CMS Proposes Delay of Medicaid Value-Based Payment Requirements

June 01, 2021 - CMS recently proposed delaying Medicaid value-based drug payment requirements for state purchasing agreements with drug manufacturers until July 2022. 

The rule, called “Medicaid Program Establishing Minimum Standards in Medicaid State Drug Utilization Review (DUR) and Supporting Value-Based Purchasing (VBP) for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and Third-Party Liability (TPL) Requirements,” was originally supposed to go into effect in January 2022.

Overall, the rule addresses the reporting by manufacturers of multiple best prices connected to a value-based purchasing agreement. 

At the end of December, CMS published the final rule in the Federal Register. The rule intended to advance the program’s efforts to support state flexibility to enter into innovative VBP arrangements with drug manufacturers for innovative therapies, such as gene therapy.

These costly therapies and new drug manufacturing approaches, required by section 1004 of the Substance Use-Disorder Prevention, promotes the Opioid Recovery and Treatment for Patients and Communities Act, as well as the existing Medicaid DUR program.

The regulations in the December final rule went into effect at the beginning of March 2021, except for certain amendatory instructions, including instruction 10.a., which is effective in January 2022.

CMS stated that it is proposing to delay instruction 10.a. to the beginning of July to assure stakeholders have the ability to implement the new value-based pricing policy in a way that assures that patient access and quality of care is protected.

The organization is also seeking public comments on the proposed delay. Notably, the comments must be submitted by June 28, 2021, to be considered.

“The primary reason for the original delay, and the new proposed delay, is to provide more time for CMS, states, and manufacturers to make the complex system changes necessary to implement the new best price and VBP program, and assure patient access and quality of care, given the current need to devote resources to the public health emergency (PHE) relating to COVID–19 that has been in effect, and will likely remain in effect through 2021,” CMS stated. 

CMS is also proposing to delay for two years the April 2022 effective inclusion date for US territories, including American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands, in the amended regulatory definitions of  “states” and “United States.”

The Covered Outpatient Drug (COD) final rule, which was published in February 2016, amended the regulatory definitions of “states” and “United States” to include the US territories.

The rule change to the definition of “states” and “United States” under the COD final rule is to include the territories would also impact the quarterly calculation of average manufacturer price (AMP) and best price by manufacturers. 

Ultimately, the change requires manufacturers to include prices paid by entities in the US territories in the same manner in which they include prices paid by entities located in one of the 50 states and District of Columbia in AMP and best price. 

Additionally, the rule requires manufacturers to include eligible sales and associated discounts, rebates, and other financial transactions that take place in the US territories in their calculations of AMP and best price once the revised definitions of “states” and “United States” take effect. 

“We believe an additional delay of 2 years may be warranted because it would allow the territories to focus their human and financial resources on ensuring the health and well-being of their beneficiaries during this PHE, rather than having to divert those resources to the development of systems required to participate in the MDRP, which can take several years to implement from start to finish, and seek public comments on this proposal,” CMS said.