Preparing for the Medicare Transaction Facilitator

In January 2026, the Centers for Medicare & Medicaid Services (CMS) will implement the first negotiated prices under the Inflation Reduction Act’s Medicare Drug Price Negotiation Program.¹ Pharmacies that dispense drugs selected for negotiation must prepare now for the operational changes that will accompany these new requirements—most notably, the rollout of the Medicare Transaction Facilitator (MTF) system.²

The MTF will serve as a centralized infrastructure to support the transmission of data and payment elements necessary to implement maximum fair prices (MFPs) for selected Medicare Part D drugs. Dispensing entities will be required to participate in the MTF to remain in network with Medicare Part D plan sponsors and ensure proper reimbursement.²

Centers for Medicare & Medicaid Services | Image credit: Timon | stock.adobe.com

Understanding the MTF and Its Components

The MTF is composed of 2 modules: the MTF Data Module (MTF DM) and the MTF Payment Module (MTF PM). The MTF DM is mandatory for pharmacies and other dispensing entities, whereas the MTF PM is optional for manufacturers.

The MTF DM will be used to identify MFP-eligible claims, transmit claim-level data to manufacturers, and collect corresponding payment data. CMS finalized regulations requiring Part D plan sponsors to amend their pharmacy network agreements and, beginning in June 2025, to require MTF DM enrollment prior to January 2026. Dispensing entities must certify the accuracy and completeness of their enrollment data. The platform will also provide access to manufacturer MFP effectuation plans, reports on claim processing status, and a centralized portal to submit disputes or complaints related to MFP payments.^2,3

Manufacturers may choose to use the MTF PM to issue refund payments to dispensing entities that acquire selected drugs above the MFP. If a manufacturer does not use the MTF PM, it is still required to transmit payment information through the MTF DM and issue refunds via its own payment mechanism.³ In either case, pharmacies will have visibility into the manufacturer’s effectuation plan, including whether the manufacturer has opted to use the PM and how refunds will be processed.

Pharmacy Responsibilities and Upcoming Enrollment

Enrollment in the MTF DM began in June 2025.¹ Chain pharmacies will be able to complete a single, centralized enrollment across locations and independent pharmacies will enroll individually. CMS also anticipates that Pharmacy Services Administrative Organizations (PSAOs) and other third-party support entities (TPSEs) may support pharmacies in managing their MTF participation.

During enrollment, dispensing entities are required to provide contact, banking, and technical information necessary to receive MFP refunds and remittance files. CMS has indicated that it will prepopulate the enrollment form using data from the National Council for Prescription Drug Programs (NCPDP), when possible, to streamline the process. Once enrolled, pharmacies can access MTF training resources, sign agreements, and begin preparing for implementation.

Enrollment in the MTF will be a one-time process, but CMS has emphasized that the MTF DM will require routine interaction. For example, the system will allow pharmacies to confirm receipt of refund payments and download Electronic Remittance Advice (ERA) files compliant with the X12 835 standard under the Health Insurance Portability and Accountability Act. Pharmacies will also be able to report if they expect significant impacts on cash flow as a result of refund timing; manufacturers must review these self-identifications as part of their MFP implementation planning.

340B–Discounted Drugs

Under the 340B drug discount program, drug manufacturers must make drugs available to “covered entities” at deep discounts. Under the Inflation Reduction Act, if an MFP-eligible drug is also 340B-eligible, the manufacturer must make the drug available at the point of service at the lesser of the 340B ceiling price or the MFP. Manufacturers have expressed concern that, without a standardized, point-of-sale mechanism to identify 340B claims, widespread duplicate discounts will occur.

In Draft Guidance released on May 12, 2025, CMS reiterated that manufacturers are responsible for preventing MFP-340B duplication.⁴ However, CMS also noted that new claim-level data elements in the MTF DM will include a “340B Claim Indicator” and information on prior MFP refunds. Manufacturers may use this data to form a “reasonable belief” that a claim is 340B-eligible and deny an MFP refund. If a manufacturer pays an MFP refund through the MTF PM, the MTF provides access to a credit/debit ledger system, which allows manufacturers to retroactively correct duplicate discounts. If a manufacturer pays outside the MTF PM, it must create its own reconciliation process, since the MTF’s ledger will not apply.⁴

In response to rebate model proposals from manufacturers to address 340B and MFP duplication and 340B compliance concerns, on August 1, 2025, the US Department of Health and Human Services, Health Resources and Services Administration, issued a call for applications from drug manufacturers to participate in the 340B Rebate Model Pilot Program.⁵ To participate in the 340B Rebate Model Pilot Program, manufacturers must have Medicare Drug Price Negotiation Program agreements with CMS for initial price applicability year 2026.⁶ Under the Pilot Program, 340B covered entities purchase MFP-eligible drugs at the standard acquisition cost and then submit various claim data elements to receive a post-purchase rebate reflecting the difference between the higher standard acquisition price and the 340B discounted price. The 340B Rebate Model Pilot Program announcement sets forth criteria for proposed rebate model plans, including requirements that rebates be paid to the covered entity within 10 calendar days of the data submission and prohibiting manufacturers from basing denials on 340B compliance (eg, diversion and Medicaid duplicate discounts).^5,6

