Medicare penalizes pharmaceutical companies for price increases that exceed inflation.

by Eve Chen; Edited by News Gate Team

President Joe Biden spoke about his administration’s plans to protect Medicare and lower health care costs, Thursday, the same day his administration released draft guidance of Medicare’s new plan to regulate drug prices.
Patrick Semansky/AP

The Centers for Medicare and Medicaid Service announced this week that pharmaceutical companies that increase the cost of prescription pharmaceuticals faster than the rate of inflation will be subject to penalties starting in 2025.

Additionally, Medicare participants on Part B medicines, which are normally prescribed by a doctor, may benefit starting on April 1 from more reasonable coinsurance costs, according to CMS officials.

The Inflation Reduction Act, which also allows the federal government to negotiate pricing for certain of Medicare’s most expensive pharmaceuticals, gives Medicare the right to offer rebates.

According to CMS Administrator Chiquita Brooks-LaSure, the federal statute “reduces out-of-pocket prescription expenses for Medicare beneficiaries and enhances the sustainability of the Medicare program for current and future generations.”

How will consumers benefit?

Enrollees won’t get checks or other direct payments from the rebate program. But recipients who get Part B drugs administered in a medical office will see some modest benefits.

Consumers typically must pay coinsurance equal to 20% of their Part B drug costs after reaching their deductible. If a drug company raises the drug price above the rate of inflation, a consumer’s coinsurance amount would be capped up to the inflation rate.

And in 2025, Medicare caps out-of-pocket spending at $2,000.

Are the rebate rules finalized?

The Centers for Medicare and Medicaid Service released draft guidance Thursday on the rebate program and will solicit feedback from the public over the next 30 days before finalizing details.

Earlier this week, the Health and Human Services Office of Inspector General issued a report flagging potential challenges for Medicare’s rebate program. It said Medicare would face challenges identifying which Part B drugs to select for rebates and accounting for other federal rebate programs.

by Eve Chen; Edited by News Gate Team

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