Medicare Drug Price Negotiation: The Part B Effectuation Gap

By Penn Quarter Partners

CMS has told the market when negotiated Part B prices take effect. It has not yet said how the money will actually move. That gap is where strategy lives between now, September 18, and effectuation.

The Medicare Drug Price Negotiation Program that has been affecting prescription drugs covered by Medicare Part D is about to expand into Part B. And if you thought the Part D infrastructure was complex to erect, as the old saying goes, you ain’t seen nothin’ yet.

On July 16, CMS released draft guidance explaining, for the first time, how drug manufacturers must make a negotiated maximum fair price (MFP) available for medicines covered under Medicare Part B. Comments are due September 18, 2026. CMS says it intends to finalize the Part B structure this fall (CMS fact sheet).

Where the Medicare Drug Price Negotiation Program is concerned, the lion’s share of public attention is devoted to which drugs are selected and what price is eventually set. But that’s just the visible half of the program. The other half — “effectuation” — is the complicated plumbing, the process by which a refund gets from a manufacturer to the medical practice that bought the drug. So far, this has involved quiet, technical conversations. But, starting January 1, 2028, effectuation for Part B drugs becomes real, and significant decisions need to be made between now and then for that to happen.

CMS’s draft guidance is candid about how much it has not decided. On the two key issues that determine how this program will work, the agency has published menus of options rather than firm answers. There is a bright side to this approach where companies are concerned. For companies that engage now, this is a meaningful opportunity to weigh in.

Why Part B Effectuation Is Harder

Up to now, the Medicare Drug Price Negotiation Program covered only Part D drugs — ones you pick up at a pharmacy. Those claims identify a product by National Drug Code (NDC), a number unique to a specific drug, made by a specific manufacturer, in a specific package.

Part B is different. It covers drugs administered by a clinician, such as infusions and injections. Many oncology, rheumatology, gastroenterology, and ophthalmology drugs are covered under Part B. Those claims bill under Healthcare Common Procedure Coding System (HCPCS) codes, which describe a procedure, not a specific product. In fact, a single HCPCS code can cover several different NDCs at once.

Therein lies a critical complication making Part B effectuation a regulatory challenge. As CMS acknowledges, because one HCPCS code can include multiple products (potentially including not the drug selected for Medicare price negotiation, but rather a competitor’s product) the agency cannot say with certainty that every claim under that code will be a claim for the negotiated drug.

This leaves two critical issues to be resolved. First, how to be certain which claims quality for the Medicare Part B negotiated price and, second, how to determine what the provider actually paid for the drug, which a manufacturer needs to know to accurately refund the difference.

What CMS Left Open

The draft guidance addresses these two issues by posing questions rather than providing answers. Each question is a live comment opportunity.

How will anyone know a claim is for the negotiated drug?

Here, CMS offers three possible paths:

1. New billing modifiers that providers would add to claims

2. A requirement to report the full 11-digit NDC on Part B claims

3. Assigning drugs their own separate HCPCS codes.

Each option would move the administrative work to a different party.

What stands in for the price the provider actually paid?

CMS proposes four ways to build a “standardized default refund amount,” build on either wholesale acquisition cost or average sales price, averaged across products, or tied to a specific NDC. The agency is specifically asking how accurate these figures are as proxies for real acquisition costs.

Can Medicare Advantage data move fast enough to support effectuation?

CMS plans to draw MA information from encounter data, but the outer deadline for reporting runs to January 31 of the following year and runs up against a 14-day prompt payment requirement for manufacturers once they receive the data. Provider would have to float the excess costs until receiving refunds and match those refunds to specific claims.

What prevents the same discount from being paid twice?

Manufacturers owe the lower of the MFP or the 340B ceiling price and CMS is clear that it will not be sorting that out. Here’s the problem — Part B claims carry a 340B modifier in traditional Medicare, but MA encounter data currently does not.

Should manufacturers receive identifiable beneficiary information?

CMS acknowledges the privacy risks in sending manufacturers the Medicare Beneficiary identifier and patient last name to support standard payment records but concluded the benefits of standardization outweigh them. The agency invites alternative suggestions.

As CMS seeks perspectives on these questions, there is a critical point that warrants emphasis so it doesn’t get lost in the morass of technical details. The obligation to deliver the negotiated price stays with the manufacturer regardless of which formula CMS selects. The standardized refund amount exists to spare manufacturers from having to calculate a real acquisition cost on each claim. Whether CMS will treat that standard amount as a compliance safe harbor is a high-value question that should be raised during this comment period but it should not be overlooked that the refund formula is a convenience, not a legal shield.

Why “Still Open” Is Itself the Risk

The expedited timeframe for this process warrants attention. Final guidance is expected this fall. Manufacturers must register with the Medicare Transaction Facilitator by May 1, 2027, and submit effectuation plans in two stages by June 1 and September 1, 2027. Prices take effect January 1, 2028.

This means organizations will have to build systems, renegotiate distribution terms, and model financial exposure for a mechanism that will have its basic rules settled roughly 14 months before they go live. Anyone waiting for certainty before starting this work will be building on a compressed schedule.

There is also a procedural point worth flagging: 2028 is the last year CMS may implement this program through guidance rather than formal rulemaking. Comments filed now are shaping a document that will not go through notice and comment again.

The Window Is Short

Between now and September 18, there is much for organizations to consider. This includes modeling exposure under each option presented by CMS, identifying areas in which data can help shape the final guidance, and identifying operational challenges with specific reform alternatives. CMS also needs to understand the implications on access and treatment options.

Penn Quarter Partners has the policy experience and expertise to life sciences companies and provider organizations with analysis, stakeholder engagement and post-comment analysis to understand and articulate the challenges and implications for patients, providers and manufacturers.