Provisions of Recently Passed Medicare Drug Bill in Effect Next Month – January 2023

As discussed in a recent CMA Alert (Aug. 18, 2022), President Biden signed into law the Inflation Reduction Act (IRA) of 2022 on August 16, 2022. This bill includes historic prescription drug provisions that will soon be of significant benefit to Medicare beneficiaries.  While some provisions will be phased in over the next few years, other provisions will become effective next month, in January 2023.

Overview of IRA Prescription Drug Provisions

The following is a summary of the Medicare-related drug provisions in the IRA, to be phased in over the next several years. Note that the Part D changes also generally apply to Medicare Advantage plans that provide Part D prescription drug coverage, known as Medicare Advantage Prescription Drug (MA-PD) plans.

• Allows Medicare to negotiate with drug manufacturers for the price of some Part D and Part B drugs (starting in 2026);
• Caps beneficiary out-of-pocket Part D drugs costs at $2,000 per year (starting in 2025 – also allows spreading of costs over course of the year); in 2024, the 5% coinsurance for Part D catastrophic coverage will be eliminated);
• Imposes checks on the annual rise in costs of drugs and Part D premiums (limitations on drug prices start in 2023, and limitations on Part D premiums start in 2024);
• Limits monthly out-of-pocket copays for insulin to $35 (starting in 2023);
• Eliminates cost-sharing for adult vaccines covered under Part D (2023); and
• Expands access to the Part D Low-Income Subsidy (“Extra Help”) (starting in 2024) – full LIS up to 150% of the Federal Poverty Level (FPL) with higher resource limits.

For details on the improvements coming in 2023 see: “https://medicareadvocacy.org/ira-part-d-improvements-start-january-2023/.

For more information, see this CMS Fact Sheet “The Inflation Reduction Act Lowers Health Care Costs for Millions of Americans” (Oct. 5, 2022), including a timeline and FAQ.