Addressing Inflation & Medicare

The Inflation Reduction Act (IRA) was enacted into law (August 17th) and included the following key provisions to address program costs:

• Permits the Medicare program to negotiate prescription drug prices for the ten of the highest-costing drugs starting in 2023, with a gradual expansion to the twenty highest-costing drugs by the year 2029.

• Ensures the full subsidy for low-income Medicare participants under Part D, and stabilizes Part D premiums by limiting any annual increase to no more than 6% through 2029.

• Caps Medicare beneficiary out-of-pocket costs at $2,000 per year, with the ability to spread out-of-pocket costs over monthly payments.

• Caps the cost of insuln at $35 per month in copays starting in 2023.

• Provide free vaccines including COVID vaccines, the shingles vaccine, and other necessary vaccines.

(updated: 8-17-22)

_________________________

Medicare Part B Premiums

HHS announced (May 27, 2022) that it will be reducing premiums increase levels for 2023 to account for overestimates in premium increases necessary for 2022. The Department said that it is too difficult to change premiums “midstream” during 2022, and therefore premiums will be adjusted downward in 2023. Announced in November (2021), Part B premiums rose 15% and deductible levels increased 13% for 2022. The Department is not saying at this point in time what the Part B premium will be for 2023.

The overestimate of the premium increase was primarily due to the preemptive cost incorporation of a new, expensive drug to treat Alzheimer's disease – Aduhelm. Earlier this year the Centers for Medicare and Medicaid determined that it would limit coverage of Aduhelm only to persons within a clinical trial. The Part B premium estimate had assumed Aduhelm would have broader coverage.

(updated: 5-28-22)

_________________________

Alzheimers Drug Decision - Aduhelm

The Centers for Medicare and Medicaid Services (CMS) announced its final decision (April 7, 2022) regarding Medicare coverage of the Alzheimers drug marketed under the name “Aduhelm.” Specifically, CMS says that Medicare will limit coverage to patients in approved controlled trials. CMS says it wants more data on the drug’s effectiveness before granting coverage to a broader population. This final decision is consistent with its initial decision in January.

Broader coverage could have significant public policy and cost considerations. Biogen, the maker of Aduhelm, originally placed the cost of the drug at $56,000 per person, per year. With the CMS decision pending, and concern growing about the future potential cost to the Medicare program, Biogen subsequently announced (December 20, 2021) that it was reducing its planned cost in half, to $28,000 per person, per year. Biogen estimated prior to the CMS decision, 50,000 persons would seek Aduhelm treatment in 2022, meaning the first year annual cost would total $1.4 billion. But this may only be a small fraction of potential future cost, as Biogen is said to be targeting persons in the early stage of Alzheimers, a population that could total anywhere between 1-2 million Americans out of a total of 6 million Americans said to be living with the disease.

For now, this matter is decided. If the drug provides more evidence of effectiveness in the future, CMS will likely need to revisit this decision.

(updated: 4-13-22)

_________________________