[Federal Register Volume 86, Number 151 (Tuesday, August 10, 2021)]
[Proposed Rules]
[Pages 43618-43623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16886]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 513

[CMS-5528-P]
RIN 0938-AT91


Most Favored Nation (MFN) Model

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule proposes to rescind the Most Favored Nation 
Model interim final rule with comment period that appeared in the 
November 27, 2020, Federal Register.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, by October 12, 2021.

ADDRESSES: In commenting, please refer to file code CMS-5528-P.
    Comments, including mass comment submissions, must be submitted in 
one

[[Page 43619]]

of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-5528-P, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-5528-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Lara Strawbridge, (410) 786-7400 or 
[email protected].

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments 
received before the close of the comment period are available for 
viewing by the public, including any personally identifiable or 
confidential business information that is included in a comment. We 
post all comments received before the close of the comment period on 
the following website as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that website to view public comments. CMS will not post on 
Regulations.gov public comments that make threats to individuals or 
institutions or suggest that the individual will take actions to harm 
any individual. CMS continues to encourage individuals not to submit 
duplicative comments. We will post acceptable comments from multiple 
unique commenters even if the content is identical or nearly identical 
to other comments.

I. Background

    Increases in Part B prescription drug spending significantly 
outpace the growth in spending on other Medicare Part B services,\1\ 
and prices in the United States (U.S.) for most Medicare Part B drugs 
with the highest Medicare spending far exceed prices in other 
countries.2 3 Specifically, drugs have consistently been a 
major contributor to the overall Medicare Part B spending trend. 
Medicare Part B fee-for-service (FFS) spending for separately payable 
physician-administered drugs and drugs furnished in a hospital 
outpatient department represented about 11 percent of Medicare Part B 
FFS benefit spending in 2015, but accounted for about 37 percent of the 
change in Medicare Part B FFS benefit spending from 2015 to 2020.\4\ In 
addition to the continued growth in spending, Medicare pays 
substantially more than other countries for many of the highest-cost 
Medicare Part B drugs that beneficiaries receive in an outpatient 
setting for which Medicare Part B allows separate payment.\5\ In many 
instances, Medicare pays more than twice as much for certain drugs as 
other countries do.\6\
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    \1\ Nguyen X. Nguyen and Steve Sheingold. Medicare Part B Drugs: 
Trends in Spending and Utilization, 2006-2017. Washington, DC: 
Office of the Assistant Secretary for Planning and Evaluation, U.S. 
Department of Health and Human Services. November 20, 2020 (https://aspe.hhs.gov/pdf-report/medicare-part-b-drugs-spending-and-utilization).
    \2\ ``Comparison of U.S. and International Prices for Top 
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-medicare-part-b-drugs-total-expenditures; El-Kilani Z, Finegold K, 
Mulcahy A, and Bosworth A. Medicare FFS Part B and International 
Drug Prices: A Comparison of the Top 50 Drugs. Washington, DC: 
Office of the Assistant Secretary for Planning and Evaluation, U.S. 
Department of Health and Human Services. November 20, 2020 (https://aspe.hhs.gov/pdf-report/medicare-ffs-part-b-and-international-drug-prices).
    \3\ Individual countries differ in the regulatory processes and 
standards governing approval of drugs and biologicals. Use of 
international drug prices in the MFN Model should not be interpreted 
to connote FDA approval or to otherwise describe any scientific or 
regulatory relationship between U.S.-approved and non-U.S.-approved 
products.
