Thursday, February 9, 2023
- Medicare Part B Drug Inflation Rebates
- HHS Releases Initial Guidance for Medicare Prescription Drug Inflation Rebate Program
News
Medicare Part B Drug Inflation Rebates
Learn how we’ll calculate beneficiary coinsurance and provider payment under the Part B inflation rebates.
Effective January 1, 2023, the Inflation Reduction Act of 2022 requires drug companies that raise their prices for certain Medicare Part B drugs faster than the rate of inflation to pay Medicare a rebate. Starting April 1, 2023, beneficiary coinsurance for certain Part B drugs (including biological products) with prices that increased at a rate faster than the rate of inflation will be adjusted so beneficiary coinsurance is based on the lower inflation-adjusted payment amount. This new inflation rebate applies to certain Medicare Part B single source drugs and biological products, including biosimilar biological products.
Starting April 1, 2023, when the Medicare Part B payment amount for a Part B rebatable drug for a calendar quarter is higher than the inflation-adjusted payment amount:
- Patient coinsurance will be based on 20% of the inflation-adjusted payment amount for the quarter and will be reflected as a percentage (that is less than 20%) of the Medicare Part B payment amount.
- The Medicare portion of your payment will be increased for the difference between the Medicare Part B payment amount and patient coinsurance, minus any Part B deductible and sequestration.
- For example, if the Medicare Part B payment amount for the drug is $100 and the patient coinsurance is 18.525%, you would charge the patient $18.52. Typically, the Medicare portion of payment to practitioners for Part B drugs and biologicals is limited to 80%. When the patient coinsurance is adjusted, the percentage of the Medicare portion of payment to you will be higher. In this example, the percentage of the Medicare portion would be 81.475% or $81.48 of the Medicare Part B payment amount.
- You must charge patients the correct amount of coinsurance, which may change quarterly.
CMS will:
- Publish Medicare Part B payment amounts for all drugs and biologicals in the quarterly drug pricing files
- Publish patient coinsurance percentages for all drugs and biologicals, including adjusted patient coinsurance percentages if the Medicare Part B payment amount is greater than the inflation-adjusted amount, in the quarterly drug pricing files
- Show in the quarterly drug pricing files:
- Your Medicare portion of payment and the patient coinsurance percentage for each HCPCS code of a drug or biological, so you can charge patients correctly
- “Inflation-adjusted coinsurance” in the Notes column if the coinsurance for a Part B drug or biological should be less than 20% of the Medicare Part B payment amount
We’ll post the April drug pricing files in March. Learn more in the Medicare Part B Drug Inflation Rebates Paid by Manufacturers: Initial Memorandum, Implementation of Section 1847A(i) of the Social Security Act, and Solicitation of Comments guidance document.
HHS Releases Initial Guidance for Medicare Prescription Drug Inflation Rebate Program
As part of President Biden’s historic Inflation Reduction Act, the nation’s new prescription drug law, for the first time ever, drug companies will pay rebates to Medicare when their prescription drug prices increase faster than the rate of inflation for certain drugs dispensed to people with Medicare. HHS announced next steps outlining how the Department will implement the new Medicare Prescription Drug Inflation Rebate Program, which will lower drug costs for millions of Americans. CMS released the initial guidance detailing the requirements and procedures for the new program.
Read the full press release.
Subscribe to the MLN Connects® newsletter. You can read previous issues in the archive.
View the Medicare Learning Network® Content Disclaimer and Department of Health & Human Services Disclosure.
The Medicare Learning Network®, MLN Connects®, and MLN Matters® are registered trademarks of the U.S. Department of Health & Human Services (HHS).
