Week Ending August 20, 2022

Congress in Recess – but Much Work Remains When They Return

Congress is now in recess until after Labor Day. If they are running for re-election, all members of the House of Representatives and one-third of the members of the Senate are now back in their states campaigning.

When they return to Washington, they have a tremendous amount of work to do, including passing funding for the federal government for FY 2023. However, even before they left for their recess the expectation among many people in Washington is that they will not be able to pass new funding by the start of the new fiscal year, which is October 1. That means, once again, they will be passing temporary funding measures to keep the government open until they can agree on full funding legislation for the entire fiscal year.

There are also cuts in Medicare looming if Congress does not take action before the end of this year. See more on that below.

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President Signs Law to Lower Prescription Drug Prices into Law

Last week President Biden signed the Inflation Reduction Act into law. That is the legislation that contains the provisions that will allow Medicare to negotiate drug prices with the big drug companies and eventually lower prescription drug prices.

In case you missed it in last week’s update, here are the important measures in the bill that will help TSCL supporters, and all seniors in Medicare in the coming years. The provisions of the legislation will kick in over a period of years and we have listed them below in the order in which they will become effective.

Starting next year vaccines will be available with no co-pay or deductible under Medicare Part D.

The measure will exclude insulin products covered under Medicare Part D from applying to Medicare patient deductibles under the program, starting next year. It will also cap insulin copayments for Medicare patients to $35 a month for plan years 2023 through 2025 regardless of whether an individual has reached the initial coverage limit or out-of-pocket threshold. Medicare patients would also receive reimbursement for any excess cost-sharing or copayments made in the first three months of 2023.

It will expand Medicare Part D premium subsidies for low-income seniors to those between 135% and 150% of the poverty line starting Jan. 1, 2024.

The measure will also cap the out-of-pocket cost of prescription drugs under Medicare Part D for beneficiaries at $2,000 a year starting in 2025.

It will direct the Health and Human Services Department to establish a “Drug Price Negotiation Program” to negotiate a maximum price of high-cost prescription drugs beginning in 2026 for Medicare Part B, which covers medicines administered in a medical setting, and Part D, the program’s prescription drug benefit.

It will also require the Department of Health and Human Services (HHS) to identify 100 drugs without competition that have been on the market for seven years and biologics that have been on the market for 11 years, and that have the highest spending under Medicare.

HHS would select 10 drugs from that list — or the maximum number eligible for negotiation that year if less than that — for negotiation in 2026 increasing to 20 drugs by 2029.

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Drug Companies to Fight to Block Laws Lowering Drug Prices

While we do not have specifics yet, the big drug companies are already planning to do all they can to stop the new laws that will lower drug prices from taking effect.

According to a report in STATNews, “Even before the law passed, the pharmaceutical industry was threatening to sue to block the reforms, with both the brand drug lobby PhRMA and the Biotechnology Innovation Organization issuing veiled promises to ‘explore every opportunity’ or ‘explore all avenues’ to stop the law from taking effect.”

We will report more as this develops in the future. If they begin efforts to repeal the new laws, TSCL will do all we can to fight to stop them.

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Medicare Cuts Looming

There are significant cuts in Medicare spending that will take place unless Congress takes action before the end of this year. Below is an explanation of why these cuts could come. We realize it is a bit complicated, but we think you should know what could happen because if cuts are made, they may severely impact the healthcare of some, or all seniors.

Health care providers could be facing a significant reduction in Medicare payments if Congress fails to pass legislation to avert these decreases by the end of the year. These looming cuts are the result of several policies that have a combined effect of reducing Medicare payments by as much as 9%.

The first of these policies is the 2% Medicare Sequestration reduction. These are the result of a law passed in 2010 meant to help reduce the federal deficit. Any year that spending on certain government programs increases the federal deficit, cuts in the spending of that program must be made.

Congress paused sequestration cuts in 2020 and 2021 due to the COVID-19 pandemic but began phasing them in again in 2022. Sequestration resumed with a 1% reduction during the second quarter of the year and fully resumed a 2% reduction on July 1.

The second of these cuts is a 4% reduction associated with the American Rescue Plan Act (ARPA) of 2021. ARPA provided $1.9 trillion in economic relief for the COVID-19 pandemic. When passing this bill, Congress failed to include a waiver of the statutory “PAYGO” requirement to offset the cost of legislation that adds to the federal budget deficit.

As a result, cuts required by law were automatically set to take effect in 2022, including a 4% Medicare reduction. While Congress ultimately passed legislation that prevented this cut from taking effect in 2022, it did so by delaying the cut until 2023. This means that Congress must pass new legislation that either fully waives cuts for the American Rescue Plan Act or pass another delay for implementation.

The last reason for the looming cuts is the most complicated and we will not even try to explain, except to say that there will be a cut in payments to some medical specialties if Congress does not act.

Between the resumption of the 2% sequestration cut, the prospect of a 4% PAYGO cut, and the expiration of the 3% physician payment increase, providers are looking at a 9% reduction in Medicare payments in 2023 compared to 2022 without Congressional action.

TSCL opposes these cuts, and we will be watching carefully when Congress returns to work next month and do all we can to prevent them.

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As we continue moving toward a new normal in dealing with the Covid 19 pandemic, TSCL remains constant in our fight for you to protect your Social Security, Medicare, and Medicaid benefits.

For progress updates or for more information about these and other bills that would strengthen Social Security and Medicare programs, visit our website at www.SeniorsLeague.org or follow TSCL Facebook or on Twitter.