On January 1, 2026, the first Maximum Fair Prices under the Inflation Reduction Act's Medicare Drug Price Negotiation Program took effect for 10 selected drugs. For pharmacies and other dispensing entities, this created an entirely new revenue-cycle process: receiving, reconciling, and disputing MFP refund payments from manufacturers, facilitated through the Medicare Transaction Facilitator (MTF).
The mechanics are complex. Refunds arrive separately from normal plan reimbursement. They are calculated from claims data transmitted through multiple intermediaries. The standard refund formula (WAC minus MFP times quantity) can be overridden by manufacturers. And when something goes wrong—a missing refund, an incorrect amount, a 340B conflict—dispensing entities must navigate a dispute process that is still being refined in real time.
This article maps the MFP refund lifecycle, explains the CARC and RARC codes that appear on remittance advice, identifies the most common timing and data mismatches, and describes the dispute workflow. It is written for pharmacy operations teams, health-system pharmacy finance, specialty pharmacy reimbursement staff, and manufacturer access teams who need to understand what happens on the dispensing-entity side of MFP effectuation.
The MFP refund lifecycle
Understanding disputes requires understanding the normal refund flow. Here is the sequence from dispensing to payment:
| Step | Actor | Action | Timeline |
|---|---|---|---|
| 1 | Dispensing entity | Fills prescription for MFP-selected drug; submits Part D claim | Day 0 |
| 2 | Part D plan sponsor | Adjudicates claim; reimburses dispensing entity at no more than MFP + dispensing fee | Within 14 days (clean claim) |
| 3 | Part D plan sponsor | Submits Prescription Drug Event (PDE) record to CMS | Within 7 calendar days of receiving claim |
| 4 | CMS / DDPS | Validates PDE data; transmits to MTF Data Module (MTF DM) | Continuous |
| 5 | MTF DM | Transmits claim data to Primary Manufacturer | Continuous |
| 6 | Primary Manufacturer | Reviews claim data; authorizes or adjusts MFP refund amount; transmits instructions to MTF DM | Within 14 days of receiving data from MTF DM |
| 7 | MTF Payment Module (MTF PM) | Processes authorized refund payment to dispensing entity | On banking days after manufacturer authorization |
| 8 | Dispensing entity | Receives electronic remittance advice (ERA / 835) and payment | Per banking schedule |
The total elapsed time from fill to refund can be 21+ days: 7 days for PDE submission, plus 14 days for manufacturer review and payment. The National Community Pharmacists Association (NCPA) has warned that this creates cash-flow risk for independent pharmacies that purchase inventory at WAC but receive plan reimbursement at MFP plus a dispensing fee—often well below acquisition cost until the manufacturer refund arrives. A Cencora (AmerisourceBergen) survey found that an estimated 90%+ of independent pharmacies were considering not dispensing MFP-eligible products due to these cash-flow concerns. In practice, Plenful, operating as a Third-Party Support Entity for large health systems, reports that up to 20% of expected MFP refunds are missing during initial reconciliation—either because the PDE was rejected, the manufacturer has not yet processed the claim, or the refund amount was adjusted from the SDRA.
The Standard Default Refund Amount (SDRA)
CMS's guidance defines the Standard Default Refund Amount as:
SDRA = (WAC − MFP) × Quantity Dispensed
This is the baseline refund amount. However, manufacturers may choose alternative refund calculations. The MTF transmits a Pricing Method Code with each refund to indicate which calculation was used:
| Code | Meaning |
|---|---|
| 1 | SDRA transmitted (standard WAC minus MFP calculation) |
| 2 | Amount other than SDRA transmitted (manufacturer used alternative calculation) |
| 3 | No refund transmitted — Prospective MFP access (manufacturer made MFP available through direct purchasing at MFP) |
| 4 | No refund transmitted — Section 1193(d)(1) Exception / 340B duplication |
When Code 2 appears, the remittance advice should include RARC N909, indicating the refund was calculated differently. When Code 4 appears, the claim has been identified as 340B-eligible, which triggers a different set of considerations.
CARC and RARC codes on the 835 remittance
The MTF 835 remittance advice uses a specific set of codes to communicate refund status. CMS worked with X12 and the RARC Committee to create these codes. Understanding them is essential for reconciliation.
Claim Adjustment Reason Code (CARC)
| Code | Description |
|---|---|
| 307 | Medicare MFP Standard Default Refund Amount Adjustment. At least one Remark Code must be provided (may be NCPDP Reject Reason Code or RARC that is not an ALERT). |
Every MFP refund transaction carries CARC 307. If the refund amount was adjusted from the SDRA, the accompanying RARC explains why.
