Technical Assistance Brief: Implementation of Inflation-Indexed Rebates for Part B Drugs

KEY TAKEAWAYS

On the basis of our prior oversight work, we anticipate that unless the Centers for Medicare & Medicaid Services (CMS) takes action to remedy several administrative issues, the agency will face the following challenges in implementing inflation-indexed rebates for Part B drugs: (1) identifying products subject to Part B rebates; and (2) excluding claims from Part B rebate calculations that were already subject to rebates under the Medicaid Drug Rebate Program, and discounts under the 340B Drug Discount Program.

WHY WE DID THIS STUDY

The Inflation Reduction Act of 2022 (IRA) requires CMS to calculate inflation-indexed rebates for certain Part B drugs beginning in 2023. Prior Office of Inspector General (OIG) work estimated that Medicare could collect billions of dollars in inflation-indexed rebates similar to those authorized by the IRA. OIG faced several methodological challenges when conducting this past work that could be informative for CMS and stakeholders as the agency implements the new rebate provisions. This technical assistance brief is intended as technical assistance for CMS to consider as it implements these new provisions.

HOW WE DID THIS STUDY

This technical assistance brief compiles insights on potential challenges in implementing inflation-indexed rebates for Part B drugs. The insights provided are drawn from OIG's prior evaluations of Part B drug rebates and our larger body of prescription drug work.

CHALLENGES THAT OIG IDENTIFIED

On the basis of our prior oversight work, we anticipate that unless CMS takes action to remedy several administrative issues, the agency will face the following challenges in implementing rebates:

• Identifying products subject to Part B rebates; and
• Excluding claims from Part B rebate calculations that were already subject to:
  • Rebates under the Medicaid Drug Rebate Program, and
  • Discounts under the 340B Drug Discount Program.

We propose potential solutions to mitigate each administrative issue.