Background

The 2026 Medicare Physician Fee Schedule (MPFS) final rule introduces methodological updates to how the Centers for Medicare & Medicaid Services (CMS) values physician services and sets Part B drug payment rates.

CMS confirmed that units of negotiated Part B drugs sold at the Maximum Fair Price (MFP) will be included in the calculation of Average Sales Price (ASP) and clarified that it will only publish the new payment limit (106% of MFP) in the ASP pricing file.

Key Considerations

Beginning January 1, 2028, Part B drugs selected for the Medicare Drug Price Negotiation Program  will be reimbursed at 106% of MFP minus sequestration, reducing provider payment for selected drugs. CMS has yet to provide guidance on how MFP will be effectuated for Part B drugs; potential pathways may introduce additional administrative and financial burden to providers. These dynamics are playing out across several domains, raising key questions for payers and manufacturers:

Commercial market impact: Commercial and Medicare Advantage contracts often tie drug reimbursement to ASP, leading to potential spillover effects in the commercial market. Therefore, ASP-based negotiated rates could begin using the newly defined MFPs as a reference price or be renegotiated using another drug pricing benchmark.

Stakeholder questions:

• How willing are payers to renegotiate contracts, given that over 80% of commercial and Medicare Advantage contracts have at least a two-year duration?
• Will the large provider networks with significant negotiation power (e.g., Group Purchasing Organizations, Managed Service Organizations) take variable approaches, and will the market become skewed toward a specific reimbursement benchmark?
• Which alternative benchmarks (e.g., wholesale acquisition cost, historic ASP) may be used as a reference for commercial contracts?
• Will MFP replace ASP as the prevailing benchmark across lines of business for negotiated products?
• How should stakeholders prepare for a potential contract variability?

Prescribing and acquisition model shifts: The shift to MFP+6% reimbursement may alter provider prescribing patterns, with impacts that vary by therapeutic area and market. New dynamics may also accelerate shifts from buy-and-bill models towards white-bagging, specialty pharmacy distribution, or self-administered options. These shifts may also impact patient access and treatment continuity as providers consider therapeutic alternatives, including pharmacy benefit products and non-negotiated drugs, that may alter the patient treatment experience.

Stakeholder questions:

• What acquisition model shifts (e.g., buy-and-bill, white bagging) should be expected, and how may payers respond?
• How does vertical payer integration impact provider prescribing behavior, specifically in practices with high utilization of drugs selected for negotiation?
• How might these changes affect patient access, treatment adherence, and care coordination across sites of care?
• If alternative reimbursement and acquisition models emerge for commercial contracts, would it disadvantage smaller providers and cause further consolidation or closures?

Entry and exit points for negotiated Part B drugs: CMS will suspend publication of ASP for negotiated Part B drugs until generics or biosimilars are marketed, at which point CMS will resume publishing ASP.

Stakeholder questions:

• What strategies should manufacturers and payers have in place at the “exit point” when ASP is republished and may have eroded over time?
• What are the timelines for implementing these strategies? What is the impact on gross-to-net projections and forecasting?
• How will the timing of biosimilar launches influence the exit-point strategy?

Practice-specific impacts: Practices with onsite infusion centers and high use of negotiated drugs will be particularly impacted by this change, a challenge intensified by ongoing consolidation and vertical integration that disproportionately strains smaller practices.

Stakeholder questions:

• Which provider types may be most impacted in the initial years of MFP implementation? How will practices, especially small community-based ones, respond?
• Are there revenue streams that practices may pursue to address shortfalls?
• What strategies may be implemented to reduce the economic impact of policy changes on affected providers?

Catalyst for federal reform: Lawmakers have reintroduced legislation to maintain the current provider reimbursement model by having drug manufacturers directly rebate Medicare for negotiated products. Amid concerns over payment reductions under MFP+6% reimbursement, proposals to maintain ASP+6% reimbursement with manufacturer rebates for the MFP difference may re-emerge in 2026.

Stakeholder questions:

• How may new or reintroduced legislation alter the impact on Part B providers?
• Would proposals impact federal spending?
• To what extent may CMS or Congress play a future role in mitigating provider reimbursement impacts?

Compounding ASP pressures: In addition to including MFP discounts in ASP, CMS finalized new requirements for manufacturers to document fair market value methodologies for all new and renewed bona fide service fee contracts, while deferring a broader redefinition. These provisions introduce new operational complexity and can potentially erode ASP further.

Stakeholder questions:

• How can manufacturers standardize fair market value documentation to ensure compliance?
• What internal review or governance structures will be necessary to support quarterly ASP submissions?
• How may these proposals align with broader pharmacy benefit manager reform discourse?

Looking Ahead

CMS’s decision to include MFP in ASP calculations creates operational, contractual, and policy uncertainties that will ripple through the market well before Part B MFPs take effect in 2028. These policies will likely continue to evolve in the interim. Avalere Health is closely tracking CMS guidance and rulemaking to assess financial implications for manufacturers, providers, and payers. Our experts help stakeholders quantify potential ASP erosion, evaluate contracting scenarios, and develop advocacy strategies to mitigate reimbursement risk and maintain patient access. To learn more, connect with us.