Decoding the Inflation Reduction Act With Adina Lasser

Show Notes

In June, the Alliance joined policymakers and patient advocates on Capitol Hill to discuss the unintended consequences of the Inflation Reduction Act (IRA). While the IRA offers benefits like capping out-of-pocket costs and reducing vaccine expenses, it also raises concerns about how plans are incentivized to control costs. These concerns are detailed in a recent report by the Alliance and Manatt.

Joining us today to explore the implications of the IRA for older adults, along with the steps CMS can take to protect beneficiaries, is the Alliance’s Public Policy Manager, Adina Lasser.

Episode Transcript

Katie Riley:

Welcome to This is Growing Old, the Alliance for Aging Research’s podcast, all about the common human experience of aging. I’m Katie Riley, Vice President of Communications here at the Alliance, and I’m your host for this episode.

The Alliance has been closely following the implications of the Infliction Reduction Act, especially as they pertain to older adults. While the IRA has allowed for some benefits to policyholders, such as a cap on out-of-pocket expenditures, decreasing vaccine costs, and providing the ability to smooth out costs over the plan year, significant concerns remain about the incentives that the IRA has created for plans to control costs. In June, we hosted an event on Capitol Hill featuring policymakers, patient advocates, health economists, and medical providers who discussed the unintended consequences of the IRA.

During that event, the Alliance released a report detailing actionable measures that CMS can legally take now without the need for congressional action to protect beneficiaries against harmful utilization management techniques. Today’s guest is an expert on all of these topics and no stranger to our podcast. She’s hosted others before, but is a first-time guest today. Adina Lasser, my colleague serves as Public Policy manager at the Alliance. I know this has been an especially busy summer for the Alliance, Adina, especially in the Public Policy space. So thank you for taking time for this conversation today.

Adina Lasser:

Yeah, thank you so much. I’m excited to be on the podcast and to be talking this through. I think this is really important information for beneficiaries, especially of the Medicare program.

Katie Riley:

Yeah. I think our listeners are going to walk away with a lot of information today, so why don’t we get right to it? Let’s dive into the questions.

Adina Lasser:

Perfect.

Katie Riley:

So how about, let’s start by grounding us a little bit in the Inflation Reduction Act, can you give us a brief overview of what it is and how it may impact older adults specifically?

“…we want to make sure that each person has the right plan for them.”

Adina Lasser:

Yeah, absolutely. So the Inflation Reduction Act is a comprehensive piece of legislation that spans a number of different sectors, and it was originally passed in 2022, and so it’s been almost two years. And it covers things from the healthcare side of things all the way to things like infrastructure, so it’s a very large piece of legislation. And I think, Katie, as you mentioned in the intro, for older adults specifically, there are a number of really positive things that we really like. For example, there’s a $35 cap on the cost of insulin free vaccines for any Medicare beneficiaries. Your out-of-pocket prescription costs are going to be only $2,000. There’s a cap on that out-of-pocket expenditure, and also beneficiaries are now going to be able to smooth out their costs over the plan year. So if you have a situation where you’re starting and right in January you get a very big medical bill, and you have a high deductible that you need to pay off, you can start to spread out those costs over the course of the year.

So hopefully for some people, that’s going to make a big difference and a big improvement. And there are also some things that we as the Alliance opposed because we were worried about the impacts that they’re having on older adults. And that’s things like, which we’ll get into I think in a little more detail soon, the Medicare Direct Negotiation program. And generally, there are some aspects of the Medicare Part D program, which is the part that pays for prescription drugs and covers prescription drugs got a complete overhaul and redesign. So that’s something that we’re on the lookout for seniors and older adults.

Katie Riley:

Yeah. I know we just came on, we’re on the heels of our June event where we talked with a lot of great experts and had just a wonderful attendance and a great conversation at that. And during that event, we released the report from Manatt Health that the Alliance created in partnership with that organization. I know, Adina, you were very in the weeds with that report and are our local guru on that one. But the report talks about the significant changes to the Part D prescription drug plan and that benefit. Can you break down what some of these changes are and why Medicare beneficiaries should be concerned?

