Medicare beneficiaries could pay less for 27 drugs covered under Part B starting next month
- The 27 drugs that may cost less for beneficiaries are those whose price increases have outpaced inflation.
- The cost savings is due to provisions in the Inflation Reduction Act, which cleared Congress last August and also ushered in other changes to Medicare drug coverage under both Part B and Part D.
- The medicines on the list are all covered under Part B because they are administered by a doctor in a clinical setting.
Some Medicare beneficiaries will begin paying less next month for 27 prescription drugs whose prices have increased at a rate that outpaces inflation, government officials announced Wednesday.
Depending on their individual coverage, beneficiaries could save between $2 and $390 per average dose for these drugs starting April 1, according to the Centers for Medicare & Medicaid Services. The reduced cost applies to certain drugs and biologicals that are administered in a hospital or other clinical setting — medications that treat cancer, arthritis and chronic kidney disease, for example — and are covered under Medicare Part B.
"Some of these drugs are life-saving for various conditions and situations like organ transplants," said Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare plans.
More from Personal Finance:
A bill in Congress aims to help prevent elder fraud
How to factor your health into a financial plan
Here's what you should consider before 'unretiring'
"It's heartbreaking to hear stories from clients about life-saving medications that are financially out of reach because of fixed income," Gavino said. "Lowering the costs may help some folks."
Beneficiaries who typically pay 20% coinsurance under Part B will see their share decline based on a lower inflation-adjusted price for the drugs on this list. And, the list of drugs impacted by this coinsurance adjustment may change quarterly.
The change is due to legislation adopted last year
The cost reduction for these 27 drugs is due to implementation of provisions in the Inflation Reduction Act, which Congress passed last August.
The law requires pharmaceutical manufacturers to pay a rebate to the Medicare program if their drug prices rise faster than the rate of inflation — which is not uncommon. Half of all drugs covered by Medicare had list price increases that outpaced inflation between 2019 and 2020, according to the Kaiser Family Foundation.
It's worth noting that the law applies to drugs under Part D as well, although information on which ones are subject to the inflation rebates won't be available until later this year, said Juliette Cubanski, deputy director of the program on Medicare policy at the Kaiser Family Foundation. Additionally, those rebates in Part D will not result in lower costs to beneficiaries — that reduction only applies in Part B.
More changes to Medicare drug coverage are in effect
This isn't the only change to drug coverage that Medicare beneficiaries may notice this year.
The Inflation Reduction Act also capped monthly cost-sharing for insulin delivered through Part D at $35, which took effect Jan. 1. Part D deductibles — which vary from plan to plan but cannot be more than $505 in 2023 — also won't apply to the covered insulin product.
For beneficiaries who take insulin through a traditional pump (which falls under Part B), the benefit starts July 1.
Additionally, as of this year, there is no longer any cost-sharing for recommended vaccines under Part D, including the one for shingles.
More changes will happen in future years
Other provisions that are intended to reduce Part D spending take effect in later years.
This includes eliminating an existing 5% coinsurance in the so-called catastrophic phase of coverage, which takes effect in 2024.
Additionally, beneficiaries' annual out-of-pocket Part D spending will be capped at $2,000 beginning in 2025. Currently, there is no out-of-pocket limit, regardless of whether you get your coverage as a standalone Part D option or through an Advantage Plan.
Medicare also will be able to start negotiating the price of some drugs beginning in 2026.