 2019 inauguration speech, Newsom vowed to use California’s “market power and our moral power to demand fairer prices” from the “drug companies that gouge Californians with sky-high prices.”

Drug spending by the state for its Medicaid, prison, state hospital, and other programs had been climbing 20% a year since 2012, so the first-term Democrat issued an executive order requiring California to make its own generic drugs and forge partnerships with counties and other states to buy drugs in bulk. He also directed the state to buy prescription drugs for Californians enrolled in Medi-Cal, the state’s Medicaid program, which covers roughly 14 million people.

Newsom no longer wanted to allow the state’s two dozen Medi-Cal managed-care health plans to provide prescription drug coverage to their enrollees, arguing the state would get a better deal from drug companies by harnessing its purchasing power.

That December, California awarded a competitive $302 million contract to Magellan Medicaid Administration, a subsidiary of Magellan Health, to make sure Medi-Cal enrollees get the medications that California would buy in bulk. Magellan provides pharmacy services to public health plans in 28 states and the District of Columbia.

Magellan was supposed to take over the drug program in April 2021. But on Jan. 4 of that year, Centene – which was seeking a greater role in the lucrative behavioral health market – announced plans to buy Magellan.

St. Louis-based Centene, however, is one of the largest Medi-Cal insurers in the state, a factor that would have disqualified it from bidding for the original contract. Centene provides health coverage for about 1.7 million low-income Californians in 26 counties through its subsidiaries Health Net and California Health & Wellness. It earned 11% of its revenue from California businesses in 2019, according to its 2021 annual report to the U.S. Securities and Exchange Commission.

But the state bent over backward to make it work, delaying implementation of the program while Magellan set up firewalls, sectioned off its business operations from Centene, and paid for a third-party monitor.State regulators reviewed the merger in a 30-minute public hearing in October 2021. They didn’t mention Centene’s legal settlements with other states.The state Department of Managed Health Care approved the merger Dec. 30. Two days later, the state launched its new prescription drug program with Magellan at the controls.

In the past 10 months, Centene has settled with nine states over accusations that it and its pharmacy business, Envolve, overbilled their Medicaid programs for prescription drugs and services: It settled with Arkansas, Illinois, Kansas, Mississippi, New Hampshire, and Ohio, according to news releases from attorneys general in those states. The three other states have not been identified by Centene or the states themselves.

The company has set aside $1.25 billion for those settlements and future lawsuits, according to its 2021 report to the SEC.

In a suit relating to wages, employee classification and sick leave, a federal court in California preliminarily approved an $8.43 million settlement for 1,322 drivers for the company in the state who opted out of Uber’s arbitration clause.

BloombergLaw reported that the proposed $8.4 million deal reached between Uber Technologies Inc. and more than 1,300 California drivers, who alleged they were misclassified as contractors, would end one of the gig economy court battles that predate the passage of Proposition 22.

The settlement award would go to about 1,322 drivers who opted out of arbitration agreements and worked for the company between Feb. 28, 2019, and Dec. 17, 2020, according to a motion for preliminary approval filed on Thursday. The December date reflects the enactment of Prop. 22, a ballot initiative that Uber helped to fund to cement app-based drivers as independent contractors.

Uber and the drivers agreed to dismiss the case in November after signaling they had reached an agreement. The deal is slated for a final approval hearing before the U.S. District Court for the Northern District of California in June. It would follow a $20 million settlement approved by the same court in 2019 between Uber and 15,000 California and Massachusetts drivers.

This class action lawsuit, seeking to represent nearly 5,000 Uber drivers, was launched in April of 2020. The plaintiffs allege that the rideshare giant improperly classifies them and others, depriving its drivers of important benefits, including minimum wage, overtime, and sick leave. The complaint also charged Uber with failing to provide properly itemized pay statements and reimburse drivers for business expenses, such as gas and insurance.

In a Jan. 26 order, the court agreed to grant certification of the proposed Class for itemized wage statements and expense reimbursement; however, U.S. District Judge Edward M. Chen trimmed claims for minimum wage, overtime, and sick leave pay.

Explaining that claims for minimum wages, overtime, and sick pay would all hinge on individual evaluations of each Class Member’s claim, Chen dismissed those class action allegations. Judge Chen also addressed Proposition 22, a new voter-enacted California law that applies only to rideshare drivers.

The settlement doesn’t answer the question of whether Uber drivers are employees entitled to benefits such as overtime, minimum wage, and business expenses – an issue that continues to be debated despite Prop. 22, which was struck down by a state judge as unconstitutional. A California appellate court is weighing that challenge. Drivers wrote in a motion for preliminary approval filed Feb. 17 that, while the settlement doesn’t answer the question of whether they were misclassified, but that it will provide them “significant value.”

