Navigating New Challenges in Medicare Rx Drug Billing
As people in the United States grow older at an incredible rate, with 10,000 new seniors every day, healthcare providers are facing significant challenges with Medicare billing. The Inflation Reduction Act (IRA) helps by limiting Medicare Part D costs, but it also complicates things. Providers need to change their strategies to keep up. Modern medicine helps people live longer but also increases healthcare costs for older people.
The Inflation Reduction Act (IRA) addresses some of these issues by expanding Medicare benefits, improving sustainability, and capping Medicare Part D expenses at $2,000 for out-of-pocket pharmacy costs. Starting in 2025, a new law requires all Medicare prescription drug plans, including stand-alone plans and Medicare Advantage plans with drug coverage, to offer members the option to pay out-of-pocket drug costs in monthly installments. This will help Part D members manage high costs early in the year by spreading expenses throughout the year.
When certain drug companies increase the prices of medications covered under Medicare Part B and Part D faster than inflation, they will have to pay rebates to the Medicare Trust Fund. This is part of the Medicare Prescription Drug Inflation Rebate Program. Starting in 2025, CMS will send invoices to these companies for rebates that cover the years 2022, 2023, and 2024. The rebate period for Part D began on October 1, 2022, and for Part B, it started on January 1, 2023. Additionally, if prices for some Part B drugs rise faster than inflation, CMS will lower the coinsurance costs for beneficiaries. So far, CMS has reduced coinsurance for 64 drugs and biologicals.
Additionally, a new option called the Medicare Prescription Payment Plan, or M3P, will let enrollees spread their OOP costs throughout the year instead of paying everything upfront at the pharmacy. Although implementing these policies is complex and affects many stakeholders, they could improve patient access to medications by making them more affordable and encouraging medication adherence.
The OOP cap is a significant part of the broader redesign of the Part D program under the IRA. This redesign will eliminate the coverage gap, known as the donut hole, and change how Medicare beneficiaries manage their drug costs. In 2025, the OOP cap will be set at $2,000, but this amount will be adjusted for inflation over time.
This cap is expected to bring significant relief to beneficiaries who struggle with high prescription costs. However, it’s essential to understand that changes in healthcare policy often have complex effects. While the OOP cap and M3P are expected to benefit enrollees significantly, there could be mixed outcomes. For example, there is concern that enrollees might face higher Part D premiums because plans will have to cover more of the drug costs above the spending cap. However, the IRA includes measures to help stabilize premiums. Plans might also respond by increasing the use of generic drugs or other cost-saving measures.
CMS sought input on how to handle challenges that drug companies might face due to drug shortages and supply chain issues, especially those beyond their control. The revised guidance includes measures to reduce rebates in such cases, consistent with the Inflation Reduction Act. It also contains rules to prevent drug companies from staying on shortage lists or delaying the resolution of supply chain issues to avoid paying rebates. While inflation rebates don’t apply to multi-source generic drugs (the ones most likely to be in shortage), there are more significant rebate reductions for Part D sole-source generic drugs and Part B and Part D plasma-derived products that are in shortage.