Remittance Advice Remark Codes (RARCs)
| Code | Description | Dispute implication |
|---|---|---|
| N907 | No refund because this claim has been identified as 340B-eligible with a ceiling price lower than MFP | If the dispensing entity believes the 340B identification is incorrect, a dispute may be warranted |
| N908 | No refund because this drug has been prospectively purchased at MFP | If the dispensing entity did not purchase at MFP, the prospective access designation may be in error |
| N909 | Refund amount has been calculated using a methodology that differs from SDRA | Review the alternative calculation; dispute if the methodology or data inputs appear incorrect |
| N910 | A refund cannot be provided for this claim at this time. Contact the manufacturer directly regarding eligibility | May indicate manufacturer-side processing issue; follow up through MTF DM dispute portal |
| N911 | This claim cannot be reimbursed until the Part D plan submits corrected PDE data to CMS for MFP validation | PDE data error; dispensing entity may need to contact the plan to correct the submission |
| N917 | Alternative refund amount calculated because the MFP is below the 340B ceiling price | Similar to N907 but with an alternative (non-zero) refund |
| N918 | No refund because CMS excludes PDE records when a compound code indicates compounded drug | No dispute available for compounded drugs |
The most common reconciliation failures
Based on CMS FAQ updates through April 2026 and NCPA guidance, the following reconciliation failures are most common in the first months of MFP effectuation:
1. Missing refund (no 835 received)
The dispensing entity fills an MFP-selected drug, receives plan reimbursement, but no MFP refund arrives. Possible causes:
- PDE rejection: The plan's PDE record was rejected by the DDPS before reaching the MTF DM. The dispensing entity has no visibility into this rejection.
- Plan submission delay: The plan has not yet submitted the PDE within the 7-day window. CMS finalized a requirement for 7-day PDE submission for MFP drugs, but compliance varies.
- Manufacturer processing delay: The manufacturer has not yet reviewed the claim within the 14-day window.
- Enrollment gap: The dispensing entity is not enrolled in the MTF DM, or enrollment information is incomplete.
2. Refund amount mismatch (SDRA estimate vs. actual)
The plan provides an estimated SDRA to the dispensing entity at the time of claim adjudication. This estimate may not match the actual refund the manufacturer transmits. Reasons include:
- Manufacturer used Pricing Method Code 2 (alternative calculation)
- Quantity discrepancy between PDE data and dispensing entity records
- NDC mismatch: The NDC on the PDE does not match what the dispensing entity actually dispensed
- WAC price discrepancy: The WAC used in the SDRA calculation differs from the current WAC
3. 340B conflict (N907 / N917)
When a claim is identified as 340B-eligible and the 340B ceiling price is lower than the MFP, the manufacturer may issue no refund (N907) or a reduced refund (N917). This creates reconciliation complexity for 340B covered entities that also dispense to non-340B patients.
The dispute question is whether the 340B identification is correct for the specific claim. CMS notes that the MTF transmits a 340B Claim Indicator but does not verify 340B status. Dispensing entities may voluntarily apply Submission Clarification Code "20" and Submission Type Code "AA" (in NCPDP F.2 and higher) to identify 340B claims on Part D submissions.
4. Timing mismatch between plan reimbursement and MFP refund
The dispensing entity receives plan reimbursement at MFP + dispensing fee (which may be below acquisition cost) and must wait for the manufacturer refund to make up the difference. This creates a cash-flow gap:
- Plan reimbursement: within 14 days of clean claim
- PDE submission: within 7 days
- Manufacturer refund: within 14 days of receiving MTF data
- Total gap: up to 21+ days from fill to full reimbursement
NCPA has advocated for manufacturers to refund within 14 days of fill date (not MTF receipt), and for PBMs to pay MFP + fair dispensing fee with no price concessions. CMS requires manufacturers to have processes for entities with material cash-flow concerns.