    \4\ 2020 Annual Report of the Boards of Trustees of the Federal 
Hospital Insurance and Federal Supplementary Medical Insurance Trust 
Funds. Accessed via: https://www.cms.gov/files/document/2020-medicare-trustees-report.pdf.
    \5\ ``Comparison of U.S. and International Prices for Top 
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-medicare-part-b-drugs-total-expenditures; El-Kilani Z, Finegold K, 
Mulcahy A, and Bosworth A. Medicare FFS Part B and International 
Drug Prices: A Comparison of the Top 50 Drugs. Washington, DC: 
Office of the Assistant Secretary for Planning and Evaluation, U.S. 
Department of Health and Human Services. November 20, 2020 (https://aspe.hhs.gov/pdf-report/medicare-ffs-part-b-and-international-drug-prices).
    \6\ ``Comparison of U.S. and International Prices for Top 
Medicare Part B Drugs by Total Expenditures'' accessed via https://aspe.hhs.gov/pdf-report/comparison-us-and-international-prices-top-medicare-part-b-drugs-total-expenditures; El-Kilani Z, Finegold K, 
Mulcahy A, Bosworth A. Medicare FFS Part B and International Drug 
Prices: A Comparison of the Top 50 Drugs. Washington, DC: Office of 
the Assistant Secretary for Planning and Evaluation, U.S. Department 
of Health and Human Services. November 20, 2020 (https://aspe.hhs.gov/pdf-report/medicare-ffs-part-b-and-international-drug-prices).
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    This imbalance in payment arises because Medicare generally 
establishes the payment for separately payable Medicare Part B drugs 
using the methodology in section 1847A of the Social Security Act (the 
Act). In most cases, this means payment is based on the average sales 
price (ASP) plus a statutorily mandated 6 percent add-on. Under this 
methodology, the Medicare program does not get the benefit of the 
substantial discounts provided in other countries, because ASP is 
calculated using only the prices that manufacturers charge to certain 
U.S.-based purchasers. ASP-based payments may also encourage the use of 
more expensive drugs because the dollar amount of the 6 percent add-on 
portion is larger for drugs with higher ASPs.\7\
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    \7\ MedPAC, June 2017, ``Medicare Part B Drug Payment Policy 
Issues,'' accessed via http://medpac.gov/docs/default-source/reports/jun17_ch2.pdf
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    The Most Favored Nation (MFN) Model interim final rule with comment 
period (85 FR 76180) \8\ (hereafter, referred to as ``the November 2020 
interim final rule'') was published in the Federal Register on November 
27, 2020, and was effective the same day, with a 60-day comment period. 
The 60-day comment period on the November 2020 interim final rule 
closed on January 26, 2021. The November 2020 interim final rule 
established a 7-year nationwide, mandatory MFN Model, under section 
1115A of the Act, with the model performance period beginning on 
January 1, 2021. The MFN Model would test an alternative way for 
Medicare to pay for certain Medicare Part B single source drugs and 
biologicals (including biosimilar biologicals). For additional 
information on the MFN Model, see the November 2020 interim final rule 
and the MFN Model website.\9\
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    \8\ Available at https://www.govinfo.gov/content/pkg/FR-2020-11-27/pdf/2020-26037.pdf.
    \9\ Available at https://innovation.cms.gov/innovation-models/most-favored-nation-model.
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    In the November 2020 interim final rule, Waiver of Proposed 
Rulemaking and Delay in Effective Date, we stated that we found that 
there was good cause to waive the notice and comment requirements under 
sections 553(b)(B) of the Administrative Procedure Act and section 
1871(b)(2)(C) of the Act because of the particularly acute need for 
affordable Medicare Part B drugs in the midst of the COVID-19 pandemic 
(85 FR 76249).
    In December 2020, while the comment period was open, four lawsuits 
were filed related to CMS's waivers of proposed rulemaking and delay in 
effective date as well as other aspects of the MFN Model and the

[[Page 43620]]

