Medicare members will see lower drug costs and payment plans

Two of the biggest stories this fall could center on new benefits starting Jan. 1 for older adults enrolled in Medicare Part D prescription drug plans.

First is a $2,000 cap on out-of-pocket payments for prescription drugs. Those with Part D (prescription drug) plans will pay no more than $2,000 in copays or coinsurance starting next year. This new limit represents a significant reduction from this year's cap of $3,500.

Second is a Prescription Drug Payment Plan. In 2025, anyone in Part D plans will be able to spread their prescription drug costs into monthly payments all year round, instead of paying everything at once at the pharmacy at the beginning of the year. However, there is a catch: enrollees must ask their Part D insurer about this benefit because they must sign up to receive limited monthly payments. Previously, Medicare had not implemented such a measure, A. Mark Fendrick, MD, director of the Center for Value-Based Insurance Design at the University of Michigan, said in an email.

In addition to these two provisions in the Inflation Reduction Act (IRA) of 2022, there are more. For example, the IRA set a cost-sharing limit for insulin at $35 per month for Medicare members, eliminated cost-sharing for vaccines covered under Part D for adults, and increased access to these vaccines in Medicaid and CHIP.

Why this is important

The key provision in the IRA allows the Medicare agency to negotiate prices directly with drug companies for the 10 most expensive drugs that doctors dispense under Medicare Part B and that patients receive in pharmacies under Part D. The negotiated prices will certainly remain in effect. According to this report from KFF, Part D drugs are expected to be available in 2026 and Part B drugs in 2028.

This drug price negotiation provision was historic because it allowed Medicare to negotiate drug prices for the first time since the passage of the Medicare Prescription Drug and Modernization Act in 2003, as we reported in August and September.

Once the Trump administration takes office in January, health journalists will have to watch to see whether Congress will take action to repeal or repeal the key IRA provision. Shannon Firth reported on the issue for MedPage Today on Wednesday (November 7), asking, “Is price negotiations in the crosshairs of the next administration or is it 'political suicide'?” Experts agree that repealing the entire law would be difficult, she wrote.

“I don't think there's anything good in Republicans saying they're going to repeal the IRA because that means lifting the out-of-pocket cap [costs]and that is political suicide,” Firth wrote, quoting Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office.

Fendrick also commented. “One of the biggest health policy challenges for the next Trump administration will be finding a balance between preserving the elements of the law that are consistent with the president-elect’s agenda – lowering prescription drug costs for Medicare beneficiaries – and “addressing those aspects that the law rejects, such as Medicare negotiations on drug prices,” he wrote.

1.5 million helps from your own pocket

According to an October report from the federal Department of Health and Human Services (HHS), the $3,500 cap helped nearly 1.5 million seniors with Part D plans this year, rising to nearly $1 billion through June Save on out-of-pocket expenses for medication. Next year, the $2,000 cap is expected to result in a savings of $19

Million seniors face $7.4 billion in out-of-pocket costs, HHS added. Before the IRA, there was no cap on drug out-of-pocket costs for Medicare members, and some of the most expensive drugs could cost seniors $60,000 a year, the report said.

Kristen Jordan Shamus, health care coverage editor for the Detroit Free Press, explained that the $2,000 cap on out-of-pocket costs applies only to the prescription drugs listed on each member's Part D plan. One formulary is the list of covered drugs, and each Part D plan lists different medications on its formulary, she added. “If you take a prescription drug that is not included in your Medicare Part D plan formulary, you will be required to pay the full cost of that drug,” she added. “The $2,000 out-of-pocket limit does not apply.”

A final note that may be important going forward is that Democrats in Congress passed the bill without Republican votes. Here is the vote count in the House and Senate. After this vote, many Republicans appreciated the provisions of this bill.

resources

• Medicare Part D enrollees will reach out-of-pocket limit by June 2024, HHS report Oct. 22.
• A Current Snapshot of the Medicare Part D Prescription Drug Benefit, KFF, October 9, 2024.
• The possibility of Medicare negotiating drug prices remains popular with voters, although most are unaware of the law and the expected savings, KFF press release, September 13, 2024.
• Inflation Reduction Act Medicare Drug Price Negotiation Program FAQs, KFF, August 20, 2024.
• Explanation of Prescription Drug Provisions in the Inflation Reduction Act, KFF, January 24, 2023.