Panelists Outline IRA Provisions to Affect Medicare Long-Term


Speakers at AMCP Nexus 2023 provided an in-depth understanding of how changes brought on by the Inflation Reduction Act (IRA) have impacted Medicare, as well as what provisions are to come.

As the implementation of the Inflation Reduction Act (IRA) reaches its first anniversary, speakers at the Academy of Managed Care Pharmacy (AMCP) Nexus meeting recapped the changes that have taken place and mapped out the provisions still to come over the next several years.

Changes including out-of-pocket (OOP) caps for Medicare Part D drugs, price negotiations between Medicare and drug manufacturers, and the implementation of the Medicare Prescription Payment Plan (MPPP) will impact plans, pharmacy benefit managers (PBMs), and patients in different ways. The speakers stressed that collaboration between stakeholders and an in-depth understanding of the IRA’s changes will be crucial to ensuring that the law can be implemented adequately.

The session began with an overview of what’s already been implemented, including the $35 co-pay cap for Medicare beneficiaries, the elimination on cost sharing for vaccines, and requirements for drug companies to pay rebates if drug prices rise faster than inflation.

2024 Provisions

In 2024, 4 major policies will go into effect, including the expansion of low-income subsidies (LIS), elimination of catastrophic enrollee cost, and limits for premium increases. LIS expansion will allow patients with incomes between 135% and 150% of poverty and higher resources to be eligible for LIS. Limits for Part D premium increases will apply to plan years 2024-2029 and will limit beneficiary premium increases to 6% annually.

Babette S. Edgar, PharmD, MBA, FAMCP, consultant at BluePeak Advisors, noted that the premium growth provision will expire 2030, which happens to be an election year.

Maximum Spending Cap in 2025

Crescent Moore, PharmD, PhD, Part D Lead, BluePeak Advisors, explained 4 major provisions going into effect in 2025:

  • Maximum spending cap for Part D drugs
  • New manufacturer discount program
  • Drop in CMS reinsurance
  • Medicare Prescription Payment Plan

Medicare part D beneficiaries will see a $2000 annual spending cap on medication, which will lead to lower OOP costs. However, the speakers noted that payers and pharmacy benefit managers (PBMs) are very worried about how they will cover these products. The new manufacturer discount program will sunset the current coverage gap discount program at the end of 2024, leading to significant claim processing updates for PBMs.

Medicare Prescription Payment Plan (MPPP)

Under the new MPPP, all plans offering Medicare Part D coverage will be required to offer their enrollees an option to pay for their OOP Part D costs in monthly payments throughout the plan year instead of paying cost-share at the pharmacy. Additionally, the Part D sponsor will have to pay the pharmacy the full cost of the medication, including the patient’s OOP liability.

Although patients will benefit by not having cost-share at pharmacies, plans and PBMs will have to develop opt-in process and procedures, use CMS’ statutory formula to calculate maximum monthly payment for patients, and establish billing process for the MPPP. They will also have to create a process to ensure accurate payment to pharmacies, accurate coordination of benefits with other health insurance, and marketing and opt-in process. Pharmacies will need to be notified when a Part D enrollee may benefit from the program based on incurred OOP costs, and plans/PBMs will be responsible for educating potential participants who are likely to benefit from the program.

When asked how liability will transfer after a patient dies, Moore clarified that while there is guidance on liability when a patient transfers plans, CMS is yet to provide guidance on death of a patient, suggesting that plans may have to absorb the costs.

Drug Price Negotiation

Kelly K. Makay, RPh, MBA, senior consultant at Bluepeak Advisors, provided an overview of how the IRA will be implemented past 2025. The major provision going into effect during 2026 and beyond is the ability for Medicare to negotiate drug prices directly with manufacturers.

In August 2023, CMS announced the first 10 drugs chosen for Medicare negotiation. Each year through 2029, more Part D and Part B drugs will be added to the negotiation list.

The provision gives manufacturers 3 options: participate in the program, decline participation but accept excise tax for refusal to negotiate, or withdrawal from federal program participation. There are 8 pending lawsuits to prevent the provision from going into effect, in which companies claim that Medicare price negotiation infringes their amendment rights, meaning that the fate of the program could be left to the court system.

This article originally appeared on AJMC.

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