{"id":33665,"date":"2024-12-04T15:51:19","date_gmt":"2024-12-04T20:51:19","guid":{"rendered":"https:\/\/avalere.com\/?p=33665"},"modified":"2025-01-06T15:42:41","modified_gmt":"2025-01-06T20:42:41","slug":"ira-negotiation-impact-on-part-b-beneficiary-oop-costs","status":"publish","type":"post","link":"https:\/\/advisory.avalerehealth.com\/insights\/ira-negotiation-impact-on-part-b-beneficiary-oop-costs","title":{"rendered":"IRA Negotiation Impact on Part B Beneficiary OOP Costs"},"content":{"rendered":"<p>The Inflation Reduction Act\u2019s (IRA) Medicare Drug Price Negotiation Program (MDPNP) allows the Centers for Medicare &amp; Medicaid Services (CMS) to negotiate Maximum Fair Prices (MFPs) for a subset of high-spend drugs. MFPs for the first 10 Part D negotiated products will take effect in 2026.<\/p>\n<p>Starting in 2028, physician-administered drugs covered under Part B will also be included in the MDPNP. The legislation defines the \u201cceiling\u201d for the MFP based on the non-federal average manufacturer price (non-FAMP) and the number of years since a drug\u2019s Food and Drug Administration approval. For Part B negotiated drugs, the MFP ceiling calculation is based on the lower of a manufacturers\u2019 average sales price (ASP) or the applicable percentage of the average non-FAMP. Additionally, Medicare fee-for-service (FFS) beneficiary coinsurance is lowered accordingly based on the MFP.<\/p>\n<p>Avalere evaluated the share of Medicare FFS beneficiaries most likely to benefit from the reduced out-of-pocket (OOP) costs stemming from the first 10 Part B drugs likely to be negotiated under the MDPNP.<a href=\"#_ftn1\" name=\"_ftnref1\">[1]<\/a><\/p>\n<h2>Supplemental Coverage in Part B<\/h2>\n<p>For drugs and services covered under Part B, Medicare FFS beneficiaries pay a 20% coinsurance amount after their deductible is met. However, many Medicare FFS beneficiaries have some source of supplemental coverage that helps with their OOP costs (e.g., employer-sponsored supplemental insurance, Medigap, Medicaid). Avalere found that approximately 88% of Medicare FFS beneficiaries in 2020 and 89% in 2021 had some form of supplemental coverage that helped cover part or all of their 20% coinsurance liability.<\/p>\n<h2>Impact of Negotiation on OOP Costs in Part B<\/h2>\n<p>Avalere estimated the first 10 Part B drugs likely to be subject to IRA negotiation based on the program methodology and historical Medicare FFS claims data. Avalere\u2019s analysis of 2020 and 2021 survey data showed that less than 1% of Medicare FFS beneficiaries in 2020 and 2% in 2021 used any of the first 10 Part B drugs likely to be selected for negotiation. Among the Medicare FFS beneficiaries using any of the first 10 Part B drugs likely to be negotiated, most have some form of supplemental coverage, primarily through Medigap plans and employer-sponsored coverage. Avalere estimated that the proportion of these beneficiaries with no supplemental coverage was 5% in 2020 and 6.1% in 2021. Consequently, Avalere finds that among all Medicare FFS beneficiaries, between 0.03% and 0.1% would experience OOP cost savings from the first 10 Part B drugs likely to be negotiated.<\/p>\n<h2>What\u2019s Next?<\/h2>\n<p>By February 1, 2025, CMS will announce the next 15 Part D drugs selected for negotiation in 2027, with Part B drugs becoming eligible for negotiation in 2028. CMS is expected to release draft guidance for Part B negotiations and the related MFP effectuation process in 2025.<\/p>\n<h2>Methodology<\/h2>\n<p>Avalere analyzed the 2020 and 2021 Medicare Current Beneficiary Survey (MCBS) data, including cost and utilization claims files, to estimate the proportion of Medicare FFS beneficiaries with supplemental coverage. Avalere then identified utilization of the first 10 Part B drugs likely to be negotiated under the MDPNP using the cost and utilization files. The MCBS data provides a representative sample of Medicare FFS beneficiaries and their claims. All results were weighted to reflect a national sample of Medicare FFS beneficiaries.<\/p>\n<h2>Learn More<\/h2>\n<p>To learn more about the impact of Medicare drug price negotiation, as well as other IRA drug pricing provisions,\u00a0<a href=\"https:\/\/pages.avalere.com\/Insights.html\">connect with an Avalere expert<\/a>\u00a0today.<\/p>\n<p><em>Funding for this research was provided by PhRMA; Avalere retained full editorial control.<\/em><\/p>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> Avalere estimates the first 10 Part B drugs likely to be negotiated include Orencia, Opdivo, Keytruda, Botox, Nucala, Ocrevus, Tecentriq, Cimzia, NPlate, and Entyvio.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Inflation Reduction Act\u2019s (IRA) Medicare Drug Price Negotiation Program (MDPNP) allows the Centers for Medicare &amp; Medicaid Services (CMS) to negotiate Maximum Fair Prices (MFPs) for a subset of high-spend drugs. MFPs for the first 10 Part D negotiated products will take effect in 2026. Starting in 2028, physician-administered drugs covered under Part B&hellip;<\/p>\n","protected":false},"author":31,"featured_media":31960,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[1001,1035],"content-categories":[129],"class_list":["post-33665","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights","tag-ira","tag-trending","content-categories-drug-pricing","entry","has-media"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>IRA Negotiation Impact on Part B Beneficiary OOP Costs | Avalere Health Advisory<\/title>\n<meta name=\"description\" content=\"Between 0.03% and 0.1% of Medicare FFS beneficiaries would experience lower OOP costs for the first 10 Part B drugs likely to be negotiated.\" \/>\n<meta name=\"robots\" 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