Reconciliation Bill With Medicare Drug Price Negotiation, Out-of-Pocket and Inflation Caps Becomes Law
On August 19th, 2022
On August 16, President Biden signed the Inflation Reduction Act—a broad climate, tax, and healthcare reconciliation bill—into law. The law extends ACA tax credit subsidies, allows Medicare to negotiate prescription drug prices, places inflationary caps on price increases for Medicare Part B and Part D drugs, and limits Medicare beneficiaries’ out-of-pocket spending on Part D prescription drugs. ASCO supports the intent of the law, which is to reduce the cost of prescription drugs and lower patient out of pocket spending. However, ASCO and other specialty societies are concerned that the drug price negotiation provision will negatively impact patient access to critical Part B prescription drugs and asked Congress to offset cuts to Part B reimbursement. Key provisions in the law that will impact cancer care include: Drug Price Negotiation – The law directs HHS to negotiate the price of a set number of drugs within Medicare Part B and Part D. The Secretary of HHS will negotiate maximum fair prices for 10 Part D drugs in 2026, 15 Part D drugs in 2027, 15 Part B or D drugs in 2028, and 20 Part B or D drugs in 2029 and beyond. These changes are not expected to affect oncology practices until 2028. Prescription drug inflation rebates – The law requires manufacturers to provide rebates to the government if the price of certain drugs increase above inflation. The Part D rebates begin in October 2022, and the Part B rebates begin in January 2023. Medicare Part B coinsurance protection – An inflation growth cap for Part B beneficiary coinsurance begins in April 2023. Medicare Part D – An out-of-pocket spending cap begins in 2024. Other updates include: • Starting in 2024, beneficiaries will owe $0 out-of-pocket for Part D drugs in the catastrophic phase. By 2025, beneficiary out-of-pocket spending will be capped at $2,000 per year. • The income threshold for the Part D low-income subsidy has been expanded from 135% to 150% of the federal poverty level. • A redesign of program benefits will take place in 2025. • Premium growth will be capped at 6% per year through 2029. • HHS is authorized make a one-time adjustment to the beneficiary Part D premium percentage in 2030 to provide longer-term premium protection. • $0 cost-sharing for vaccines goes into effect in January 2023. • Repeal of the rebate rule begins in January 2027. ACA – Premium tax credit subsidies are extended through 2025.
On August 16, President Biden signed the Inflation Reduction Act—a broad climate, tax, and healthcare reconciliation bill—into law. The law extends ACA tax credit subsidies, allows Medicare to negotiate prescription drug prices, places inflationary caps on price increases for Medicare Part B and Part D drugs, and limits Medicare beneficiaries’ out-of-pocket spending on Part D prescription drugs. ASCO supports the intent of the law, which is to reduce the cost of prescription drugs and lower patient out of pocket spending. However, ASCO and other specialty societies are concerned that the drug price negotiation provision will negatively impact patient access to critical Part B prescription drugs and asked Congress to offset cuts to Part B reimbursement. Key provisions in the law that will impact cancer care include: Drug Price Negotiation – The law directs HHS to negotiate the price of a set number of drugs within Medicare Part B and Part D. The Secretary of HHS will negotiate maximum fair prices for 10 Part D drugs in 2026, 15 Part D drugs in 2027, 15 Part B or D drugs in 2028, and 20 Part B or D drugs in 2029 and beyond. These changes are not expected to affect oncology practices until 2028. Prescription drug inflation rebates – The law requires manufacturers to provide rebates to the government if the price of certain drugs increase above inflation. The Part D rebates begin in October 2022, and the Part B rebates begin in January 2023. Medicare Part B coinsurance protection – An inflation growth cap for Part B beneficiary coinsurance begins in April 2023. Medicare Part D – An out-of-pocket spending cap begins in 2024. Other updates include: • Starting in 2024, beneficiaries will owe $0 out-of-pocket for Part D drugs in the catastrophic phase. By 2025, beneficiary out-of-pocket spending will be capped at $2,000 per year. • The income threshold for the Part D low-income subsidy has been expanded from 135% to 150% of the federal poverty level. • A redesign of program benefits will take place in 2025. • Premium growth will be capped at 6% per year through 2029. • HHS is authorized make a one-time adjustment to the beneficiary Part D premium percentage in 2030 to provide longer-term premium protection. • $0 cost-sharing for vaccines goes into effect in January 2023. • Repeal of the rebate rule begins in January 2027. ACA – Premium tax credit subsidies are extended through 2025.
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