Medicaid Coverage of Clinical Trial Routine Costs

State Medicaid programs are now required by federal law to cover the “routine costs” of medical care that a beneficiary receives while enrolled in a qualifying clinical trial. That requirement comes from the Clinical Treatment Act, a provision of the Consolidated Appropriations Act, 2021, and it took effect January 1, 2022. Before this law, Medicaid coverage of routine trial-related care was left to state discretion, in contrast to Medicare, which has covered routine costs in qualifying clinical trials since 2000 under National Coverage Determination (NCD) 310.1.

This guide explains what the Clinical Treatment Act requires, how “qualifying clinical trial” and “routine patient costs” are defined for Medicaid purposes, how the mandate compares to Medicare’s longer-standing coverage policy and to TRICARE’s separate rule for military beneficiaries, and what research administrators should know about how states have implemented the requirement.

What the Clinical Treatment Act requires

Section 210 of the Consolidated Appropriations Act, 2021 (enacted December 27, 2020) amended the Social Security Act to make coverage of routine patient costs associated with qualifying clinical trial participation a mandatory Medicaid benefit in every state, effective for items and services furnished on or after January 1, 2022. The Centers for Medicare & Medicaid Services (CMS) issued implementing guidance to state Medicaid directors in State Medicaid Director letter SMD #21-005, which set out the definitions and state plan amendment (SPA) process states needed to follow to come into compliance.

Because the requirement changed a mandatory benefit under a state’s Medicaid state plan, states were required to submit a State Plan Amendment to CMS reflecting the new coverage. States whose legislatures needed to act to authorize or fund the change were, consistent with standard Medicaid mandatory-benefit transition rules, given some additional time tied to the state’s first regular legislative session after enactment — which is one reason state-by-state effective dates and SPA approval timing were not perfectly uniform even though the federal mandate itself is dated January 1, 2022.

What counts as a “qualifying clinical trial”

For Medicaid purposes under the Clinical Treatment Act, a qualifying clinical trial is a clinical trial, in any phase of development, conducted in relation to the prevention, detection, or treatment of a serious or life-threatening disease or condition. This is a different, and broader, test than the four-question NIH definition of a clinical trial used for grants-administration purposes — see CASRAI’s guide to the NIH clinical trial definition for that separate framework. It is also structured differently from Medicare’s NCD 310.1 “qualifying clinical trial” test, discussed below.

What counts as “routine patient costs”

Routine patient costs are the items and services that would otherwise be covered by Medicaid for the beneficiary if they were not enrolled in the trial — for example, hospitalizations, physician visits, and standard diagnostic testing associated with managing the beneficiary’s condition. The definition also extends to items and services needed to diagnose or treat complications arising from trial participation.

Routine patient costs do not include:

The investigational item or service itself (the drug, device, or intervention that is the subject of the trial), unless it would otherwise be covered by Medicaid outside the trial context.
Items or services provided solely to satisfy data-collection or data-analysis needs of the trial and that are not used in the clinical management of the patient.
Items or services customarily provided free of charge by the trial sponsor.

This structure is conceptually close to how Medicare’s NCD 310.1 defines routine costs — both exclude the investigational article itself and data-only procedures — but the two coverage policies are governed by different statutory authority and are not interchangeable for billing purposes.

How this compares to Medicare’s NCD 310.1

Medicare has covered routine costs in qualifying clinical trials since a national coverage determination issued in 2000, well before Medicaid had any equivalent federal requirement. See CASRAI’s Medicare Clinical Trial Policy (NCD 310.1) reference and the related guide to NCD vs. LCD coverage determinations for the Medicare-side mechanics, including the deeming criteria (such as NIH, VA, DOD, CDC, AHRQ, or CMS funding, or conduct under an FDA Investigational New Drug application) that can qualify a trial without a case-by-case CMS review.

Key differences a research administrator should track:

Statutory basis and timing. Medicare’s coverage rests on a national coverage determination dating to 2000; Medicaid’s rests on the Clinical Treatment Act, a 2021 statutory mandate effective January 1, 2022 — over two decades later.
Qualifying-trial test. Medicare’s NCD 310.1 applies a specific multi-factor test, including therapeutic intent and deeming criteria tied to particular funders or an IND. The Clinical Treatment Act’s Medicaid test is the broader “any phase, serious or life-threatening disease or condition” standard described above.
Program structure. Medicare is a single federally administered program, so NCD 310.1 applies uniformly nationwide. Medicaid is state-administered under federal minimum requirements, so while the coverage mandate itself is now uniform, claims processing, prior authorization rules, and managed-care plan implementation can vary by state.

