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2022 Inflation Reduction Act: Changes to Medicare Part D prescription drug coverage 2023 and beyond.

Category: Annual Medicare Plan Changes
Published: Aug, 16 2022 04:08:27


A number of changes are included in the “Inflation Reduction Act of 2022” that will impact future Medicare Part D prescription drug plan coverage and costs.  Here is a year-by-year summary of some of the top Medicare Part D plan changes:

Beginning 2023
  • Drug price increases tied to inflation:  Drug companies will be required to pay rebates to Medicare if retail drug prices (for Part B and Part D drugs) rise faster than inflation (CPI-U).

  • No co-pay vaccines:  Medicare Part D beneficiaries will have no cost sharing for vaccines that are recommended by the Advisory Committee on Immunization Practices (ACIP), such as Shingles and Pneumonia vaccines.

  • $35 insulin:  Insulin included on a Medicare Part D plan formulary will have a $35 monthly co-pay and will not be subject to the plan’s deductible.  The cost of insulin will then stay consistent throughout the Initial Coverage Phase, Coverage Gap (Donut Hole), and will not exceed the $35 co-pay in the Catastrophic Coverage phase (meaning that the cost of insulin will be $35 or less).

    In addition, beginning July 1, 2023, insulin furnished through Medicare Part B durable medical equipment (DME), will also have a monthly co-pay of no more than $35.

    This new low-cost insulin provision is similar to the current Medicare Part D Senior Savings Model where 2021 and 2022 Medicare Part D plans had the option to offer select forms of insulin on the plan's formulary for a copay of $35 or less.
Beginning 2024
  • No cost for Part D formulary drugs after reaching 2024 TrOOP:  The 5% coinsurance will be eliminated in the Catastrophic Coverage phase and establish a maximum out-of-pocket drug cost (RxMOOP) capping formulary drug costs at the annual 2024 total out-of-pocket cost threshold or TrOOP (estimated to be around $7,750 in 2024 - equating to Part D formulary drugs with a retail value of around $11,742).

  • Partial-LIS becomes Full-LIS:  Benefits for the low-income subsidy program will be extended with full-LIS benefit qualifications increased to 150% of FPL and consequently, the current partial-LIS (135% to 150% of FPL) designation will be eliminated.  With full-LIS or Extra Help benefits, Medicare Part D beneficiaries can have a $0 monthly premium, no deductible, and very-low drug co-pays.  (Section 11404)

  • Eliminate large Part D premium increases: Annual Part D plan premiums cannot increase more than 6% per year.
Beginning 2025
  • No cost for Part D formulary drugs after reaching $2,000 out-of-pocket cap:  Medicare Part D beneficiaries will have a $2,000 maximum cap on out-of-pocket spending for Part D formulary drugs (RxMOOP).  In 2025, the $2,000 RxMOOP should be reached when a person purchases Medicare Part D formulary drugs with a retail value totaling $6,335.  The $2,000 RxMOOP can increase every year like other Medicare Part D parameters*.

  • Change to Medicare Part D plan designs:  With the addition of the $2,000 RxMOOP, Medicare Part D plans would have only two parts of coverage (or less):  (1) the Initial Deductible (if any) and (2) the Initial Coverage Phase that would continue until December 31 of the plan year - or cease when the plan member's out-of-pocket spending reached $2,000 and the person has no additional costs for Part D formulary drugs.  Medicare Part D plans would no longer have the Part D Coverage Gap (Donut Hole with the accompanying  Donut Hole discount) and Catastrophic Coverage phases.

  • A person's drug costs can be evenly spread over the year:  Medicare Part D plans are required to provide plan members an option allowing people to spread their monthly prescription drug costs evenly over the year.
Beginning  2026
  • Federal government drug price negotiation:  In 2026, HHS will be allowed to negotiate prices for 10 Medicare Part D drugs (single-source drugs with the highest Medicare Part D spending over the past 12 months).
  • Insulin copay may be less than $35:  Insulin covered by a Medicare Part D plan will cost the lesser of the $35 co-pay or 25% of the retail price (as negotiated by the plan or by the government** (HHS)).
In 2027
  • Federal government drug price negotiation:  HHS will negotiate prices for 15 additional Medicare Part D drugs with high spending.
In 2028
  • Federal government drug price negotiation:  HHS will negotiate prices for 15 Medicare Part D and Part B drugs with high spending.
In 2029 (or subsequent year)
  • Federal government drug price negotiation:  HHS will negotiate prices for 20 additional Medicare Part D and Part B drugs with high spending.

