Dear Deputy Administrator Brooks:

Thank you for the opportunity to provide comments on the Centers for Medicare & Medicaid Services’ (CMS) Draft Guidance on Manufacturer Effectuation of the Maximum Fair Price (MFP) in 2028 under the Medicare Drug Price Negotiation Program. As the Director of Health Care Policy at the American Action Forum, I support policies that increase access to affordable, quality, and innovative health care. Policies that promote such access are largely underpinned by free market principles, competition-based economics, and innovation.

The 2028 program year will mark the first time that maximum fair prices (MFPs) apply to selected drugs payable under Medicare Part B, requiring CMS to adapt an effectuation framework initially developed for Part D to a substantially different drug purchasing, coding, and payment system. The scale of that transition warrants careful implementation.

I have consistently raised concerns about the use of government price setting as a substitute for market-based competition in prescription drug markets. The recommendations below do not alter those concerns. As CMS implements the requirements established by Congress, however, the agency should seek to minimize additional administrative and financial distortions created by effectuation itself. Part B already contains established coding, pricing, claims, and provider-enrollment infrastructure. Wherever possible, CMS should use that infrastructure rather than layering new reporting systems and transactional requirements onto providers, manufacturers, and Medicare Advantage (MA) organizations.

Identify MFP-eligible Claims Through Existing HCPCS Infrastructure

CMS proposes three different approaches to identifying MFP-eligible Part B claims when products might otherwise share a Healthcare Common Procedure Coding System (HCPCS) code: requiring claims modifiers, requiring 11-digit National Drug Code (NDC-11) reporting, or assigning separate HCPCS codes to selected and non-selected products.

CMS should adopt the third option and rely on separate HCPCS codes. This approach is particularly well suited to the initial 2028 implementation. CMS notes that all selected drugs payable under Part B for 2028 are biologic products already assigned unique HCPCS codes containing only NDCs associated with the selected drug. Under Option 3, CMS could therefore identify MFP eligibility without requiring either an additional modifier or NDC-11 reporting. NDC reporting would represent a meaningful departure from existing Part B claims practices and impose unnecessary burden on providers and MA organizations.

If additional data is requested, it should have a corresponding operational benefit. For 2028, requiring NDC-11 information to determine whether an MFP-eligible selected drug was furnished would duplicate information that CMS can already obtain from the HCPCS code. CMS should not impose new claims reporting requirements when its existing coding system can accomplish the same objective.

Adopt an ASP-based, Low-burden SDRA

CMS must determine how to calculate the Standard Default Refund Amount (SDRA) used to facilitate retrospective MFP refunds. The agency proposes four methodologies. Options 1a and 1b rely on wholesale acquisition cost (WAC), while Options 2a and 2b rely on average sales price (ASP). Options 1b and 2b would additionally require NDC-11 reporting on Part B claims.

Of the options presented, CMS should select Option 2a. Basing the standardized pricing metric on the average reported ASPs of the selected drug’s NDCs assigned to a HCPCS code, weighted by ASP sales volume, is a more natural starting point for a Part B methodology. Congress established the ASP methodology for Part B drug payment, and ASP remains CMS’ primary pricing methodology for separately payable Part B drugs. ASP data is reported quarterly, is a volume-weighted average of sales to U.S. purchasers (subject to statutory exclusions), and incorporates many discounts and price concessions.

WAC, by contrast, is an undiscounted list price. The Medicare Payment Advisory Committee (MedPAC) has noted that WAC is typically higher than ASP and is used in Part B when ASP data are not yet available. Neither ASP nor WAC can perfectly represent every individual provider’s acquisition cost, but ASP is more closely tied to actual market transactions and is already embedded throughout the Part B payment system.

