CMS Issues Most Favored Nation Drug Pricing Model

The Model is mandatory for all Medicare physicians, non-physician practitioners, supplier groups (such as group practices), hospital outpatient departments (including 340B-covered entities), ambulatory surgical centers, and other providers and suppliers that receive separate Medicare Part B fee-for-service payment for the Model’s included drugs.   

Participants may be granted a financial hardship exemption from the Model; however, these exemptions will be granted at the sole discretion of the agency.  Cancer hospitals, children’s hospitals, critical access hospitals, rural health clinics, federally qualified health centers and Indian Health Service facilities will not participate. CMS will also exclude from the Model hospitals participating in CMS Innovation Center models in which payment for outpatient services is made under a fully capitated or global budget basis, such as the Maryland Total Cost of Care Model. CMS will not exclude entities participating in the Oncology Care Model (OCM) but will adjust reconciliation calculations to avoid paying performance-based payments based on the MFN Model’s drug payment changes. 

Included Drugs

The first year of the demonstration includes 50 Part B drugs that encompass a high percentage of Medicare Part B drug spending. Each year, CMS will re-assess the list and new Part B drugs may be added to include drugs that move into the top 50 drugs based on updated annual Part B spending, after applying certain exclusions. CMS will only remove drugs from the list under limited circumstances. 

Certain categories of drugs are excluded from the MFN Model’s drug list, including: 

• Vaccines, 

• Radiopharmaceuticals, 

• Oral anti-cancer, anti-emetic, and immunosuppressive drugs, 

• Compounded drugs, 

• Intravenous immune globulin products, 

• Drugs billed under HCPCS codes to which any generic drugs are assigned, and 

• Drugs subject to an EUA or approved for treating COVID-19, and drugs billed under “not otherwise classified” codes. 

Comment period on the Model ends 60 days after publication in the Federal Register.