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IRA Provisions — Important Notes for Brokers

By: Chalen Jackson, as featured by the National Association of Health Underwriters

As noted in the National Association of Health Underwriters’ (NAHU) timeline article in the October newsletter, President Biden signed into law the Inflation Reduction Act in August, which, among other major policy initiatives, contained several major changes to Medicare drug coverage, phased in over the next several years.  Three major provisions are taking effect at the start of 2023:

      • Drug manufacturers must pay rebates to Medicare if the price of certain part B drugs rises faster than inflation.
      • Adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP), will be available under part D at $0 cost sharing.
      • All covered insulins will be capped at $35 for a monthly supply for both part B and D insulins covered by a beneficiary’s plan.

These major provisions will drastically affect what clients may pay for prescription drugs in 2023 and, unfortunately, finding the most cost-advantaged coverage is not going to easy this year.  While many factors play into choice of coverage, costs will be difficult for beneficiaries and brokers to determine this year.

Let’s break down the biggest things you need to know to make sure your clients are covered.

Insulins Will Not Show Up as $35 in Quoting Tools

Due to the timing of the IRA being signed into law, Medicare plan sponsors had long since submitted their final plan of bids to CMS.  In a September 26th memo, CMS indicated that the Medicare Plan Finder (and most other quoting/enrollment tools) will show the original bid amount for covered insulins, not the new $35 cap amount.  They plan to display a footnote indicating the true $35 cap amount.  At this time, the best advice for most brokers is to quote your insulin dependent clients twice, once to ensure their insulins are covered by a plan and again to verify the costs of their non-insulin drugs.

CMS is Granting an SEP Next Year if Beneficiaries Can Find a Better Plan

CMS has indicated that it knows this is going to cause confusion and many beneficiaries may end up in a more expensive plan because of it.  Due to this, CMS indicated that it will be very willing to grant exceptional circumstances SEPs for beneficiaries who can find a lower-cost plan at any time in 2023.  Unfortunately, this process means the client must call Medicare and be directly enrolled, cutting out the broker and, under current processes, likely generating a compliant as well.

Clients May Still Be Paying More During Q1

Due to the short timeframe to implement all these new cost-sharing provisions, CMS has granted plans limited leeway through March 31, 2023, to continue to charge their originally approved cost-sharing and copay amounts, with the requirement that they reimburse beneficiaries within 30 days.  While CMS expects plans to make “every effort” to implement appropriate cost sharing by January 1, 2023, it is still likely some beneficiaries may end up paying more during Q1 than $35/month.  Even though these beneficiaries are required to be reimbursed within 30 days, it is likely to cause confusion and frustration.

What Can Brokers Do?

As always, as brokers, our responsibility is to communicate changes and educate our clients on anything that can affect their coverage choices.  This Annual Enrollment Period, our diabetic clients may need a little more care than usual, and more follow-up during the first part of the year.  Be prepared to send out Q1 reminders, hold retention meetings and field questions.  Although the provisions of the Inflation Reduction Act are going to save beneficiaries some money this year, it may take a little longer than we would like, and cause more confusion than we need during an already busy time of the year.

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