Spring has sprung and so have the announcements from Centers for Medicare and Medicaid Services (CMS). The month of March saw a flurry of activity regarding the Inflation Reduction Act (IRA) in terms of coinsurance for rebatable drugs and biologics; the soon-to-be end of the COVID Public Health Emergency; and changes to Medicare Part D drug benefits for calendar year 2024.
The following describes the announcements, how they impact Medicare prescription drug benefits and how Elixir is preparing for these changes.
Inflation Reduction Act impacts patient coinsurance for rebatable drugs and biologics
On March 15, 2023, CMS released the most-recent quarterly Average Sales Price (ASP) public use file, which will be in effect April 1–June 30, 2023. CMS also published an updated ASP file on March 23, 2023. The ASP file includes Medicare Part B rebatable drugs and biologics determined to exceed the inflation-adjusted payment amount. [i] The ASP file specifies inflation-adjusted coinsurance percentages for these drugs.
What this means for payers:
- As of April 1, 2023, per the IRA, when a Part B coinsurance lower than 20% applies for a rebatable drug for a calendar quarter, the plan sponsors must charge members the lesser of the plan’s coinsurance percentage OR the coinsurance percentage per the ASP file.
- CMS also releases quarterly updates to the Outpatient Prospective Payment System (OPPS) payment rates, which are in effect at the beginning of each quarter. [ii] The OPPS rates apply to the plans’ medical benefit and are not applicable to Part B drug pricing as processed by the PBM.
To meet the requirements of the IRA, Elixir updated the configuration to apply member coinsurance percentages for the rebatable drugs and biologicals. The next quarterly ASP file update will take place in mid-June 2023 and be effective July 1, 2023.
For more information on the IRA and its impact on healthcare, refer to our recent blog.
COVID-19 public health emergency ending May 11th
Based on current COVID-19 trends, the Department of Health and Human Services (HHS) announced the Public Health Emergency (PHE) and National Emergency related to COVID-19 will expire at the end of the day on May 11, 2023. With COVID cases, hospitalizations and deaths all on a significant decline, the HHS determined it was appropriate to transition away from the emergency phase. [iii]
On March 24, 2023, CMS issued the Memo, “Coronavirus Disease 2019 (COVID-19) Related Exercise of Enforcement Discretion Ending May 11, 2023.” The memo:
- Clarifies that plan sponsors must return to their normal filed benefit.
- Notes that “CMS expects Medicare Advantage organizations and Medicare Medicaid Plans to notify all enrollees at least 30 days before the effective date of any plan changes [and] Part D sponsors must provide notice of any changes as required by 42 CFR § 423.128(g).”
The memo indicates a change to CMS directives as their initial communications about the Public Health Emergency expiration appeared to allow plan sponsors the option of leaving these flexibilities in place. Many sponsors were planning to do so through the 2023 contract year to avoid actual or perceived member disruption.
With the new CMS directive, Elixir is updating configuration for all Medicare plans to terminate the COVID flexibilities effective May 12, 2023.
To communicate this mid-year change notification to our Medicare members, Elixir is following the Medicare Communication and Marketing Guidelines (MCMG), which outlined a notification deadline of April 24, 2023. Plan sponsors must determine how to notify their members of the end of COVID flexibilities. This communication can be delivered to their members either electronically or by mail, as per member request.
An exception to the new rule
If a plan submitted a bid for calendar year 2023 that reflects the COVID flexibilities, they can remain in place through the plan year. Whether they are part of your filed benefit or for other reasons, please notify your Elixir Account Manager to ensure your plan remains configured accordingly.
Calendar year 2024 Medicare Benefits reflect changes to the Part D drug benefit
The impact of the IRA is evident in the calendar year 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies [iv] published by CMS on March 31, 2023. Elixir is preparing the 2024 benefit configuration with these and all other updates from the Rate Announcement.
Calendar year 2024 Changes to the Part D drug benefit include:
- Cost sharing for covered Part D drugs will be eliminated for beneficiaries in the catastrophic phase of coverage.
- Income limits for the full low-income subsidy program (LIS) benefit under Part D will increase from 135% to 150% of the federal poverty limit (FPL). Medicare beneficiaries earning between 135% and 150% of the FPL will be eligible for full low-income premium and cost-sharing subsidies and a $0 deductible if they:
- Meet the resources requirements under sections 1860D-14(a)(3)(D) or (E) of the Social Security Act (the Act)
And
- Would have been eligible for the partial low-income premium and cost-sharing subsidies and a reduced deductible under section 1860D-14(a)(2) of the Act had the IRA not been enacted.
- The deductible will continue to not apply to any Part D covered insulin product. In the initial coverage and coverage gap phases, cost sharing must not exceed the $35 copayment for a month’s supply of each covered insulin product.
- The deductible will continue to not apply to any adult vaccine recommended by the Advisory Committee on Immunization Practices (ACIP). For beneficiaries in the initial coverage and coverage gap phases, the statute requires these vaccines be exempt from any co-insurance or other cost sharing fees when administered in accordance with ACIP’s recommendation.
Standard Benefits calendar years 2023 vs. 2024
| 2023 | 2024 | |
| Deductible | $505 | $545 |
| Initial Coverage Limit | $4,660 | $5,030 |
| Out-of-Pocket Threshold | $7,400 | $8,000 |
| Minimum Cost Sharing in Catastrophic Coverage Portion of the Benefit | ||
| Generic/Preferred Multi-Source Drug | $4.15 | Not Applicable |
| Other | $10.35 | Not Applicable |
Elixir will continue to monitor these topics and all announcements from CMS and their impact to the Medicare prescription drug benefit. Please contact your designated Elixir Account Executive or Compliance Officer for more information.
Resources
[i] https://www.cms.gov/medicare/medicare-part-b-drug-average-sales-price/2023-asp-drug-pricing-files
[iv] https://www.cms.gov/files/document/2024-announcement-pdf.pdf