For billing-compliance purposes, both programs share the same core risk: billing Medicare, Medicaid, or a trial sponsor for the same routine-cost item is a double-billing pattern that has been the basis of False Claims Act enforcement actions. See CASRAI’s guide to False Claims Act liability in clinical trial billing and clinical trial billing compliance checklist for how research offices structure charge review to avoid it.

How this compares to TRICARE

TRICARE, the Department of Defense’s health program for military beneficiaries, has its own separate rule governing routine-cost coverage for clinical trial participants, most recently updated through a DOD final rule. See CASRAI’s TRICARE Clinical Trial Coverage guide for what changed and how TRICARE’s qualifying-trial and routine-cost definitions compare to Medicare’s and Medicaid’s. As with Medicare and Medicaid, TRICARE, Medicare, and Medicaid are separate payers with separate statutory authority and separate coverage tests — a trial that qualifies under one program’s definition does not automatically qualify under another’s, and coverage determinations, appeals, and billing rules must be worked out payer by payer.

State-level implementation and variation

Because Medicaid is jointly administered by states within federal parameters, the Clinical Treatment Act’s practical rollout has not been perfectly identical across states. Some states already provided routine-cost coverage for clinical trial participants under prior state law, regulation, or a Section 1115 demonstration waiver before the federal mandate took effect, and simply needed to align existing state policy with the new federal floor. Other states implemented the requirement for the first time through the SPA process CMS guidance in SMD #21-005 laid out.

Areas where state Medicaid programs can differ in practice, even under the same federal mandate, include:

How the requirement is operationalized for beneficiaries enrolled in Medicaid managed care organizations versus fee-for-service Medicaid.
Prior authorization and utilization review procedures applied to routine-cost claims tied to trial participation.
Provider network and out-of-state care rules, which affect whether a beneficiary can receive covered routine care at an out-of-state trial site.

Because implementation details are set at the state Medicaid agency level and can change, research administrators working across multiple states should confirm current requirements directly with the relevant state Medicaid agency or its published state plan and provider manual rather than relying on a single national summary — including this one.

What this means for research administration

For institutions enrolling Medicaid beneficiaries in clinical trials, the practical implications include:

Coverage analyses now need to check Medicaid explicitly, not just Medicare. A coverage analysis (the document mapping which trial-related items and services are billable to a third-party payer versus the sponsor or study budget) should treat Medicaid routine-cost coverage as a mandatory federal floor since January 1, 2022, rather than a state-by-state unknown.
The Medicaid and Medicare “qualifying clinical trial” tests are not the same test. A trial that qualifies for Medicare coverage under NCD 310.1’s deeming criteria is not automatically confirmed to meet the Clinical Treatment Act’s broader serious-or-life-threatening-disease standard, and vice versa — each program’s criteria should be checked independently when building a coverage analysis that spans multiple payers.
Billing systems and charge master reviews should distinguish payer-specific routine-cost rules. Because Medicare, Medicaid, and TRICARE each define routine costs and qualifying trials slightly differently, and because state Medicaid programs can layer additional procedural requirements (prior authorization, managed-care routing) on top of the federal mandate, a single blanket coverage rule across payers risks both under-billing (leaving reimbursable routine costs uncollected) and over-billing (a False Claims Act exposure).

Frequently asked questions

When did Medicaid start covering routine costs of clinical trials?

The mandatory coverage requirement took effect January 1, 2022, under the Clinical Treatment Act (Section 210 of the Consolidated Appropriations Act, 2021, enacted December 27, 2020). Before that date, Medicaid coverage of routine trial-related costs was a matter of state discretion rather than a federal requirement.

Does the Clinical Treatment Act cover the experimental drug or device being tested?

No. It covers routine patient care costs — the items and services a beneficiary would receive regardless of trial enrollment, plus care for trial-related complications. It does not cover the investigational item or service itself, or items and services provided solely for the trial’s data collection or analysis, unless those items would otherwise be covered by Medicaid outside the trial.

Is Medicaid’s clinical trial coverage the same as Medicare’s NCD 310.1?

They cover conceptually similar ground — routine costs, not the investigational article — but they are separate policies with separate statutory authority, separate effective dates (Medicare since 2000, Medicaid since 2022), and separate qualifying-trial tests. See CASRAI’s Medicare Clinical Trial Policy (NCD 310.1) reference for the Medicare-specific criteria.

Do all states implement Medicaid clinical trial coverage the same way?

The coverage mandate itself is a uniform federal floor as of January 1, 2022, but because Medicaid is state-administered, procedural details — such as managed-care routing, prior authorization, and out-of-state provider rules — can vary by state. Confirm current requirements with the specific state Medicaid agency involved.

Medicaid Coverage of Clinical Trial Routine Costs: The Clinical Treatment Act Explained