CMS Bona Fide Service Fee Requirements: Manufacturer Challenges Under the CY 2026 Final Rule

The Centers for Medicare & Medicaid Services’ CY 2026 Physician Fee Schedule Final Rule introduced new documentation requirements for manufacturers reporting Average Sales Price (ASP) for Medicare Part B drugs.

Among the most significant changes are new requirements related to Bona Fide Service Fees (BFSFs). Manufacturers must now provide additional documentation supporting their treatment of these fees, along with certifications from certain fee recipients confirming that the fees are not passed through, in whole or in part, to their clients or customers.

While CMS’s objective is to ensure that legitimate service fees are distinguished from price concessions, the certification requirement has created a significant practical challenge. Manufacturers are responsible for accurate ASP reporting, yet compliance may depend on the cooperation of independent wholesalers, distributors, PBMs, specialty pharmacies, GPOs, and other service providers.

CMS has now made clear that if a service provider refuses to provide the required certification, the fee cannot be treated as a BFSF.

This creates meaningful contractual, operational, and financial risk for manufacturers, even when the underlying service is legitimate, necessary, and priced at fair market value.

Background

Bona fide service fees may generally be excluded from ASP when they:

• Reflect fair market value;
• Are paid for legitimate, itemized services actually performed;
• Relate to services the manufacturer would otherwise perform or contract for; and
• Are not passed through to the recipient’s clients or customers.

Historically, manufacturers could rely on reasonable assumptions regarding whether a fee was passed through when they lacked evidence to the contrary.  The CY 2026 Final Rule shifts the framework toward affirmative documentation.  Manufacturers must now provide reasonable assumptions supporting their ASP calculations and document the methodology used to determine FMV. For applicable new or renewed contracts, manufacturers must also obtain certification from the recipient confirming that the fee is not passed through.

The Certification Challenge

During rulemaking, manufacturers warned CMS that they cannot force independent service providers to execute BFSF certifications.

That concern has become one of the most significant implementation issues.

The manufacturer has a regulatory need for the certification, while the fee recipient may have little incentive to provide it. Large organizations may also hesitate to certify because they have complex downstream pricing arrangements and may be unwilling to make a broad representation regarding how fees are ultimately treated across their customer relationships.  In other situations, existing contracts may not require the service provider to cooperate with government price-reporting requests.  Manufacturers may therefore have no contractual mechanism to compel a certification.

CMS has subsequently clarified that if the service provider refuses to provide the certification, the fee cannot qualify as a BFSF.  This creates an unusual result: a manufacturer may demonstrate that the service was actually performed, establish that the fee represents fair market value, and have no evidence that the payment was passed through, yet still lose BFSF treatment solely because the recipient will not sign the required certification.

Potential Financial Impact

The consequences can extend beyond documentation.

If a fee cannot be treated as a BFSF, it may need to be treated as a price concession in the ASP calculation. Depending on the amount of the fee and the economics of the product, this could reduce reported ASP and potentially affect Medicare Part B reimbursement.  For manufacturers with significant distribution, data, administrative, or service fees, the financial consequences could be material.

Contract and Operational Complications

The requirements also create significant contract-management challenges.

CMS has indicated that certifications may be required not only for new agreements and renewals, but also when existing agreements are amended. Changes to fees, products, package sizes, contract terms, or other material provisions may trigger the need for a new certification.  As a result, BFSF compliance can no longer be managed solely as a quarterly government pricing exercise.

Moving forward, coordination between Legal, Compliance, Finance and Contract Management Teams will be required to ensure all contract amendments and renewals are communicated to Government Pricing before they create unexpected ASP consequences.

Recommended Manufacturer Actions

Manufacturers should consider several steps to reduce compliance and financial exposure:

1. Create a centralized BFSF inventory identifying service providers, covered products, fees, FMV support, certification status, and contract renewal dates.
2. Add certification cooperation language to contracts requiring service providers to provide documentation reasonably necessary for government price reporting.
3. Establish contract amendment triggers so Government Pricing is notified when fees, products, services, or contract terms change.
4. Escalate certification refusals quickly to Legal, Compliance, Government Pricing, and the applicable commercial team.
5. Model the ASP impact of losing BFSF treatment before negotiating with the service provider.
6. Maintain an audit-ready record tying together contracts, certifications, FMV analyses, reasonable assumptions, and internal approvals.

Conclusion

CMS’s CY 2026 Final Rule significantly increases manufacturer responsibility for documenting Bona Fide Service Fees.

The underlying policy goal is to ensure that payments excluded from ASP are legitimate service fees rather than disguised price concessions. However, the certification requirement creates a difficult compliance dynamic because manufacturers may be held accountable for documentation that only an independent third party can provide.  The most significant concern is that a legitimate, commercially reasonable, fair-market-value service fee may lose BFSF treatment solely because the recipient refuses to execute the required certification.

For manufacturers, the issue is therefore broader than government price reporting. It affects contract negotiations, reimbursement modeling, FMV governance, and relationships with wholesalers, distributors, PBMs, and other service providers.

As implementation continues, CMS may need to consider whether the current framework appropriately distinguishes between manufacturers that cannot substantiate a service fee and manufacturers that have satisfied every requirement within their control but cannot compel an independent third party to provide a federal certification.

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