Well we have all heard about the Inflation Reduction Act (IRA) that was signed into law back in August of this year, but what does it mean to a Medicare Part D prescription drug plan and the changes we can expect?
In this article we are not going to be discussing everything dealing with the Inflation Reduction Act, but mainly what you can expect will take place each year for Part D prescription drug coverage. Keep in mind that when we are talking about Part D changes, it is not limited to just stand-alone prescription plans, but also includes the prescription component of Medicare Advantage plans (MAPD).
Numbers By The Year
Changes for 2023
- Shingles vaccine will be at no charge to Medicare beneficiaries thru their Part D coverage beginning January 1, 2023.
- Insulin pricing will be reigned in to allow Medicare beneficiaries to pay no more than $35 for a 1 month supply of insulin (or multiples) that they currently take or need to take. Covered insulin will not be subject to any Part D deductible and can be provided from a retail pharmacy or mail order.
In addition the new law requires that the first group of 10 drugs will be chosen to undergo new price negotiations to set a ‘fair price’. The 10 drugs chosen must meet the following requirements:
- Highest Spending
- Brand Name
- No Competition
Once the new pricing has been decided, the changes for those 10 drugs will go into effect in 2026.
Changes for 2024
- Beginning January 1, 2024 Medicare beneficiaries with prescription drug coverage will get relief if they reach the Catastrophic Phase of spending. Once they enter the Catastrophic Phase, those beneficiaries will no longer have to pay any co-insurance or co-payments during that entire phase for any covered drug.
- As discussed in changes for 2023 the selected 10 drugs to undergo fair pricing should be published by the Centers for Medicare & Medicaid Studies (CMS) no later than September 1, 2024. As stated before, this pricing will not go into effect until 2026.
- Starting in 2024 and thru 2029 Part D plans will be limited to increases of no more than 6% over the previous year’s premium. The goal is to stabilize plan premiums beginning in 2030 and lasting thru subsequent years.
Changes for 2025
- The next group drugs to undergo fair pricing will increase from 10 to 15. By the end of November CMS is required to publish the new maximum pricing for these 15 drugs. The new pricing will go into effect in 2027.
- Medicare Part D beneficiaries will pay no more than $2,000 in out-of-pocket costs for their covered prescription drugs.
- In an effort to afford Medicare beneficiaries a way to spread out their prescription drug costs evenly over 12 months, the new Smoothed Cost Sharing payment option will be introduced.
- Manufacturer discounts will be applicable to not only the catastrophic phase but the initial coverage phase as well.
Changes for 2026
- The initial 10 drugs selected in 2023 to undergo the new fair pricing model will go into effect.
- Once again in 2026 there will be another group of 15 drugs selected to undergo the fair pricing model. Unlike previous years, drugs under Part B of Medicare to can be included. The fair price of these selected drugs will be published by CMS no later than by the end of November and will go into effect in 2028.
Changes for 2027
- Fair pricing on the 15 selected drugs in 2025 will go into effect. This means that there will now be 25 active drugs under this program.
- The new group of drugs to be selected for the fair pricing negotiations will increase this year to 20 and will include both Part B and Part D drugs.
- By the end of November the maximum fair prices for these 20 drugs must be published by CMS and will go into effect in 2029.
Changes for 2028
- The amount of covered drugs under the maximum fair pricing in effect will now be a total of 40.
- An additional 20 new drugs will be selected for price negotiations (Part B and Part A drugs)
- By the end of November CMS will publish the new maximum fair pricing for these 20 drugs to go into effect in 2030.
Changes for 2029
- The amount of covered drugs under the maximum fair pricing in effect will now be a total of 60.
- Once again another 20 drugs from Part B or Part D will be selected for price negotiations.
- The 20 selected drugs will have their new maximum fair pricing published by CMS by the end of November. The new pricing on these drugs will go into effect in 2031.
The Wrap Up
While your clients will not feel the full relief of the Inflation Reduction Act immediately, they should hopefully receive reduced out of pocket costs on their covered prescription drugs that will continue to grow each year. To view the Inflation Reduction Act official Implementation Timeline for CMS click here. If you have any additional questions regarding the Medicare Part D prescription drug plan changes beginning in 2023 give us a call at (800)924-4727. Need to more Part D plan options, click here to see a very small sampling of the carriers we offer independent brokers.