November 2020 interim final rule: Association of Community Cancer 
Centers v. Azar, No. 8:20-cv-03531 (D. Md.); California Life Sciences 
Ass'n v. CMS, No. 3:20-cv-08603 (N.D. Ca); Regeneron Pharmaceuticals v. 
HHS, No. 7:20-cv-10488 (S.D.N.Y.); and Community Oncology Alliance, 
Inc. v. HHS, No.1:20-cv-03604 (D.D.C.). On December 28, 2020, the U.S. 
District Court for the Northern District of California issued a 
nationwide preliminary injunction in California Life Sciences, which 
preliminarily enjoined HHS from implementing the MFN Model and the 
November 2020 interim final rule. The lawsuits in the U.S. District 
Court for the District of Maryland and the U.S. District Court for the 
District of Columbia were stayed based on the nationwide preliminary 
injunction. On December 30, 2020, the U.S. District Court for the 
Southern District of New York issued a preliminary injunction in 
Regeneron Pharmaceuticals v. HHS, which preliminarily enjoined HHS from 
applying the November 2020 interim final rule to Regeneron's drug 
EYLEA[supreg] (aflibercept).
    On January 8, 2021, the Solicitor General determined not to appeal 
the preliminary injunction issued in California Life Sciences. On 
January 19, 2021, at the parties' request, the U.S. Northern District 
of California stayed the case until at least April 23, 2021. 
Subsequently, on April 26, 2021, another stay was granted until July 
26, 2021. On July 29, 2021, another stay was granted until September 
27, 2021.
    In Regeneron Pharmaceuticals, on February 2, 2021, the plaintiff 
filed a letter seeking leave to file a motion for summary judgment, and 
HHS filed a letter seeking leave to file a motion for a stay. On 
February 10, 2021, the U.S. District Court for the Southern District of 
New York granted HHS's request and stayed the case for 90 days (that 
is, through May 11, 2021). On May 10, 2021, the stay in this case was 
extended for an additional 90 days, until August 9, 2021, to give HHS 
time to consider how to proceed with the rule in light of the 
``unanimous'' court decisions to date. In its order, the court noted 
that HHS should ``not assume that another stay will be granted,'' as 
the stays gave HHS ``a half-year to reach a conclusion regarding how to 
proceed[.]''
    As a result of the nationwide preliminary injunction, the MFN Model 
was not implemented on January 1, 2021, as contemplated in the November 
2020 interim final rule. While the nationwide preliminary injunction 
has been in place, CMS considered how to proceed given stakeholders' 
concerns about potential impacts of the MFN Model.

II. Provisions of the Proposed Regulations

    We received approximately 1,166 timely pieces of correspondence in 
response to the November 2020 interim final rule. We appreciate the 
comments that we received. We note that many commenters agreed with HHS 
about the urgency of addressing high prescription drug prices, but 
nearly all of the commenters expressed concern about beginning the 
model on January 1, 2021, including starting the model during the 
COVID-19 pandemic. Given that the nationwide preliminary injunction 
precluded implementation of the MFN Model on January 1, 2021, as 
contemplated, that multiple courts found procedural issues with the 
November 2020 interim final rule, and that stakeholders expressed 
concern about the model start date,\10\ we are proposing to rescind 
regulations added by the November 2020 interim final rule and remove 
the associated regulatory text at 42 CFR part 513. We believe this 
proposed rule communicates how we wish to proceed with the November 
2020 interim final rule to the courts and the public. Since the 
preliminary injunctions prevented the November 2020 interim final rule 
from taking effect, we do not believe there would be any disruption to 
reliance interests or Medicare program administration if this proposed 
rule were to take effect. If finalized, our proposal would allow us to 
take time to further consider the issues identified by commenters and 
would address the November 2020 interim final rule's procedural 
deficiencies by rescinding it. We note that this proposed rule (that 
is, our proposal to effectively withdraw an interim final rule with 
comment period) is limited to the codification of the November 2020 
interim final rule, and does not reflect any judgment by HHS regarding 
future policy.
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    \10\ For example, commenters stated that the MFN Model should 
not start during the COVID-19 pandemic, and in addition that the 
model should not begin on January 1, 2021, while the public comment 
period for the November 2020 interim final rule was ongoing (until 
January 26, 2021). Further, commenters stated that CMS failed to 
allow MFN participants sufficient time to prepare for model start 
and to develop and deploy new systems with distributors and 
customers to exclude model sales from ASP reporting.
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    On July 9, 2021, President Biden signed an Executive Order on 
Promoting Competition in the American Economy that, in part, directs 
the Secretary of HHS to take steps to lower the prices of and improve 
access to prescription drugs and biologicals. HHS is exploring 
opportunities to promote value-based care for our beneficiaries; to 
address the high cost of Medicare Part B drugs, manufacturers' pricing, 
and the resulting growth in Medicare Part B drug spending; and to 
modernize the Medicare program to improve the quality and cost of care 
for beneficiaries. We will continue to carefully consider the comments 
we received on the November 2020 interim final rule as we explore all 
options to incorporate value into payments for Medicare Part B drugs 
and improve beneficiaries' access to evidence-based care.
    We invite comments on our proposal to rescind and remove the 
regulations at 42 CFR part 513, which also would withdraw the MFN 
Model.

