Feds Detail Plan To Cover Up To $500 In Hemp CBD And THC Products For Medicare Patients Under Program Launching Next Week

Patients enrolled in select federal health insurance programs could have up
to $500 of hemp-derived products covered each year beginning as early as
April 1, according to new details about the cannabis initiative that’s
being implemented by the Centers for Medicare & Medicaid Services (CMS).

The CBD-focused plan will also allow a certain amount of THC in products,
but the agency said the planned rules are subject to change if federal hemp
policy changes, as is currently expected under a law set to take effect
later this year.

President Donald Trump signed an executive order in December that calls on
the attorney general to finalize a rule federally rescheduling marijuana
that also contained components to “improve access” to full-spectrum CBD
products. To that end, the CMS update posted on Friday details how certain
of its “Innovation Center” models will facilitate a pilot program providing
coverage to regulated, hemp-derived cannabidiol.

Participants would be required to ensure that CBD is sourced from “a
legally compliant source and high-quality farm,” prepared as an oral
solution and tested for cannabinoid content so that available products
contain no more than 0.3 percent delta-9 THC by dry weight and up to 3
milligrams of total THC per serving.

CMS said that centers participating in one of three models that receive
substance access Beneficiary Engagement Incentives (BEI) will be able to
“consult with eligible beneficiaries about the possible use of eligible
hemp products to improve symptom control.”

“Participants implementing this BEI may elect to furnish such hemp products
up to $500 a year, per eligible beneficiary, subject to model requirements
and safeguards,” it said, while emphasizing that Medicare “does not pay the
participant for the products, and beneficiaries should not be asked to
submit a Medicare claim for the product.”

The three eligible innovation center models are CMS’s ACO REACH Model, Enhancing
Oncology Model and Long-term Enhance ACO Design (LEAD) Model. For the first
two, participants can elect to utilize the BEI for CBD coverage starting on
April 1. For LEAD participants, the start date is January 1, 2027.

Participating organizations under those models must first elect the
substance access BEI and then produce a CMS implementation plan that
describes “the specific eligible hemp product(s) and dosing information,
the amount/frequency of distribution, beneficiary eligibility criteria,
safeguards/oversight, and other requirements outlined in participation
agreements.” Those plans would need to receive CMS approval before
participants could offer cannabidiol coverage.

After initial details about the initiative were revealed last week, CMS
faced questions about the potential impact of a law set to take effect in
November that would redefine hemp in a way that would strictly limit the
types of cannabis products that are currently permitted under the 2018 Farm
Bill that Trump signed in his first term. That law expressly prohibits hemp
derivatives containing more than 0.4 milligrams of total THC per container,
which industry stakeholders say would effectively eradicate the consumable
hemp market.

*Here’s how CMS is defining hemp products allowed through its substance
access BEI:*

“Eligible hemp products are limited to federally legal hemp-derived
products containing no more than 0.3 percent delta-9 THC and expressly
excludes inhalable products, any products containing more than 3 mg per
serving of tetrohydrocannabinols (such as delta-8-tetrahyrdocannabinol,
delta-10-tetrahyrdocannabinol, and tetrahydrocannabinolic acid) in an
orally administered form, and any products containing cannabinoids not
naturally produced or capable of being produced by or in the cannabis plant
during its cultivation.”

The agency acknowledged that its definition complies with the 2018 Farm
Bill provisions and noted that its coverage plan “does not override the
Controlled Substances Act or authorize Schedule I substances.”

“To be eligible, hemp products must also comply with applicable state and
local laws,” CMS said, raising additional questions about potential
regulatory complications as multiple states have proactively moved to
restrict hemp product availability in anticipation of the pending federal
policy change. “If the legal limits on hemp-derived products changes…CMS
will adjust its definition in accordance with the law.”

CMS further explained that cannabinoid products “must be furnished and
provided directly by a qualified physician affiliated with the participant
organization, as specified by the model participation agreements,” and
model participants “cannot instruct beneficiaries to purchase retail
products and submit receipts for reimbursement under the BEI.”

To be approved to provide CBD coverage, model participants must 1) meet
federal, state and local “production, quality and safety laws and other
mandated standards,” 2) be sourced from legally compliant farms “consistent
with 2018 Farm Bill hemp requirements” and 3) be tested for cannabinoid
content, as well as “contaminants and microbial hazards.”

The new details about the rules for the CBD pilot program come weeks after
a co-founder of the hemp company Charolette’s Web, which has been
collaborating with CMS, said the agency had already finalized its plans for
federal health insurance coverage of cannabidiol.

Bill Morachnick, CEO of Charlotte’s Web, said in a press release on Monday
that they are “grateful for CMS’s thoughtful approach in expanding access
and creating space for responsible, evidence‑based hemp wellness
conversations in clinical settings.”

“This program aligns with our mission to advance safe, high‑quality,
science‑backed hemp options for consumers, and we remain committed to
supporting sensible legislation that protects patients and strengthens the
integrity of our industry,” he said.

