The MVP Act amends title XIX of the Social Security Act to make value‑based purchasing (VBP) arrangements an explicit part of Medicaid drug pricing law. The bill allows manufacturers to report multiple best‑price points for the same dosage/strength when the manufacturer offers the VBP to all States; it changes how average manufacturer price (AMP) and Medicare average sales price (ASP) treat outcome‑based refunds, reimbursements, withholds, and installment payment structures tied to VBP contracts; and it creates an explicit Antikickback Statute safe harbor for manufacturer or third‑party payments to States tied to VBP outcomes.
The statute imposes tight implementation timelines (multiple 180‑day rulemaking or guidance deadlines for HHS and the HHS Office of Inspector General) and directs the Government Accountability Office to study the effects of VBP arrangements — including on access to high‑cost transformative therapies, Medicaid expenditures, and related programs (340B, Medicaid rebates, and Medicare Part B). For compliance officers and manufacturers, the bill changes how outcome‑contingent remuneration is reported and excluded from key pricing metrics, while giving States tools (and new administration tasks) to negotiate and coordinate VBP agreements — including cross‑State fund transfers for inpatient drugs.
At a Glance
What It Does
The bill amends Medicaid rebate and pricing law to (1) permit manufacturers to establish multiple best‑price points for a single drug under a VBP if the arrangement is offered to all States; (2) exclude certain outcome‑triggered refunds/withholds from AMP calculations and from Medicare ASP in related situations; and (3) add an AKS exception for remuneration to States tied to VBP outcomes. It also requires HHS guidance for inpatient drug VBPs and a GAO study.
Who It Affects
State Medicaid agencies (negotiating and administering VBPs), drug manufacturers (reporting, rebate exposure and contract design), hospitals and inpatient providers (new guidance for drugs provided in inpatient settings), and federal administrators (CMS, OIG) and auditors (GAO) charged with rulemaking and oversight.
Why It Matters
This bill lowers legal and reporting barriers that have discouraged VBP adoption by clarifying how outcome‑based payments interact with AMP, best‑price, and ASP rules and by creating an explicit AKS exception. That changes incentives for bringing outcome‑contingent pricing to Medicaid, with direct implications for access to expensive therapies and for Medicaid and federal program spending.
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What This Bill Actually Does
The MVP Act takes a package of policy fixes that proponents have sought for value‑based drug contracts and writes them into the Medicaid and Medicare price‑reporting framework. First, it amends the Medicaid rebate statute to permit manufacturers to report multiple best‑price points for a single dosage form and strength when those prices arise from VBP arrangements — but only when the manufacturer offers the arrangement to every State.
The provision also includes a rule making clear that nothing in the change prevents a manufacturer from treating a VBP as a bundled sale.
Second, the bill narrows what counts toward the average manufacturer price (AMP) by excluding outcome‑triggered refunds, rebates, reimbursements, free goods, or payment withholds that are triggered by a patient’s failure to meet the VBP’s outcome measures. For VBP contracts that spread payments over time, the statute requires that AMP be calculated as if the full aggregate contract price were paid at the first installment in the rebate period — a mechanical rule that prevents installment timing from lowering reported AMP for rebates.
The Secretary must implement these AMP changes through rulemaking within 180 days.Third, the bill adjusts Medicare’s average sales price (ASP) rules so that ASP excludes the same outcome‑based remuneration that AMP excludes, but only for manufacturers that elect to report multiple best‑price points under Medicaid. The statute also directs HHS to issue guidance for State Medicaid agencies on using VBPs for inpatient drugs, including how multiple States can enter coordinated agreements and transfer funds so a patient treated outside their State of residence can be accounted for under their home State’s VBP pricing.Fourth, the Act adds an explicit exception to the federal Antikickback Statute for manufacturer (or third‑party) payments to States under VBPs when those payments are triggered by a patient failing to achieve contract outcomes.
The HHS Inspector General must issue implementing rules within 180 days. Finally, the Comptroller General must study and report by mid‑2029 on how VBPs affect access (including to high‑cost and gene‑editing therapies), disparities, Medicaid expenditures, and interactions with the 340B program and Medicare Part B.
