(a) Determination of Part B rebatable drugs. (1) For each applicable calendar quarter, CMS will:

(i) Identify single source drugs or biological products, including biosimilar biological products, covered under Part B; and

(ii) Identify the applicable billing and payment code for each drug or biological product set forth in paragraph (a)(1)(i) of this section.

(2) For a drug or biological product identified under paragraph (a)(1) of this section, CMS will determine whether the drug or biological product meets the exclusion criteria set forth in paragraph (b) or (c) of this section as of the first day of the applicable calendar quarter.

(3) To determine whether a drug or biological product is a Part B rebatable drug under this section, CMS will use the most recent available data submitted to CMS by manufacturers pursuant to section 1927(b)(3)(A)(iii) of the Act or section 1847A(f)(2), as applicable, and other available data, including but not limited to information available at FDA.gov and information in drug pricing compendia, as applicable.

(b) Excluded product categories. The following categories of products are not considered Part B rebatable drugs:

(1) Qualifying biosimilar biological products. Biological products as defined under section 1847A(b)(8)(B)(iii) of the Act.

(2) Products with historically excepted grouped billing and payment codes. Single source drugs or biological products that were within the same billing and payment code as of October 1, 2003, and which, as required under section 1847A(c)(6)(C)(ii) of the Act, are treated as multiple source drugs.

(3) Products billed under a NOC code. A drug or biological product billed under a NOC code.

(4) Radiopharmaceutical drugs and biological products. A separately payable radiopharmaceutical drug or biological product not paid under section 1847A of the Act.

(5) Skin substitutes. A product included within the suite of cellular- and tissue-based products that aid wound healing.

(6) Drugs with average total allowed charges under the applicable threshold. Drugs and biological products for which the Medicare Part B average total allowed charges for a year per individual that uses such drug or biological are below the applicable threshold, as set forth in paragraph (c) of this section.

(7) Certain vaccines and other products. The following products:

(i) The vaccines as set forth in section 1861(s)(10) of the Act, which includes the influenza, pneumococcal, hepatitis B, and COVID-19 vaccines.

(ii) Monoclonal antibodies used for treatment or post-exposure prophylaxis of COVID-19 that are covered and paid for under section 1861(s)(10) of the Act. This exclusion will apply to applicable quarters until the end of the calendar year in which the EUA Declaration ends.

(iii) Monoclonal antibodies that are used for pre-exposure prophylaxis of COVID-19 that are covered and paid for under section 1861(s)(10) of the Act. This exclusion will apply to applicable calendar quarters even after the year in which the EUA Declaration ends, as long as after the EUA Declaration is terminated, these products have an FDA-approved application or license.

(8) Generic drugs. Part B drugs approved under an Abbreviated New Drug Application (ANDA) submitted under section 505(j) of the Federal Food, Drug, and Cosmetic Act (FD&C Act).

(c) Drugs and biological products with average total allowed charges below the applicable threshold. For each applicable calendar quarter, CMS will identify drugs and biological products with Part B average total allowed charges for a year per individual that uses such a drug or biological product that are below the applicable threshold determined under the calculations set forth in this section. Such drugs and biological products are not considered Part B rebatable drugs and will be excluded from the identification of Part B rebatable drugs in paragraph (a) of this section.

(1) Average total allowed charges for a year per individual. For each drug or biological that is identified as set forth in paragraph (a) of this section, CMS will calculate average total allowed charges for a year per individual as follows:

(i) For single source drugs and biological products assigned to only one billing and payment code, CMS will sum the allowed charges from final action claims greater than $0 and divide the summed amount by the number of individuals who use such a drug or biological with allowed charges for this billing and payment code.

(ii) For single source drugs and biological products assigned to more than one billing and payment code, CMS will sum the allowed charges from final action claims greater than $0 for all billing and payment codes and divide the summed amount by the number of individuals who use such a drug or biological with allowed charges for these billing and payment codes.

(iii) For single source drugs and biological products previously crosswalked to a grouped billing and payment code:

(A) If crosswalked to a grouped billing and payment code during the full year, CMS will calculate the average total allowed charges per individual per year for the drug using allowed charges and the number of individuals who used the drug or biological product based on claims for the previously grouped billing and payment code during the year.

(B) If crosswalked to a grouped billing and payment code and later assigned to a unique billing and payment code for part of the year, CMS will calculate average total allowed charges per individual per year by:

(1) Summing the total allowed charges billed under the unique billing and payment code for the drug with dates of service on or after the Medicare effective date for this unique billing and payment code and identifying the individuals on those claims.

(2) Summing the total allowed charges on claims billed under the previously grouped billing and payment code and identifying individuals with claims prior to the unique billing and payment code's effective date.

(3) Summing the total allowed charges as determined in paragraphs (c)(1)(iii)(B)(1) and (2) of this section and dividing by the total number of individuals, de-duplicated for individuals determined under paragraphs (c)(1)(iii)(B)(1) and (2).

(2) Applicable threshold. CMS will calculate the applicable threshold for an applicable calendar quarter as follows:

(i) For applicable calendar quarters in 2023, the applicable threshold is equal to $100.

(ii) For applicable calendar quarters in 2024, the applicable threshold is equal to $100 increased by the percentage increase in the CPI-U for the 12-month period ending with June of 2023.

(iii) For applicable calendar quarters in each subsequent calendar year, the applicable threshold is equal to the unrounded applicable threshold calculated for the prior calendar year increased by the percentage increase in the CPI-U for the 12-month period ending with June of the previous year.

(iv) If the resulting amount under paragraphs (c)(2)(i) through (iii) of this section is not a multiple of $10, CMS will round that amount to the nearest multiple of $10.

(3) Application of the applicable threshold at the billing and payment code level. For each applicable calendar quarter, CMS will apply the exclusion of drugs and biological products identified in paragraph (c)(1) of this section, with average total allowed charges for a year per individual less than the applicable threshold set forth in paragraph (c)(2) of this section, to applicable billing and payment codes as follows:

(i) For single source drugs or biological products assigned to a unique billing and payment code, CMS will exclude the assigned billing and payment code for an applicable calendar quarter if the average total allowed charges for a year per individual are less than the applicable threshold.

(ii) For a single source drug or biological product that is assigned to more than one billing and payment code during a year, CMS will exclude all such assigned billing and payment codes for an applicable calendar quarter.

(4) Definition of year. For purposes of the calculations set forth in this section, a year is defined as the 4 consecutive calendar quarters beginning 6 calendar quarters before the applicable calendar quarter. CMS will use final action claims from the Medicare fee-for-service claims repository where separate payment was allowed for the applicable billing and payment code for dates of service within a year to calculate Part B average total allowed charges for that year.