Medicare Prescription Drug Rebate Rule

The Inflation Reduction Act of 2022 is a comprehensive legislative package encompassing healthcare, tax, and climate change provisions. The law introduces measures to decrease drug spending by the federal government and lower prescription drug costs for individuals enrolled in Medicare.

In mid-March 2023, the Department of Health and Human Services (HHS) announced the first set of Medicare Part B covered prescription drugs to be impacted by provisions made within this legislation. These provisions allow for lower drug coinsurance on these specific drugs due to high manufacturer price increases over the allotted limit.

Below we review the implications of the Inflation Reduction Act and how you may be affected if prescribed one of the qualifying drugs.

What is the Medicare Prescription Drug Rebate Rule?

The Medicare prescription drug rebate rule requires drug manufacturers to pay rebates (or penalties) to Medicare if they increase the cost of drugs used by Medicare beneficiaries at a higher rate than inflation. This rebate will lessen the coinsurance amount required by the Medicare enrollee when receiving a drug covered by Medicare Part B. 

The Medicare inflation rebate provision uses 2021 as the baseline year for determining price changes relative to inflation. From there, the average inflation rate will determine which drugs are eligible for the penalty.

If prescribed an eligible drug, your typical 20% Medicare Part B copayment amount will be reduced.

Which Drugs Are Eligible for the Drug Rebate Penalty?

The first batch of eligible drugs are covered by Medicare Part B and are administered by a physician. If you receive any of these 27 prescription drugs, your out-of-pocket costs will reduce beginning in April 2023. On average, seniors prescribed a medication eligible for a rebate will save anywhere from $2 to as much as $390 per dose.

In addition to imposing a penalty on companies for raising their prices more quickly than inflation, this Medicare drug rebate rule steers other companies from doing the same to curb excessive drug price increases year after year.

According to a recent HHS study, 1,200 prescription drugs increased their prices more quickly than inflation in 2021. The goal of the rebate rule is to reduce this number significantly and reduce spending on drugs for Medicare enrollees.

The 27 drugs impacted include:

• Abelcet
• Akynzeo
• Atgam
• Aveed
• Bicillin C-R
• Bicillin L-A
• Carnitor
• Cytogam
• Elzonris
• Fetroja
• Flebogamma DIF
• Folotyn
• Fragmin
• Humira
• Leukine
• Minocin
• Mircera
• Nipent
• Padcev
• Rybrevant
• Signifor LAR
• Sylvant
• Tecartus
• Winrho SDF
• Xiaflex
• Xipere
• Yescarta

Adjustments to Drug Coinsurance

Traditionally, Medicare Part B coinsurance is 20% of the total bill once the Part B deductible has been met. This means you must pay 20% of the costs out-of-pocket. The Medicare prescription drug rebate rule lessens this coinsurance amount for anyone receiving a qualifying drug.

Coinsurance amounts for the first 27 drugs range from as low as 10.274% to 19.969% depending on the amount over inflation the drug price was increased. The chart below reveals each drug and its coinsurance amount for 2023.

How to Get Help With Medicare Prescription Drug Rebates 

If you receive any of the drugs listed above in an outpatient setting, you will notice a decrease in your out-of-pocket spending in the coming months. For beneficiaries looking to cut out-of-pocket costs, additional coverage options are available to help cover the cost of Medicare Part B coinsurance.

For individuals who wish to reduce their healthcare spending, Medicare Supplement plans are a great way to receive comprehensive coverage and overall reduce costs. Complete our online rate form or contact us at the number above to review plan options in your area, check your eligibility, and compare your options today.