Collectively, the bill creates legal clarity and administrative requirements that make outcome‑contingent drug contracts more operationally feasible in Medicaid, while assigning regulators and agencies short timelines to write implementing rules and guidance.
The Five Things You Need to Know
The bill permits manufacturers to report multiple best‑price points for the same dosage/strength under Medicaid, but only if the manufacturer offers the value‑based purchasing arrangement to all States.
It excludes outcome‑triggered refunds, rebates, reimbursements, free goods, and payment withholds tied to VBP performance from AMP calculations and directs HHS to implement that change by rule within 180 days.
For VBPs that pay in installments, AMP must be calculated as if the full aggregate contract price were paid in the first installment of the rebate period, preventing timing‑based AMP reductions.
Medicare ASP rules are amended so manufacturers who elect multiple best‑price reporting under Medicaid may exclude the same outcome‑based amounts from ASP calculations for drugs sold under VBPs.
The bill creates an explicit Antikickback Statute exception for remuneration from manufacturers (or third parties on their behalf) to States under VBPs when payments are tied to patient outcomes, and requires the HHS OIG to issue implementing rules within 180 days; GAO must report on VBP impacts by June 30, 2029.
Section-by-Section Breakdown
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Multiple best‑price points for VBP contracts
This amendment to 1927(c)(1)(C)(ii) allows manufacturers to include multiple best‑price points for the same dosage form and strength when those prices arise from VBP arrangements, but conditions that flexibility on the manufacturer offering the arrangement to all States. Practically, that means a manufacturer cannot selectively grant a lower VBP price to only some States and treat that as a non‑best price; it must broaden the offer to the full State Medicaid market to claim multiple points. The provision also expressly preserves a manufacturer’s ability to treat a VBP as a bundled sale, limiting objections that the change would eliminate existing contracting tools.
AMP definition adjustments and statutory VBP definition
The bill adds a new AMP exclusion for outcome‑contingent remuneration tied to VBPs — defined to include refunds, rebates, reimbursements, free goods, and withheld or reduced payments triggered when a patient fails to meet contract outcomes — and it adds a special AMP rule treating installment arrangements as if full aggregate payment occurred in the first installment for rebate‑period purposes. It also adopts the Code of Federal Regulations definition of 'value‑based purchasing arrangement' (CFR 447.502) by reference, creating a single regulatory touchpoint for what qualifies as a VBP under the new provisions. HHS must issue rulemaking implementing the AMP changes within 180 days, which is a short window that will require agencies to decide on operational reporting templates and timing quickly.
Medicare ASP exclusion tied to Medicaid VBP elections
Section 1847A(c)(3) is amended so that ASP calculations for drugs sold under VBPs exclude the same outcome‑based remuneration that AMP excludes, but only where the manufacturer has elected to include multiple best‑price points under Medicaid reporting. This ties Medicare reporting treatment to a manufacturer’s election in Medicaid, creating a cross‑program linkage: the choice to report multiple best‑price points in Medicaid determines ASP treatment in Medicare. Compliance teams will need to coordinate Medicaid reporting elections with Medicare reporting practices.
HHS guidance for inpatient drugs and multi‑State agreements
The Secretary must issue guidance within 180 days on using VBPs for drugs furnished as part of inpatient hospital services but reimbursed separately from the hospital payment. The guidance must address how multiple States can enter coordinated contracts with manufacturers and allow fund transfers so individuals treated out‑of‑state can be treated as if they received the drug in their State of residence for pricing and accounting purposes. That creates new options for States with small patient populations (e.g., rare disease therapies), but it imposes legal and operational questions about cross‑State transfers, auditing, and cash flow between State Medicaid programs.
Antikickback Statute exception for VBP‑tied State remuneration
The bill adds an explicit exception to section 1128B(b)(3) for remuneration provided by a manufacturer or a third party on a manufacturer’s behalf to a State under a VBP when payments are triggered by a patient failing to achieve the arrangement’s outcomes. The HHS Office of Inspector General must implement this exception through rulemaking within 180 days. The change removes a legal deterrent that has made manufacturers wary of outcome‑based payments to States, but it leaves the OIG to define guardrails and compliance conditions in implementing regulations.