III. Collection of Information Requirements

    As stated in section 1115A(d)(3) of the Act, Chapter 35 of title 
44, United States Code, shall not apply to the testing and evaluation 
of CMS Innovation Center Models. However, costs incurred through 
information collections were described in sections III.H., III.I.b., 
and VI.C.5. of the November 2020 interim final rule (85 FR 76221, 
76222, and 76244, respectively) . If this proposed rule is finalized, 
requirements related to the information collection described in the 
November 2020 interim final rule would not continue. As such, resulting 
savings are included in the estimate of the impact of our proposal to 
withdraw the MFN Model in section V.C. of this proposed rule. Further, 
this proposed rule does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact Analysis

A. Statement of Need

    The purpose of this proposed rule is to propose the rescission of 
the Most Favored Nation Model, codified by an interim final rule with 
comment period

[[Page 43621]]

that appeared in the November 27, 2020 Federal Register, and remove the 
associated regulatory text at 42 CFR part 513, which also would 
withdraw the MFN Model.

B. Overall Impact

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any one year, 
or adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory actions or with economically significant 
effects ($100 million or more in any 1 year). Based on our estimates, 
OMB's Office of Information and Regulatory Affairs has determined this 
rulemaking is ``economically significant'' as measured by the $100 
million threshold. Accordingly, we have prepared an RIA that to the 
best of our ability presents the costs and benefits of the rulemaking.

C. Detailed Economic Analysis

    Removing the regulatory text at 42 CFR part 513, which also would 
withdraw the MFN Model, would mean that the annualized/monetarized 
estimates of costs and transfers presented in the November 2020 interim 
final rule (85 FR 76235 through 76248) would not be realized. The 
regulatory impact analysis of the November 2020 interim final rule 
estimated that the MFN Model would result in substantial overall 
savings for the Medicare program, the Medicaid program, and 
beneficiaries, and that model participants would experience costs 
associated with complying with the regulations, survey completion, and 
potential requests for financial hardship exemption.
    In the November 2020 interim final rule, we presented estimates 
from the CMS Office of the Actuary (OACT) (85 FR 76236) and the HHS 
Office of the Assistant Secretary for Planning and Evaluation (ASPE) 
(85 FR 76240). We noted that there is much uncertainty around the 
assumptions for both the OACT and ASPE estimates, and refer readers to 
section VI.C. of the November 2020 interim final rule for a more 
complete discussion of the estimated impacts of the MFN Model. These 
potential impacts were estimated to occur beginning January 2021 
through December 2028, in alignment with a January 1, 2021 model start. 
However, because the MFN Model was not implemented on January 1, 2021, 
as contemplated in the November 2020 interim final rule, such effects 
have not occurred.
    Nevertheless and notwithstanding the nationwide preliminary 
injunction, this analysis uses a baseline in which the November 2020 
interim final rule was implemented on January 1, 2021, to calculate the 
monetized estimates of the effects of this proposed rule. We maintain 
the analytical approach described in the regulatory impact analysis of 
the November 2020 interim final rule, and for the purpose of 
quantifying the effects of this proposed rule, assume that the 
regulations added by the November 2020 interim final rule will be in 
full effect if this proposed rule is not finalized. As a result of the 
rescission of the regulations added by the November 2020 interim final 
rule, this proposed rule would, if finalized, prevent the occurrence of 
the estimated costs and transfers presented in the November 2020 
interim final rule. We summarize this result in Tables 1 and 2, which 
illustrate, inversely, the monetized estimates contained in Table 17 
(85 FR 76247) and Table 18 (85 FR 76248) of the November 2020 interim 
final rule. The period covered shown in Tables 1 and 2 begins January 
2021 in alignment with the accounting statements and tables presented 
in the November 2020 interim final rule. This approach illustrates that 
this proposed rule, if finalized, would prevent the realization of the 
annualized/monetarized estimates of costs and transfers that were 
presented in the November 2020 interim final rule. Because the MFN 
Model was not implemented, readers should understand that this proposed 
rule does not affect conditions in the past.

