The American Rescue Plan Act’s impact on Medicaid and pharma

The American Rescue Plan Act of 2021 – a $1.9 trillion aid package to assist in the United States’ recovery from the economic and health effects of the COVID-19 pandemic – was signed into law on March 11, 2021. The bill calls for a number of provisions to increase aid coverage, assist businesses and individuals, and support the economy overall to lessen the hardships brought upon by the novel coronavirus. (1)(2)

Within the detailed bill, there are two sections of special interest for the pharmaceutical and life sciences industry as they relate directly to Medicaid coverage of COVID-19 vaccines and the sunset of a critical drug rebate provision. These new stipulations may require pharmaceutical manufacturers to reconsider their government program coverage strategies not only for the present, but also for a post-pandemic future.

Mandatory COVID-19 vaccine coverage under Medicaid

Section 9811 of the American Rescue Plan aims to establish a treatment bundle within Medicaid. COVID-19 testing, treatment and immunization are now seen as a required medical assistance benefit for Medicaid eligibility groups. In addition to the bundle covering treatment for COVID-19 and related conditions, there is also a provision which overrides state limits on benefit coverage for cases where the coronavirus is the primary diagnosis. Because this is a coverage rule specifically for Medicaid beneficiaries, entitlement to treatment ceases once patients are no longer deemed eligible for Medicaid.

This is the largest Medicaid coverage determination to date, as prior provisions focused on specific eligibility groups (i.e., children, pregnant women, people diagnosed with cervical or breast cancer). This plan was enacted starting on March 11, 2021, and runs through one year after the public health emergency ends.

This law also establishes a benefit-limit override by expanding coverage for patients diagnosed with or presumed to have COVID-19, as well as for those with conditions that may complicate the COVID-19 treatment process.(3) Underlying conditions that would impact COVID-19 treatment would be deemed as mandatory coverage, ignoring any state plan limits. There are questions surrounding this benefit override, such as what constitutes a presumptive COVID-19 diagnosis as well as which conditions are believed to complicate COVID-19 treatments. Contingency planning is also required for individuals whose Medicaid eligibility lapses while receiving treatment.