Understanding the Medicare Phase-in: What It Means to Qualify as a Specified Manufacturer

Do you have questions about the recent notice from CMS indicating that your company might qualify as a Specified Manufacturer for the Medicare Phase-In? Understanding this designation is crucial for navigating the special discounts billed by Medicare for Part D claims.

To qualify as a Specified Manufacturer, CMS evaluates Medicare Part B claims data, Part D PDE data, and manufacturer-provided ownership details. Manufacturers who sign a Discount Program agreement in time to be covered for any of the years of the phase-in are automatically considered, eliminating the need for a separate application.

The following criteria will be used for determining whether a manufacturer qualifies for the phase-in:

1. Had a Coverage Gap Discount Program agreement in effect for 2021.
2. Had Single Source/Biologic product(s) covered, which represented less than 1% of Medicare’s overall Part D and Part B expenditures for 2021.

Manufacturers who meet the criteria as a Specified Manufacturer will benefit from a unique “phase-in” approach, resulting in reduced percentages billed over several years. Instead of facing the full 10% discount during the Initial Coverage period and a 20% discount during the Catastrophic period, eligible manufacturers will owe rates according to the following schedule:

• 2025: 1% discount on all claims
• 2026: 2% discount on all claims
• 2027: 5% discount on all claims
• 2028: 8% discount on all claims
• 2029: 10% discount on all claims
• 2030: 10% discount during Initial Coverage; 15% discount during Catastrophic Coverage
• 2031: 10% discount during Initial Coverage; 20% discount during Catastrophic Coverage
• All Years After 2031: 10% discount during Initial Coverage; 20% discount during Catastrophic Coverage

Understanding these phased discounts is essential for manufacturers participating in Medicare Part D. Stay informed and prepared for the evolving landscape of healthcare reimbursement.

For further assistance in navigating Medicare Part D and maximizing your benefits as a Specified Manufacturer, the team at Prescription Analytics offers expert support and guidance tailored to your specific needs. Our specialized knowledge can help you make informed decisions and capitalize on available opportunities in this complex environment.

Sources:

CMS: “Pharmaceutical Manufacturers; All Part D Plan Sponsors,” May 12, 2023

CMS: “Pharmaceutical Manufacturers; All Part D Plan Sponsors”