Of the $8.4 million proposed settlement, administration costs totaled $29,000; requested attorneys’ fees represent a quarter or $2.1 million; and each named plaintiff will receive $10,000.

Each driver, under the proposed settlement, would be entitled to part of the settlement based on the number of miles drivers picked up passengers and food deliveries, as well as the number of miles driven. The drivers’ attorney Shannon Liss-Riordan anticipated about half of the class will submit a claim.

This is but one of many legal actions Uber is facing over its use of independent contractors as drivers for the ride-hailing app, with the company facing another class action lawsuit lodged early this year over Prop 22. The lawsuit claims that Prop 22, reportedly written and heavily funded by Uber and other rideshare apps, leaves drivers with little pay and few options.

Uber has also been in the spotlight over a growing number of sexual assaults reported by drivers and riders alike.

William Valdez, while employed as a firefighter for the Orange County Fire Authority, sustained a continuous trauma industrial injury in the form of hypertension, coronary artery disease, hands including thumbs, shoulders, feet including toes, and to the upper digestive tract in the form of a hiatal hernia.

In finding permanent disability of 89%, his right and left thumb disabilities were added together rather than combined utilizing the Combined Values Chart in the 2005 Schedule for Rating Permanent Disabilities, as were his right and left foot disabilities. The disabilities were otherwise combined utilizing the Combined Values Chart. (2005 Schedule at pp. 8-1 – 8-4.)

Valdez contended on reconsideration that the WCJ erred in combining applicant’s orthopedic disabilities with his internal medicine disabilities by way of the CVC rather than adding the percentages of permanent disability. Reconsideration was denied in the panel decision of Valdez v Orange County Fire Authority ADJ11323413 (March 2022).

Valdez argues that the orthopedic disabilities should be added to the internal medicine disabilities based on the June 23, 2021 deposition testimony of orthopedist Mitchel Silverman, M.D. Dr. Silverman opined that applicant’s orthopedic impairments did not “overlap” with the internal medicine impairments.He opined that the impairments affected different activities of daily living and work restrictions, although the activities of daily living and work restrictions were not specified.

Explaining why the orthopedic disability should be added to the internal medicine disability, Dr. Silverman testified, “I understand the CVC, but the courts have decided. I haven’t decided, the courts have decided, that there’s a way to look at this in terms of adding them, and I agree in this particular case.”

However the panel concluded that “Dr. Silverman’s report is not substantial medical evidence sufficient to rebut the use of the Combined Values Chart.”

In Athens Administrators v. Workers’ Comp. Appeals Bd. (Kite) (2013) 78 Cal.Comp.Cases 213 (writ den.), the evaluator explained why the disparate impairments were not actually disparate, and the impairments in question were all under the physician’s expertise.

“In contrast, here one specialist is suggesting that we add impairments found by him in his own specialty to impairments in completely different body systems found by a different specialist. As an orthopedist, it was Dr. Silverman’s role to describe and give a whole person impairment with regard to the orthopedic impairment.”

“Dr. Silverman did not give any compelling reason why the orthopedic and internal medicine impairments should be added, and questions beyond applicant’s orthopedic impairment, including applicant’s overall impairment or the operation of the CVC, are beyond Dr. Silverman’s expertise.” (Applied Materials v. Workers’ Comp. Appeals Bd. (D.C.) (2021) 64 Cal.App.5th 1042, 1097 [86 Cal.Comp.Cases 331].)

On April 2020 Rogelio Trigueros filed a claim for workers’ compensation benefits claiming injury to his upper extremities, shoulders, arms, hand and fingers while employed as a farm laborer for respondent Gonzalez Ag., Inc.

On May 4, 2020, employer’s insurance carrier mailed a Notice Regarding Delay of Workers’ Compensation Benefits from Kansas City, Missouri, to petitioner in California.

Sixteen days later, Trigueros requested and obtained a panel of three chiropractic Qualified Medical Evaluators eligible to evaluate his workers’ compensation claim.

The Employer challenged the timing of his request for a QME panel and the matter proceeded to trial, resulting in the workers’ compensation administrative law judge concluding the panel was valid.

Reconsideration was granted, with the WCAB panel agreeing with employer. The WCAB replaced the WCJ’s finding with its own finding that the QME panel was invalid because petitioner prematurely requested it before waiting 20 days from mailing of the Delay Notice. In doing so, the WCAB stated it applied its own rules as set forth under California Code of Regulations, title 8, section 10605 (WCAB rule 10605) rather than the more general CCP § 1013 mail delay provisions.

In its prior en banc decision in Messele v. Pitco Foods, Inc. (2011) 76 Cal.Comp.Cases 956 and as established under section 5316, the WCAB’s own rules govern service of process and any applicable extensions of time to act where they differ from the more generally applicable provisions under CCP § 1013.

