Most Favored Nation (MFN) Rule Threatens Access to Medicare Part B Drugs


Florida Medical Clinic Orlando Health

At Florida Medical Clinic Orlando Health, we strive to give our patients the tools and information they need to manage their health and advocate for better care. 

That’s why our doctors are choosing to speak up about an important government ruling that will affect Medicare beneficiaries, particularly those who are rheumatology, oncology, or gastroenterology patients, called the Most Favored Nation (MFN) Rule. 

The ruling, which will go into effect on January 1st, 2021, will test a “most favored nation” payment system for Medicare Part B drugs over the course of the next seven years. Unfortunately, this flawed attempt to force drug companies to lower their prices will have disastrous consequences for patients, including: 

  • Reduced access to critical medications used to treat cancer and rheumatic diseases
  • Being forced to use less-effective drugs that negatively impact patients’ quality of life
  • Being forced to switch providers mid-treatment

For these reasons, Florida Medical Clinic Orlando Health’s Rheumatology Department joins the American Society of Clinical Oncology and the American College of Rheumatology in opposing this policy.

In this blog, we break down what the new Most Favored Nation Ruling is, how it will affect Medicare patients’ access to care, and what you can do to help stop this dangerous ruling from going into effect. 

What is the Most Favored Nation (MFN) Rule?

On November 27, 2020, the Centers for Medicare and Medicaid Services (CMS) announced a new payment model for Medicare Part B drugs called the Most Favored Nation (MFN) Model. 

The Most Favored Nation Model will affect the way providers are reimbursed for the top 50 Medicare Part B drugs. Currently, providers are reimbursed 100% of the average sale price (ASP) for a drug, plus a 6% add-on to cover the transportation, storage, and administration of the drug. Under this new ruling, providers will be reimbursed the “most favored nation” price, meaning the lowest international price for a particular drug.

The stated goal of this ruling is to lower drug prices for patients in the United States. But the way that this ruling is attempting to tackle this problem is not only ineffective, but it also poses serious health risks for patients.

Instead of targeting the US drug manufacturers that set the prices for prescription drugs, the MFN Rule will place the burden of cost reduction on physicians and hospitals, making it more difficult for them to provide certain medications to patients.

This is because the international price for a drug could be much lower than what is available domestically, so providers could be reimbursed for less than what it costs to get the drug from the manufacturer. The success of the MFN Rule depends on drug manufacturers choosing to lower their prices so that doctors and hospitals aren’t left to operate at a loss, but based on similar experiments in the past, this is unlikely to happen. 

What drugs are affected by the MFN ruling? 

The MFN payment model will apply to the top 50 drugs that make up the majority (80%) of Medicare Part B spending. Of these 50 drugs, 38 are used to treat cancer and blood disorders, and 10 are used to treat rheumatic diseases.

The ruling will not include drugs used at home, vaccines, oral drugs, multiple drug sources, intravenous immune globulin products, and any drugs used in the treatment of COVID-19. 

When does the new MFN ruling go into effect?

The MFN Model will be implemented on January 1st, 2021. However, the ruling is open for comment until January 26, 2021. This means that there is a small window between Inauguration Day on January 20th and January 26th for the incoming Biden Administration to potentially change or suspend the ruling based on the comments that are received.

The MFN pricing model will be phased in over the first 4 years of the program. In 2021, providers will be reimbursed for 25% of the MFN price for drugs and 75% of the average sale price. The percentage that providers are reimbursed based on the MFN price increases by 25% each year until providers are being reimbursed 100% of the MFN price starting in 2024.

To submit a public comment on the MFN Ruling, visit the Federal Register website. Anyone can submit a comment, and while there are no rules as to what you can submit, does provide some tips for submitting more effective comments.

Who does the ruling affect? 

The MFN Model will affect Medicare programs only, so patients with private plans will not be directly impacted. It is also more likely to affect patients with cancer, rheumatic diseases, multiple sclerosis, and GI conditions like inflammatory bowel syndrome. 

The Most Favored Nation Model will be mandatory for Medicare-participating providers nationwide, including: 

  • Physicians
  • Non-physician practitioners
  • Group practices
  • Hospital outpatient departments
  • Ambulatory surgical centers

However, certain health care providers are exempt from the MFN Model, including: 

  • Children’s hospitals 
  • PPS-exempt cancer hospitals (PCHs)
  • Critical access hospitals
  • Rural health clinics
  • Cancer hospitals 

What the Most Favored Nation Rule Means for You

1. You May Lose Access to Treatment

The rule itself estimates that in 2021, 9% of people covered by Medicare will lose access to Medicare Part B medications in 2021, and 19% will lose access by the end of 2022. 

Why? If a provider is unable to offer a certain treatment due to the MFN Model’s lower reimbursement rates, then their patients would either have to receive a less-effective alternative, find a hospital that is exempt from the MFN experiment to continue treatment. But finding a new doctor for something as highly specialized as oncology or rheumatology isn’t easy, and may lead some patients to forego treatment altogether. 

2. Your Out-of-Pocket Costs Probably Won’t Go Down 

While the government will see a large reduction in Medicare spending over the course of the 7-year-long experiment, patients won’t see their health care costs go down. A new study estimates that just 1% of Medicare beneficiaries would see a drop in out of pocket costs under this new ruling. 

3. Your Local Health Care Provider May Be Forced Out of Business

Under the proposed MFN Model, Medicare Part B reimbursements will be cut significantly. As a result, physicians and hospitals will have to absorb losses while drug companies are free to keep overcharging for essential medications. 

While the MFN Rule does have protections in place for practices that fall into the red, medical practices can’t apply for those financial hardship exemptions until 2022. By then, many small practices may already be forced out of business. 

How You Can Help

While we can all agree that something must be done about America’s unusually high drug prices, these reforms should not restrict patients’ access to care. Risking the health and safety of Medicare patients, who are primarily 65 and older, for this 7-year-long “experiment” is simply unethical. 

If you or someone you care about will be affected by the Most Favored Nation Rule, there is still time to act. Here are just a few ways you can make your voice heard and ask the government to consider an alternative policy solution before the comment period closes on January 26, 2021: 

  1. Print this template to send a letter directly to the CMS urging them to rescind the MFN Rule
  2. Leave a public comment on the Federal Register
  3. If you are a rheumatology patient who will be affected by this ruling, contact your legislators and urge them to take action against it

As we continue to face a public health emergency, access to essential medications has never been more important. The Rheumatology Department at Florida Medical Clinic Orlando Health thanks you for your help on this urgent health matter.



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