by Leslie Small
As part of long-awaited guidance that CMS issued to states on
Jan. 30 outlining how they can test-drive a fixed federal Medicaid budget and
more program flexibilities, the Trump administration invited states to try out
something else that hasn't been done before: implement a closed drug formulary
for a portion of their Medicaid population.
"For the first time, participating states will have more
negotiating power to manage drug costs by adopting a formulary similar to those
provided in the commercial market, with special protections for individuals
with HIV and behavioral health conditions," CMS said in its press release
unveiling the Healthy Adult Opportunity demonstration, which states can apply
for via a Section 1115 Medicaid waiver.
Currently, states' Medicaid programs must cover all FDA-approved
drugs, as mandated by federal law. But CMS is suggesting that states can waive
that requirement for the population they choose to cover under their
demonstration — likely people who are covered by Medicaid expansion — and still
participate in the Medicaid Drug Rebate Program.
But some industry experts tell AIS Health they’re not sure
whether that will be legally permissible.
"I have my doubts as to whether this will bear legal
scrutiny because it goes against the entire Medicaid Drug Rebate Program, which
is rebates in exchange for open formularies," says Jeff Myers, the former
CEO of Medicaid Health Plans of America and founder of health care consulting
firm OptDis.
Indeed, "the legal side is obviously the giant question
with the whole Healthy Adult Opportunity program," Jason Karcher, an
actuary with Milliman, Inc., tells AIS Health. "We just don’t know how the
courts will ultimately see this, although I think it would be fair to be
skeptical that we'll actually get to see a waiver under this [guidance] make it
in the near future."
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