What to Know About Medicare’s Hemp-Derived Product Program

Proponents of medicinal hemp and medical marijuana are generally pleased with the pilot program launched in April by CMS to allow certain Medicare enrollees access to hemp-derived products.

Unlike the 2013 Cole memorandum issued by the Justice Department during the Obama administration — which said that the federal government wouldn’t enforce marijuana-related Controlled Substances Act provisions in states that legalized marijuana — “this is the government actually setting up a program structure to permit cannabis-derived compounds into a federal medical regime,” Andrew Livingston, director of economic and market analysis for Vicente LLP, a hemp and cannabinoids law firm, said in a phone interview. “This is the government actually doing something [affirmative], not just non-enforcement.”

Under the program announced on April 1, “eligible hemp-derived products can be incorporated into patient care plans under clinician guidance, consistent with model requirements and applicable law,” CMS said in a press release. However, the program will only be available to beneficiaries enrolled in the Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) model and the Enhancing Oncology Model, and will be available to participants in the Long-Term Enhanced ACO Design Model beginning in 2027.

For the current performance period, five ACO REACH organizations have submitted implementation plans that CMS will review. CMS said it anticipated those plans, if approved, to be able to start offering the program right away, with additional participants added over time.

“CMS is committed to innovation that meets patients where they are while maintaining strong safeguards and clinical oversight,” CMS Administrator Mehmet Oz, MD, MBA, said in the release. “We’re expanding the tools available to improve patients’ health while generating important insights into how providers can use these tools safely and effectively in real-world care settings.” The agency said that it, however, “does not make claims regarding the therapeutic value of these products.”

The program, known as the Substance Access Beneficiary Engagement Incentive, allows participating organizations to “furnish eligible hemp-derived products for up to $500 per year per eligible beneficiary, subject to model requirements and safeguards, as well as clinical determination,” the release said. Eligible hemp-derived products must contain no more than 0.3% delta-9 tetrahydrocannabinol (THC), and the program excludes certain products, such as inhalable products, any products containing more than 3 mg per serving of THC in an orally administered form, and any products containing cannabinoids not naturally produced by or in the cannabis plant during its cultivation.

In addition to cancer, “chronic pain is typically the condition that [THC] is used most for, [along with] sleep issues, HIV, AIDS, and [post-traumatic stress disorder], although I don’t know how effective 3 mg or less of THC is going to be,” said Livingston.

The program doesn’t constitute a change in Medicare coverage because providers will be supplying the products; beneficiaries will receive it at no charge and will not be permitted to submit claims for the products. “Participating organizations are responsible for procurement and must comply with program integrity safeguards, including restrictions on marketing to induce beneficiary selection and requirements governing financial arrangements,” the release added.

The National Organization for the Reform of Marijuana Laws (NORML) praised the new program. “The integration of certain therapeutic cannabis products into the Medicare program further legitimizes the use of marijuana as a medicine, particularly for improving the health-related quality of life of older Americans and seniors,” Paul Armentano, the organization’s deputy director, said in an email. “This program will enhance health practitioners’ ability to assess the real-world safety and efficacy of these products in various patient populations, while furthering greater acceptance of these products among both patients and physicians.”

The program’s primary downside, Livingston said, “is going to be the complicated financial structures that likely do not incentivize healthcare organizations enough to implement this … It’s hard to have a program where an organization is required to buy a product and then give it to their patients for free. So my hope is that in future years, that is expanded … to make it a reimbursable expense.”

Another issue is that the product needs to be legal at the state and federal level, he added. “So states like California or Michigan or Arizona that have significant restrictions on hemp-derived cannabinoid products, they may not be able to provide those within this federal regime.”

The Trump administration is also taking other actions aimed at easing marijuana regulations. Last Thursday, President Donald Trump’s acting attorney general signed an order reclassifying state-licensed medical marijuana as a less-dangerous drug, a major policy shift long sought by advocates who said cannabis should never have been treated like heroin by the federal government.

The order signed by Todd Blanche does not legalize marijuana for medical or recreational use under federal law. But it does change the way it’s regulated, shifting licensed medical marijuana from Schedule I — reserved for drugs without medical use and with high potential for abuse — to the less strictly regulated Schedule III. It also gives licensed medical marijuana operators a major tax break and eases some barriers to researching cannabis.

The Associated Press contributed to this story.

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