CMS encourages manufacturers and dispensing entities to resolve 340B and MFP reconciliation disputes collaboratively.⁷ However, if a dispensing entity believes that a manufacturer failed to offer the correct price due to an error in 340B identification, it can submit a complaint to CMS using the official Complaint and Dispute Intake Form. CMS will investigate whether the manufacturer met its obligations, considering the accuracy of claim data and any operational barriers. If CMS finds that an MFP refund was owed, the manufacturer will be given a chance to correct the issue before CMS takes enforcement action. If a claim is 340B-eligible and the 340B price is lower than the MFP already paid, the manufacturer can request a credit using the MTF DM.⁷

Operational Considerations for Pharmacies

The MTF will play a critical role in enabling pharmacies to access the negotiated prices set under the Inflation Reduction Act. For pharmacies purchasing drugs at a cost that exceeds the MFP, the timing and reliability of retrospective refund payments will have significant financial implications. Refunds must be transmitted by manufacturers within 14 calendar days of receiving claim-level data from the MTF. Beginning in 2028, this 14-day payment window will also apply to Part B claims.

Pharmacies should work now to identify internal staff or external partners who will be responsible for enrollment, banking setup, and monitoring payments through the MTF system. CMS will offer technical assistance during the enrollment period and will publish manufacturer effectuation plans in Fall 2025 to support pharmacy planning.

Since it is anticipated that many if not all manufacturers of MFP drugs for initial price applicability year 2026 participate in the 340B Rebate Model Pilot Program, it is important for 340B contract pharmacies to start meeting with their contracted covered entities and third-party administrators to assess the impact and implementation of such rebate models.

Looking Ahead

MTF enrollment began in June 2025, and CMS encourages all parties to enroll no later than November 15, 2025, to avoid disruptions. The first cycle of negotiated MFPs will apply to 10 Part D drugs in 2026, but beginning in 2028, Part B drugs will also be eligible for selection. CMS is already engaging manufacturers and expects additional drugs to be added in future years. Pharmacies dispensing any of the selected drugs to Medicare Part D or Medicare Advantage Prescription Drug plan beneficiaries will be required to use the MTF.

To stay informed, pharmacies should regularly visit the CMS Drug Price Negotiation Program webpage and subscribe to Medicare Transaction Facilitator updates. CMS has also published a dedicated FAQ for pharmacies and dispensing entities.⁷ Although the MTF represents a significant change in workflow for pharmacies, early preparation and awareness will be critical to maintaining access to covered beneficiaries and receiving timely reimbursement for drugs subject to MFPs.

REFERENCES

1. Pharmacy and Dispensing Entity Resources. Centers for Medicare & Medicaid Services. Updated July 29, 2025. Accessed August 27, 2025. https://www.cms.gov/priorities/medicare-prescription-drug-affordability/overview/medicare-drug-price-negotiation-program/pharmacy-and-dispensing-entity-resources

2. Medicare Transaction Facilitator (MTF) Overview for Dispensing Entities. Centers for Medicare & Medicaid Services. April 2025. Accessed August 27, 2025. https://www.cms.gov/files/document/pharmacy-and-dispensing-entity-mtf-fact-sheet.pdf

3. Medicare and Medicaid Programs; Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly. Federal Register. 42 CFR Parts 417, 422, 423, 460. April 15, 2025. Accessed August 27, 2025. https://www.federalregister.gov/documents/2025/04/15/2025-06008/medicare-and-medicaid-programs-contract-year-2026-policy-and-technical-changes-to-the-medicare

4. Draft Guidance on the Medicare Drug Price Negotiation Program [Email from Chris Klomp, CMS Deputy Administrator and Director of the Center for Medicare]. May 12, 2025. Accessed August 27, 2025. https://www.cms.gov/files/document/ipay-2028-draft-guidance.pdf

5. 340B Rebate Model Pilot Program. Health Resources and Services Administration. Updated August 2025. Accessed August 27, 2025. https://www.hrsa.gov/opa/340b-model-pilot-program

6. Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year 2026. News release. Centers for Medicare & Medicaid Services. August 15, 2024. Accessed August 27, 2025. https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026

7. Medicare Transaction Facilitator: Pharmacies and Other Dispensing Entities Frequently Asked Questions. Centers for Medicare & Medicaid Services. Updated July 2025. Accessed August 27, 2025. https://www.cms.gov/files/document/pharmacy-and-dispensing-entity-mtf-faq.pdf