ASP pricing explained for Medicare Part B drugs at ASP plus 6%

ASP pricing in Medicare Part B

ASP pricing is how Medicare Part B pays for most drugs given in a doctor's office or hospital outpatient department. Manufacturers report each drug's average sales price, net of discounts, every quarter, and CMS sets the payment limit for each Healthcare Common Procedure Coding System (HCPCS) code at 106% of ASP (ASP plus 6%).

CMS publishes those limits in the quarterly Medicare Part B Drug Payment Limit File, still called the ASP pricing file. Outside Medicare, ASP can mean average selling price.

What average sales price means

The statute defines ASP as a manufacturer's sales to all US purchasers in a calendar quarter, divided by the total units sold in that quarter (SSA §1847A(c)(1)). It's a net price. Volume discounts, prompt pay and cash discounts, free goods tied to a purchase requirement, chargebacks and rebates other than Medicaid rebates all come off (42 CFR 414.804). Bona fide service fees are not price concessions.

Sales exempt from Medicaid best price under section 1927(c)(1)(C)(i) are left out (SSA §1847A(c)(2)), and so are sales the regulation calls merely nominal: below 10% of average manufacturer price (AMP) for the same quarter. Lagged rebates and chargebacks use a 12-month rolling average (42 CFR 414.804).

Manufacturers calculate ASP per 11-digit National Drug Code (NDC). Medicare bills by HCPCS code, and one code often covers several NDCs. CMS then uses a volume-weighted average (42 CFR 414.904(b) and CMS payment limits overview, March 2026).

ASP payment is plus 6% for most drugs

The allowed amount is the lesser of the actual charge or 106% of ASP (42 CFR 414.904(a)). CMS uses that limit for most separately payable drugs and biologicals, not for drugs paid on a cost basis or bundled into a prospective payment (CMS ASP hub). For a single-source drug, the limit is the lower of 106% of ASP and 106% of wholesale acquisition cost (WAC), the list price to wholesalers or direct purchasers before discounts or rebates (§1847A(c)(6)(B)).

The 6% add-on isn't a practice's profit margin. A 2% sequestration cut applies to Medicare's 80% share. If coinsurance is collected in full, total payment is about 104.3% of ASP (ASPE issue brief, 2020 and CMS fact sheet). Sequestration is set to run into the first part of FY2033 (CRS R48880).

For Part B rebatable drugs whose price rose faster than inflation, coinsurance since April 1, 2023 is 20% of the inflation-adjusted payment amount (§1847A(i)(5)).

Biosimilars

A biosimilar is paid at its own ASP plus 6% of the reference product's ASP. A qualifying biosimilar, whose ASP is less than the reference ASP, gets 8% of the reference ASP for 5 years (42 CFR 414.904(j)).

Products already paid on ASP started that 5-year clock on October 1, 2022. Products first paid on ASP from that date through December 31, 2027 start in their first payment quarter (CMS ASP reporting). 2027 is the last start date, so the 8% can run into 2032.

When ASP plus 6% does not apply

• New drugs with no ASP yet are paid up to 103% of WAC during the initial period, for dates of service from January 1, 2019 (42 CFR 414.904(e)(4)).
• If the HHS Office of Inspector General (OIG) finds ASP exceeds AMP by 5% or more in two consecutive quarters, or three of the previous four, payment can be 103% of AMP, when that is lower than 106% of ASP and the drug is not on the FDA shortage list (42 CFR 414.904(d)(3)). Payment can also be based on the widely available market price when ASP exceeds that price by 5% (CMS overview).
• Influenza, pneumococcal, hepatitis B and COVID-19 vaccines are paid at 95% of AWP (CMS overview).
• From January 1, 2028, selected Part B drugs are paid at 106% of the maximum fair price (CMS overview). CMS announced the first list that includes Part B drugs on January 27, 2026 (CMS press release). Drugs selected for 2026 and 2027 stay out unless renegotiated (CMS overview).

Finding payment limits in CMS ASP files

The CMS page is titled "Medicare Part B Drug Payment Limit File." The CY2026 physician fee schedule final rule renamed the ASP Pricing Files so maximum fair price limits can appear in the same download (Federal Register, Nov 5, 2025). The URL did not change. It is still widely called the ASP fee schedule.

Files run from 2026 back to 2021, plus a 2005-2020 archive. Each quarter has a Payment Limit File (ZIP, in xls and csv) and an ASP NDC-HCPCS Crosswalk from the NDC to the ASP code billed. Flu vaccines have their own price file and crosswalk. NOC (not otherwise classified) files are listed through 2025, not for 2026.

The October 2026 file covers October 1 to December 31 and has about 900 HCPCS codes. It also lists drugs not payable under Part B when the manufacturer has not reported, or lacks a required agreement.

A listing is not coverage. CMS says a code or payment limit "does not indicate whether Medicare covers a particular product." If the drug is missing, the Medicare Administrative Contractor (MAC) still sets a limit, in this order: ASP, National Average Drug Acquisition Cost (NADAC), VA Federal Supply Schedule, then invoice price (CMS overview).

The two-quarter lag

Payment limits "reflect sales that occurred two quarters prior" (CMS ASP FAQ, March 2026). The October 2026 file uses second-quarter 2026 data: April to June sales.

CMS generally releases a file "a few days before the effective date" (CMS ASP FAQ, March 2026). The October 2026 file was posted on September 17, and the January, April and July 2026 limit files were revised on September 15, 2026 (ASP pricing files). Check the revision date before you use an older download.

Manufacturer ASP reporting

Manufacturers calculate ASP each quarter and submit the ASP report within 30 days of quarter-end (CMS ASP reporting). The Q3 2026 report is due October 30, 2026, and the Q4 report on January 30, 2027. The CEO, CFO or a delegate reporting directly to either certifies it (42 CFR 414.804(a)(7)).

Manufacturers with a Medicaid drug rebate agreement have reported since 2004. Part B manufacturers without one must report for quarters beginning January 1, 2022 (CMS ASP regulations and policy). From January 1, 2026, the ASP report also needs reasonable assumptions, including fair market value for bona fide service fees, and a letter from each fee recipient that the fee is not passed on (42 CFR 414.804(a)(5)).

The CY2026 rule also added a new bundled-arrangement definition for sales from January 1, 2026 and counts units sold at a maximum fair price in ASP (Federal Register, Nov 5, 2025).

Late reporting, misrepresentation or false information can trigger civil money penalties. Check the current inflation-adjusted amounts before you estimate exposure.

ASP vs AWP

Before 2005, Medicare Part B paid on AWP, not ASP. The old rule paid 95% of AWP. The Medicare Modernization Act of 2003 paid most drugs at 85% of AWP for 2004, then moved payment to 106% of ASP on January 1, 2005 (42 U.S.C. 1395u(o) and OIG OEI-03-05-00200).

The reason was the gap. MedPAC says AWP "is a list price that does not represent the actual price in the marketplace" (MedPAC Payment Basics). OIG says AWP is "not defined in law or regulation" and does not account for discounts or rebates (OIG OEI-03-11-00060). In that 2005 study of 2,077 NDCs, using third-quarter 2004 data, median ASP was 49% below AWP. Generics were 68% below. That is a 2004 snapshot, not today's gap.

RegAffairs AI's answer on ASP pricing links the CMS files and the payment rules.