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Proposed Rule Supports Value-Based Payments for Medicaid Drugs

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule on several aspects of Medicaid prescription drug policy, including provisions related to creating value-based purchasing (VBP) arrangements with manufacturers and minimum standards to reduce opioid prescribing–related fraud and abuse.

Several 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 proposed rule would modify existing policies and create 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.

CMS also proposes to amend current regulations on state Medicaid drug utilization reviews (DURs) to implement minimum standards for opioids. Current regulations require states to develop, set standards for, and conduct DURs that best fit their programs and covered patient populations. The agency’s proposed changes implement provisions for safe prescribing as required under the SUPPORT for Patients and Communities Act and aim to reduce prescribing-related fraud and abuse. The agency seeks comments on other opioid-related DUR standards the agency might adopt through future rulemaking.

Other provisions of note in the proposed rule include:

  • clarifications to calculating average manufacturer price (AMP) and Medicaid “best price” for prescription drugs covered by manufacturer-sponsored patient assistance programs;
  • changes to the calculation of a manufacturer’s brand name AMP as a result of recently enacted legislation;
  • alignment of regulations with the Medicaid drug rebate statute, including new requirements for state reporting and certification of state utilization data; and
  • proposed changes to how states should handle paying claims that have a liable third party, especially in instances that impact patient access to care.

The agency issued an accompanying press release, fact sheet, and blog post by CMS Administrator Seema Verma related to the proposals. The proposed rule was published in the Federal Register on June 19, with a 30-day comment period.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Gontscharow is a senior policy analyst for America's Essential Hospitals.

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