On January 30, 2020, the Centers for Medicare & Medicaid Services (CMS) issued its long awaited and highly anticipated State Medicaid Director Letter (SMD Letter) announcing the “Healthy Adult Opportunity” (HAO) initiative that will allow states to carry out demonstrations to implement either an aggregate or per-capita cap financing model for certain Medicaid populations. We’ve previously previewed and highlighted some of the key expectations for this long-awaited guidance.… More
Category Archives: Prescription Drug Coverage
Earlier this year, we wrote about a lawsuit involving the 340B drug pricing program. We sometimes write about the 340B program because it is integrally linked to the Medicaid prescription drug rebate program. So today, we wanted to call attention to a proposed regulation issued by the Massachusetts Medicaid program (which is called “MassHealth”) that shows that link clearly.
Section 1927 of the Social Security Act requires pharmaceutical manufacturers to provide a rebate to state Medicaid plans if they want to have their drugs covered by Medicaid. … More
On September 17, 2019, Tennessee released its proposal to block grant most of the funding the state’s Medicaid program (TennCare) receives from the Federal government. If approved by CMS, the amendment to the state’s longstanding 1115 waiver program would make Tennessee the first state in the nation to move to a true “block grant” format for Medicaid funding. A draft of the proposed waiver is available on the state’s website —… More
We have talked previously on this blog about ongoing efforts by the Administration to reform drug pricing, including efforts to dramatically revamp the way in which health plans and their PBMs (including Medicaid MCOs) negotiate drug discounts. At the state level, PBMs have been under fire in recent years, with several State Medicaid agencies alleging a lack of transparency in contracts with the states.… More
The Department of Health and Human Service’s Office of Inspector General (OIG) has issued a couple of reports lately on Medicaid coverage of prescription drugs and we thought we’d highlight them here.
The first report suggests that the Medicaid program could save hundreds of millions of dollars a year by re-determining the calculation of average manufacturer price (AMP) for some authorized generic products. … More
On April 11, 2019, the Massachusetts House Committee on Ways and Means released its FY 2020 budget (H.3800). The legislation includes provisions authorizing MassHealth (the Massachusetts Medicaid program) to negotiate supplemental rebates directly with drug manufacturers, and provides for further proceedings before the Health Policy Commission for manufacturers refusing to negotiate supplemental rebates at levels satisfactory to the Commonwealth. These provisions represent amendments to a MassHealth drug pricing proposal included in Governor Baker’s FY 2020 filing in January.… More
On January 31, 2019 the HHS Office of Inspector General (OIIG) issued a proposed rule that will be published in the Federal Register on February 6. The proposed rule has the potential to fundamentally re-structure the prescription drug marketplace in the United States by dramatically altering the economics of pharmaceutical pricing. Although much of the attention surrounding the rule has been focused on its effect on the Medicare Part D prescription drug program,… More
It was just earlier this week that we were writing about a flurry of solicitations released by the the Massachusetts Executive Office of Health and Human Services (EOHHS) seeking bids from manufacturers of select, generally high-priced outpatient drugs for supplemental rebates in MassHealth’s fee-for-service and managed care programs. At that time, we noted that this exercise was likely foreshadowing the release of Governor Baker’s budget proposal.… More
In an interesting (intriguing even?) turn of events, in late December 2018 the Massachusetts Executive Office of Health and Human Services (EOHHS) announced through its public bidding site that it was seeking bids from manufacturers of select, generally high-priced outpatient drugs for supplemental rebates in MassHealth’s fee-for-service and managed care programs. While the state has before used the public bidding process successfully to negotiate supplemental rebates for the state’s Medicaid program (for example,… More
Despite Mylan’ $465 million settlement with the Department of Justice for overcharging Medicaid millions of dollars for its product EpiPen, Congress is not ready to let bygones be bygones. In a display of bipartisanship, Sen. Grassley (R-IA) and Sen. Wyden (D-OR) unveiled a bill (section-by-section summary) entitled “The Right Rebate Act” (RRA) on December 4, 2018 and explicitly cited the EpiPen experience as the chief motivating factor for its creation. … More
In a wide-ranging speech on CMS’s efforts to lower Medicaid drug costs, Administrator Seema Verma announced yesterday that CMS has approved Michigan’s proposed state plan amendment to utilize value-based payment arrangements with drug manufacturers. With CMS’s blessing, Michigan can now enter contracts with pharmaceutical companies in which manufacturers provide the state supplemental rebates when their drugs fail to meet specified treatment benchmarks.
Michigan is the second state that has received CMS’s approval to pursue value-based purchasing agreements.… More
It was a busy day for CMS today. After keeping everyone in suspense for months, CMS finally issued its decision on the Massachusetts state Medicaid program waiver request that proposed to limit access to covered outpatient drugs to Medicaid (in Massachusetts, called “MassHealth”) enrollees. As many observers predicted, CMS did not approve the state’s request. Notably, however, the CMS response letter provided a pathway for Massachusetts to achieve a substantially similar result. … More
On March 23, CMS finalized updates to the Medicaid National Drug Rebate Agreement (NDRA) for the first time in 27 years to incorporate legislative and regulatory changes that have occurred since the Agreement was first published. As my colleague previously wrote, CMS proposed changes to the NDRA in November 2016—most, though not all, of the proposed changes were finalized.
