CY 2026 PFS Majorly Updates ASP Reporting

Regulatory Shifts in Medicare Part B Drug Pricing and Reporting

With the advent of recent legislative action, Medicare Part B drug reimbursement is now closely tethered to the manufacturer-reported ASP (Average Selling Price). This is a significant change from the past when ASP calculations allowed manufacturers to base their figures on reasonable assumptions, especially in intricate contract environments involving specialty distributors, group purchasing organizations, pharmacies, and third-party logistics providers. CMS also previously allowed certain manufacturer-paid fees, such as BFSFs, to be excluded from the ASP price-concession calculation, provided they met specific criteria.

However, in recent rulemaking cycles, CMS proposed several significant reforms to these frameworks, including fair market value (FMV) methodologies for BFSFs, expansion of disclosure requirements, and new documentation standards for ASP reporting. Despite pushback from stakeholders, CMS finalized some of these proposals in the 2026 PFS final rule, indicating potential future rulemaking on the issues it did not adopt.

Major Policies in the CY 2026 Medicare PFS Final Rule

MFP and ASP

In the final rule, CMS detailed how units sold at the Manufacturer’s Financial Penalty (MFP) for selected drugs under the negotiation framework will be accounted for in ASP calculations. This will ensure better alignment of the Medicare Part B reimbursement methodology once MFP pricing takes effect. CMS also announced a transition from the ASP-based drug payment limit file to a payment limit file that will reference MFP rather than ASP for selected drugs.

Bundled Arrangements and Price Concessions

CMS has instituted a definition for “bundled arrangement” in ASP reporting. This term covers situations where price concessions are contingent on purchasing behavior or volume targets involving the same or different drugs, aligning with Medicaid’s approach.

“Bundled Arrangement” refers to an arrangement where a rebate, discount, or other price concession is tied to the purchase of the same or another product or some other performance requirement. Examples might include market share attainment, including or tier placement on a formulary, purchasing patterns, or prior purchases. The resulting discounts or other price concessions are typically more substantial than those that would have been available if the bundled drugs or biologicals had been purchased separately or outside the bundled arrangement.

CMS introduced this definition to address manufacturers’ admitted failure to report a broad range of bundled price concessions in previous ASP submissions. From 2026, manufacturers will need to identify bundled arrangements and document their methodologies in their quarterly ASP submissions.

BFSFs

While CMS did not adopt a proposed dramatic redefinition of BFSF, it did finalize a requirement for manufacturers to secure a certification or warranty from service fee recipients declaring they will not pass the fees to any client or customer. Despite not adopting the more rigorous proposed FMV and independent valuation methodologies, CMS strongly suggested that manufacturers document which services are linked to cost or volume and how those analyses are conducted.

Documentation of Reasonable Assumptions

From now on, manufacturers will need to include reasonable assumption letters with quarterly ASP submissions. These letters should detail the methodology behind any assumptions related to the treatment of BFSFs, bundled arrangements, and MFP units. For existing BFSF contracts, CMS expects documentation to be complete by April 30, 2026.

Implications for Manufacturers

• ASP modelling: Due to the inclusion of MFP units and the broader push for transparency and documentation, manufacturers should model impacts on ASP and evaluate how price concessions, bundled arrangements, and fees will be treated.
• Documentation readiness: Manufacturers should review service fee arrangements to ensure they have the necessary certifications and should prepare documentation concerning underlying assumptions, methodologies, and data sources for ASP calculations.
• Cross-program alignment: To help promote consistency across federal pricing programs and reduce discrepancies, manufacturers should align their government-pricing teams and keep an eye on their output for diverging methodologies.
• Monitor further rulemaking: As CMS may make further adjustments, manufacturers should continue to monitor CMS rules and guidance documents for updates.

The final rule represents a noteworthy shift in the regulatory landscape for Part B drug pricing and manufacturer reporting obligations. Although CMS did not adopt all of its aggressive proposals, the final rule nonetheless strengthens documentation and certification requirements, clarifies the inclusion of MFP units in ASP calculations, and urges manufacturers to review the rule’s requirements to align internal processes, contracts, and reporting frameworks by the January 1, 2026 effective date.