CHA News

HHS Announces Part B Drug Pricing Payment Model and Part D Safe Harbor Final Rule

For CFOs, finance & reimbursement staff, government relations staff, pharmacy managers

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The Centers for Medicare & Medicaid Services (CMS) has issued an interim final rule implementing a new mandatory payment model – the Most Favored Nation Model – that bases the price Medicare pays for certain drugs on the lowest price paid in some other developed nations. The model will take effect Jan. 1, 2021, and runs until Dec. 30, 2027.

Specifically, for Medicare Part B drugs and biologicals, the Most Favored Nation Model will pay the lowest price, adjusted for purchasing power, paid by any country in the Organisation for Economic Co-operation and Development that has a gross domestic product (GDP) per capita of at least 60% of the U.S. GDP per capita. Providers will be paid a single, flat add-on amount for each dose of a Most Favored Nation drug instead of a percentage of each drug’s cost. Beneficiary cost sharing for this payment will also be waived. All Medicare providers and suppliers that receive separate Medicare Part B fee-for-service payment for the model’s included drugs, with certain exceptions, will be required to participate.

CHA is reviewing the interim final rule and will provide members with details in the coming weeks. Additional information on the model is available in a fact sheet. CMS will accept comments in the interim final rule for 60 days following publication in the Federal Register.

In addition, the U.S. Health & Human Services Department Office of Inspector General finalized a final rule that eliminates the current system of drug rebates in Medicare Part D. Specifically, the policy expressly excludes rebates on prescription drugs paid by manufacturers to pharmacy benefit managers and Part D plans from safe harbor protection under the anti-kickback statute.