{"id":18276,"date":"2020-01-31T15:47:02","date_gmt":"2020-01-31T20:47:02","guid":{"rendered":"https:\/\/avalere.com\/?p=18276"},"modified":"2022-07-19T11:23:32","modified_gmt":"2022-07-19T15:23:32","slug":"cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit","status":"publish","type":"post","link":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit","title":{"rendered":"CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit"},"content":{"rendered":"<h2>Background<\/h2>\n<p>Through the new financing model of\u00a0<a href=\"https:\/\/www.medicaid.gov\/sites\/default\/files\/Federal-Policy-Guidance\/Downloads\/smd20001.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Healthy Adult Opportunity (HAO)<\/a>, states could exercise flexibilities\u00a0for non-mandatory adult populations\u00a0available under existing waiver authority as well as significant new flexibilities, including implementing closed formularies and making other program adjustments without\u00a0advance\u00a0federal approval.<\/p>\n<p>Notably, the benefit package for the adult population eligible under this demonstration must meet at least the Essential Health Benefit (EHB) standard, tied to the commercial and individual insurance market. Although the EHB package includes prescription drugs as a required category, the drug coverage standard varies significantly from the Medicaid coverage requirements under the Medicaid Drug Rebate Program (MDRP), which requires coverage of all medications that have a rebate agreement with states:<\/p>\n<ul>\n<li>As outlined under the HAO and in accordance with EHB standards, states could implement closed drug formularies, with a minimum coverage requirement of the greater of either:\n<ul style=\"padding-bottom: 0;\">\n<li>1 drug per class<\/li>\n<li>The same number of drugs in each category and class as a selected EHB benchmark plan<\/li>\n<\/ul>\n<\/li>\n<li>States would be required to cover substantially all antipsychotics, antidepressants, antiretroviral drugs, and products treating opioid use disorder<\/li>\n<li>Covered drugs would be subject to mandatory manufacturer rebates required under the MDRP<\/li>\n<\/ul>\n<h2>Key Considerations for Prescription Drugs under the HAO<\/h2>\n<p>As states and stakeholders consider potential impacts of the HAO initiative, Avalere observes a host of key considerations and outstanding questions related to prescription drugs.<\/p>\n<h3>MDRP \u201cGrand Bargain\u201d<\/h3>\n<p>CMS\u2019s closed formulary initiative marks a significant departure from long-standing Medicaid policy, which requires states to cover all drugs for which manufacturers pay mandatory rebates. Previously, CMS rejected Massachusetts\u2019 1115 waiver proposal to implement a closed formulary in the state.<\/p>\n<h3>EHB Benchmark Drug Formularies<\/h3>\n<p>With greater benefit flexibility, states may develop closed formularies more similar to commercial plans for their HAO demonstrations. Given that states are currently required to cover virtually all drugs for Medicaid beneficiaries, this marks a major change to the program.<\/p>\n<h3>Protected Classes<\/h3>\n<p>The HAO establishes protection for robust coverage of antipsychotics, antidepressants, and antiretroviral drugs, overlapping with 3 of the 6 protected classes under Medicare Part D; however, it does not explicitly protect the other 3 Part D protected classes (anticonvulsants, immunosuppressants, and antineoplastics). States electing a limited formulary would be required to cover \u201csubstantially all\u201d drugs for mental health (antipsychotics and antidepressants) and HIV (antiretrovirals), consistent with Medicare Part D requirements. In addition, the HAO adds an obligation to cover \u201call forms, formulations, and delivery mechanisms\u201d for products treating opioid use disorder (OUD). CMS indicates these requirements support the agency\u2019s initiatives related to HIV and OUD.<\/p>\n<h3>State Incentives Under Capped Funding Arrangements<\/h3>\n<p>Under an aggregate cap or per capita cap financing model for non-mandatory adult populations under age 65, states will explore ways to limit Medicaid spending so as not to exceed the allotted amount and to secure shared savings (up to 50% of remaining cap dollars above 80% of the cap). Options related to drugs could include stricter utilization management (e.g., prior authorization) and lack of coverage for high-cost drugs. Additionally, states will have more flexibility to set cost-sharing amounts for drugs over their statutorily defined limits, which could increase spending for beneficiaries. Aggregate beneficiary out-of-pocket costs cannot exceed 5% of household income, consistent with existing policy.<\/p>\n<h3>Supplemental Rebate Dynamics<\/h3>\n<p>With more flexibility to exclude unprotected drugs from formularies, states may have greater leverage in supplemental rebate negotiations, particularly in competitive classes. As a result, manufacturers may need to reevaluate supplemental rebate strategy in securing drug coverage under an HAO paradigm.<\/p>\n<h3>Development and Coordination of Multiple Formularies<\/h3>\n<p>Management of both a standard Medicaid drug list and HAO formulary could increase administrative burden for states and may factor into a state\u2019s calculation of whether to participate in the HAO. However, many states already operate multiple formularies across Medicaid and the Children\u2019s Health Insurance Program and have processes in place to address potential complications.<\/p>\n<p><span data-contrast=\"none\">To receive Avalere updates and learn more about the risk adjustment program and the changes outlined in the CMS white paper,\u00a0<\/span><a href=\"https:\/\/info.avalere.com\/LP=46\"><span data-contrast=\"auto\">connect with us<\/span><\/a><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Find out the\u00a0<\/span><a href=\"https:\/\/advisory.avalerehealth.com\/webinars\/avalere-2020-healthcare-industry-outlook-see-the-turns-ahead\"><span data-contrast=\"auto\">top 2020 healthcare trends to watch<\/span><\/a><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Background Through the new financing model of\u00a0Healthy Adult Opportunity (HAO), states could exercise flexibilities\u00a0for non-mandatory adult populations\u00a0available under existing waiver authority as well as significant new flexibilities, including implementing closed formularies and making other program adjustments without\u00a0advance\u00a0federal approval. Notably, the benefit package for the adult population eligible under this demonstration must meet at