GAO study and reporting requirements
GAO must study whether VBPs improve access, outcomes, and costs, with specific attention to transformative therapies (including rare disease gene therapies), socioeconomic disparities, the interaction with the Medicaid rebate program, the 340B program, and Medicare Part B. GAO is tasked to analyze the types of VBP pricing structures, evaluate which work well in practice, and estimate long‑term savings for States; the report is due to Congress by June 30, 2029. That deadline creates a multi‑year window to observe early implementations and will inform any future statutory or regulatory adjustments.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- State Medicaid agencies — gain statutory clarity and tools to negotiate outcome‑based contracts, plus HHS guidance on using VBPs for inpatient drugs and options for multi‑State coordination that can improve access to therapies for small patient populations.
- Patients with rare or high‑cost conditions — could see expanded Medicaid access to transformative therapies if VBPs align payment with outcomes and make manufacturers more willing to provide contracts that reduce upfront cost barriers.
- Manufacturers willing to use outcome‑based models — receive clearer reporting rules, an AKS exception for State payments tied to outcomes, and predictable AMP/ASP treatment that reduces legal uncertainty around outcome‑contingent remuneration.
- Hospitals and inpatient providers — get federal guidance about how inpatient drugs may be included in VBPs and how cross‑State billing and transfers can be managed, which may reduce administrative friction for patient access.
Who Bears the Cost
- Drug manufacturers — face added reporting complexity (multiple best‑price points, AMP/ASP coordination), potential changes in rebate liabilities due to AMP/ASP mechanics, and compliance costs to adapt contracts and reporting systems.
- State Medicaid programs — must build negotiating, accounting, and audit capacity to run VBPs and to perform or receive cross‑State fund transfers for inpatient drugs; smaller States may need technical assistance to participate effectively.
- Federal agencies (CMS and the HHS OIG) — must complete multiple rulemakings and issue guidance within 180 days, creating a resource and timeline burden and requiring rapid policy design decisions that affect complex payment systems.
- 340B covered entities and safety‑net providers — could see indirect impacts if VBP price reporting changes affect Medicaid rebate calculations or AMP/best‑price dynamics that feed into 340B ceiling price computations.
Key Issues
The Core Tension
The central dilemma is whether to prioritize legal and operational clarity that expands value‑based contracts (thereby potentially improving access and aligning payment with outcomes) or to prioritize the integrity and simplicity of existing rebate‑based price‑reporting systems (which protect program revenues and broad price concessions). The MVP Act leans toward enabling VBPs, but in doing so it creates trade‑offs between incentivizing innovation in contracting and preserving the rebate and discount mechanisms that keep net prices low for Medicaid and downstream programs.
The bill attempts to thread a narrow policy needle: it incentivizes value‑based contracts by exempting certain outcome‑contingent remuneration from AMP and ASP calculations and by creating an AKS exception for State payments tied to outcomes. But those same mechanics create several operational and integrity questions.
Excluding outcome‑based withholds and refunds from AMP and ASP reduces the apparent transactional price that feeds rebate formulas, which could lower rebates owed under current law or shift when and how rebates are collected. The statute partially addresses timing by treating installment payments as if paid in full in the first installment for AMP, but that mechanical fix may produce perverse incentives about contract timing and structuring.
Another unresolved issue is measurement and data flow. VBPs depend on reliable outcome measurement and patient‑level data exchange across providers, manufacturers, and State systems.
The bill requires HHS guidance on multi‑State arrangements and allows fund transfers, but it does not lay out standardized data‑sharing protocols, audit rights, or specific metrics for common therapeutic areas. That gap risks disputes over outcome attribution, reconciliation lags, and increased administrative costs.
Finally, the linkage across programs — Medicaid best‑price elections affecting Medicare ASP treatment and touching 340B ceilings — creates cross‑program spillovers that may disadvantage entities not directly part of VBP negotiations and will require careful rulemaking to avoid unintended budgetary shifts.
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