2027 Physician Fee Schedule Proposed Rule: CMS Proposes Mandatory 340B Claims Data Reporting

The Medicare Drug Inflation Rebate Program

Sections 11101 and 11102 of the Inflation Reduction Act of 2022 (IRA) inflation rebates on Medicare Part B and D utilization. For Part D, section 1860D–14B of the Social Security Act requires that, beginning with plan year 2026, CMS exclude from the total number of units used to calculate the Part D inflation rebate amount those units for which a manufacturer provides a discount under the 340B Drug Pricing Program. In other words, the IRA prohibits CMS from claiming an IRA-based inflation rebate on Medicare utilization when the drug administered or dispensed to a Medicare beneficiary was procured at the 340B price.

To implement this statutory exclusion requirement, CMS finalized a “Prescriber-Pharmacy Methodology” in the 2026 PFS final rule, under which CMS identifies potentially 340B-eligible claims by evaluating whether the prescriber on a Prescription Drug Event (PDE) record is affiliated with a registered 340B covered entity and whether the dispensing pharmacy is a contract pharmacy associated with that entity. Units identified under this methodology are removed from Part D inflation rebate calculations beginning with claims with dates of service on or after January 1, 2026. 

As part of the 2026 PFS final rule, CMS additionally established a voluntary 340B Repository to collect data about 340B units submitted by covered entities on a voluntary basis, with the repository expected to launch in the fall for testing purposes. CMS stated that the data submitted to the voluntary repository would not be used to calculate inflation rebates unless and until CMS proposed and finalized a policy to use such data. 

Key Change in the 2027 PFS Proposed Rule: Mandatory 340B Repository Reporting

Under the 2027 PFS proposed rule, CMS is now proposing to add subsection (c) to 42 C.F.R. § 428.203, under which providers and suppliers that are covered entities — as defined in 42 C.F.R. § 10.3 — would be required to submit Part D 340B claims data to the 340B Repository.

Per CMS, shifting participation from voluntary to mandatory will ensure more “complete and reliable data submissions,” thereby improving the agency’s ability to accurately assess whether the 340B Repository data could be used reliably in the future to exclude 340B units from Part D inflation rebate calculations. CMS also notes that stakeholders had previously recommended that it require covered entities and their contractors to report data to a 340B repository. 

The specifics of CMS’ proposal for this new requirement are as follows.

• Data Elements and Scope: 340B providers would be required to submit specified data elements associated with each claim for units of a covered Part D drug billed to Medicare by such covered entity or its contractor(s) (such as contract pharmacies) for which a manufacturer provides a discount under the 340B Program. This requirement would apply to claims for units dispensed by contract pharmacies that the covered entity identifies as 340B-eligible and for which the covered entity obtains a 340B discount, including through retrospective replenishment models, as well as to claims for units dispensed by the covered entity’s in-house pharmacy. 
• Submission Timeline and Frequency: 340B providers would be required to submit the requisite data on a quarterly basis, starting in 2027 for Part D claims with dates of service on or after January 1, 2027. 
• Continued Use of Prescriber-Pharmacy Methodology: CMS states that the data submitted to the 340B Repository would not be used to calculate inflation rebates at this time. Instead, CMS will continue to use the prescriber-pharmacy methodology to remove 340B units from Part D inflation rebate calculations, and any future proposal to use the 340B Repository data for this purpose would undergo separate notice-and-comment rulemaking.
• Medicare Enrollment Connection: CMS proposes that this new reporting requirement would fulfill a 340B provider’s obligation to provide access to documentation relating to covered Part D drugs written or ordered by the 340B provider in order to maintain enrollment in Medicare. 

Comment Period and Next Steps

340B covered entities — including hospitals, federally qualified health centers, and other safety-net providers and their contract pharmacy agents — should evaluate their readiness to comply with mandatory data submissions to the 340B Repository beginning in 2027. Key considerations include:

• Ensuring internal systems and processes can identify 340B-eligible Part D claims, including those dispensed through contract pharmacies and retrospective replenishment models. 
• Preparing for quarterly data submissions with appropriate data validation procedures. 
• Monitoring the operational launch of the 340B Repository, which CMS expects to occur in the fall for voluntary submissions. 
• Engaging with CMS during the comment period to address any operational concerns regarding the transition from voluntary to mandatory reporting.

Comments on this proposed rule are due by September 14.

We will continue to monitor developments in this rulemaking and provide updates as they become available. For questions about the proposed rule or assistance preparing comments, please contact the authors.