Managed Care Outlook 2024

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There is quiet but strong momentum in Washington to reclassify medical cannabis under the Controlled Substance Act (CSA) from a Schedule I drug to a Schedule III drug in 2024. Reclassification would represent a monumental shift in federal cannabis policy and an express acknowledgement that there are accepted medical uses for the drug. Consumers are already seeking insurance coverage for medical cannabis, and the drug’s expected reclassification may cause an explosion of coverage demands. Health plans should consider their policy toward cannabis now and prepare for the fallout.

Autoren: Jason T. Mayer

Key stat - American consumers are expected to spend more than $33 billion on cannabis in 2023Here, we provide background on the expected reclassification of cannabis as a Schedule III drug, an overview of existing litigation over cannabis coverage, and considerations for health plans as they navigate the expected change in federal policy toward cannabis.

Cannabis expected to be reclassified as a Schedule III drug

On October 6, 2022, President Biden directed the Secretary of Health and Human Services (HHS) “to review expeditiously” how cannabis is scheduled under federal law. Currently, cannabis is classified as a Schedule I drug under the CSA, meaning that the drug has “a high potential for abuse” with “no currently accepted medical use in treatment in the United States” and cannot safely be dispensed under a prescription. Heroin, LSD and peyote are examples of other Schedule I drugs.

Following President Biden’s direction, on August 29, 2023, HHS recommended that the Drug Enforcement Agency (DEA) – which has the final authority to reschedule a drug – reschedule cannabis from a Schedule I to a Schedule III drug. A Schedule III drug has a lower potential for abuse than Schedule I or Schedule II drugs and “a currently accepted medical use in treatment in the United States.” HHS based its recommendation on an extensive Food and Drug Administration (FDA) review of cannabis and related findings, although those findings have not been released to the public. Previously, DEA has testified during a congressional hearing that it is bound by FDA’s recommendations on scientific and medical matters.

The upshot is that DEA is likely to reschedule cannabis to a Schedule III drug as soon as 2024, possibly before the upcoming presidential election.

Cannabis coverage litigation

Consumers and other cannabis industry participants have already successfully sued for insurance coverage for medical cannabis, despite its current prohibition under federal law. For example, the state Supreme Courts of New Hampshire and New Jersey and appellate courts in New Mexico have ordered state workers’ compensation insurers to reimburse the cost of medical cannabis for injured workers. By contrast, the state Supreme Courts in Maine and Minnesota have held that the CSA preempts reimbursement for medical cannabis under their respective workers’ compensation laws, relying on the drug’s classification as a Schedule I drug under the CSA and principles of federal preemption. The latter cases may be decided differently if cannabis is rescheduled as a Schedule III drug.

In addition, there is at least one pending case filed by a putative class in New Mexico seeking coverage for medical cannabis from commercial and Medicaid health plans under state law. Cannabis reclassification under federal law could dramatically impact the health plans’ arguments and defenses in such cases and lead to more coverage lawsuits against health plans throughout the country.

Key takeaways
  • While cannabis is currently illegal under federal law, the government signaled that cannabis may be reclassified as a drug with accepted medical use in treatment in the U.S. as soon as 2024
  • Multiple state courts have ordered worker’s compensation insurers to cover the cost of medical cannabis, and consumers are likely to demand coverage under their health plans if the drug is reclassified under federal law as expected
  • Health plans should begin thinking about their approach to covering (or not covering) cannabis, including by reviewing plan designs and considering contracting and reimbursement issues
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