Adina Lasser:

Yeah, absolutely. And the first thing that I want to note is, and I think, Katie, you also mentioned this, that there are a lot of changes coming. So we really want Medicare beneficiaries leading up to 2025 to take a second look at their plan. One thing that often happens is that somebody, when they first get on a Medicare program, for example, when they turn 65 or they get a qualifying condition, they pick a plan and then they just stick on it because it’s easier than changing every year. It takes a lot of research. It’s a hardship, but this year is the year to do it because we think that there are going to be a number of changes coming to everybody’s plan, and we want to make sure that each person has the right plan for them.

And the reason for that is pretty multifaceted, but essentially there are a lot of changing incentives for plans that came about in the redesign, and they collectively have more financial liability than they did before, which means that they’re going to be looking for ways to save costs, and that could impact what drugs they cover, what doctors, beneficiaries are able to see, and also the price of the premiums the beneficiaries pay to get their coverage. And the Manatt report lays out the underlying reasons for that that are found in the Inflation Reduction Act. For example, there’s something called the catastrophic coverage phase, which is once a beneficiary is passed a certain level, I think it’s $7,500 of costs. Plans used to be responsible for only 15% of that phase, and now they’ve gone up to 60% in 2025, and that was 2023 to 2025, so that’s a big change in two years.

Medicare also has the ability to negotiate a lower cost for drugs now, which is the first time that the program has been able to do that, and that means that plans will likely lose some rebate revenue. So essentially, plans are often paid based on the difference between what the drug’s cost is or list price is, what we call it, and what they negotiate their drug down to, so higher prices can actually benefit plans in many ways. And since we’re expecting to get those prices soon, it’s going to start to tumble. I think we’re reaching an inflection point where we’re going to start to see some of those impacts.

Katie Riley:

Great. That’s a really great way to break it down and understand how all this stuff in the back end works. I think we just see the prices and don’t think about how you arrive at that point, so thank you for that breakdown. Utilization management is a word that is going around a lot, especially at the Alliances where it’s something that we’re very concerned with. Can you talk a little bit about how utilization management impacts Medicare beneficiaries ability to access these prescription medications?

“…all of these policies are treating patients as an amalgam, and every patient is an individual.”

Adina Lasser:

Yeah. So even if we don’t know it, we are all unfortunately familiar with utilization management. Utilization management is how insurance companies control their spending. So some of it is normal and to be expected, and that’s things like dictating that you’re seeing certain practitioners or even making sure that you’re using a drug for its intended purpose and getting the intended effect, but there are lots of different kinds of it. There are a couple that we’re really concerned about. One is called step therapy, which essentially means that to get on a drug, you need to try and fail on a less expensive medication first. So that could be things like taking a steroid before you take some new innovative medication, and sometimes that’s fine, but what we’re really concerned about is when it goes against clinical guidelines or when it gets in between the physician and the patient and their relationship, and the decisions that they’re making together.

It also can be things like prior authorization where your doctor has to write you a letter. And overall, we just really want to make sure that a patient’s care is coming from the conversation that the patient is having with their physician and what the physician individually thinks would make sense for that patient. Because what we have to remember is that all of these policies are treating patients as an amalgam, and every patient is an individual.

Katie Riley:

All of these things are really important and they’re all happening in the background. But open enrollment is where this all comes to a head, and beneficiaries need to be looking into their plans. After they select a plan, how soon will these changes go into effect, and how soon will these changes to prescription drug prices and access take effect?

Adina Lasser:

Yeah. So 2025 is the big year. Some of them have already taken effect. For example, the no cost sharing vaccine has already gone into effect. The insulin cap of $35 has already gone into effect, but a lot of what we’re talking today starts in 2025, and then we’ll continue growing into 2026. Specifically the way the direct negotiation program is set up, there’s 10 drugs this year and there will be more in 2026, and more from year following.

