CMS Unveils Medicaid Block Grant Option, Ramifications for 340B Unclear

CMS Unveils Medicaid Block Grant Option, Ramifications for 340B Unclear

The Centers for Medicare & Medicaid Services (CMS) this morning invited state Medicaid directors to pilot test giving up open-ended federal Medicaid funding for able-bodied adults in exchange for a fixed federal allocation and more control over benefit design. Individuals with disabilities, those getting long-term care, children, and pregnant women would be excluded. Democratic lawmakers and a number of healthcare advocacy groups have criticized the initiative and it is expected to be challenged in court.

If the initiative takes flight, perhaps the biggest potential change for 340B stakeholders would be that states, for the first time, could have restrictive Medicaid prescription drug formularies. Under federal law, if drug manufacturers want their products covered by Medicaid, they must give states rebates on the states’ expenditures on those products. In exchange, state Medicaid programs must cover virtually all FDA-approved drugs (aka: covered outpatient drugs). Drug manufacturers also must sign a separate agreement with the federal government to charge qualified hospitals, health centers, and other providers 340B program ceiling prices (or less) for covered outpatient drugs, with the 340B prices pegged to Medicaid drug rebate percentages.

CMS Unveils Medicaid Block Grant Option, Ramifications for 340B Unclear The Centers for Medicare & Medicaid Services (CMS) this morning invited state Medicaid directors to pilot test giving up open-ended federal Medicaid funding for able-bodied adults in exchange for a...

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