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Avalere Statement on CMS’s Healthy Adult Opportunity Program

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CMS’s Healthy Adult Opportunity program, a new Section 1115 demonstration initiative, will allow state Medicaid programs to move toward capped financing models for some non-disabled adult beneficiaries with an opportunity for shared savings and additional flexibilities.

One of the most significant changes is to the way state Medicaid programs can manage prescription drugs. States would be able to develop closed formularies and exclude drugs from coverage, while continuing to receive full manufacturer rebates. Despite protections for certain drugs (e.g., mental health, HIV, opioid use disorder), we expect states could use this flexibility to develop formularies more similar to commercial plans. This is a significant departure from the long-standing policy, which requires states to cover all drugs for which manufacturers pay mandatory rebates.

Outside of changes to the drug benefit, these demonstrations could also allow states to use alternate managed care oversight standards and change other program elements (e.g., provider payment rates).

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