“The updated guidance from CMS represents an important step in
strengthening how hemp-based options are considered within care settings,”
Morachnick said in a separate statement. “By reinforcing a science-driven
framework centered on safety, quality, and transparency, it creates a
clearer path for responsible integration into patient care. We see this as
meaningful progress toward expanding access to trusted, non-intoxicating
hemp solutions in a way that aligns with both clinical standards and
patient needs.”

CMS Administrator Mehmet Oz explained in December that the policy change
will “allow millions of Americans on Medicare to become eligible to receive
CBD as early as April of next year—and at no charge if their doctors
recommend them.”

He added that Medicare Advantage insurers CMS has contacted are “also
agreeing to consider CBD to be used for the 34 million Americans that they
cover.”

As previously described by the administrator, the plan would involved those
65 and older who qualify for Medicare, but the specific qualifying
conditions weren’t detailed. There were repeated mentions of chronic pain,
specifically related to cancer, but it’s possible the CBD eligibility
criteria includes additional conditions.

In its latest update, CMS said patients with disqualifying conditions under
the Innovation Center models, as well as those who are pregnant or
breastfeeding, could not receive CBD. They must also be at least 18 years
old to participate.

At the signing ceremony for the marijuana and hemp executive order Trump
signed in December, Oz also gave kudos to Howard Kessler, founder of The
Commonwealth Project, which produced a video about the benefits of
cannabidiol for seniors that the president shared on Truth Social last year
and who apparently has pressed Trump to enact reform to expand cannabis
access.

While CMS implemented an earlier final rule last April specifically
stipulating that marijuana, as well as CBD that can be derived from
federally legal hemp, are ineligible for coverage under its Medicare
Advantage program and other services, the agency is now revising that
policy.

CMS had already announced certain changes as part of a rulemaking process
that was unveiled late last year, affecting “marketing and communications,
drug coverage, enrollment processes, special needs plans, and other
programmatic areas” for insurance programs it oversees. One of those
changes dealt with cannabidiol coverage.

The rule as proposed would amend regulations, which currently state that
any “cannabis products” cannot be covered. The policy would prevent
coverage for only “cannabis products that are illegal under applicable
state or federal law, including the Federal Food, Drug, and Cosmetic Act.”
Since hemp and its derivatives like CBD are federally legal, the change
suggests patients in states where such products are legal could make valid
insurance claims to pay for the alternative treatment option, as long as
the product is also federally legal.

Meanwhile, following the White House announcement in December, Oz spoke
with NewsNation about the policy change, responding to a question about how
the broader marijuana rescheduling decision squares with the Trump
administration’s aggressive efforts to stymie the flow of other illicit
drugs, particularly fentanyl.

“We think they fit hand in hand,” he said. “This is really about
researching—specifically CBD, which is hemp-derived endocannabinoids
[sic]—are actually worthy of Americans using them,” he said. “It’s hard to
do some of this work, especially with medical marijuana. And this is not
about legalization of marijuana.”

“There is no legalization language at all,” he added. “It’s about
rescheduling this class of product so that it can be researched more
readily.”

The idea that marijuana has no medical value, as its currently defined as a
Schedule I drug, is “just patently wrong for marijuana,” he said, noting
that the Food and Drug Administration (FDA) has approved certain
cannabis-based drugs for conditions such as epilepsy “that work quite
nicely.”

“That belief that it should be Schedule I is just an incorrect place to put
it,” he said. “Schedule III seemed to make sense to the president. He
argued that it allows us to do the research more readily.”

“We’re finding a way to allow Medicare beneficiaries to get access to some
of these products. And so, within Medicare, we have the ability, for the
first time ever—and we delivered on this promise to the president today—to
allow doctors to recommend hemp-derived CBD for patients who have cancer,
for example, and have a lot of pain from that.”

The administrator said surveys show a majority of seniors who take CBD for
pain management find it beneficial, and the White House wants to “make it
easier for patients to access this” and allow them to access the
cannabinoid at “no charge” through the federal health insurance program.

Meanwhile, Oz took a different tone last month when he warned that “there
are going to be consequences” as more Americans choose marijuana over
alcohol—including problems caused by “high-dose hemp and CBD.”

In the background, the U.S. Department of Health and Human Services (HHS)
and FDA recently submitted proposed regulations concerning CBD enforcement
and compliance with the White House Office of Management and Budget’s (OMB)
Office of Information and Regulatory Affairs (OIRA). There’s been
speculation that the rule could be related to the CMS pilot program, but
that hasn’t been confirmed. And it’s also possible the proposal is linked
to an unrelated FDA mandate from Congress to produce a list of known
cannabinoids ahead of the federal hemp redefinition.

With respect to the marijuana components of Trump’s executive order,
Attorney General Pam Bondi was directed to expeditiously finalize a
proposal to move cannabis from Schedule to Schedule III of the CSA, which
would not federally legalize it but would remove certain research barriers
and let state-licensed marijuana businesses take federal tax deductions
they’re currently barred from under an Internal Revenue Service (IRS) code
known as 280E. That rescheduling proposal remains pending, however.

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