Option 2a also provides this market-based advantage without requiring providers to change their claims reporting practices. CMS would standardize existing NDC-level ASP information into HCPCS billing units and weight those ASPs using sales-volume information already reported through the ASP system. Option 2b might marginally improve precision by weighting ASP according to actual Medicare claims volume, but doing so would require NDC-11 reporting on Part B claims. The appropriate balance for implementing this structure should be a sufficiently accurate standardized measure that can be operationalized through existing systems. Option 2a best strikes that balance.

CMS should also finalize its proposed public SDRA file and require its update quarterly in line with the existing ASP cycle. Given the regulatory imposition of this program already, the file would allow Part B providers to estimate expected refunds for reconciliation and cash-flow purposes. CMS should preserve historical versions of the file as well, allowing providers and manufacturers to identify the methodology and SDRA applicable to previously submitted claims.

Finally, CMS should monitor how well an ASP-based SDRA continues to approximate acquisition costs after Part B MFP effectuation begins. Before imposing additional reporting requirements in support of SDRA calculation and MFP effectuation, CMS should evaluate ongoing provider experience.

Establish Predictable SDRA Compliance and Reconciliation Rules

The usefulness of an SDRA depends not only on how CMS calculates it, but also on whether parties can reasonably rely on it. For Part D, CMS states that, absent information indicating otherwise, payment of the SDRA will be considered sufficient to meet a manufacturer’s obligation to make the MFP available. For Part B, CMS says that it intends to establish an oversight approach aligned with whatever SDRA methodology is ultimately finalized, with Part B-specific compliance considerations.

CMS should carry its same basic principles from Part D into Part B. Absent information indicating otherwise, timely payment of the CMS-calculated Part B SDRA should be considered sufficient to meet the manufacturer’s MFP obligation. Such treatment is necessary if the SDRA is to function as a genuine administrative default. If manufacturers remain exposed to immediate compliance risks despite adhering to the calculated amount via CMS’ chosen methodology, manufacturers will have an incentive to independently reconstruct provider-specific acquisition costs on each claim. That outcome would undermine much of the simplification the standardized methodology is intended to create.

Accepting this standard does not need to make the SDRA the final arbitration if reconciliation issues come to light. A standardized ASP-based proxy will inevitably differ from actual acquisition costs in some cases. Where information demonstrates that an additional refund is necessary to provide MFP access, CMS should allow the parties to reconcile the difference through adjustment and complaint procedures before treating the difference as noncompliance.

A correction-first approach is particularly appropriate given the magnitude of the statutory enforcement mechanism. A failure to make the MFP available can result in a civil monetary penalty equal to 10 times the relevant price differential multiplied by the applicable units. CMS’ proposal to give manufacturers 10 business days to respond to a notice of potential noncompliance and consideration of technical failures outside a manufacturer’s control when determining liability is directional appropriate. CMS should retain that fault-sensitive approach for Part B and distinguish a refusal to provide MFP access from a discrepancy generated by third-party operational failures.

Where Possible, Use Existing Provider and Payment Infrastructure

The Medicare Transaction Facilitator (MTF) will necessarily expand as the number of selected drugs under Medicare drug price negotiation increases. CMS should ensure the design of that expansion aligns with existing information flows and payment infrastructure.

CMS proposes using provider enrollment and payment information maintained in the Provider Enrollment, Chain, and Ownership System (PECOS) to establish Part B provider profiles in the MTF. Refunds facilitated through the MTF Payment Module would generally be delivered using banking information already registered in PECOS and remittance information would use the existing X12 835 standard. CMS concludes that aligning PECOS and MTF processes would eliminate redundant maintenance of payment information, reduce the risk of inconsistencies, and decrease administrative complexity.

CMS should finalize this approach and take it further where possible. Any additional MTF enrollment obligation should be limited to information genuinely necessary to access the system, authorize users, or receive MFP-specific remittance information. CMS should also evaluate end-to-end refund timing, rather than judging timeliness solely against the manufacturer’s 14-day payment requirement. Under the proposed process, the 14-day clock begins only when the MTF transmits verified claim-level information to the manufacturer. Consequently, a manufacturer could satisfy the 14-day standard even where a provider has already waited weeks or months for the relevant information to move through claims adjudication, CMS verification, and the MTF.

