Medicaid Best Price Reforms Can Encourage Innovative Payment Arrangements for Chronic Therapies

This NPC study extends previous work analyzing reforms to CMS’ Medicaid Best Price reporting rules to encourage the uptake of value-based purchasing agreements for chronic disease treatments. 

One of the barriers that stand between patients and innovative treatments, including potentially curative cell and gene therapies, is the lack of innovation in how the health care system pays for them. Previous NPC research has highlighted the impact of regulations that haven’t kept up with the rapidly evolving treatment landscape. Value-based purchasing arrangements (VBPAs) are innovative payment methods that can better align the value of a treatment with the price paid and, ultimately, to improve patient access. 

A new study from the NPC and Tufts Medical Center research team, published in Expert Review of Pharmacoeconomics & Outcomes Research, sheds light on different approaches that could encourage greater adoption of VBPAs for chronic therapies and expand access for patients. The study models the effects of 2020 CMS reforms to the Medicaid Drug Rebate program, alongside proposed reforms to the Best Price reporting. 

Though unintended, Medicaid price reporting regulations have been a primary impediment to the uptake of innovative payment models for commercial payers. The rules have produced an environment where it’s too risky for some payers and developers to enter VBPAs that encourage patient access. 

New models suggest that reforms from CMS, which went into effect in June 2022, can encourage the uptake of VBPAs and alleviate some payer uncertainty and risk associated with covering these therapies. Based on the results of the new study, among all proposed reforms, the Multiple Best Prices (MBP) methodology is most likely to enable VBPAs for many chronic therapies.

This research also shows that further reforms could encourage even greater access to these therapies. These reforms include: 

  • Enabling VBPA contracting capabilities for state Medicaid agencies
  • Allowing alternative reform approaches such as National Pooling which would be administratively less complex than Multiple Best Prices, and 
  • Finding alternative approaches for ultra-rare conditions which will continue to face access challenges.

Read more about the study here