Is Pink the new Black and will MFN be the new ASP? Your Questions Answered about the CMS New MFN Payment Rule 12/8/20

Thank you for continuing to read our newsletters and submit comments and questions! We have heard several questions related to our previous newsletter regarding the recently issued rule by CMS impacting Part B medication payments, Most Favored Nation (MFN). Today’s edition is geared toward answering your questions!

Please reference last week’s newsletter for an overview of the MFN rule: Black Friday Price Drop!!!-For Drug Payments??

What is the add on payment for the new MFN drugs?

• CMS has published the HCPCS M1145 – MFN drug add-on, per dose. This code is to be billed with each dose of an MFN drug and will be reimbursed $148.73 in Q1,2021.

• M1145 will replace the 6% of ASP add on payment that most providers receive today for the same drug.

How do I bill the per add on dose?

• M1145 represents “per dose”. A dose is defined as a line item for that HCPCS code by Date of Service and does not include lines that report waste with a JW modifier.

• This HCPCS code must be added as a single line item per claim, and all “doses” of MFN-designated drugs totaled so that the billed units of M1145 is equal to the total doses of all MFN-designated drugs billed on the claim

To illustrate this:

The organization on a monthly billing cycle infuses 2 doses of rituximab (J9312) 450 mg with 50 mg of waste with each dose. No other services are provided.

Note the billing for the drug and administration services do not change and should reflect the practice your organization is doing today. The M1145 is a new line item that should be added to the claim per date of service. This example displays M1145 with 2 lines which represent the 2 doses received on 11/05/2020 & 11/19/2020 respectively. To further illustrate, we applied a markup on top of the payment amount of $148.73. We recommend your markup reflect your standard of practice within your organization, but covers the handling, storage and other overhead cost of the drug. 

For 340B institutions, what is the payment rate when a JG vs. TB modifier is applied?

Select 340B providers have been required to apply a TB or JG modifier to 340B purchased drugs. Today and continuing for CY2021, a TB modifier is informational only and a JG modifier signals a payment reduction by CMS to ASP – 22.5%. 

When a MFN drug is used and purchased at the 340B price in which a JG modifier is applied CMS will be pay the lower of: 

1. ASP – 22.5% (see the OPPS Final Rule), or

2. ASP+MFN blended payment

In either scenario, CMS will also apply the add-on payment (M1145) to all 340B eligible drugs.

It is unclear in the MFN rule how the drugs in which the TB modifier is applied will be paid. A TB modifier may be applied to a 340B purchased drug with “pass-through” status or applied to a 340B purchased drug at an excepted location. CMS has language within the OPPS that grants a manufacturer 2-3 years of pass-through status for eligible drugs and continues to receive a payment rate of ASP+6%. The language is conflicting and further guidance is needed from CMS.

Do I do anything different as a provider when a drug is listed on the FDA drug shortage list?

Drugs listed on the FDA listing of drug shortages will revert back to ASP+6% reimbursement on the first day of the next quarter in which they appear on the drug shortage list. Providers should continue to bill the add on code (M1145) when using the MFN drug even while it is listed on the FDA drug shortage list. CMS will determine how to temporarily pay providers at the ASP+6% versus the ASP + MFN blended payment. 

How often will the list of drugs be updated?

According to the rule, the list of drugs will be updated annually, effective each January 1. In general, these Top 50 drugs will remain on the list, but new drugs may be added each year. Other information will change on a quarterly basis. For example, the ASP and Most-Favored Nation Model payment rates will be recalculated each quarter. In addition, a drug that appears on the FDA drug shortage list will have the payment revert back to ASP on the first day of the next quarter and will remain until it is removed from the drug shortage list when it will move back to the MFN Model payment on the first day of the next quarter. 

The expectation is that manufacturers will lower their price for these products when they are used on Medicare beneficiaries so that providers will not be reimbursed less than the payment they receive. Are you aware of any manufacturers that have announced price decreases? 

We have not seen any manufacturers publicly stating that they will be offering price reductions based upon this Rule, but it is early since the Rule was just published in the Federal Register on November 27, 2020. However, if manufacturers do provide different pricing, they have to exclude those sales units when they report the average sales price (ASP) the next quarter to CMS so that it doesn’t dilute out the ASP pricing calculation. This may be problematic as manufacturers may require providers to accumulate those purchases separately. One option is to set up a separate account similar to 340B accounts. The rule does not specify a specific process to track products paid under the Most Favored Nation Model, so it will be up to each manufacturer to determine how best to verify the information.

When will we know the final payment rates effective January 2, 2021?

We don’t know. According to the rule, it appears that there will be a separate table posted on a unique CMS website devoted to the Most Favored Nation Model. That website is: https://innovation.cms.gov/innovation-models/most-favored-nation-model. We recommend checking the website often.

Please continue to submit your questions and have your question answered!