States Can Again Weigh in on TennCare Demonstration with Closed Formulary

States and other stakeholders have another chance to weigh in on Tennessee’s 10-year Medicaid funding demonstration which was approved by the Centers for Medicare & Medicaid Services (CMS) in early January during the final days of the Trump administration.  In April, two legal advocacy organizations sued the federal government to block the demonstration, though the plaintiffs have since agreed to pause the lawsuit on the condition that a new federal comment period be opened.  CMS is accepting public comments through September 9.   

The Medicaid demonstration enables Tennessee to receive a capped amount of federal funding and flexibility to change the program at its discretion, so long as changes maintain or are additive to its level of coverage in 2020.  Savings that the state achieves through the demonstration can be invested in other health programs.   

One aspect of note within the Tennessee waiver is CMS’s approval for a closed drug formulary – a state strategy that has taken on increased relevance following the Food and Drug Administration’s accelerated approval of Aduhelm in June. Under accelerated approval, Biogen has until 2029 to complete confirmatory trials to prove Aduhelm is performing as hoped.  In the meantime, Aduhelm’s approval has the potential to lead to millions in increased Medicaid spending for a drug with unproven clinical benefits.  

States have few policy levers to address the impact of the accelerated approval program on their Medicaid spending, however, a closed formularies would enable a state to exclude certain drugs, like those approved under the accelerated approval program, from coverage.  Another approach is reflected in the recent Medicaid and CHIP Payment and Access Commission (MACPAC) recommendation to Congress to increase Medicaid rebates for accelerated approval drugs until confirmatory trials are complete.  While Tennessee’s closed formulary was approved as part of its 1115 demonstration, an earlier request by Massachusetts for approval of a closed formulary was denied in 2018.  Dan Tsai, who led the closed formulary effort in Massachusetts, is now the Director of the Center for Medicaid and CHIP within CMS.  

Though states can weigh in on any aspect of Tennessee’s waiver, the re-opened federal comment period represents an important opportunity for comments related to closed drug formularies, specifically following the controversial FDA approval of Aduhelm through the accelerated approval program.  Comments on the closed formulary, or any other aspect of the TennCare 1115 waiver, can be shared here.