However, the Court of Appeal reversed the WCAB and remanded the case of Tigueros v WCAB and Gonzalez Ag., (March, 2022)

In granting the petition for writ of review, the court notified the parties that it appeared the WCAB based its determination on the out-of-state location where the claims administrator mailed the triggering delay notice from instead of the location where it served the notice on petitioner.

WCAB rule 10605 provides that the time added for service is “(1) Five calendar days from the date of service, if the place of address and the place of mailing of the party, attorney or other agent of record being served is within California; (2) Ten calendar days from the date of service, if the place of address and the place of mailing of the party, attorney or other agent of record being served is outside of California but within the United States;

And that, pursuant to WCAB Rule 10605(a)(1), the WCAB instead should have added only five days to the statutory 10-day waiting period, for a total of 15 days, before considering the first day a party may validly request a QME panel.

The WCAB responded that it agreed and requested the Court of Appeal to annul the WCAB’s decision and remand the matter for further proceedings.

According to the National Alliance of State Pharmacy Associations, more than a dozen states have expanded what pharmacists can do to include testing and treating people for illnesses such as strep throat, flu, and urinary tract infections and preventing HIV. Some states allow pharmacists to prescribe oral contraceptives or drugs to help people quit smoking. Typically, pharmacists have prescribing authority under agreements with doctors or rules called statewide protocols.

But a report by Kaiser Health News says that a limited number of states have gone further, allowing pharmacists to prescribe medications on their own to treat a broad range of conditions for which there are rapid point-of-care tests, if it’s appropriate based on clinical guidelines.

“We’re seeing more states looking at direct prescribing authority now as opposed to collaborative practice agreements,” said Allie Jo Shipman, director of state policy at the National Alliance of State Pharmacy Associations. The alliance offers point-of-care testing and point-of-care treating training programs for pharmacists and pharmacy students.

The Biden administration, which has leaned on pharmacies to help battle the covid pandemic by administering vaccines and tests, is now calling for a limited number of pharmacies with retail clinics that employ doctors or other health care workers with prescribing authority to directly provide medication rapidly to people who test positive for the virus. The “test-to-treat” program is designed to make sure that people with covid get a course of antiviral medication quickly because it is most effective if used within five days of when someone shows symptoms.

But physicians don’t necessarily welcome this development. Doctor groups have long objected to the taking on of certain types of patient care by pharmacists, nurse practitioners, physician assistants, and other nondoctors unless it is overseen by or approved by physicians.

In November, the American Medical Association, which represents doctors, announced that since 2019, it had successfully opposed more than 100 legislative actions that would have expanded nonphysicians’ scope of practice, called scope creep. The group also issued a statement criticizing the Biden administration’s plan to allow pharmacy-based clinics to prescribe covid antiviral medications, saying that the program poses a danger to patient safety and risks negative health outcomes. And the AMA unsuccessfully opposed a federal decision to let pharmacists give covid vaccines to children younger than 18.

Meanwhile, the American College of Physicians, which represents internists, announced it “opposes independent pharmacist prescriptive privileges and initiation of drug therapy outside of a collective practice agreement, physician standing order or supervision, or similar arrangement.”

The AMA didn’t respond to questions about independent pharmacist prescribing, and the ACP declined to comment on its policy.

But are physicians correct that patient safety is at risk if a doctor isn’t involved in prescribing decisions? Pharmacists say that they want to provide care in line with their training and skills and that they know their limits. And they note that timely prescribing is vital for treating covid and other infectious diseases.

They also note that pharmacists are increasingly part of the multidisciplinary clinical teams that direct patient care at hospitals and in health care systems.

“Pharmacists are the professionals that are the most trained to deal with drug interactions,” said Rita Jew, a pharmacist who is president of the Institute for Safe Medication Practices, a nonprofit that focuses on preventing medication errors. “We monitor patients for both efficacy and side effects. So from that perspective, it’s not a safety concern. Delay in treatment is a concern.”

Many pharmacists are eager to expand their menu of patient services, but payment remains a problem. Pharmacists aren’t generally recognized as service providers under Medicare and don’t typically receive payment when they spend time evaluating, testing, or treating patients. Many private insurers follow Medicare’s lead on payment.

Dr. Jeffrey Singer, a general surgeon and a senior fellow at the libertarian Cato Institute, wrote a recent blog post suggesting that doctors who object to nonphysician prescribing may be more worried about competition than patient safety.

“Rather than work to prevent laws that could meet the needs of patients, the onus is on the profession to persuade people that they need to see a doctor,” Singer said in an interview, adding that he has relied on pharmacists’ expertise in his practice. “I ask them, ‘Is there any particular problem with this drug?’ They have the software. And that’s what they’re trained to do.”