Passing along information on Biden’s Inflation Reduction Act, one year out, and the impact on the US.
Update on CMS implementation of the Inflation Reduction Act on its 1st anniversary, ACA Signups, Charles Gaba
via the Centers for Medicare & Medicaid Services (CMS) (note: this press release actually came out on August 16th):
The Inflation Reduction Act of 2022 was signed into law on August 16, 2022. The new law provides meaningful financial relief for millions of people with Medicare by improving access to affordable treatments and strengthening the Medicare Program both now and in the long run. The law makes improvements to Medicare by expanding benefits, lowering drug costs, keeping prescription drug premiums stable, and improving the strength of the Medicare program. The law also extends enhanced financial help to purchase HealthCare.gov and state-based Marketplace plans and expands access to Advisory Committee on Immunization Practices (ACIP) recommended vaccines for adults with Medicaid coverage.
Specifically, the Inflation Reduction Act:
- Ensures that people with Medicare pay no more than $35 for a month’s supply for each covered insulin product under Medicare prescription drug coverage, Traditional Medicare, or Medicare Advantage.
- Lowers Medicare Part D prescription drug costs and redesigns the prescription drug program (e.g., people enrolled in Medicare prescription drug coverage who have very high drug costs will no longer have to pay cost-sharing for their prescription drugs in the catastrophic phase of the program starting in 2024, and caps annual out-of-pocket prescription drug costs at $2,000 for 2025).
- Makes adult vaccines, recommended by the ACIP, available at no cost for people with Medicare prescription drug coverage starting January 1, 2023, and later in 2023 for people with Medicaid coverage.
- Allows Medicare to negotiate directly with participating drug companies to improve access to innovative treatments for people with Medicare and lower costs for the Medicare program.
- Requires drug companies that raise their drug prices faster than the rate of inflation to pay Medicare a rebate and reduces coinsurance for these drugs for people with Medicare under certain circumstances.
- Provides more assistance in affording Medicare prescription drug coverage premiums and out-of-pocket drug costs by expanding the low-income subsidy program (LIS or “Extra Help”) under Medicare Part D to 150% of the federal poverty level starting in 2024.
- Extends increased financial help to purchase affordable, comprehensive health insurance plans through HealthCare.gov and the state-based Marketplaces.
This law means millions of Americans across all 50 states, U.S. territories, and the District of Columbia will save money from meaningful benefits. The Inflation Reduction Act is accomplishing the following just one year after being enacted:
- Saving Affordable Care Act Marketplace consumers an average of more than $800 per year from continued expansion of financial assistance, based on national estimates.
- Driving the nation’s uninsured rate to historic lows.
- Lowering insulin costs for 4 million seniors and other Medicare beneficiaries with diabetes by capping a month’s supply of each covered insulin at $35.
- Providing ACIP-recommended adult vaccines at no cost to millions of people with Medicare.
- Lowering out-of-pocket costs for some people with Medicare for certain Part B drugs and biologicals with prices that have increased faster than the rate of inflation.
- Projecting savings for nearly 19 million seniors of an average of $400 per year when the $2,000 cap on out-of-pocket prescription drug costs goes into effect in 2025.
Below is a summary of the milestones that CMS has met for implementing the provisions of the Inflation Reduction Act:
MEDICARE INFLATION REBATES
The new law requires drug companies that raise their drug prices faster than the rate of inflation to pay Medicare a rebate in certain circumstances. People with Traditional Medicare and Medicare Advantage who use these drugs may, depending on other health coverage they may have, pay a reduced amount for their coinsurance. This leads to a stronger Medicare for current and future enrollees and discourages rapid price increases by drug companies. The following describes actions CMS has taken to implement the Medicare Prescription Drug Inflation Rebate Program:
February 9, 2023: HHS Releases Initial Guidance for Medicare Prescription Drug Inflation Rebate Program
CMS announced next steps outlining how it is implementing the new Medicare Prescription Drug Inflation Rebate Program.
March 15, 2023: Inflation Reduction Act Tamps Down on Prescription Drug Price Increases Above Inflation
CMS announced that for the time period of April 1 through June 30, 2023, 20 Part B rebatable drugs had an adjusted coinsurance rate based on the inflation-adjusted payment amount. People with Traditional Medicare and Medicare Advantage who used these drugs, depending on other health coverage they may have had, may have paid a reduced coinsurance during this specific quarter when compared to what they would have paid if the new law had not been passed. For the quarter of April 1-June 30, 2023, people with Medicare may have experienced coinsurance amounts that were lower than what they would have paid before the new law passed by as much as $1 – $372 per average dose.
June 9, 2023: Inflation Reduction Act Continues to Lower Out-of-Pocket Prescription Drug Costs for Drugs with Price Increases Above Inflation
CMS announced the list of 43 prescription drugs for which Part B beneficiary coinsurances may be lower between July 1 through September 30, 2023. Some people with Traditional Medicare or Medicare Advantage who take these drugs covered under Part B may save between $1 and $449 per average dose in this quarter, depending on their individual coverage.
MEDICARE PRESCRIPTION DRUG COVERAGE IMPROVEMENTS
As a result of the new law, people with Medicare are benefiting from lower prescription drug costs and a redesigned prescription drug program. Implementation of changes to Medicare drug coverage includes the following CMS actions:
January 1, 2023: Out-of-Pocket Cap on Insulin Costs
Starting January 1, 2023, people enrolled in a Medicare prescription drug plan began paying no more than $35 for a month’s supply of each insulin product they take that is covered by their Medicare prescription drug plan and dispensed at a pharmacy or through a mail-order pharmacy. Also, Part D deductibles no longer apply to covered insulin products.
