On July 16, 2026, the Centers for Medicare & Medicaid Services (“CMS”) issued draft guidance describing, for the first time, how manufacturers must provide access to the “maximum fair price” (“MFP”) for drugs payable under Medicare Part B selected for the Inflation Reduction Act’s (“IRA’s”) Medicare Drug Price Negotiation Program (the “Program”). The Medicare Drug Price Negotiation Program: Draft Guidance, Manufacturer Effectuation of the Maximum Fair Price in 2028 (“Draft Guidance”) addresses the process by which manufacturers of drugs selected or renegotiated for initial price applicability year (“IPAY”) 2028 must make the MFP available to Part B providers beginning January 1, 2028, including how the Medicare Transaction Facilitator (“MTF”) will facilitate those obligations.
The Draft Guidance builds on the final guidance Medicare Drug Price Negotiation Program: Final Guidance, Implementation of Sections 1191 – 1198 of the Social Security Act for Initial Price Applicability Year 2028 and Manufacturer Effectuation of the Maximum Fair Price in 2026, 2027, and 2028 (“IPAY 2028 Final Guidance”) issued in September 2025, which included the MFP effectuation requirements for Part D selected drugs for IPAY 2028. Once final, the content of the Draft Guidance will supersede the relevant portions of the IPAY 2028 Final Guidance. Any content from the IPAY 2028 Final Guidance that is not covered in the Draft Guidance will remain in effect for IPAY 2028.
In prior alerts, we outlined the steps required for manufacturers to submit MFP effectuation plans to CMS for the IPAY 2026 cycle and described key issues to monitor during the first months of MFP effectuation for Part D drugs. This alert summarizes the key MFP effectuation policies in the Draft Guidance as they apply to drugs payable under Part B and highlights several major policy design questions on which CMS is soliciting comment.
Under section 1193(a)(1)(B) of the Social Security Act (the “Act”), manufacturers of selected drugs payable under Part B are required to provide access to the MFP “to hospitals, physicians, and other providers of services and suppliers.” As with CMS’s MFP effectuation policies for Part D drugs, manufacturers may provide access to the MFP (1) prospectively by ensuring the price of the drug is at or below the MFP or (2) retrospectively by providing Part B providers a refund equal to the difference between the provider’s acquisition cost and the MFP. Consistent with the IPAY 2028 Final Guidance, manufacturers must develop their policies for providing access to the MFP—including addressing material cash flow concerns for dispensing entities and/or Part B providers—and submit this information in an Effectuation Plan to CMS in two stages. Manufacturers must provide information that “most directly impacts dispensing entities and/or Part B providers (for example, the Primary Manufacturer’s indication of whether it intends to use the MTF Payment Module to process MFP refund payments)” by June 1, 2027, and provide the remaining information required for the Effectuation Plan by September 1, 2027.
Consistent with the Part D framework, the Draft Guidance leverages the MTF and its two components, the MTF Data Module (“MTF DM”) and the MTF Payment Module (“MTF PM”), to support MFP effectuation for selected drugs payable under Part B.
The Draft Guidance requires all manufacturers that reach an MFP for selected drugs for IPAY 2028 to register with the MTF DM by May 1, 2027. Part B provider enrollment in the MTF DM is optional but strongly encouraged, and CMS is considering using data from the Medicare Provider Enrollment, Chain, and Ownership System (“PECOS”) to facilitate the enrollment process.
Although CMS will not charge manufacturers, dispensing entities, or Part B providers for participating in the MTF DM or MTF PM for IPAY 2028, the Agency is considering establishing “user fees or transaction fees paid by [manufacturers] to sustain MTF PM operations.” CMS has asked for comments on “the scope and structure of potential user fees or transaction fees for the MTF PM in future years.”
For the MTF DM for Part B, CMS proposes drawing on two data sources depending on the beneficiary’s coverage:
- For Original Medicare (“OM”), the MTF DM will draw from claims data in the Integrated Data Repository (“IDR”), which verifies the HCPCS code against the selected drug list before sending claim-level data elements to the manufacturer.
- For Medicare Advantage (“MA”), CMS intends to use MA encounter data submitted to the Encounter Data System (“EDS”) and transmit such data to the MTF DM. In the Draft Guidance, CMS solicits comments on how to use MA encounter data more efficiently, including whether CMS should consider a new requirement for MA organizations to submit data on a timeline that is shorter than the MA encounter data submission timeline under 42 C.F.R. § 422.310 and include 11-digit National Drug Codes (“NDC-11”) and 340B modifiers on MA encounter data.
