What practices need to know about the Most Favored Nation rule

By Brad Tallamy

The Trump administration recently finalized an Interim Final rule implementing the Most Favored Nation (MFN) payment system for Medicare Part B drugs beginning on January 1, 2021. Instead of the current reimbursement system of ASP+6, the MFN model caps reimbursement for the top 50 Part B drugs at the lowest price in 22 OECD nations with gross domestic products of at least 60 percent of the United States’ GDP.

CMS will also set a flat provider add-on payment of $148.73 per administration. There will be no beneficiary cost-sharing for this add-on payment.

The new Medicare reimbursement system applies to community physicians; group practices; hospital outpatient departments; ambulatory surgical centers, and other providers who bill under Part B for the included drugs.

Because the MFN methodology is set up to determine reimbursement to community physicians & other Medicare providers, the rate they are reimbursed may not be the price they paid for a drug. As a result, many practices—particularly smaller, rural providers—may be underwater under the MFN formula, losing money each time they administer the drug to a patient.

This is unsustainable, likely resulting in serious patient access issues. In fact, the rule states, “While there are significant savings as a result of this model, a portion of the savings is attributable to beneficiaries not accessing their drugs through the Medicare benefit, along with the associated lost utilization.”

Right drug, right time

AmerisourceBergen is committed to ensuring patient access to the right drug at the most appropriate site of care.  Needless to say, this admission by CMS is contrary to our mission and we will ensure policymakers hear our collective concerns.

Importantly, we believe the MFN rule will face legal challenges that could prevent implementation. The MFN rule is believed to violate the Administrative Procedure Act, which oversees how government agencies develop and issue regulations.

The Biotechnology Innovation Organization and Pharmaceutical Research and Manufacturers of America have filed lawsuits against the Trump administration challenging the rule. Provider groups may file suits as well.

Stakeholder perceptions matter

Even if struck down by the courts, the policy of tying Medicare reimbursement to international prices in an attempt to lower U.S. drug prices will not go away. House Democrats have also embraced this concept, as has President-elect Biden, although the approaches vary from the current MFN mandatory demonstration project.

The current 60-day comment period, ending January 20, 2021, allows stakeholders to share their opinions. That’s why it’s important to voice the impact that changes to the reimbursement structure could bring your practice and your patients.

About the Author

Brad Tallamy

Senior Director, Government Affairs
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