For providers that must acquire costly physician-administered drugs before receiving reimbursement, the economically relevant measure is the period between furnishing the drug and receiving the MFP refund. CMS should monitor that full interval and publish aggregate information on payment timing after implementation.

Minimize Additional Medicare Advantage Reporting

For 2028, CMS proposes using existing MA encounter data submitted through the Encounter Data System (EDS). CMS reports that 85 percent of MA encounter data are currently submitted within 60 days of the claim-from date, while it considers whether selected-drug encounters should be submitted on an accelerated timetable. That statistic presents both reassurance and reason for continued monitoring.

Timely effectuation is especially important in Medicare Advantage. More than half of Medicare beneficiaries eligible to enroll in MA are now enrolled in private plans; KFF estimates that 35.2 million beneficiaries, or 55 percent of eligible beneficiaries, were enrolled in MA in 2026.

CMS should begin with the existing encounter-data infrastructure rather than immediately establish a parallel submission system for MFP effectuation. If empirical experience shows that encounter-data lag is causing material delays in MFP refunds, CMS could subsequently establish a targeted requirement for selected-drug information to be transmitted more quickly to the MTF. Any such change should be limited to the data necessary for effectuation and should avoid requiring MA organizations to transmit claims separately to individual manufacturers.

CMS should likewise finalize its proposal to distinguish EDS edits relevant to MFP eligibility from edits relevant only to other Medicare purposes. The agency is correct that requiring resolution of every EDS edit before transmitting an otherwise verified selected-drug encounter could delay MFP refunds and create financial hardship for Part B providers. An encounter that contains sufficient information to establish that an eligible beneficiary received a selected drug should be allowed to proceed through the MFP effectuation process even where unrelated risk-adjustment or data-quality issues remain.

Clarify the 120-day Complaint and Dispute Period

CMS should retain the proposed 120-calendar-day period for complaints and disputes but clarify when that period begins for Part B claims. The draft guidance currently provides that complaints and disputes must be submitted within 120 days “from the date of the subject of the complaint or dispute.” In Part B, however, the precipitating event that gives rise to a dispute and the point at which the affected party can identify that issue may occur at substantially different times. MA encounter lag, corrected claims, MTF transmissions, refund adjustments, and retrospective reconciliation can all delay the availability of information necessary to determine whether the appropriate MFP refund was paid.

CMS should therefore clarify that the 120-day period begins when the affected party receives the payment, remittance information, claim-level data, or other information reasonably necessary to identify the disputed issue, rather than automatically beginning on the date of service or another earlier event. This approach would preserve a defined and administrable filing period without allowing procedural rights to expire before a party could reasonably know that a discrepancy exists.

Conclusion

Part B effectuation presents different challenges to previous effectuation in the initial Part D MFP process. Part B relies on different coding conventions, different purchasing arrangements, different payment mechanisms, and two major claims-data pathways through Original Medicare and Medicare Advantage. Implementing MFP effectuation without attention to not only initial impact but future impact could increase administrative cost without improving MFP access.

CMS can avoid disruption by building on infrastructure already used in Part B. Existing HCPCS codes can identify selected drugs without imposing unnecessary NDC reporting. An ASP-based SDRA can use a familiar Part B pricing metric while preserving existing claims workflows. PECOS, MA encounter data, and centralized MTF functionality can minimize duplicative reporting. Finally, clear default payment, dispute, and compliance standards can provide the certainty necessary for those systems to operate effectively.

CMS should therefore approach Part B MFP effectuation with a preference for existing infrastructure, minimal new reporting, transparent methodologies, and predictable compliance rules. These principles will not resolve the broader problems associated with government-administered drug pricing, but they can prevent the effectuation process from adding unnecessary costs and complexity to an already suppressive Part B payment system.