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June 22, 2020

Around the nation: CMS announces proposal to encourage value-based drug pricing

Daily Briefing

    The proposed rule aims to make it easier for commercial health plans to enter into value-based payment agreements with drugmakers by changing the way Medicaid's so-called "best prices" are calculated, in today's bite-sized hospital and health industry news from the District of Columbia, Maryland, Michigan, and Wisconsin.

    • District of Columbia: President Trump on Wednesday released a $53 million, two-year plan aimed at curbing suicide among veterans. The initiative includes a public awareness messaging campaign, which is scheduled to start in the coming weeks, that intended to raise awareness about veteran suicides during times of isolation. The program also includes funding for initiatives related to firearm safety, placing barriers near railroads and bridges, and workplace wellness programs (Yen, Associated Press, 6/18).
    • Maryland: CMS on Wednesday released a proposed rule that intends to make it easier for commercial health plans to enter into agreements with drugmakers that base an insurer's payment for a treatment on patients' outcomes. CMS Administrator Seema Verma explained that current regulations requiring drugmakers to charge Medicaid their "best prices" for their products have stymied private insurers' ability to enter into value-based payment agreements with drugmakers, because "[i]f a drug didn't work in 20% of cases, in those cases the payment might be zero," which could be lower than the Medicaid price and therefore conflict with federal requirements. To address that issue, the agency's new proposed rule would change the way Medicaid best prices are calculated while continuing to ensure Medicaid programs receive drugmakers' best prices for their products, Verma said (Beasley, Reuters, 6/17; Livingston, Modern Healthcare, 6/17; King, FierceHealthcare, 6/17; CMS release, 6/17).
    • Michigan/Wisconsin: Advocate Aurora Health and Beaumont Health on Wednesday announced the systems are considering a merger that would create a 34-hospital health system spanning Illinois, Michigan, and Wisconsin. If the organizations ultimately merge, the combined health system would be one of the largest hospital systems in the Midwest and likely would generate more than $17 billion in annual revenue (Herman, Axios, 6/17; Reindl, Detroit Free Press, 6/17; Advocate Aurora Health release, 6/17).

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