MEDICAID REBATE LIABILITY FORECASTING AFTER UNWINDING, PUERTO RICO INCLUSION

For pharmaceutical manufacturers accruing for Medicaid rebate liabilities, new updates on continuous enrollment unwinding from the COVID Public Health Emergency and the addition of Puerto Rico to the Medicaid Drug Rebate Program (MDRP) may have implications for your forecasts. Below is a summary of what you need to know.

Since the onset of the COVID-19 pandemic, Medicaid enrollment has risen more than 30% to over 92M, in part from a provision in the 2020 Families First Coronavirus Response Act (FFCRA) referred to as “continuous enrollment.” This provision paused periodic ongoing eligibility verification processes for Medicaid recipients while there was a national Public Health Emergency (PHE) declaration in effect.

In February 2023, the Consolidated Appropriations Act decoupled the continuous enrollment provision from the PHE and terminated continuous enrollment on March 31, 2023. With the sunset of continuous enrollment, states are now required to return to normal Medicaid eligibility and enrollment operations in a process referred to as “unwinding.”

Furthermore, the Puerto Rico Health Insurance Administration announced that Puerto Rico will join MDRP in January 2023, with the first billing cycle set to occur in April 2023. The Puerto Rico Health Insurance Administration (“ASES” for its Spanish acronym) has been working alongside their Rebates Aggregator (and recently named PBM), Abarca Health, LLC, to implement the operational framework needed for MDRP. Pharma manufacturers may begin to receive automatic email notifications when ASES invoice packages are available through Abarca’s repository as early as May 2023 for 1Q23 utilization. Per Abarca, the main method for invoice delivery will be through their portal.

Estimated impacts on Medicaid enrollment from these program updates are as follows:

• Continuous enrollment unwinding is estimated to reduce Medicaid rebate enrollment between 5 – 13% (or by 5 and 12 million enrollees) nationally during the approximate 12- to 14-month unwinding period:
  • Disenrollment numbers and timelines will vary by state due to when individual states start unwinding and how they prioritize and execute renewal processes
  • States can obtain temporary unwinding exceptions, made available by CMS, with a goal of minimizing procedural eligibility terminations. As of March 31, 2023, CMS has approved 188 waivers across 47 states/territories for varied unwinding strategies that include referencing other programs to confirm eligibility and timeline extensions.
• The participation of Puerto Rico in MDRP will increase Medicaid enrollment by an estimated 1.5 million enrollees or more:
  • 1.5 million enrollees reflect 2021 Medicaid participation, so current estimates may be higher
  • 8 Medicaid programs are being offered to start, including Child Health Insurance Program (CHIP) for children and JCODE programs for physician administered drugs
  • Details regarding when Puerto Rico will be fully operational on MDRP are still unknown, however pharma manufacturers may see ASES invoice notifications as early as May 2023
  • The net impact of continuous enrollment unwinding and the addition of Puerto Rico to MDRP may result in a decline in overall Medicaid enrollment over the course of the next 12-14 months

Pharmaceutical manufacturers should stay tuned for additional legislative and Medicaid program updates that may evolve forecasts for Medicaid enrollment and Medicaid rebate liabilities.

Sources:

Jennifer Tolbert, Meghana Ammuia. (April 5, 2023) 10 Things to know about the Unwinding of the Medicaid Continuous Enrollment. KFF. https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-the-unwinding-of-the-medicaid-continuous-enrollment-provision/#nine

(March 22, 2023) Centers for Medicare & Medicaid Services Medicaid and CHIP Continuous Enrollment Unwinding: What to Know and How to Prepare. https://www.cms.gov/files/document/transcriptmedicaidchipcontinuousenrollmentunwinding03222023.pdf

(April 5, 2023) HHS Reminds States of Legal Obligations to Federal Civil Rights Protections as States Transition from Medicaid Continuous Coverage Changes as the Public Health Emergency Ends
https://www.hhs.gov/about/news/2023/04/05/hhs-reminds-states-legal-obligations-federal-civil-rights-protections-states-transition-medicaid-continuous-coverage-changes-public-health-emergency-ends.html#:~:text=As%20a%20result%20of%20the,referred%20to%20as%20%E2%80%9Cunwinding.%E2%80%9D

(Accessed April 10, 2023) COVID-19 PHE Unwinding Section 1902(e)(14)(A) Waiver Approvals https://www.medicaid.gov/covid-19-phe-unwinding-section-1902e14a-waiver-approvals/index.html

Edwin Park (March 21, 2023) Medicaid Drug Rebate Program News and Notes https://ccf.georgetown.edu/2023/03/21/medicaid-drug-rebate-program-news-and-notes/