least the&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[993],"content-categories":[259],"class_list":["post-18276","post","type-post","status-publish","format-standard","hentry","category-insights","tag-archive","content-categories-policy","entry","no-media"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit | Avalere Health Advisory<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit | Avalere Health Advisory\" \/>\n<meta property=\"og:description\" content=\"Background Through the new financing model of\u00a0Healthy Adult Opportunity (HAO), states could exercise flexibilities\u00a0for non-mandatory adult populations\u00a0available under existing waiver authority as well as significant new flexibilities, including implementing closed formularies and making other program adjustments without\u00a0advance\u00a0federal approval. Notably, the benefit package for the adult population eligible under this demonstration must meet at least the&hellip;\" \/>\n<meta property=\"og:url\" content=\"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit\" \/>\n<meta property=\"og:site_name\" content=\"Avalere Health Advisory\" \/>\n<meta property=\"article:published_time\" content=\"2020-01-31T20:47:02+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-07-19T15:23:32+00:00\" \/>\n<meta name=\"author\" content=\"avalere_wp\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@avalerehealth\" \/>\n<meta name=\"twitter:site\" content=\"@avalerehealth\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"avalere_wp\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit | Avalere Health Advisory","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit","og_locale":"en_US","og_type":"article","og_title":"CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit | Avalere Health Advisory","og_description":"Background Through the new financing model of\u00a0Healthy Adult Opportunity (HAO), states could exercise flexibilities\u00a0for non-mandatory adult populations\u00a0available under existing waiver authority as well as significant new flexibilities, including implementing closed formularies and making other program adjustments without\u00a0advance\u00a0federal approval. Notably, the benefit package for the adult population eligible under this demonstration must meet at least the&hellip;","og_url":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit","og_site_name":"Avalere Health Advisory","article_published_time":"2020-01-31T20:47:02+00:00","article_modified_time":"2022-07-19T15:23:32+00:00","author":"avalere_wp","twitter_card":"summary_large_image","twitter_creator":"@avalerehealth","twitter_site":"@avalerehealth","twitter_misc":{"Written by":"avalere_wp","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit#article","isPartOf":{"@id":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit"},"author":{"name":"avalere_wp","@id":"https:\/\/advisory.avalerehealth.com\/#\/schema\/person\/6cea6678c016753ac38b9aad6cff71aa"},"headline":"CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit","datePublished":"2020-01-31T20:47:02+00:00","dateModified":"2022-07-19T15:23:32+00:00","mainEntityOfPage":{"@id":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit"},"wordCount":678,"commentCount":0,"publisher":{"@id":"https:\/\/advisory.avalerehealth.com\/#organization"},"keywords":["Archive"],"articleSection":["Insights &amp; Analysis"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit#respond"]}]},{"@type":"WebPage","@id":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit","url":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit","name":"CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit | Avalere Health Advisory","isPartOf":{"@id":"https:\/\/advisory.avalerehealth.com\/#website"},"datePublished":"2020-01-31T20:47:02+00:00","dateModified":"2022-07-19T15:23:32+00:00","breadcrumb":{"@id":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/advisory.avalerehealth.com\/insights\/cmss-healthy-adult-opportunity-program-proposes-significant-changes-to-medicaid-drug-benefit#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/advisory.avalerehealth.com\/"},{"@type":"ListItem","position":2,"name":"CMS\u2019s Healthy Adult Opportunity Program Includes Significant Changes to Medicaid Drug Benefit"}]},{"@type":"WebSite","@id":"https:\/\/advisory.avalerehealth.com\/#website","url":"https:\/\/advisory.avalerehealth.com\/","name":"Avalere Health Advisory","description":"","publisher":{"@id":"https:\/\/advisory.avalerehealth.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/advisory.avalerehealth.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/advisory.avalerehealth.com\/#organization","name":"Avalere Health","url":"https:\/\/advisory.avalerehealth.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/advisory.avalerehealth.com\/#\/schema\/logo\/image\/","url":"https:\/\/advisory.avalerehealth.com\/wp-content\/uploads\/2025\/03\/avalere-health-logo-cropped-white_1x.webp","contentUrl":"https:\/\/advisory.avalerehealth.com\/wp-content\/uploads\/2025\/03\/avalere-health-logo-cropped-white_1x.webp","width":433,"height":47,"caption":"Avalere Health"},"image":{"@id":"https:\/\/advisory.avalerehealth.com\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/x.com\/avalerehealth"]},{"@type":"Person","@id":"https:\/\/advisory.avalerehealth.com\/#\/schema\/person\/6cea6678c016753ac38b9aad6cff71aa","name":"avalere_wp","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/advisory.avalerehealth.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/b39b7367e9be99e141408d09d07b8853?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/b39b7367e9be99e141408d09d07b8853?s=96&d=mm&r=g","caption":"avalere_wp"},"url":"https:\/\/advisory.avalerehealth.com\/author\/avalere_wp"}]}},"_links":{"self":[{"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/posts\/18276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/comments?post=18276"}],"version-history":[{"count":7,"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/posts\/18276\/revisions"}],"predecessor-version":[{"id":18320,"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/posts\/18276\/revisions\/18320"}],"wp:attachment":[{"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/media?parent=18276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/categories?post=18276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/tags?post=18276"},{"taxonomy":"content-categories","embeddable":true,"href":"https:\/\/advisory.avalerehealth.com\/wp-json\/wp\/v2\/content-categories?post=18276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}