   Table 1--Accounting Statement: Estimated Impacts From CY 2021 to CY 2028 as a Result of Provisions of This
                                    Proposed Rule Based on the OACT Estimate
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                                                                                  Units
                                                       ---------------------------------------------------------
               Category                    Estimates                     Discount rate
                                                          Year dollar         (%)            Period covered
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Costs:
    Annualized Monetized ($million/              -29.4            2018               7  January 2021--December
     year).                                                                              2028.
                                                 -27.1            2018               3  January 2021--December
                                                                                         2028.
                                       -------------------------------------------------------------------------
To Whom...............................  Hospital/physicians.
                                       -------------------------------------------------------------------------
    Annualized Monetized ($million/               -0.4            2018               7  January 2021--December
     year).                                                                              2027.
                                                  -0.4            2018               3  January 2021--December
                                                                                         2027.
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Transfers:

[[Page 43622]]

 
    Annualized Monetized ($million/           11,502.5            2018               7  January 2021--December
     year).                                                                              2027.
                                              11,906.3            2018               3  January 2021--December
                                                                                         2027.
                                       -------------------------------------------------------------------------
From Whom to Whom.....................  Federal Government to hospitals/physicians and MA plans.
                                       -------------------------------------------------------------------------
    Annualized Monetized ($million/            4,087.2            2018               7  January 2021--December
     year).                                                                              2027.
                                               4,228.3            2018               3  January 2021--December
                                                                                         2027.
                                       -------------------------------------------------------------------------
From Whom to Whom.....................  Beneficiaries to hospitals/physicians and MA plans.
                                       -------------------------------------------------------------------------
    Annualized Monetized ($million/              577.5            2018               7  January 2021--December
     year).                                                                              2027.
                                                 596.5            2018               3  January 2021--December
                                                                                         2027.
                                       -------------------------------------------------------------------------
From Whom to Whom.....................  States to hospitals/physicians and MA plans.
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 Table 2--Accounting Statement: Estimated Impacts From CY 2021 to CY 2028 as a Result of the Provisions of This
                                    Proposed Rule Based on the ASPE Estimate
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                                                                                  Units
                                                       ---------------------------------------------------------
               Category                    Estimates                     Discount rate
                                                          Year dollar         (%)            Period covered
----------------------------------------------------------------------------------------------------------------
Costs:
    Annualized Monetized ($million/              -29.4            2018               7  January 2021--December
     year).                                                                              2028.
                                                 -27.1            2018               3  January 2021--December
                                                                                         2028.
                                       -------------------------------------------------------------------------
To Whom...............................  Hospital/physicians
                                       -------------------------------------------------------------------------
    Annualized Monetized ($million/               -0.4            2018               7  January 2021--December
     year).                                                                              2027.
                                                  -0.4            2018               3  January 2021--December
                                                                                         2027.
                                       -------------------------------------------------------------------------
Transfers:
    Annualized Monetized ($million/            7,058.3            2018               7  January 2021--December
     year).                                                                              2027.
                                               7,276.5            2018               3  January 2021--December
                                                                                         2027.
                                       -------------------------------------------------------------------------
From Whom to Whom.....................  Federal Government to hospitals/physicians and MA plans
                                       -------------------------------------------------------------------------
    Annualized Monetized ($million/            4,504.9            2018               7  January 2021--December
     year).                                                                              2027.
                                               4,638.6            2018               3  January 2021--December
                                                                                         2027.
                                       -------------------------------------------------------------------------
From Whom to Whom.....................  Beneficiaries to hospitals/physicians and MA plans
                                       -------------------------------------------------------------------------
    Annualized Monetized ($million/              342.4            2018               7  January 2021--December
     year).                                                                              2027.
                                                 351.6            2018               3  January 2021--December
                                                                                         2027.
                                       -------------------------------------------------------------------------
From Whom to Whom.....................  States to hospitals/physicians and MA plans
----------------------------------------------------------------------------------------------------------------

