Hemp Product Use in Medicare: CMS Greenlights Pilot Program under the Substance Access Beneficiary Engagement Incentive

On April 1, 2026, the Centers for Medicare & Medicaid Services (CMS), through the CMS Innovation Center (CMMI), officially launched a new pilot program which allows participants in specific CMS programs to offer eligible hemp products to eligible Medicare beneficiaries.

Specifically, the Substance Access Beneficiary Engagement Incentive (Substance Access BEI), which is a new, optional incentive available to health care providers participating in certain CMMI models (Model Participants), to consult with their patients about the possible use of federally legal hemp‑derived products to improve symptom control and provide eligible hemp products to certain beneficiaries up to $500 a year, per eligible beneficiary in states where eligible hemp products are considered legal, subject to significant safeguards and oversight requirements. 

What is the Substance Access BEI?

The Substance Access BEI is an engagement incentive that permits Model Participants, at their own expense, to provide eligible hemp products to aligned beneficiaries, up to $500 per beneficiary per year, so long as CMS approval is obtained and all program requirements are met.

Participation in the Substance Access BEI is limited to Model Participants in:

• The Accountable Care Organization (ACO) REACH Model and the Enhancing Oncology Model (EOM) beginning April 1, 2026; and
• The Long‑term Enhanced ACO Design (LEAD) Model beginning January 1, 2027.

Participation is optional, and only Model Participants that affirmatively elect the incentive and receive CMS approval may offer it to eligible beneficiaries.

What are Key Program Requirements ?

To implement the Substance Access BEI, Model Participants must submit and maintain a CMS‑approved implementation plan. At a minimum, the plan must address:

• The specific eligible hemp product(s) to be offered and dosing information;
• Distribution amount and frequency;
• Beneficiary eligibility criteria;
• Safeguards, oversight, and monitoring mechanisms; and
• Other requirements set forth in applicable participation agreements.

Model Participants are required to submit quarterly reports specific to the Substance Access BEI and provide supplemental information to CMS upon request.

What Types of Hemp Products are Included in the Substance Access BEI?

Eligible hemp products under the Substance Access BEI are limited to federally legal hemp-derived products containing no more than 0.3% delta-9 THC and those products that expressly comply with applicable state and local laws. The following products are excluded from the Substance Access BEI:

• Inhalable products;
• Any products containing more than 3 mg per serving of tetrahydrocannabinols in any orally administered form (including delta-8, delta-10, and THCA); and
• Any products containing cannabinoids not naturally produced or capable of being produced by or in the cannabis plant during its cultivation.

Model Participants are responsible for procuring eligible hemp products and offering said products to eligible beneficiaries in full compliance with all applicable laws.  The Substance Access BEI requires eligible hemp products be provided directly by a qualified physician affiliated with the Model Participant, as specified by the model participation agreements.

Model Participants are also responsible for ensuring that the products used meet certain quality and safety requirements, which at a minimum, must: (1) meet federal, state, and local production, quality and safety laws and mandated standards; (2) come from a legally compliant sources and high-quality farms, consistent with 2018 Farm Bill hemp requirements; and (3) be tested by a third party for potency (including accurate cannabinoid measurements) and for contaminates and microbial hazards with negative results.

What Beneficiaries are Eligible?

Only Medicare beneficiaries aligned to an approved Model Participant may receive the Substance Access BEI.  CMS materials indicate that beneficiary eligibility generally requires that the individual:

• Be age 18 or older;
• Not meet applicable frailty exclusions;
• Not have specified disqualifying conditions; and
• Not be pregnant or breastfeeding.

What Role Does a Physician Play In the Substance Access BEI?

A physician must determine that the potential use of an eligible hemp product is appropriate and must document shared decision‑making with the beneficiary , that includes a discussion of potential benefits and risks, beneficiary goals and preferences, and a review of current medications and possible interactions.