The MTF DM dispute process
CMS established a dispute process through the MTF Data Module portal. Based on the final guidance and public comments, the dispute workflow includes:
Dispute categories
| Category | Sub-types |
|---|---|
| Pricing and quantity | NDC mismatch, WAC/MFP/SDRA price discrepancy, quantity discrepancy |
| 340B duplication | RARC N907 discrepancy, Submission Clarification Code 20 discrepancy |
| MFP effectuation and refund | Refund payment delay (greater than 14 days post MTF Process Date), refund payment discrepancy (e.g., RARC N909), refund payment missing (e.g., RARC N908, N910, N911) |
Required information for dispute submission
The dispensing entity must provide:
- Claim identifiers: CHO Name, Pharmacy NPI, RX number, Fill number, Date of Service, NDC, Quantity Dispensed
- Medicare Part D Authorization ID (NCPDP vD.0 field 503-F3 or vF6 field B34-98)
- MTF Internal Claim Number(s) or Reference ID(s) from the X12 835 (optional if the dispute is that the refund is missing)
- Dispute reason: selected from the categories above
- Supporting documentation: SFTP file upload capability for batch dispute submissions
Dispute timeline
CMS's guidance sets a 120-day window for dispute submission from the date of the triggering event. Industry commenters (including DDPS organizations) have noted that 120 days may be insufficient when the underlying issue involves PDE rejects, alternate claim adjudication, or manufacturer processing delays that are not immediately visible to the dispensing entity.
What happens after submission
The MTF DM routes the dispute to the relevant manufacturer. The manufacturer reviews the claim data and either:
- Adjusts the refund amount and authorizes a corrected payment through the MTF PM
- Confirms the original determination and provides an explanation
- Requests additional information from the dispensing entity
If the dispensing entity disagrees with the manufacturer's response, CMS's guidance allows escalation through a complaint process, but the complaint is not a formal appeal with binding resolution.
Building a reconciliation workflow
Step 1: Flag MFP-selected drugs at adjudication
Train dispensing staff and configure pharmacy management systems to identify when an MFP-selected drug has been dispensed. The Part D claim response includes an Approved Message Code (61 in NCPDP vF6) indicating the claim involves an MFP drug. This triggers the reconciliation requirement.
Step 2: Track the SDRA estimate
When the plan adjudicates the claim, it provides an estimated SDRA. Record this amount as the expected refund. The estimate may appear in an optional message field in the claim response.
Step 3: Pull 835 remittance from MTF PM
The MTF does not push remittance files to pharmacies. Dispensing entities (or their Third-Party Support Entity / TPSE, such as a PSAO or technology vendor) must pull the 835 files using the MTF API or portal.
Step 4: Match each 835 to the originating claim
For each MFP-selected drug claim with Approved Message Code 61, match:
- Date of service
- NDC
- Quantity
- RX number
to the corresponding 835 entry with CARC 307.
Step 5: Verify the refund amount
Compare the actual refund to the SDRA estimate. If they differ, check the RARC:
- N909 → manufacturer used alternative calculation; verify reasonableness
- N907 → 340B conflict; verify 340B status
- N910 or N911 → processing issue; monitor and dispute if not resolved
Step 6: Escalate missing or incorrect refunds
If no 835 arrives within 21 days of the fill date, or if the refund amount is incorrect and cannot be explained by the RARC, submit a dispute through the MTF DM portal.
Manufacturer-side considerations
For manufacturer access teams, the dispute process creates operational requirements:
- Effectuation plan design: The manufacturer's effectuation plan (due September 1 before the applicable year) must specify refund calculation methodology, cash-flow mitigation procedures, and dispute-handling processes
- 14-day prompt payment: CMS requires manufacturers to authorize refunds within 14 days of receiving MTF DM data. If the 14th day falls on a weekend or holiday, the deadline is not extended
- Pricing Method Code transparency: If using Code 2 (alternative calculation), the manufacturer must be able to explain the methodology in dispute responses
- 340B handling: The manufacturer must have a clear policy for claims identified as 340B-eligible, including whether N907 or N917 applies and how the 340B ceiling price is determined
What to monitor
- CMS MTF portal updates: CMS continues to update FAQ documents and user guides; the April 2026 update added the full CARC/RARC code list
- NCPA reconciliation tutorials: NCPA publishes step-by-step guides for comparing SDRA estimates with actual refunds, including tutorials for reconciling MTF and Beacon MFP data
- Cash-flow mitigation programs: Some manufacturers offer accelerated refund timelines or prospective purchasing agreements for dispensing entities with material cash-flow concerns
- 2027 MFP expansion: 15 additional Part D drugs will have MFPs effective in 2027, including Ozempic (semaglutide). This will expand the reconciliation burden significantly
- Payer API evolution: The CMS-0062-P proposed rule (April 2026) may eventually enable more streamlined claims verification between payers, manufacturers, and dispensing entities
This article is for informational purposes only and does not constitute legal, financial, or reimbursement advice for any specific entity. MFP effectuation requirements are subject to CMS guidance updates. Always verify current requirements through the MTF Help Desk (877-683-4457) and CMS resources.
Last updated: May 31, 2026.
Sources
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- NCPA. "Member Alert: Upcoming Medicare Part D Contracts and MFP Drugs in 2026." June 2025. ncpa.co
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