Notably, and unlike Part D claims, CMS contemplates in section 40.4.2.1.2 of the Draft Guidance that Part B claim-level data will include the Medicare Beneficiary Identifier and Beneficiary Last Name in order to “create ERAs (explanations of payment) using the X12 835 standard adopted under HIPAA for payments not passed through the MTF PM.” Acknowledging the resulting privacy considerations, CMS observes that “providing specific information on individual beneficiaries that constitutes PII or PHI could increase privacy and security risks if not properly protected by the Primary Manufacturer,” but determined that the “benefits of consistency and standardization . . . outweigh those risks.” CMS is soliciting feedback on this or alternative approaches to sharing claim-level data with manufacturers for purposes of effectuating MFP.
Unlike Part D claims, which use National Drug Codes (“NDCs”) to identify specific drug products, Part B claims use Healthcare Common Procedure Coding System (“HCPCS”) codes for billing and payment. A single HCPCS code can include multiple NDCs—including, potentially, NDCs for both selected and non-selected drugs (e.g., where a generic product sharing a HCPCS code with a selected drug is approved after the selected drug enters the Program). Therefore, CMS cannot say with complete certainty whether every claim billed with a HCPCS code containing a selected drug constitutes a claim for the selected drug. CMS presents three options to address this identification challenge:
- Option 1 — Claims Modifiers: CMS would require Part B providers to report a new modifier (illustratively, “JM”) on OM claims to indicate that an MFP-eligible NDC for a selected drug was administered or furnished, and a second modifier (illustratively, “JN”) to indicate that an NDC for a non-selected drug was administered or furnished. CMS is also considering requiring MA organizations to collect these modifiers on encounters.
- Option 2 — NDC-11 Reporting: CMS would require reporting of the NDC-11 in addition to the HCPCS code on Part B claims for selected drugs, enabling the MTF to identify MFP-eligible claims directly from the NDC.
- Option 3 — Separate HCPCS Codes: CMS would assign separate HCPCS codes to selected drugs and non-selected drugs that would otherwise share a HCPCS code, relying on the unique HCPCS code assignment to identify MFP-eligible claims without requiring additional modifiers or NDC reporting.
CMS is soliciting comments on these options to identify MFP-eligible Part B claims and the potential implications for stakeholders.
As with the process for identifying MFP-eligible claims, the reliance on HCPCS codes for drugs payable under Part B complicates the process of calculating the SDRA for these products. The SDRA is, as the name suggests, a standardized pricing metric that manufacturers of selected drugs may rely upon when calculating the refund owed when providing access to the MFP retrospectively. Under the statute, the manufacturer is responsible for providing the dispensing entity or Part B provider access to the drug at the MFP. However, because the manufacturer cannot know the exact acquisition cost for the selected drug, CMS allows manufacturers to use the SDRA to approximate the difference between the dispensing entity or provider’s acquisition cost and the MFP.
For Part D drugs, CMS has defined the SDRA as the difference between wholesale acquisition cost (“WAC”) of the selected drug and the MFP. For drugs payable under Part B, however, there may be no way for CMS or the manufacturer to know the WAC of the selected drug administered to the beneficiary because multiple NDC-11s of the selected drug may be payable under the same HCPCS code. As a result, the manufacturer may face difficulties determining the acquisition cost of the selected drug being billed and calculating a refund amount using the method established for Part D drugs. To address this problem, CMS has outlined four possible options to calculate the SDRA for drugs payable under Part B:
- Option 1a — Weighted Average WAC: CMS would calculate the SDRA using a volume-weighted average WAC across all NDCs associated with a selected drug’s HCPCS code, with weighting based on ASP sales volume data. This option would not require NDC reporting on Part B claims.
- Option 1b — Published WAC per NDC: CMS would calculate the SDRA using the published WAC for the specific NDC dispensed or administered. This approach would require providers to report NDC-11 information on Part B claims.
- Option 2a — Weighted Average ASP by Sales Volume: CMS would calculate the SDRA using a volume-weighted average ASP across all NDCs associated with a selected drug’s HCPCS code, weighted using manufacturer-reported ASP sales volume data. This option would not require NDC reporting on Part B claims.
- Option 2b — Weighted Average ASP by Part B Claims Volume: CMS would calculate the SDRA using ASP data but weight the NDC-specific ASPs based on Medicare Part B claims volume rather than overall sales volume. Like Option 1b, this approach would require NDC-11 reporting on Part B claims.
Once CMS selects a final approach, the Agency indicates that it “intends to establish an approach to monitoring and oversight that aligns with the final Part B SDRA policy and allows CMS to consistently assess whether a Primary Manufacturer is providing access to the MFP to Part B providers.”
