Many payers expect IRA to have negative impact on Part D plans

Changes to the Medicare Part D program—including capping insulin copays and out-of-pocket spending and eliminating the 5% coinsurance requirement for the catastrophic phase—from the Inflation Reduction Act (IRA) could negatively impact payers, according to a survey of health plans.

The survey, conducted by Cencora’s Managed Care Network and presented at AMCP Nexus yesterday, asked 50 health payers in March for their initial reaction to changes to Medicare Part D. While payers disagreed about some of its impact, or were not certain of its potential effects, many payers agreed the changes would be negative to their interests.

Of the respondents, 44% of payers think the changes will have an adverse impact on their portfolio of Part D plans and 34% think it will have relatively limited impact. About 1 in 5 payers think they will need to reduce the number of plans they offer.

More than three-quarters of payers believe the IRA will necessitate somewhat to significantly more narrow drug formulary coverage, and 42% believe there will be greater utilization management in plans. About one-third of respondents expect greater utilization management for high-cost medications, and 16% believe utilization will change on a case-by-case basis.

Utilization management tools are put into place to mitigate costs through less expensive therapeutic alternatives like lower cost medications, step therapy and prior authorization.

“I expect that we are going to see slightly higher premiums,” said Kimberly Westrich, director of value and access strategy at Cencora, in an interview with Fierce Healthcare. “I expect we're going to see tightening of utilization management. I'm going to be watching to see if that financial relief really does show up for beneficiaries.”

Nearly half of all respondents said they expect premiums to increase at least 5%. No respondents expect premiums to be reduced lower than current levels.

The drug price negotiation program has stolen many of the headlines surrounding changes to Part D because of the IRA, but that doesn’t make other aspects of Part D redesign any less important, said Westrich.

A second survey for plans will be conducted in March, to which Westrich expects payers to respond more pessimistically about how the changes will impact payers’ bottom line.

“I think it’s possible that some of the payers that we talked to hadn’t really given a lot of serious thought yet,” said Westrich, referring to the survey conducted last March. “They hadn’t been putting their plan designs together and talking with their actuaries knowing what this is really going to look like. I’m really curious to see how this is going to change when we talk to them in early 2024.”

In Cencora’s survey, 66% of respondents were health plans, 18% were integrated delivery networks and 16% were from pharmacy benefit managers.