The third major modification: The law now requires drug costs manufacturers to pay rebates or face severe penalties if the prices of drugs covered by Part D and some by Part B rise faster than the rate of inflation.

Medicare will need months to figure out which price increases will result in rebates and how much each rebate will cost. However, it has been estimated by the Congressional Budget Office that this provision will save Medicare more than $56 billion over a ten-year period.

Since 1990, Medicaid has used a similar strategy. Dr. Cubanski stated, “It definitely has an effect on keeping spending under control.

The changes in the years to come will be more significant drug costs.

Medicare will limit Part D beneficiaries‘ annual out-of-pocket spending to $2,000 in 2025. Dr. Cubanski stated, “Most drugs today can cost $500 to $1,000 per month.” Or perhaps you take ten medications, which results in high out-of-pocket expenses.

In 2024, a form of cap will take effect even earlier. When beneficiaries reach the catastrophic expenditure threshold, Medicare will eliminate the 5% co-pay, effectively reducing out-of-pocket costs to approximately $3,250. The limit of $2,000 is set for the following year. Subsidies for low-income people will also become more accessible.

The fact that the new law requires Medicare to begin bargaining with drug manufacturers is probably the most significant policy change.

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