January 1, 2023: Elimination of Cost-Sharing for Recommended Vaccines
As of January 1, 2023, people with Medicare drug coverage pay nothing out-of-pocket for adult vaccines recommended by ACIP, including vaccines for shingles, whooping cough, tetanus, and more.
April 5, 2023: Expanding Eligibility for Extra Help
CMS finalized regulations to expand eligibility for the full low-income subsidy (LIS) benefit (also known as “Extra Help”) to certain individuals with limited resources and who earn up to 150% of the federal poverty level. Beginning January 1, 2024, this change will provide the full subsidy to those who currently qualify for the partial subsidy. This action will improve access to affordable prescription drug coverage for approximately 300,000 individuals with Medicare.
May 12, 2023: Part D Redesign Elements
The Inflation Reduction Act requires CMS to establish a new Part D Manufacturer Discount Program beginning on January 1, 2025, as part of the redesign of Part D. CMS released draft guidance that proposes to largely align the new program and agreements with those already in place for the existing Coverage Gap Discount Program, which sunsets on December 31, 2024.
July 1, 2023: Insulin Cost Cap for Medicare Part B and Medicare Advantage Starting July 1
As of July 1, people with Medicare Part B and Medicare Advantage coverage who get their insulin for use with a traditional pump have their out-of-pocket cost for insulin capped at $35 per month per each covered insulin product. CMS created a series of resources, including a list of Frequently Asked Questions (FAQs), a social media toolkit, and more to help ensure people can benefit from these important provisions.
July 17, 2023: CMS Released Sample Calculations on Out-of-Pocket Drug Cost Changes
CMS released a summary with sample calculation of how monthly costs may be calculated under the provision of the new drug law requiring Part D sponsors to provide enrollees the option to pay out-of-pocket prescription drug costs in monthly payments over the course of the plan year instead of at the point of sale, beginning in 2025.
MEDICARE DRUG PRICE NEGOTIATION
Under the new drug law, Medicare has the authority to negotiate directly with participating drug companies to improve the affordability of some of the costliest single-source brand-name drugs covered under Medicare Part B and Part D. This means that people with Medicare will have increased access to innovative, life-saving treatments, and the costs will be lower for the Medicare program.
January 11, 2023: HHS Announces Key Dates for the First Year of the Inflation Reduction Act’s Medicare Drug Price Negotiation Program
CMS announced key dates for the first year of the Medicare Drug Price Negotiation Program under the Inflation Reduction Act. For the first time in history, because of the Inflation Reduction Act, Medicare will have the ability to negotiate prescription drug prices. That process begins in 2023, and the first negotiated prices will go into effect in 2026.
March 15, 2023: HHS Releases Initial Guidance for Historic Medicare Drug Price Negotiation Program for Initial Price Applicability Year 2026
CMS issued initial guidance detailing the requirements and parameters — including requests for public comment — on key elements of the new Medicare Drug Price Negotiation Program for 2026, the first year the negotiated prices will apply. The initial guidance outlined how Medicare intends to use its new authority to effectively negotiate with participating drug companies for lower prices on selected high-cost drugs. The negotiation process will focus on key questions, including but not limited to the selected drug’s clinical benefit, the extent to which it fulfills an unmet medical need, and its impact on people who rely on Medicare.
June 30, 2023: CMS Releases Revised Guidance for Historic Medicare Drug Price Negotiation Program
CMS released revised guidance for how the agency will conduct drug price negotiations. The agency made several changes from the initial guidance to incorporate feedback from comments received from the public. The agency received more than 7,500 comments on the initial guidance from consumer and patient groups, drug companies, pharmacies, individuals, and other interested parties and subsequently posted comments on CMS.gov.
MARKETPLACE AND MEDICAID
Many consumers will benefit from paying lower amounts for health care coverage premiums through 2025 on HealthCare.gov and state-based Marketplaces because the new law extends the enhanced financial assistance that was put in place by the American Rescue Plan Act. Thanks to the Inflation Reduction Act, adults with Medicaid coverage will gain coverage of all ACIP-recommended vaccines without cost-sharing.
October 31, 2022: 10th Year of Marketplace Open Enrollment Includes IRA Premium Subsidies to Lower Costs
Thanks to the American Rescue Plan Act and the Inflation Reduction Act, both signed into law by President Biden, a majority of consumers on HealthCare.gov continued to have access to affordable premiums that help lower costs for families. Four out of five HealthCare.gov customers were able to find plans for $10 or less per month after tax credits.
June 27, 2023: Mandatory Medicaid Coverage of Recommended Adult Vaccines
The Inflation Reduction Act requires state Medicaid programs to cover and pay for all recommended vaccines for adults without cost sharing. CMS issued a state health officer letter providing guidance on how to implement this policy. Coverage must start no later than October 1, 2023.
TEMPORARY INCREASES IN PAYMENT FOR BIOSIMILARS
October 3, 2022: Temporary Increase in payment under Medicare for Qualifying Biosimilars
The Inflation Reduction Act requires a temporary, five-year increase in the Medicare Part B payment for certain qualifying biosimilars that have an average sales price (ASP) that is not more than the ASP of the reference biological product. Such qualifying biosimilars are paid ASP plus 8% (rather than plus 6%) of the reference biological product’s ASP, which began on October 1, 2022. This temporary add-on payment is intended to increase access to and utilization of biosimilars and promote competition in the marketplace. CMS has posted quarterly drug pricing files that reflect the temporary increased amount.