Historically, Medicaid Drug Rebate Program (MDRP) statutory and regulatory requirements did not keep pace with the developments in the market, which now promotes pricing tied to value. However, a CMS rule finalized in 2022 seeks to enable value-based purchasing by introducing new price reporting options such as bundled sales or multiple performance tiers. While the CMS rule revisions create opportunity, there are significant challenges remaining with MDRP reporting for cell and gene therapy (CGT) value-based purchasing (VBP) arrangements.

• Challenge — Bundled sales reporting: Bundled sales reporting enables developers to spread the impact of the price of value-based discounts over all utilizations. A bundled sales approach is ineffective when an insufficient patient population exists to absorb the discounts associated with poor outcomes.
• Challenge — Multiple tier reporting: The multiple guaranteed net unit price (GNUP) option for MDRP requires developers to report a best price for each unique, contract-defined outcome tier offered in a VBP arrangement. Developers must offer Medicaid the opportunity to contract for the same VBP arrangement. Multiple VBP agreements make this approach administratively complex and may reduce options, flexibility, and innovation for VBP arrangements for CGT.
• Challenge — Inability to offer VBP arrangements to states that participate in purchasing pools such as the National Medicaid Pooling Initiative (NMPI), TOP$, and Sovereign States Drug Consortium (SSDC).

Recommendations/suggestions:

CMS could address the threat created by small populations or administration of numerous performance-based contracts by changing the definition of bundled sales to allow bundling across payers, reporting periods, or both. Further insights are provided in the Health Affairs publication, Medicaid Best Price Volatility Could Inhibit Payment Innovation.

We also encourage CMS to explore how it could play a role in addressing a broader set of operational barriers to the adoption of value-based contracting beyond pricing regulations.

1. Facilitate scaled-up CMS grants to state Medicaid agencies to develop the capabilities and resources to design, negotiate, and implement these agreements. FoCUS experience suggests that there is a meaningful learning curve in establishing these types of value-based payment arrangements. Grants to date have enabled some adoption by states. More grants will be required to scale.
2. Consider options for simplifying the process of obtaining CMS approvals to enable adoption of Precision Financing Solutions. It would be helpful if CMS could clarify whether the agency’s expectation is that each state seek a State Plan Amendment (SPA) to take advantage of the relevant VBP provisions being proposed. To do this, the agency could consider offering a blanket approval rather than requiring individual SPAs, or issuing a pre-approved SPA template that states could adopt akin to ‘automatic approval.’
3. Advance efforts to track outcomes for performance-guarantees. FoCUS experience suggests that states will require resources to track and extract data to evaluate performance in outcomes-based contracts. CMS may be able to help advance real-world data systems capable of national longitudinal patient monitoring. For example, allowing IT investments needed for performance tracking as part of capability grants; facilitating cross-disease area and cross-sectoral collaborations to create scale in data collection; enabling cross-state/cross-payer interoperability; and linking given patient movement across payers. It is also imperative to define data element standards to ensure data uniformity and to maintain data interoperability.
4. Consider carving-out CGTs from Medicaid Managed Care Organizations (MCOs) to ensure uniform coverage and potentially mitigate small MCO’s actuarial risk.

Issue: Payer agreements that use performance metrics not reported in the FDA-approved label may place the developer in violation of FDA guidelines for communication with payers.

Recommendation/suggestion: FDA should clarify that patient real-world performance metrics are acceptable in performance-based agreements when therapies are administered to patients in accordance with the label indications and usage criteria. Metrics should not be limited to those included in the FDA label. FDA guidelines remain relevant for any communications regarding metrics.

Issue: The AKS regulations currently provide a safe harbor for traditional rebates, but do not explicitly include value-based agreements that tie payments or rebates to outcomes and may pay for monitoring visits that relate to the terms of the value-based agreement.

Recommendation/suggestion: Explicitly include rebates and payments arising from performance-based agreements in an AKS safe harbor.

Issue: Sharing patient performance data among the involved parties in performance-based agreements (especially developers and subsequent payers) often requires additional hurdles due to Health Insurance Portability and Accountability Act (HIPAA) regulations that did not contemplate this type of agreement.

Recommendation/suggestion: The Department of Health and Human Services should amend HIPAA regulations to ensure that those investing in patient health through long-term performance-based agreements can access needed, relevant data. Clarify any enabling requirements for patient and provider consent forms.

Issue: Federal and state insurance regulations usually require refiling and approval of insurance products if patient benefit designs are altered. This 12–18-month process can delay patient-favorable changes by payers.

Recommendation/suggestion: Amend regulations to allow payers to make modifications beneficial to all participants, such as reductions or waivers of deductibles, co-pays, and coinsurance payments; increases in patient incentives; and other improvements in patient access for specific therapies with automatic regulatory approval upon filing with insurance regulators.

Issues: Some therapies provided in the inpatient setting are reimbursed through existing fixed-rate payments (e.g., DRGs) that are intended to cover a range of possible treatment options. Including new high-cost therapies in this setting may create a substantial loss for providers if they choose to use such a therapy, even after potential new technology add-on payments. Thus, there are concerns that reimbursement will continue to be a barrier to access for Medicare patients.

Historically, payment rates in outpatient settings have been more predictable than in the inpatient setting. Medicare typically pays the Average Sales Price (ASP) plus 6% for separately billable drugs. In a recent ruling, beginning in calendar year 2023, CMS will also pay for all outpatient drugs purchased under 340B using the same formula. This essentially removes disparate treatment from prior distinctions of pass-through versus non-pass-through drugs.

Recommendation/suggestion: Policymakers should ensure predictable payment that equalizes reimbursement levels across settings of care. CMS should establish fair and predictable payments to ensure appropriate provider reimbursement in all settings.