CMS Issues Proposed Rule to Rescind Most Favored Nation Model Interim Final Rule

Last Updated: Aug 20, 2021


Update:

The Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule that would rescind the Most Favored Nation (MFN) Model interim final rule. The proposed rule can be accessed here.

A comment period regarding the proposed rule is open until Oct. 12, 2021.

CMS is exploring new opportunities to address the high cost of Medicare Part B drugs and Medicare reimbursement spending. In July, President Biden signed an Executive Order on Promoting Competition in the American Economy that, in part, directs the US Department of Health and Human Services (HHS) and CMS to take steps to lower the prices of and improve access to prescription drugs and biologicals.

This proposed rule to rescind the MFN Model Rule follows a federal lawsuit that resulted in the effective date of the MFN Model Rule being delayed. The full memorandum, in the case of Association of Community Cancer Centers et al v. Azar et al., granting the restraining order can be accessed here.

PAMED has policy endorsing lowering drug prices. One of the concerns raised in lawsuits regarding the MFN Model is that prescription drug could become more expensive and the cost be shifted more to practices because of lower reimbursement, thus affecting patient care.

You can learn more about the lawsuits regarding the MFN Model in this article from the American Society of Clinical Oncology.



In response to President Trump’s Executive Orders 13947 and 13948 mandating steps to lower drug prices, the Centers for Medicare and Medicaid Services (CMS) announced a new prescription drug payment model, the Most Favored Nation (MFN) Model, by issuing an interim final rule with comment period on Nov. 20, 2020. Highlights of the rule include:

Model Drug Payment

The MFN Model aims to lower costs of physician-administered Medicare Part B drugs and biologicals by paying no more than the lowest price that drug manufacturers receive in other countries. In the MFN Model, payment will be based on the lowest adjusted international price instead of paying an amount based on the price manufacturers charge in the U.S.

In addition, the MFN Model will also pay providers a flat fee added on for each dose of a drug included in the MFN Model. The per-dose add-on for the first quarter of 2021 will be $148.73. This amount was calculated using 6.1224 percent of 2019 historic spending of the cohort of drugs included in the first year of the model and will be trended forward with an inflationary factor quarterly. CMS increased the 6 percent add-on from 2019 to equal 6 percent post-sequestration. Beneficiary cost-sharing will be waived for the per-dose add-on amount.

The current Medicare Part B payment amount for separately payable drugs is based on the manufacturer’s reported average sales price (ASP) plus 6 percent of the ASP as an add-on amount.

MFN Model Drugs

The MFN Model will focus on a set of 50 drugs which includes those that represent a high percentage of Medicare Part B spending. In addition to excluding drugs used at home, vaccines, oral drugs, multiple source drugs, and intravenous immune globulin products will also be excluded. Drugs that treat patients with suspected or confirmed COVID-19 will be excluded. CMS will add drugs to the model annually based on spending for the top 50 Medicare Part B drugs.

Implementation Dates

The program is slated to begin Jan. 1, 2021 and will operate for seven years, concluding Dec. 31, 2027. The MFN Price will be phased in over the first 4 years of the program, at 25 percent per year, then continuing at 100 percent of the MFN Price for the remaining years. CMS will continue to monitor and evaluate the program throughout its course.

Additional Resources

CMS Fact Sheet

MFN Model Website

Supporting Documentation, including list of MFN Drugs

MFN Model Interim Final Rule

The public comment period for the MFN Model Interim Final Rule with Comment Period ends Jan. 26, 2021.

PAMED members with questions on the MFN Model can contact our Knowledge Center at 800-228-7823 or KnowledgeCenter@pamedsoc.org.

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