CMS presents proposed rules aimed at negotiating payments for novel therapies

June 18, 2020

The rules update provisions to promote value-based payment for prescription medications.

The Centers for Medicare & Medicaid Services (CMS) has introduced new proposed rules aimed at allowing commercial plans and states to negotiate payment for innovative new therapies based on patient outcomes.

According to a news release, the current regulations create challenges for drug manufacturers in reporting payments under value-based arrangements to CMS and hinders payers and manufacturers from coming up from designing new payment arrangements based on the value provided. The proposals will empower states, insurers, and manufacturers to pay for prescription drugs based on the effectiveness of that drug, which will foster innovation in treatments which impact patients most and reduce healthcare spending and hospital visits.

“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,” CMS Administrator Seema Verma says in the release.  “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.”

The proposed rules support healthcare’s move to value-based payment rather than payment based on volume while also increasing accountability for outcomes due to insurers being able to negotiate discounts based on how effective a drug is. Widespread adoption of these payment arrangements can lead to the collection of more evidence on clinical outcomes for a particular therapy, which can enable physicians to use new medications and treatments in a targeted way, the release says.

“Increasing the link between reimbursement and drug effectiveness will also encourage payers to facilitate patients’ access to new therapies by easing more traditional utilization management practices,” the release says.