CMS Aims to Cut Medicare Part D Costs for 2023

What's going on with Medicare Part D costs?

The Centers for Medicare & Medicaid Services (CMS) has recently issued a proposal to reduce Medicare Part D costs, making prescription medications more affordable to thousands of Medicare beneficiaries nationwide. The proposal is designed to help beneficiaries afford critical medicine by lowering out-of-pocket costs and improving overall price transparency. 

The changes proposed focus on the flow of discounts negotiated within Medicare Part D. Currently, Part D providers can save on medication costs through price concessions, a system in which they pay less money to pharmacies that fail to meet specific metrics. This is just one example of the many discounts negotiated between insurers and drug makers, which have the potential to reduce Medicare costs for Part D beneficiaries significantly. Unfortunately, many of these discounts are not disclosed to the consumer, nor are they applied at the point of sale. In effect, consumers are paying a more significant portion of the drug’s price than they need to. 

Why make these changes now?

This lack of transparency can have catastrophic effects on beneficiaries. Thousands of people encounter the Medicare ‘donut hole’ or coverage gap each year, forcing them to pay up to thousands of dollars in medication fees out of pocket. While the right supplemental insurance can help keep you out of the donut hole, planning is the best way to manage a gap in coverage. Unfortunately, due to a lack of clarity in the pricing of prescription medications, it is all too easy to stumble into the donut hole, causing significant financial hardship.

Under the new rule, which is set to come into effect in January 2023, Part D plans must apply all price concessions they receive from network pharmacies to the point of sale and be transparent about any price concessions or discounts they receive. In addition, CMS aims to redefine what the lowest possible payout for medications can be, setting it to be equal to the negotiated price. Currently, negotiated prices are often much higher than paid out to pharmacies. 

2023 will also see the release of real-time benefit-comparison tools by Medicare Part D providers, thanks to a rule passed by the CMS in 2021. The new tool will allow enrollees to compare the prices of different medications and identify their exact co-pay. It can also alert beneficiaries to cheaper generic drugs if one is available. 

In addition to changes in Medicare Part D, the proposal includes several significant reforms, such as new rules for third-party marketing organizations, improved access to care during disasters and emergencies, simplification of the Dual Eligible Special Needs Plan (D-SNP) enrollment process, changes to the 5-star rating system, and an overall increase in transparency. 

The proposal is part of the Biden Administration’s framework for reducing prescription drug costs. Other proposals, such as reducing the coverage gap and penalizing drug makers for raising prices faster than inflation, were not mentioned in CMS’s announcement and are not part of the proposed changes. 

What do these upcoming Medicare Part D cost changes mean for me?

THE CMS’s proposed changes are expected to go into effect at the beginning of 2023. If you wish to take advantage of this new rule, you should enroll in a Medicare Part D plan before the end of 2022, either as part of your Initial Enrollment Period or as part of the Annual Enrollment Period from October 7th – December 15th. If you are also enrolled in a Medicare Part D or Medicare Advantage plan, this is also an excellent time to review your current prescription drug coverage. 

Our licensed insurance agents can help you understand your options and answer questions such as “how much does Medicare Part D cost?” or “does this plan cover the prescription medications I need?”.