The Inflation Reduction Act of 2022 (IRA) has shown a spotlight on Medicare prescription drug coverage which includes several provisions to lower prescription drug costs for people with Medicare Part D. Part D covers prescription benefits (for self-administered drugs such as those picked up at a pharmacy and taken at home) and regulates Medicare prescription drug plans.
The new drug law makes improvements to Medicare that will expand benefits, lower costs, keep prescription drug premiums stable, and improve the strength of the Medicare program. The new drug law also reduces drug spending by the federal government. The new law is the most significant changes to the Part D program since the creation of Part D in 2006. Every Medicare beneficiary will be affected by these changes. The IRA contains many provisions that they believe could help make health care much more affordable for people who have Medicare Part B and Part D coverage. Changes will take effect January 1, 2025.
What are the changes?
First, a new $2,000 cap on enrollee out-of-pocket spending for covered Part D drugs, lowering the out-of-pocket cap from $8,000 per year to $2,000 per year. This is good news for some Medicare beneficiaries, particularly ones taking expensive brand-name drugs. Second, eliminating the Coverage Gap (aka donut hole). For 2025, the Part D benefit will have three stages instead of four: Yearly Deductible, Initial Coverage, and Catastrophic Coverage. Third, a new Medicare Prescription Payment Plan (MPPP or M3P).
How does the New Medicare Prescription Payment Plan (MPPP or M3P) work?
The law requires that all Medicare Prescription Drug (PDP) plans offer a Prescription Payment Plan.
Members will have an option to spread the out-of-pocket prescription drug costs in the form of capped monthly payments instead of all at once at the pharmacy. Members with a $600 drug cost are likely to benefit from this new prescription drug plan. The new M3P plan changes the timing of the payment not the cost of the medications.
How do I know what’s changing on my plans and how can I prepare?
Watch for your Annual Notice of Change (ANOC). If you are currently on a PDP or a Medicare Advantage with Prescription Drug (MAPD) plan, by law you are to receive an ANOC by the end of September. It is important for you to review the notice. This is the first step in preparing you for Medicare Annual Enrollment (AEP). The ANOC describes any changes in coverage, cost or service area for the upcoming plan year. An easy-to-read comparison chart is included that will show 2024 plan year benefits compared to the new benefits for 2025. Lastly, we recommend that you do an annual review of your prescriptions because of possible changes to the drug formularies. Remember Medicare Annual Enrollment is October 15 thru December 7.
