The Inflation Reduction Act (IRA) was signed into law in August 2022 and will have significant effects on the managed care industry. A presentation at AMCP Nexus 2023 reviewed the IRA implementation timeline through 2029. The speakers focused on important provisions this year, next year, and beyond.
The session was presented by speakers from BluePeak Advisors, a leading national healthcare consultancy that focuses on government programs: Babette S. Edgar, PharmD, MBA, FAMCP, co-founder; Kelly K. Makay, RPh, MBA, a senior health plan services consultant, and Crescent Moore, PharmD, PhD, Part D lead. They reviewed that the IRA will bring:
- Expanded government authority to negotiate drug costs.
- Changes to Medicare Part D benefits.
- Limitations on premiums.
- A monthly cap on Part D cost-sharing.
Among the changes in effect for 2023 is the elimination of cost-sharing on vaccines. Instead, vaccines recommended by the Advisory Committee on Immunization Practices will be available to enrollees at no cost and with no deductible. This extends beyond Medicare to state Medicaid and CHIP programs, the speakers advised. Also this year, the IRA is limiting Medicare Part D insulin cost-sharing to $35 per month. In addition, the government is now able to impose a rebate on drug manufacturers who increase certain prices faster than the inflation rate. The government is also limiting Part B coinsurance for certain medications.
On the horizon for 2024, the speakers explained, the IRA will expand eligibility requirements for full low-income subsidy (LIS) benefits to the level that used to qualify people for partial benefits, simultaneously eliminating partial LIS benefits. Also starting in 2024 and extending through 2029, the IRA will limit beneficiary premium increases to 6% annually. The changes also eliminate the 5% coinsurance for catastrophic coverage in 2024 and retire the Coverage Gap Discount Program.
Beginning in 2025, the IRA will cap out-of-pocket drug spending at $2,000 and establish a new manufacturer discount program for low-income enrollees, which will require significant changes to claims processing and reporting requirements. Major changes also are in store for the way Medicare enrollees pay for prescriptions. “All plans offering Medicare Part D coverage will be required to offer their enrollees and option to pay for their out-of-pocket Part D costs in monthly payments throughout the plan year instead of paying their cost-sharing at the pharmacy,” the speakers said, and the Centers for Medicare & Medicaid Services (CMS) is in the process of developing further guidance for sponsors and educational tools to help enrollees understand the new process.
Beyond 2025, the IRA will bring drug price negotiations, with CMS able to set maximum fair prices for certain drugs and assess penalties if those prices are not applied at the point of sale.
Edgar BS, Makay KK, Moore C. Industry Landscape: The Road Ahead for the Inflation Reduction Act. Session L5. Presented at AMCP Nexus 2023; Oct. 16‒19, 2023; Orlando, Fla.