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CMS Proposes Rule to Base Prescription Drug Payments on Patient Outcomes

Analysis  |  By Jack O'Brien  
   June 17, 2020

CMS stated that the proposed rule will also bolster the agency's efforts to combat the opioid epidemic.

The Centers for Medicare & Medicaid Services (CMS) released a proposed rule Wednesday afternoon that ties payment for prescription drugs to patient outcomes.

According to a press release, CMS's proposal aims to loosen regulations on developing value-based purchasing (VBP) arrangements, encourage innovation, and empower "states, private payers, and manufacturers to pay for prescription drugs based on clinical outcomes."

Prescription drug manufacturers will be allowed to report multiple 'best prices' for a drug therapy under the Medicaid Drug Rebate Program (MDRP), according to CMS, so long as the prices are tied to a VBP arrangement.

As part of the proposed rule, CMS plans to create minimum standards for state Medicaid Drug Utilization Review (DUR) programs in an attempt to bolster the agency's efforts to combat the opioid epidemic.

During a press call Wednesday, CMS Administrator Seema Verma said the proposed rule aims to offer a pathway for patients to access more expensive prescription drugs.

"CMS's rules for ensuring that Medicaid receives the lowest price available for prescription drugs have not been updated in thirty years and are blocking the opportunity for markets to create innovative payment models," Verma said in a statement. "By modernizing our rules, we are creating opportunities for drug manufacturers to have skin in the game through payment arrangement that challenge them to put their money where their mouth is."

Related: Seema Verma's American Dream: Empower Consumers, Unleash Competition

The announcement is the latest effort by the Trump administration to move healthcare organizations towards a system based value-based care and address the issue of high prescription drug prices.

The agency also plans to revise its average manufacturer price reporting beyond the 36-month limit to "allow for revisions to pricing metrics as a result of VBP arrangements."

Another aspect of the proposed rule includes a clarification that rebates paid on Medicaid managed care claims are "only excluded under a CMS authorized supplemental rebate agreement."

Editor's note: This story has been updated with commentary from a press call with CMS Administrator Seema Verma Wednesday evening.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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