Federal Regulation Update: CMS Seeks to Yank Most Favored Nation Model

For more information about this blog post, please contact Khaled J. KleleRyan M. MageeLabinot Alexander Berlajolli, or Brianna J. Santolli

86 FR 43618: This proposed rule rescinds the Most Favored Nation (“MFN”) Model – a drug pricing model that matches payments for Medicare Part B drugs and biologicals to the lowest price paid by other comparable countries. The MFN was intended as an innovative way to lower prescription drug costs, reduce Medicare reimbursement rates to healthcare facilities, and open negotiations to discounts with drug manufacturers.

Instead, however, as we covered in previous blog posts, several federal district courts intervened to temporarily prevent the Centers for Medicare and Medicaid Services (“CMS”) from implementing the MFN, originally scheduled to begin January 1, 2021. On December 23, 2020, the U.S. District Court for the District of Maryland issued a nationwide temporary restraining order, enjoining CMS’s implementation of the rule. In a related case, just days later on December 28, 2020, the U.S. District Court for the Northern District of California followed suit. Two more days later, on December 30, 2020, the U.S. District Court for the Southern District of New York also issued its own injunction, enjoining implementation of the rule specifically as it pertains to EYLEA®.  The underlying lawsuits allege, among other things, that CMS violated the dictates of the APA rulemaking process, the MFN exceeds statutory authority, and the MFN raises issues of constitutionality.

CMS is supposedly exploring new opportunities to address the high cost of Medicare Part B drugs and Medicare reimbursement spending. Comments to this proposed rule are due by October 12, 2021.

86 FR 35615: This final rule finalizes the methodology and data sources necessary to determine federal payment amounts to be made for program year 2022 to states that elect to establish a Basic Health Program (“BHP”) under the Patient Protection and Affordable Care Act. A BHP is another option for states to provide affordable health benefits to lower income individuals who satisfy certain income criteria. In states that elect to operate a BHP, the BHP will make affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the federal poverty level (“FPL”) who are not otherwise eligible for Medicaid, the Children's Health Insurance Program (“CHIP”), or affordable employer-sponsored coverage, or for individuals whose income is below these levels but are lawfully present non-citizens ineligible for Medicaid. 

86 FR 41803: This proposed rule would reinterpret the scope of the general requirement that State payments for Medicaid services under a State plan must be made directly to the individual practitioner providing services, in the case of a class of practitioners for which the Medicaid program is the primary source of revenue. Specifically, this proposal, if finalized, would explicitly authorize states to make payments to third parties to benefit individual practitioners by ensuring health and welfare benefits, training, and other benefits customary for employees, if the practitioner consents to such payments to third parties on the practitioner's behalf. Comments are due by September 28, 2021.