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CMS Issues Proposed Rule on Medicaid Value-Based Payments

June 19, 2020

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CONTACTS
Mary Mullaney, Director, Hospital Payment Policies

The Centers for Medicare & Medicaid Services (CMS) released a proposed rule on June 17 that would encourage value-based purchasing (VBP) arrangements between manufacturers and payers for drugs covered under Medicaid. It also proposes changes to the calculation of the average manufacturer price (AMP) of a brand name drug when there is also an authorized generic, and it includes revisions to state Medicaid Drug Utilization Review (DUR) programs designed to reduce opioid-related fraud, misuse, and abuse. CMS also issued a fact sheet and a press release.

The proposed rule modifies the definitions of best price and VBP to clarify that a drug can have multiple Medicaid “best prices” that would be tied to VBP arrangements. These “best prices” would be associated with certain patient outcomes agreed upon by payers and manufacturers. Additionally, the VBP arrangements would allow for bundled sales of certain drugs as long as there is a performance component to the arrangement.

The proposed rule seeks to provide clarity around the exclusion of authorized generics from the AMP calculation, which was approved by Congress in a fiscal year 2020 appropriations bill. Manufacturers must reflect changes to the calculation of AMP for rebate periods beginning October 1, 2019.

Finally, CMS is proposing new safety edits in state DUR programs, including edits to identify and mitigate potential misuse and abuse related to opioids. The agency seeks to require DUR to identify cases in which a patient is prescribed an opioid after being prescribed medication-assisted therapy or diagnosed with an opioid use disorder. CMS also seeks comment on potential additional standards that could be implemented through future rulemaking.

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