On January 1, a provision of the Inflation Reduction Act (IRA) went into effect requiring drug companies to pay rebates to Medicare when prescription drug prices increase faster than the rate of inflation for certain drugs given to people enrolled in the program. The provision also provides for lower Medicare Part B beneficiary cost sharing on such drugs beginning April 1, 2023.

The inflation rebate applies to Medicare Part B “rebatable” drugs, which the Centers for Medicare & Medicaid Services (CMS) defines as “a single source drug or biological product, including certain biosimilar biological products, which are generally injectable and infused drugs or biologicals administered by a physician in a doctor’s office or hospital outpatient setting.” 

Beginning April 1, the beneficiary coinsurance for rebatable drugs will be 20% of the inflation-adjusted payment amount, which will be less than what the beneficiary would otherwise pay in coinsurance.

CMS posts payment information each quarter for separately payable Part B drugs, including the Part B rebatable drugs subject to the coinsurance adjustments, in the Medicare Part B Quarterly Sales Pricing (ASP) file. For the first time, the April 2023 ASP public file will also include the coinsurance adjustments for certain Part B rebatable drugs as required by the IRA. The Part B drugs impacted by a coinsurance adjustment may change quarterly.

As beneficiaries pay less in coinsurance for certain Part B rebatable drugs, Medicare will pay providers and practices the difference between the Medicare allowed amount and the adjusted beneficiary coinsurance, after applying the Part B deductible and prior to sequestration, if applicable.

CMS has posted a list of drugs with adjusted coinsurance amounts for the quarter from April 1-June 30, 2023.

Providers and practices may want to check their billing systems to ensure that the new coinsurance amounts for these drugs are properly reflected.

For more information, please see the following from CMS:

• Fact Sheet: Medicare Prescription Drug Inflation Rebate Program Part B Rebatable Drug Coinsurance Reduction
• Fact Sheet: Medicare Prescription Drug Inflation Rebate Program Initial Guidance
• Reduced Coinsurance for Certain Part B Rebatable Drugs under the Medicare Prescription Drug Inflation Rebate Program

UPDATE (as of April 11, 2023)

CMS updated the list of drugs subject to reduced coinsurance for the calendar quarter April 1 – June 30, 2023. Seven drugs were  removed from the list:

• Elzonris
• Fetroja
• Folotyn
• Tecartus
• Winrho SDF
• Xipere
• Yescarta

CMS has a complete list of the 20 drugs subject to reduced coinsurance. 

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