D. Regulatory Flexibility Act (RFA)

    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $8 million to $41.5 million in any 1 year. Individuals and 
states are not included in the definition of a small entity. For 
details, see the Small Business Administration's ``Table of Small 
Business Size Standards'' at https://www.sba.gov/document/support--table-size-standards. The rule of thumb used by HHS for determining 
whether an impact is ``significant'' is an adverse effect equal to 3 
percent or more of total annual revenues.
    This proposed rule, if finalized, would impact the vast majority of 
Medicare-participating providers and suppliers that submit claims for 
separately payable Medicare Part B drugs by preventing the impacts 
described in the November 2020 interim final rule (85 FR 76246) from 
being realized. There are over 20,000 small entities that would be 
included or affected by the MFN Model if the model was implemented. We 
refer readers to Table 3 and Table 8 in the November 2020 interim final 
rule (85 FR 76195 and 76219, respectively) to see the number of 
entities, as well as the types of providers and suppliers, that would 
be most likely impacted by the MFN Model. This proposed rule proposes 
to withdraw the MFN Model, and therefore would likely impact these same 
entities. Accordingly, we have determined that a Regulatory Flexibility 
Analysis (RFA) is required. As its measure of significant economic 
impact on a substantial number of small entities, HHS uses a

[[Page 43623]]

change in revenue of more than 3 to 5 percent. We do believe that this 
threshold will be reached by the requirements in this proposed rule. 
Therefore, the Secretary has certified that this proposed will have a 
significant economic impact on a substantial number of small entities. 
The RFA presented in the November 2020 interim final rule (85 FR 76245) 
describes the potential impact of the MFN Model, if it was implemented, 
on small entities. If finalized, this proposed rule would prevent those 
impacts from being realized. Specifically, the lower drug payments and 
alternative add-on payments described in section III.F. of the November 
2020 interim final rule would not occur. Instead, payment for submitted 
claims would be made under the applicable Medicare payment methodology. 
This RFA, together with the preamble, constitutes the required 
analysis.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 603 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicare 
payment regulations and has fewer than 100 beds. Similar to urban 
entities, we estimate that this proposed rule, if finalized, would have 
a significant impact on small rural hospitals by preventing the impacts 
described in the November 2020 interim final rule (85 FR 76246) from 
being realized. Specifically, if the MFN Model was implemented, these 
rural entities would experience drug payment reductions and overall 
payment reductions similar to urban entities. Instead, if this proposed 
rule is finalized, payment for submitted claims would be made under the 
applicable Medicare payment methodology.
    We welcome comments on our estimate of significantly affected 
providers and suppliers and the magnitude of estimated effects for this 
proposed rule.

E. Unfunded Mandates Reform Act (UMRA)

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2021, that 
threshold is approximately $158 million. As discussed in section V.C. 
of this proposed rule, the financial impacts for States (that is, an 
estimated overall reduction in State spending) presented in the 
November 2020 interim final rule (85 FR 76235 through 76248) would not 
be realized. This proposed rule does not mandate any spending by State, 
local, or tribal governments, or by the private sector, and hence an 
UMRA analysis is not required.

F. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. As discussed in section V.C. of this proposed rule, the 
financial impacts for States (that is, an estimated overall reduction 
in State spending) presented in the November 2020 interim final rule 
(85 FR 76235 through 76248) would not be realized. Since this 
regulation does not impose any costs on State or local governments, 
preempt State law, or otherwise have Federalism implications, the 
requirements of Executive Order 13132 are not applicable.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on July 21, 2021.

List of Subjects for 42 CFR 513

    Administrative practice and procedure, Health facilities, Medicare, 
Reporting and recordkeeping requirements.

PART 513--[REMOVED]

0
For the reasons set forth in the preamble and under the authority at 5 
U.S.C. 301, the Centers for Medicare & Medicaid Services proposes to 
remove 42 CFR part 513.

    Dated: August 3, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-16886 Filed 8-6-21; 4:15 pm]
BILLING CODE 4120-01-P