On March 26,… More
On November 17th, Arizona’s state Medicaid agency (the Arizona Health Care Cost Containment System, or AHCCCS) sent a letter to CMS proposing policies that it believes will build on past successes and “leverage conservative principles.”
In the letter, AHCCS seeks input from CMS on ideas to “modernize” the prescription drug benefits offered under the state’s Medicaid plan.
(Also, notably, though not the topic of this blog post,… More
Back in July, my colleague Tom Barker told you about a CMS proposal to institute a fundamental reimbursement methodological change for 340B drugs used in the hospital outpatient setting. We have noted before the link between the Medicaid prescription drug rebate program and the 340B program. As a refresher, in order to have its outpatient drugs covered by Medicaid, the manufacturer must agree to three separate requirements. First,… More
On September 8, 2017, following the mandated 30-day public comment period, the Baker Administration concluded its review of the pending MassHealth Section 1115 Demonstration Amendment Request. The submitted waiver request can be viewed online here. Once received at CMS, the agency will have to time to review the proposal, and must also solicit additional public feedback, prior to finalizing any waiver.
On July 21, 2017, the Massachusetts Executive Office of Health and Human Services (“EOHHS”) announced its intent to submit a request to amend its existing MassHealth Section 1115 Demonstration to the Centers for Medicare and Medicaid Services (“CMS”). If approved (by both the State legislature, and CMS), it would be the most sweeping change to any state’s Medicaid pharmacy benefit to date. We previously previewed some of the changes EOHHS was considering under the new flexibility granted to states under the Price/Verma administration on this blog.… More
CMS Proposes Fundamental Reimbursement Methodological Change for 340B Drugs Used in Hospital Outpatient Setting
We have noted before the link between the Medicaid prescription drug rebate program and the 340B program. As a refresher, in order to have its outpatient drugs covered by Medicaid, the manufacturer must agree to three separate requirements. First, the manufacturer must agree to provide a rebate to Medicaid equal to the greater of 23.1% of the average manufacturer price (AMP) of the drug, or AMP minus the best price of the drug. … More
Price and Verma to State Governors: Just Come and Ask Us for Flexibility – What Providers & Drug Manufacturers Could Expect
The last several weeks have been nothing short of enthralling, like an episode of House of Cards. After seven years of campaigning on the repeal of the Affordable Care Act (ACA), Republicans were ultimately unable to create consensus for their highly anticipated repeal-and-replace legislation known as the American Health Care Act (AHCA). But as the drama on the Hill comes to an end (at least until tax reform is picked up),… More
The nomination of Seema Verma by President-Elect Trump for the position of CMS Administrator sends a clear signal that the Trump Administration considers Medicaid one of its top healthcare reform priorities. Seema Verma is the the “architect” of the Healthy Indiana Plan 2.0” waiver (HIP 2.0), a consumer-driven Medicaid expansion demonstration approved by the Obama Administration under a Section 1115 waiver. Most recently, Verma was also involved in designing Kentucky’s proposed “Kentucky HEALTH” (“HEALTH”) Section 1115 waiver,… More
As we continue our coverage of the potentially seismic changes to the Medicaid Program under a Trump Administration, we’d like to take a momentary detour into the weeds—it’s inevitable in Medicaid after all—and touch on a recent development that may be of interest to some of our readers.
Overview & Analysis
On August 12, 2016, the Health Resources and Services Administration (HRSA) published a proposed rule entitled “340B Drug Pricing Program; Administrative Dispute Resolution” (Proposed Rule). The Proposed Rule follows the Advanced Notice of Proposed Rulemaking (APRM) issued by HRSA on September 20, 2010 and aims to establish requirements and procedures for the 340B Program’s administrative dispute resolution (ADR) process. Interested parties may submit written comments on or before October 11,… More
In light of the growing cost (and demand for) specialty pharmaceutical products, and the corresponding stress this growth has had on state Medicaid coffers, CMS is now actively encouraging states Medicaid programs to engage in value based purchasing (VBP) arrangements with manufacturers. On Thursday July 14, CMS released guidance documents to state Medicaid agencies and manufacturers regarding participation in these VBP arrangements.
As states consider creative ways to finance high cost drug spend,… More
On January 21, 2016, the Centers for Medicare & Medicaid Services (CMS) published a long-awaited final rule entitled “Medicaid Program: Covered Outpatient Drugs.” CMS actually proposed this rule in February, 2012, so it’s taken almost four years for the agency to finalize the many policies on which they sought comment – almost all of which flow from the enactment of the federal health care reform law that was enacted in 2010,… More
Although outpatient prescription drugs are not a mandatory benefit under the Medicaid program, all 50 states do provide at least some coverage for prescription drugs. Manufacturers that want their drugs covered under Medicaid must agree to pay rebates to the Medicaid program (for brand name drugs, rebates must equal at least 23.1% of the average manufacturers price of the drug); must agree to participate in the 340B program; and must agree to provide federal supply schedule pricing to federal government agencies.… More
The Affordable Care Act extends and simplifies Medicaid eligibility beginning January 1, 2014, by replacing Medicaid’s previous multiple categorical groupings and limitations with one simplified overarching rule: all individuals aged <65 years with incomes less than 138 percent of the federal poverty level ($15,415 for an individual or $26,344 for a family of 3 in 2012) who meet citizenship/lawful US status and state residency requirements are entitled to Medicaid benefits.… More