Medicare Compliance & Reimbursement

Urgent: Submit comments by the Oct. 12 deadline.

After months of legal wrangling and public outrage, the feds propose to rescind the much-maligned Most Favored Nation (MFN) Model associated with Medicare Part B drug prices.

Background: Last November, the Centers for Medicare & Medicaid Services (CMS) published an interim final rule (IFR) in the Federal Register in response to an executive order from President Trump to find alternative ways for both Medicare Part B and D to pay for drugs. The IFR offered a globally-inspired solution for Part B with the implementation of the MFN Model.

By “aligning payment for Medicare Part B drugs and biologicals … with international prices and removing incentives to use higher-cost drugs,” CMS aims to “control unsustainable growth in Medicare Part B spending without adversely affecting quality of care for beneficiaries,” the IFR stated. The MFN Model was slated to start on Jan. 1, 2021, with a mandatory seven-year, nationwide performance period.

Here’s Why the Feds Halted the MFN Model Rollout

As soon as the IFR comment period opened, the MFN Model drew major stakeholder scrutiny — more than 1,100 comments. Many commenters questioned why CMS would initiate a new model in the middle of a pandemic when so many providers were already struggling with new Medicare policies and COVID-related difficulties.

Additionally, “commenters stated that CMS failed to allow MFN participants sufficient time to prepare for model start and to develop and deploy new systems with distributors and customers to exclude model sales from [average sale price] ASP reporting,” points out an Aug. 10 proposed rule to rescind the Part B drug payment model.

Legal actions followed the public outrage over the IFR. “In December 2020, while the comment period was open, four lawsuits were filed related to CMS’ waivers of proposed rulemaking and delay in effective date as well as other aspects of the MFN Model,” explains the rule.

Eventually, “a federal court temporarily blocked the policy from taking effect on January 1, 2021 because the rule did not adhere to the notice and comment procedures required by the federal Administrative Procedure Act (APA),” notes Wachler & Associates in the law firm’s Health Law Blog.

Interestingly, a different executive order factored into CMS’ decision to rescind the MFN model. On July 9, President Biden issued an executive order — Promoting Competition in the American Economy — “that, in part, directs the Secretary of HHS to take steps to lower the prices of and improve access to prescription drugs and biologicals,” the rule says. To align with the order, HHS is tasked with finding ways to decrease rising Part B drug costs and Medicare spending while modernizing the system with value-based policies and methodologies, suggests the proposed rule.

“CMS indicates that rescinding the November Rule would address procedural deficiencies identified by the courts and allow additional time for the agency to consider the issues raised by comments to the November Rule,” say attorneys Richard P. Church, Leah D’Aurora Richardson, and Elaine C. Naughton with law firm K&L Gates LLP in online legal analysis. The proposed rule also restates and outlines the directives stated in the executive order, Church, D’Aurora Richardson, and Naughton point out.

Timeline: CMS is accepting comments on these proposals through Oct. 12.

Resources: Find the November IFR at www.govinfo.gov/content/pkg/FR-2020-11-27/pdf/2020-26037.pdf. Read the August proposed rule on the MFN Model at www.govinfo.gov/content/pkg/FR-2021-08-10/pdf/2021-16886.pdf. Peruse President Biden’s executive order at www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.