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CMS Issues Initial Inflation Reduction Act Rebate Guidance for Part B Drugs

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On Feb. 9, the Centers for Medicare & Medicaid Services (CMS) issued initial guidance for implementing the manufacturer Medicare Part B drug inflation rebates included in the Inflation Reduction Act.  

Given that these rebates take effect on April 1, 2023, certain provisions — including calculating Part B cost-sharing for drugs subject to the rebate — are issued as final. Beginning April 1, when the specified amount for a Part B “rebatable” drug for a calendar quarter exceeds the inflation-adjusted payment, beneficiary co-insurance for the drug will be equal to 20% of the inflation-adjusted payment amount. When a separately payable claim line for a Part B rebatable drug is processed and the co-insurance is less than 20% of the published payment limit, the Medicare payment to the billing health care provider will equal the difference between the Medicare payment limit and the applicable beneficiary coinsurance amount.   

Rebatable drugs are single-source drugs or biological products (including biosimilars) whose average total allowed charges a year per individual user under Part B are less than a $100 threshold. CMS will align the process used to identify rebatable drugs with the processes used to identify separately payable single-source drugs and biological products for purposes of determining quarterly payment limits.  

Beginning with the April 2023 quarterly pricing files, the applicable beneficiary co-insurance percentage would be shown for each Healthcare Common Procedure Coding System code in the pricing files that are posted on the CMS website. Appendix A in the guidance provides an illustrative example of the CMS Part B quarterly drug pricing file that incorporates co-insurance amounts for rebatable drugs.  

Comments on the guidance are due to CMS by March 11.