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CMS Finalizes Rule on Value-Based Payments for Medicaid Drugs

The Centers for Medicare & Medicaid Services (CMS) Dec. 21 released a final rule addressing minimum standards in Medicaid State Drug Utilization Review (DUR), creating value-based purchasing (VBP) arrangements with manufacturers, and outlining minimum standards to reduce opioid prescribing–related fraud and abuse.

Several finalized provisions aim to make innovative VBP arrangements more flexible. CMS notes these arrangements are important in efforts to lower drug costs and ensure patient access to needed medications, specifically drug therapies. The final rule largely mirrors the proposed rule; included below are important highlights relevant to essential hospitals.

Medicaid Drug Price Reporting

The final rule modifies existing policies and creates new rules within the Medicaid Drug Rebate Program for manufacturer price reporting obligations and other reporting requirements to allow prescription drugs to be tied to a VBP arrangement. Notably, the final rule allows single drugs to be available at several different price points and also allows each drug to establish a “best price” that can be tied to different VBP arrangements. CMS realizes the extensive operational and technical changes that might be required to implement this new regulation and, therefore, delayed multiple best price reporting to January 2022.

Medicaid DURs

CMS finalized changes to state Medicaid DURs to implement minimum standards for opioids. Regulations before this final rule required states to develop, set standards for, and conduct DURs that best fit their programs and covered patient populations. The agency now implements provisions for safe prescribing as required under the SUPPORT for Patients and Communities Act and aim to reduce prescribing-related fraud and abuse.

State Reporting Requirements

CMS finalized a requirement that states participating in a VBP arrangement report data yearly, and within 60 days of the end of each year. Required information will include:

  • national drug codes for drugs covered under the VBP;
  • product FDA list name;
  • number of prescriptions;
  • cost to the state to administer VBP; and
  • total savings generated by the supplemental rebate due to VBP.

To ensure CMS has sufficient time to develop a collection instrument for this information, the policy will go into effect in January 2022.

The agency issued an accompanying fact sheet related to the final rule.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Abigail Painchaud is a policy associate at America's Essential Hospitals.

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