Healthcare agencies mellow on medical cannabis as CMS launches Medicare hemp pilot
Federal healthcare agencies are changing their tune on hemp and derivative products that contain CBD, the primary cannabinoid produced by the flowering plants. The shift comes after President Donald Trump’s administration rescheduled marijuana to a lower classification, opening the door for more research on the effects of, and possible medical applications for, both CBD and THC—the latter being the primary component of marijuana products, recreationally used to get “high.”
On April 1, the Centers for Medicare & Medicaid Services announced it would allow providers and payers participating in Medicare alternative payment models to utilize and prescribe hemp products, as long as there is a legitimate “clinical determination” for doing so.
The agency did not provide examples of when hemp and CBD can be used. Instead, the purpose of this Substance Access Beneficiary Engagement Incentive (BEI) pilot is to test ways these products can be used as part of a “clinician-led care plan, based on shared decision-making between the clinician and patient.”
CMS said, for now, the official use of hemp will be limited to participants in the ACO REACH Model and the Enhancing Oncology Model. While that means patients covered by Medicare will benefit, those whose providers bill traditional fee-for-service and are not enrolled in one of these alternative payment models will be ineligible to have CBD products paid for by the government.
“CMS is committed to innovation that meets patients where they are while maintaining strong safeguards and clinical oversight,” CMS Administrator Mehmet Oz, MD, said in an announcement. “Under [President Donald Trump’s] leadership, 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.”
As for how providers and managed care plans will be reimbursed, CMS said BEI will offer $500 per year, per eligible beneficiary, which can be used to procure commercial CBD products. This excludes anything inhalable, as well as any products that fall outside the federally allowed threshold of 0.3% delta-9 THC.
CMS added that this program does not override existing federal and state laws that control Cannabis plants and products, including the Controlled Substances Act. This means patients in states with stricter regulations may not be able to lawfully get CBD, regardless of medical need.
The BEI pilot will roll out to additional alternative payment model participants beginning in 2027.
FDA vows not to kill the vibes
On the same day CMS unveiled its more relaxed approach toward medical cannabis, the U.S. Food and Drug Administration (FDA) followed with a policy shift of its own.
In a letter, FDA Commissioner Marty Makary, MD, said the agency will relax its “enforcement posture” towards CBD products, specifically those legalized under the 2018 farm bill—though he reiterated that the FDA has some authority to do so under existing federal law.
“CMS has signaled an intention to expand various coverage flexibilities to potentially include hemp-derived CBD products,” Makary wrote. “The FDA does not intend to enforce sections 502(f)(1) or 505 of the Federal Food, Drug and Cosmetic Act with respect to an orally administered, hemp-derived CBD product solely on the basis that it contains CBD.”
He confirmed that this mellow approach was conditional on products being “manufactured, marketed, and labeled in a manner that would be consistent with the dietary supplement framework,” which includes a ban on packaging that makes hemp appealing to children.
He cited the rescheduling of cannabis and the CMS hemp pilot as reasons for the FDA taking a hands-off approach. For now, it seems some cannabis candies and baked goods will stay on store shelves for the foreseeable future.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.