The Inflation Reduction Act (IRA) was signed into law in August 2022 and went into effect January 1, 2023. The IRA makes wide-reaching changes to healthcare as it extends the expanded Affordable Care Act program through 2025 and allows Medicare to negotiate prescription drug prices.
Most notably, Medicare beneficiaries will now pay no more than $35 for a month's supply of insulin. Plus, they will not incur any out-of-pocket costs for adult vaccines recommended by the Centers for Disease Control and Prevention's (CDC) Advisory Committee on Immunization Practices (ACIP).
Along with healthcare regulatory changes from the Centers for Medicare and Medicaid Services (CMS), the IRA also includes provisions to address energy and climate policy changes over the next 10 years. For more on the IRA, refer to our previous blog, which outlines the Act’s planned changes through 2029.
Here’s what lies ahead from the Act in calendar year 2023.
Medicare Part B Drug Rebates
(Effective January 1, 2023)
Drug manufacturers are required to pay rebates to Medicare if prices for certain Part B drugs increase faster than the rate of inflation. These rebates must be invoiced by September 30, 2025.
Coinsurance for Part B Drugs
(Effective April 1, 2023)
Members with Traditional Medicare may pay a lower coinsurance for some Part B drugs if the drug’s price increased faster than the rate of inflation in a benchmark quarter.
(Effective July 1, 2023)
Members with Traditional Medicare who take insulin through a traditional pump will pay no more than $35 for a month’s supply of insulin, and the deductible will not apply to the cost of the prescription. This rule applies to members using pumps covered through the durable medical equipment benefit under Part B.
Medicare Part D Drugs Selected for the Drug Price Negotiation Program
(By September 1, 2023)
CMS will announce the first 10 Medicare Part D drugs selected for the Drug Price Negotiation Program. The program authorizes Medicare to directly negotiate drug prices for certain high expenditure, single source Medicare Part B or Part D drugs. The negotiated maximum fair prices for these drugs will be announced by September 1, 2024, and prices will be in effect starting January 1, 2026.
Coverage of CDC and ACIP-Recommended Vaccines
(Effective October 1, 2023)
The Act eliminates the cost sharing for adult vaccines for those on Medicare Part D. It also requires states to cover vaccines for Medicaid and Children’s Health Insurance Program beneficiaries. This benefit only applies to vaccines cleared by the CDC’s ACIP.
Part D Senior Savings Model
(Ending December 31, 2023)
The benefit of the Part D Senior Savings model is similar to that of the IRA, which caps cost-sharing for each insulin product under a Medicare prescription drug plan at $35 for a month’s supply. Part D deductibles will not apply to these covered insulin products. Due to the similarities, CMS will end the Part D Senior Savings Model on December 31, 2023.
Elixir will continue to monitor all guidance related to the IRA and its impact to the Medicare prescription drug benefit. Please contact your designated Elixir Account Executive or Compliance Officer for more information.
Centers for Medicare & Medicaid Services (2023). Part D Senior Savings Model. Retrieved from https://innovation.cms.gov/innovation-models/part-d-savings-model
Inflation Reduction Act: CMS Implementation Timeline (2023). Retrieved from https://www.cms.gov/files/document/10522-inflation-reduction-act-timeline.pdf
Centers for Medicare & Medicaid Services (2023). Medicare Drug Price Negotiation Program. Retrieved from https://www.cms.gov/files/document/medicare-drug-price-negotiation-program-next-steps-implementation-2026.pdf