CMS is seeking stakeholder input on the four potential methods for calculating the SDRA for drugs payable under Part B. In particular, CMS is requesting feedback on the accuracy of WAC and ASP as proxies for provider acquisition costs and the operational implications of requiring NDC-11 reporting on Part B claims.
Under section 1193(d) of the Act, manufacturers of selected drugs are not required to provide access to both the MFP and the 340B ceiling price for selected drugs distributed to Medicare beneficiaries by 340B covered entities. Instead, manufacturers are required to provide the lower of the MFP and the 340B ceiling price. In the IPAY 2028 Final Guidance, CMS disclaimed responsibility for deduplicating MFP and 340B claims. CMS reiterates this position in the Draft Guidance.
Unlike claims for Part D drugs, however, since January 1, 2025, CMS has required that “all 340B covered entities that submit claims for separately payable Part B drugs and biologicals . . . report the “TB” modifier (or successor modifier) on claim lines for drugs acquired through the 340B Program on Original Medicare claims.” CMS states in the Draft Guidance that it will include this claims modifier in the MTF data elements transmitted to the manufacturer. Because the modifier is not currently included in MA encounter data, CMS is also exploring whether to require MA organizations “to submit 340B modifiers in encounter data to identify drugs purchased under the 340B Program.” Although CMS states that transmittal of the TB claims modifier for OM claims “does not represent or imply that CMS verified the 340B status of the claim,” the Agency also states that, if the TB code is included in the MTF claim-level data for a particular administration or furnishing of the selected drug, the manufacturer “need only maintain documentation showing that the 340B ceiling price is lower than the MFP for the applicable claim” when withholding an MFP refund.
These updates to MFP-340B deduplication occur against the backdrop of ongoing HHS deliberations regarding authorization of a potential 340B Rebate Model. Under such a model, manufacturers would provide the 340B ceiling price through a retrospective rebate following the submission of claims data rather than as an up-front discount. In an Information Collection Request published on June 15, 2026, the Health Resources and Services Administration noted that it was working on a 340B Rebate Model Pilot “limited to manufacturers with current Medicare Drug Price Negotiation Program Agreements with the Centers for Medicare & Medicaid Services.” If this pilot is implemented, it could provide another avenue for manufacturers to prevent duplication of the MFP and 340B ceiling price.
For OM claims, CMS will transmit data once a claim has been adjudicated and is approved for payment. Claims data flows from the IDR to the MTF DM, which verifies the HCPCS code against the selected drug list before sending the claim-level data elements to the manufacturer.
For MA claims, CMS intends to use MA encounter data submitted to the Encounter Data System. Although CMS has observed that approximately 85% of MA encounters are submitted within 60 days of the claim, the current deadline extends to January 31 of the following year. CMS is considering a potential requirement for MA organizations to submit encounter data for selected drugs on a shorter timeline, though any such requirement would require future rulemaking.
The Draft Guidance would require manufacturers to provide access to the MFP for selected drugs payable under Part B within the same 14-day time frame as for Part D drugs. The MTF DM’s transmission of the claim-level data elements to the manufacturer would start the 14-day MFP payment window, within which the manufacturer must transmit the claim-level payment elements for each claim or encounter. Also, if applicable, the manufacturer must transmit payment of an amount that provides access to the MFP when an MFP refund is appropriate.
In the event a claim is reversed, adjusted, or determined not to be MFP-eligible after a manufacturer has transmitted claim-level payment elements, the MTF “will maintain a credit/debit ledger system that tracks credits and debits related to MFP refunds at the Part B Billing Provider NPI level for the HCPCs code(s) that includes a selected drug.” This credit/debit ledger will only apply to manufacturers that participate in the MTF PM and facilitate refund payments through the MTF PM.
CMS states in the Draft Guidance that it “intends to align the policies for selected drugs payable under Part B with the policies for selected drugs covered under Part D.” CMS is seeking comments on “any enforcement considerations or approaches unique to Part B claims.”
CMS has announced a 60-day public comment period on the Draft Guidance. Comments must be received by 11:59 PM PT on September 18, 2026. Comments may be sent via email to IRARebateandNegotiation@cms.hhs.gov with the subject line “Medicare Drug Price Negotiation Program Draft Guidance.” CMS intends to issue final guidance later this fall.
If you are interested in submitting comments on the Draft Guidance or discussing MFP effectuation for the current or future cycles more broadly, please contact the authors of this alert. Covington’s Health Care Practice Group includes several former CMS and HHS officials who advise extensively on IRA considerations for manufacturers.
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