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Medicare Changes Coming In what is being called the biggest disruption in decades


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wo regulations will greatly impact Medicare recipients this next year — the Inflation Reduction Act¹ and the Centers for Medicare and


Medicaid Services (CMS) Final Rule² for the 2025 plan year.


WHAT IS CHANGING?


Passed in 2022, the Inflation Reduction Act eliminates the donut hole of standard Part D plans and caps the out-of-pocket Medicare Part D costs at $2,000, starting in 2025. This is a $6,000 decrease from the 2024 cap. The legislation also capped covered insulin at $35 starting in 2023. In addition, CMS can start negotiating drug prices in 2026. Note: Part B drugs are not affected by this new legisla- tion. The CMS Final Rule refines Medicare payment policy through annual rulemaking and responds to changes in clinical practice and industry operations. In response, carriers must adjust benefits, premium and file new plans for the upcoming contract year.


While millions will benefit from the $2,000 annual Part D prescription drug cap, millions more could see premium increases, as carri- ers absorb the impact of the new legislation. This new Part D cap is in addition to the elimination of out-of-pocket costs during the catastrophic coverage phase of Part D.


2025 PART D STANDARD BENEFIT ENROLLEE COST SHARING


• Deductible: Enrollee pays 100% of covered Part D prescription drugs until deductible is met, if any


• Initial Coverage Phase: Enrollee pays 25% of covered Part D prescription drug costs


• Catastrophic Phase: Enrollee pays $0 once the $2,000 out-of-pocket thresh- old is met


Due to these changes, Part D and Medicare Advantage with Pre- scription Drug coverage (MAPD) carriers are fac- ing the difficult decision of reducing benefits and increasing premiums, as CMS did not provide the extra reimburse- ment carriers were expecting. To mitigate this, carriers may:


• Add deductibles to generic drugs


• Remove expensive medications for the drug formulary • Increase premiums • Restrict network pharmacies


Although Medicare Advantage plans (MAPD) are also affected by the new legislation, MAPD plans have more leverage to absorb more of the impact. However, MAPD carriers will also see Medicare cuts, with reimburse- ments far less than they are used to.


EXPECT TO SEE


• Higher copays and out-of-pocket limits on Medicare Advantage (MAPD) plans • Increased premium • Significant decreases in extra benefits, such as dental, vision and hearing and the Part B giveback


• Carriers exiting low populated counties (rural)


• Carriers exiting the Medicare Advantage and/or Part D market altogether


Extra benefits may decrease in value and coverage, or carriers may remove them altogether. Plans will have to adapt and overcome the additional costs. Instead of Medicare recipients choosing a plan based


18 focus | FALL 2024 | ISSUE 3


on extra value-added benefits, Medicare recipients may get back to basics and choose a plan based on catastrophic events and total out-of-pocket costs.


In addition, beginning in 2025, CMS will add the Medicare Prescription Payment Plan³ — a ‘smoothing provision’ to help consum- ers with the rising costs of medications. Financed and billed through the carriers, members will have the opportunity to spread the cost of covered medications over the course of the calendar year, with no cost to the consumer at the pharmacy counter. This will help with high out-of-pocket expenses early in the year while satisfying the deduct- ible. Members must opt-in to this benefit. Failure to repay the carrier as billed, how- ever, will result in disenrollment from the program, but not disenrollment from the plan. This new provision will create a greater financial burden on carriers, which will drive up premiums. CMS expects that carriers ac- counted for this potential debt when pricing their 2025 plans.


RELIEF


Due to potential negative consequences of the Inflation Reduction Act, CMS released the Premium Stabilization Demonstration


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