*1860D-2(b)(6) Annual percentage increase  -  The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered part D drugs in the United States for part D eligible individuals, as determined by the Secretary for the 12-month period ending in July of the previous year using such methods as the [HHS] Secretary shall specify.


** 1860D-2(b)(9)(D) APPLICABLE COPAYMENT AMOUNT.—
In this paragraph, the term ‘applicable copayment amount’ means, with respect to a covered insulin product under a prescription drug plan or an MA–PD plan dispensed —
  (i) during plan years 2023, 2024, and 2025, $35; and
  (ii) during plan year 2026 and each subsequent plan year, the lesser of—
    (I) $35;
    (II) an amount equal to 25 percent of the maximum fair price established for the covered insulin production accordance with part E of title XI [PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE SOURCE DRUGS];or
    (III) an amount equal to 25 percent of the negotiated price of the covered insulin product under the prescription drug plan or MA–PD plan.


See also:

The New Medicare Drug Bill Is Big, But Seniors Won't See Many Of Its Benefits For Years
https://www.forbes.com/sites/howardgleckman/2022/08/10/the-new-medicare-drug-bill-is-big-but-seniors-wont-see-many-of-its-benefits-for-years

What is RxMOOP?
https://q1medicare.com/faq/What-is-the-RxMOOP/732

Sources include:

https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf
https://www.congress.gov/bill/117th-congress/house-bill/5376/text

see:  Subtitle B—Prescription Drug Pricing Reform

PART 1—LOWERING PRICES THROUGH DRUG PRICE NEGOTIATION
SEC. 11001. PROVIDING FOR LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE SOURCE DRUGS.
PART E—PRICE NEGOTIATION PROGRAM TO LOWER PRICES FOR CERTAIN HIGH-PRICED SINGLE SOURCE DRUGS

PART 2 — PRESCRIPTION DRUG INFLATION REBATES
SEC. 11101. MEDICARE PART B REBATE BY MANUFACTURERS
SEC. 11102. MEDICARE PART D REBATE BY MANUFACTURERS

PART 3—PART D IMPROVEMENTS AND MAXIMUM OUT-OF-POCKET CAP FOR MEDICARE BENEFICIARIES
SEC. 11201. MEDICARE PART D BENEFIT REDESIGN
(Social Security Act SEC. 1860D–14C. MANUFACTURER DISCOUNT PROGRAM)
SEC. 11202. MAXIMUM MONTHLY CAP ON COST-SHARING PAYMENTS UNDER PRESCRIPTION DRUG
PLANS AND MA–PD PLANS

PART 5—MISCELLANEOUS
SEC. 11401. COVERAGE OF ADULT VACCINES RECOMMENDED BY THE ADVISORY COMMITTEE5
ON IMMUNIZATION PRACTICES UNDER MEDICARE PART D
SEC. 11404. EXPANDING ELIGIBILITY FOR LOW-INCOME SUBSIDIES UNDER PART D OF THE MEDICARE PROGRAM.
SEC. 11406. APPROPRIATE COST-SHARING FOR COVERED INSULIN PRODUCTS UNDER MEDICARE PART D.
SEC. 11407. LIMITATION ON MONTHLY COINSURANCE AND ADJUSTMENTS TO SUPPLIER PAYMENT UNDER MEDICARE PART B FOR INSULIN FURNISHED THROUGH DURABLE MEDICAL EQUIPMENT.

The Kaiser Family Foundation (KFF):  "Understanding the Health Provisions in the Senate Reconciliation Legislation"
https://www.kff.org/medicare/understanding-the-health-provisions-in-the-senate-reconciliation-legislation/

Urban Institute:  "Capping Medicare Beneficiary Part D Spending at $2,000: Who Would It Help and How Much?" https://www.urban.org/research/publication/capping-medicare-beneficiary-part-d-spending-2000-who-would-it-help-and-how






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