Key Takeaways for Organizations Contemplating Participating in Substance Access BEI

The Substance Access BEI represents a notable expansion of CMMI flexibility, but it is accompanied by tight eligibility controls, significant reporting obligations, and meaningful regulatory risk. Eligible organizations considering participation should carefully assess:

• Their ability to design and operationalize a compliant Implementation Plan;
• State‑law constraints affecting product eligibility;
• Internal compliance, documentation, and oversight capabilities; and
• Financial exposure associated with furnishing non‑reimbursed products.

At a minimum, we recommend that organizations which are considering participation in the Substance Access BEI take the following proactive steps:

• Confirm Model Eligibility. Verify that the organization is an active participant in the ACO REACH, EOM, or LEAD Models for the applicable performance period and confirm that organization leadership has formally decided to elect the Substance Access BEI. We also recommend reviewing the model participation documentation to ensure the organization can fully comply with all requirements related to the Substance Access BEI.

• Develop a CMS-Compliant Implementation Plan. Prepare a written implementation plan that addresses all CMS-required elements and is sufficiently detailed to withstand a CMS program integrity review.
• Assess Federal and State Law Alignment. Confirm that all contemplated products meet the federal definition of hemp and are otherwise lawful under federal, state, and local laws.

• Establish Clinical Governance and Documentation Protocols. Implement policies requiring a physician determination that the use of an eligible hemp product is appropriate for each eligible beneficiaries, standardize documentation to ensure it meets CMS requirements, and ensure that care workflows include follow-up planning and ongoing monitoring of eligible beneficiaries who use eligible hemp products.

• Define Beneficiary Eligibility Controls. Establish criteria that largely incorporates the CMS-identified criteria for beneficiary eligibility and ensure a process is in place to ensure that only eligible beneficiaries receive the Substance Access BEI.
• Address Financial and Operational Risk. Budget for the fact that the Substance Access BEI will not be reimbursed by CMS. Further, a participating organization should establish internal accounting and controls to ensure compliance with the $500 per beneficiary annual limit. 

• Train Clinical and Administrative Staff. Educate clinicians, care teams, and administrative staff on topics such as: the scope of the consultations under the Substance Access BEI, the documentation requirements, the prohibitions on billing Medicare for eligible hemp products, the legal status of hemp under federal and state laws, and the consequences of noncompliance with CMS-requirements of the Substance Access BEI.

• Prepare for Reporting, Audit, and Oversight. Ensure compliance, legal, and clinical teams are aligned on audit readiness and establish processes to support quarterly reporting to CMS and ongoing monitoring to ensure compliance with the Substance Access BEI.

On March 30, 2026 a  lawsuit challenging the Substance Access BEI program was filed in the United States District Court for the District of Columbia by a coalition of nine drug safety advocacy groups, including Smart Approaches to Marijuana, seeking an order to vacate and set aside the program. Plaintiffs allege that CMS unlawfully adopted the Substance Access BEI in violation of the Administrative Procedures Act by bypassing required notice-and-comment rulemaking, acting arbitrarily and capriciously by implementing the new pilot program which conflicts with a prior CMS rule indicating that marijuana will not be covered by Medicare, by acting in excess of its statutory authority, and that the Substance Access BEI conflicts with controlling federal statutes (e.g., the 2026 Agriculture Appropriations Act and the Controlled Substances Act). The case is Smart Approaches to Marijuana v. Kennedy et al., Case No. 1:26-cv-01081 (D.D.C.). 

On April 1, 2026, the court denied plaintiffs’ emergency motion for a temporary restraining order, finding the plaintiffs had not met the high standard for such relief. The court will next consider a preliminary injunction motion, briefing is due on April 9 and a hearing is scheduled for April 20, 2026.

We will continue to monitor the pending lawsuit challenging the Substance Access BEI, as well as CMS guidance and model‑specific documentation as the Substance Access BEI is implemented across the CMMI models above and whether it expands to additional CMMI models. Please reach out to the authors, your Foley relationship partner, or to our Health Care Practice Group and Health Care & Life Sciences Sector with any questions.