How the Medicaid Final Rule May Affect Value Based Arrangements

April 2021

In the waning hours of the Trump administration, Seema Verma and other top Centers for Medicare & Medicaid Services (CMS) officials penned a blog in Health Affairs outlining key areas where the administration had advanced accountability by moving beyond fee-for-service payment. One particular action of note was a final rule issued Dec 31, 2020 that supported value-based purchasing for drugs covered by Medicaid. This rule became effective March 1, 2021, yet little guidance and follow through has come from CMS.

This is natural with a change in administration. However, these policies have bi-partisan support and have implications at the state level. This rule aims to address Medicaid Best Price reporting and provide some flexibility to the state level. States such as Oklahoma, Texas and Massachusetts have had to seek State Plan Amendments from CMS to remove some of the administrative and statutory burdens that would prevent more novel arrangements within Medicaid. When guidance for implementation is provided, expectations are that many more states will push for value-based arrangements with manufacturers.

States are not the alone in encouraging rule implementation. Organizations like the Alliance for Regenerative Medicine (ARM) are calling on HHS Secretary Javier Bacerra to implement the rule. ARM made the case that new regenerative treatments are meant for complex conditions and need novel purchasing approaches to ensure timely access for patients. Given the interest from many stakeholders on the need to reform the nearly 30-year-old Medicare Drug Rebate Program Law, we expect more groups to increase the drumbeat to Bacerra.

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