Katie Riley:

So what steps can CMS take to protect Medicare Part D beneficiaries now? I know this is what the meat and potatoes of the Manatt report is. Can you go into that a little bit?

Adina Lasser:

Yeah, absolutely. So one of the things that I think we’re hearing a lot is policymakers saying, “We don’t want to get into the fray of the IRA,” and they don’t have to, essentially. I mean, CMS has the ability to make a number of changes to protect beneficiaries now without congressional intervention, and we think that they need to be doing that, and we need to be taking proactive steps to put guardrails in place to ensure that no harm is coming to older adults, and that people aren’t progressing in their disease or something similar negative impacts. So we have a couple of ideas and things that we’re pushing. First is we’re asking the agency to define medically appropriate, and what medically appropriate situations are for utilization management. So at this moment, the agency has said to make changes to your prescription drug formulary, which is the list of drugs that a plan covers, those changes need to be medically appropriate and need to have a reasonable justification, but they haven’t defined what that is, and so we need to know what does the agency consider to be medically appropriate.

We’re also asking that CMS update and enhance oversight of prescription drug plans. Essentially what the agency has said so far is that they’re planning to monitor things, but we don’t know what that means reasonably. We don’t know what data they’re using. We don’t know how quickly they’ll be able to respond. We don’t know if a plan goes outside of what’s allowed, what the repercussions for that will be. And all of these are really important for beneficiaries because the more that the agency has oversight into what the plans are doing, the quicker they can be to respond, and the more agile they can be to respond. So we need some clarification on what that looks like, and we also need to have it where the agency publishes the plan for what that will be, and then there’s time for public comment on it.

We need for beneficiaries, for policymakers, for patient advocates to be able to comment on what that means and what that plan looks like. We also really want the agency to enhance beneficiary education and transparency. There is a resource called Plan Finder where you can go in and look and see, “At this pharmacy, how much will my drug cost if I’m on this specific plan?” What it does not say is if that drug is subject to some kind of utilization management. So we want that to be right at the forefront and to have beneficiaries fully informed and able to make the right choices for them, we also are asking that the agency expand their annual health equity analysis to include utilization management, and that’s to ensure that any impacts that are happening are not having a distorted effect on minority populations or people in rural communities, or underserved people either.

Katie Riley:

Yeah. This all makes a lot of sense, and as we noted in the report, these are things that they could possibly do today and are legally able to do. Why do you think that it hasn’t happened yet?

“Educating yourself, I think is the number one thing you can do.”

Adina Lasser:

A little unclear. We’ve met with the Medicare team a couple of times. We’ve consistently gotten answers like, “We’ve heard of this. We don’t think there’s a problem. We know this is coming.” So frankly, those answers just aren’t acceptable. Actually, step therapy prior authorization, unfair to utilization management has not been a problem in the Medicare program in the past, and so it’s almost an identity thing that the Medicare program doesn’t see themselves as having this issue, but we know now that we’re at an inflection point as all of these changes from the IRA go into effect.

Katie Riley:

All right. Final question, what can our listeners who are hearing all of this and trying to process it, what can they do to ensure that they are protected under the IRA and where can they find more information with updates on the Medicare price negotiation program?

Adina Lasser:

Absolutely. Yeah. Educating yourself, I think is the number one thing you can do. I think anyone listening to this podcast is so far ahead of what we might expect, but there’s a lot of tools for beneficiaries. Your annual explanation of benefits is a good spot to start. That plan finder tool that I mentioned, and then also we’ll be talking on the Alliance website about all of the relevant policy updates for our older adults.

Katie Riley:

Yeah, great. This is wonderful information. Very useful to anyone listening or listening on behalf of a loved one. Adina, thank you so much for all of this great info. I know you and the team will continue to update us and release new information as you monitor this, especially through open enrollment season. So thank you.

Adina Lasser:

Thank you. Thank you for having me.

Katie Riley:

Yes. And as always, be sure to check out the Alliance’s website, agingresearch.org, to stay updated on the Policy team’s work in this important area. Thank you for tuning in to This is Growing Old.