The Centers for Medicare & Medicaid Services (CMS) has released significant guidance to support the Inflation Reduction Act (IRA) provisions that impacts Medicare enrollees, health plans, pharmacy benefit managers (PBM) and pharmaceutical manufacturers. There are several key changes forth coming in contract year (CY) 2024 that will require additional oversight and monitoring to ensure compliance to the regulation:
Expansion of Full Benefit Low Income Subsidy (LIS)
The IRA is expanding eligibility for individuals that qualified for partial benefits (135%-150% of the federal poverty level) allowing them full LIS benefits. For around 300,000 individuals, this translates to no deductible (which is $104 in 2023) and conversion from a coinsurance of 15% to flat cost-share for brands and generics. Oversight considerations include additional year end testing to ensure the accurate processing of claims for these individuals and additional monitoring of paid claims in 2024 to ensure deductibles and copays are calculating correctly.
Eliminating Catastrophic Enrollee Cost
For 2024, the enrollee out-of-pocket (OOP) limit is increased to $8000 but above that amount, members will no longer have an out-of-pocket responsibility for future claims. The responsibility of the current enrollee cost share (up to 5%) will now fall to the Plans. Individuals who reach this level of out-of-pocket spending will realize financial relief with no additional spend for the balance of the year. Again, oversight considerations include additional year end testing to ensure the accurate processing of claims for these individuals and additional monitoring of paid claims in 2024 to ensure accumulations and cost shares are calculating appropriately.
Limits Beneficiary Premium Increases
The IRA provides for an adjustment to the calculation of the base beneficiary premium starting in 2024 and effective through 2029. This adjustment limits premium increases to no more than 6% from the prior year. With the numerous IRA changes in 2024 including removal of catastrophic copays and in 2025 with OOP cap, this provision was a needed step to prevent these additional costs from being passed on to the beneficiary. Medicare prescription drug plans are going to need to collaborate with their actuaries on the impact of this additional IRA change to ensure any increases in beneficiary premiums are within IRA limits. From an oversight perspective, Medicare plan compliance teams will need to oversee the premium increases to ensure increases are within the IRA limits.
Prescription Drug Events (PDEs) Reporting Requirements
For CY2024 only, CMS has provided guidance on PDE reporting requirements for covered insulin products and adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP). These examples include the following:
- Reporting as Part D standard prescription drug coverage
- Reporting PDEs when the deductible does not apply
- Determining patient pay when the non-insulin coinsurance amount is less than the covered insulin product copay
- Reporting in the coverage gap
- Calculating and reporting the low-income cost-sharing subsidy (LICS) amount
- Special rules pertaining to straddle claims
Two memos have recently been published by CMS to assist Plans with implementation and oversight of these changes. The first memo was issued on May 16th, 2023, and is entitled “Prescription Drug Event Record Reporting Instructions for the Implementation of the Inflation Reduction Act for Contract Year 2024”. It provides several example calculations for the above scenarios and can be found at https://www.cms.gov/files/document/ira-2024-pdeguidance-final508g.pdf. The second memo was published on November 15th, 2023, and is entitled “Updates to the Drug Data Processing System (DDPS) for Benefit Year 2024”. This memo includes changes to existing edits, the addition of new edits, and the end dates to some existing edits. Oversight activities should include the above PDE scenarios and edit changes in CY2024.
As IRA changes will be forth coming in future years, it is suggested that Plans perform a full review of future contract year enhancements to determine impact to internal processes as well as to the enrollee experience.
BluePeak can help!
BluePeak can assist plan sponsors with ensuring the appropriate oversight and monitoring strategies are in place to ensure a successful CY2024. Email [email protected] for additional information.
