Survey: Part B Price Negotiation Could have Significant Impact on Providers

Healthcare providers who serve Medicare patients say drug price negotiations for Part B drugs could present significant operational challenges for their practices and impact their patients, according to a new survey by Avalere Health of more than 300 medical practices nationwide.

The survey, conducted among providers who serve patient populations with at least 25% Medicare beneficiaries, reveals that providers are worried about the financial sustainability of administering high-cost medications under the program’s new reimbursement structure.

Under the current system, healthcare providers operate on a “buy and bill” model, purchasing medications and receiving reimbursement from Medicare at the drug’s average sales price (ASP) plus a 6% markup to cover overhead expenses.

But under the Inflation Reduction Act, CMS can select Part B drugs in 2026 for price negotiation, with new prices taking effect in 2028. This means that the 6% added payment to the physician will be based on the new lowered price. In a study last year, Avalere estimated that provider payments will be reduced by up to 50% on the drugs that are expected to be chosen.

This year, Avalere surveyed 300 physicians about what that lowered reimbursement rate will mean for their practices. The survey found that about 79% of providers anticipate a moderate or severe impact to patient access to Part B drugs due to reimbursement cuts.

Kolton Gustafson

“What it means for them is that markup would decrease in the future,” Kolton Gustafson, principal at Avalere, said in an interview. “On an individual drug administration basis, it doesn't sound like a lot of money, but once you add it all up and all the volume and all of their Medicare patients, it really starts to build.”

Additionally, 92% of providers in the survey said they would be somewhat or very likely to stop stocking Part B drugs that are subject to negotiation, and 68% of providers are moderately or severely concerned that reimbursement cuts will lead to negative treatment outcomes for their patients. This could have several effects, Gustafson said. “It could be an interruption to a patient's current course of treatment, or it could be that the provider may consider treating them with a therapeutic alternative,” he said.

This could lead to fewer treatment options for patients or force them to travel to different providers who still carry their preferred medications.

Specialty Practices Most at Risk

The impact appears likely to hit certain medical specialties particularly hard. Oncology practices are expected to face the most significant challenges, given that the high-cost cancer medications are likely to be included in negotiations. Rheumatology, immunology and neurology practices are also anticipated to experience substantial effects.

The exact list of drugs subject to negotiation for 2028 has not been finalized, and recent changes in the legislative approach — including provisions related to orphan drugs — may alter which medications are ultimately selected.

Related: Big Beautiful Bill Reduces Drugs Eligible for Price Negotiations

A provision One Big Beautiful Bill, for example, would delay Medicare price negotiation for drugs that have orphan indications, according to recent papers published in Health Affairs. In one paper, researchers found that nearly one-third of high-spending drugs projected to meet the $200 million spending threshold by 2030 will be exempted or delayed because of new provisions.

In the Avalere survey, providers also expressed concerns about increased administrative complexity, possible cuts to staff and the potential of shifting care away from provider offices to more expensive hospital outpatient departments.

Gustafson said these challenges may not be limited to Medicare patients. The negotiated prices are expected to influence average sales price calculations over time, potentially reducing reimbursement rates in commercial insurance markets as well. Many provider contracts with commercial insurers are structured as percentages of ASP, meaning these rates could decline alongside Medicare reimbursements.

“Providers may consider whether their staffing model can continue as it currently is or whether they can afford the wages they currently provide,” he said.