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CMS Proposes to Withdraw Part B Drug Model

The Centers for Medicare & Medicaid Services (CMS) has proposed withdrawing the Trump administration’s Most Favored Nation (MFN) model interim final rule.

Citing litigation halting implementation of the model and stakeholder comments opposing the Jan. 1 model start state, CMS now proposes to rescind the November 2020 rule and remove the regulatory text added by the proposed rule. America’s Essential Hospitals submitted comments on the interim final rule, urging CMS to withdraw the model due to substantive and procedural issues.


Last November, CMS issued an interim final rule creating a seven-year model, beginning Jan. 1, 2021, phasing in a reduced payment rate for 50 Medicare Part B drugs over four years and then paying Medicare providers the fully reduced rate for the remaining years of the model.

In issuing an interim final rule instead of a proposed rule, CMS bypassed soliciting public input through a notice-and-comment period, as required by the Administrative Procedure Act (APA). This procedural deficiency, in addition to other flaws with the model, led to legal challenges against the rule. In December, a federal judge in California issued an injunction halting implementation of the seven-year MFN model, reasoning that CMS violated the APA by failing to issue a proposed rule, which would have allowed for notice and comment. CMS has held off on implementing the MFN model since this injunction.

Next Steps

Because the MFN model already was paused by the court injunction, its implementation currently is halted. CMS must consider stakeholder comment on this proposed rule and issue a final rule before formal rescission of the MFN model.

In the proposed rule released this week, CMS does not include other potential ways to address Part B drug prices, noting that the withdrawal of the interim final rule “does not reflect any judgment by [the Department of Health and Human Services] regarding future policy.”

America’s Essential Hospitals is analyzing the proposed rule for comment. CMS is accepting comments on this proposed rule until Oct. 12.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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