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CMS News | HHS | USA | Medicare, and Medicaid | Health insurance | Healthcare News

Updated: Jun 27, 2023


CMS announced that the Inflation Reduction Act would reduce the cost of prescription drugs and premiums of healthcare plans

CMS announced that through the Inflation Reduction Act, the Biden administration aims to reduce prescription drug costs and make health insurance more affordable.

Through the act, the Biden administration is aiming to reduce the costs by

  • Lowering the prescription drugs costs in Medicare by negotiations with the manufacturers

  • In Medicare, by 2025, a yearly cap of $2,000 on out-of-pocket spending on prescription drugs

  • Aiming to reduce the premiums of healthcare plans through

CMS announced that before the Inflation Reduction Act, more than 5 million Americans with Medicare faced challenges in affording prescription drugs.

CMS further announced that the average cost of prescription drugs in the US is $1,500 and the costs of prescription drugs are usually higher in the US. Through the Inflation Reduction Act, CMS aims to increase competition and reduce the costs of prescription medicines.

Medicare announced that in 2023, it would negotiate on ten drugs on which Medicare spends the highest amount in Part D and has no competition. CMS further announced that Medicare will choose another 15 drugs in 2027 for price negotiation, 15 more drugs from Part B and Part D in 2028, and 20 more from Part B and Part D every year.

In 2025, a new Manufacturer Discount Program will be initiated; the manufacturers must provide discounts. A 10% discount has to be provided in the initial phase, and a 20% discount was mandated in the catastrophic phase.

Government reinsurance in the catastrophic phase will reduce from 80% to 20% for most branded products in Part D drugs. Currently, Medicare pays 80% of the costs for Part D drugs.

Manufacturers have to provide rebates if they increase the prices of the pharmaceuticals above the inflation.

The Inflation Reduction Act also aims to reduce the out-of-pocket costs of vaccines in Medicare, Medicaid, and the Children’s Health Insurance Program.

CMS announced that the people enrolled under Medicare drug coverage would not pay for the vaccines recommended by Advisory Committee on Immunization Practices (ACIP).

Vaccines recommended by ACIP will be provided at no cost for Americans enrolled in Medicaid and CHIP from October 1, 2023.


February 9, 2023

Initial guidance was released for Medicare Prescription Drug Inflation Rebate Program; it also seeks public opinion on key topics.

The U.S. Department of Health and Human Services (HHS) published the initial Medicare Prescription Drug Inflation Rebate Program guidance detailing the requirements and procedures.

As per the law, companies must pay rebates if the prescription drug prices are higher than inflation. The U.S., in general, pays a higher price for prescription drugs compared to other countries. The Biden administration announced that they have considered controlling the rise in the cost of prescription drugs as a priority.

From January 1, 2023, the first quarter has started, during which the companies are required to pay rebates if the prices are increased more than the inflation rate.

From April 1, 2023, it is expected that people with Medicare and Medicare Advantage are expected to pay a lower coinsurance for some Part B drugs.

From 2025, CMS aims to send the first invoices to drug companies for rebates.

The rebates must be paid to the Medicare Trust Fund if the drug prices increase more than the inflation. 80% of the prescription drug spending is for branded products, and the rebates are expected mainly from the branded drugs.

CMS further requested comments from the public on critical topics, including the process to determine the number of drug units for rebatable drugs and penalties for companies that fail to pay rebates.


HHS approved the 12-month postpartum expansion in California, Florida, Kentucky, and Oregon

The U.S. Department of Health and Human Services (HHS) approved the 12-month postpartum expansion of Medicaid and Children’s Health Insurance Program (CHIP) coverage in California, Florida, Kentucky, and Oregon. The Centers for Medicare & Medicaid Services (CMS) announced that nearly 126,000 families would benefit from this expansion.

The other states that have extended Medicaid and CHIP coverage from 60-days to 12 months were South Carolina, Tennessee, Michigan, Louisiana, Virginia, New Jersey, and Illinois. The CMS announced that it is working with the other state governments to expand the postpartum coverage and benefit 720,000 pregnant and postpartum individuals annually.

CMS, in its statement, announced that Medicaid covers 42% of childbirth in the U.S. As per the HHS and ASPE report, one in three pregnancy-related deaths were reported between one week and one year after childbirth. Further, it announced that these efforts are towards the commitment of HHS and the Biden administration to address maternal health outcomes.



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