Cost Savings for Insulin Are in Order for Medicare Part B, D Enrollees

Medicare beneficiaries with diabetes are now on a path to potentially save millions in out-of-pocket costs on insulin this year under the Inflation Reduction Act (IRA). This massive savings certainly would have been true in 2020, as out-of-pocket costs for insulin under Medicare are currently capped at $35 per monthly prescription for part D enrollees.

Results from a recent U.S. Department of Health and Human Services (HHS) analysis shared that Medicare beneficiaries who use insulin would have saved $734 million in Part D and $27 million in Part B if these caps had been in effect in 2020. Overall, total savings would have been $761 million, or just over $500 per beneficiary with savings. About 1.5 million enrollees would have benefited from these savings.

This HHS analysis follows as prescription insulin costs were capped under the IRA for Medicare part D members on January 1. A similar cap for part B members will take effect on July 1, 2023.

Those enrolled in a Medicare Part D plan or a Medicare Advantage plan with a prescription drug coverage have no deductible for covered insulin products — such as injectable insulin, inhaled insulin, and disposable “patch” pumps — and have a copayment cap of $35 per month supply of each covered insulin product.

With part B, beneficiaries or those enrolled in a Medicare Advantage plan, who use an insulin pump furnished through durable medical equipment, will no longer have to pay a deductible for insulin and will have a copayment cap of $35 per month supply for their Part B covered insulin. Prior to the IRA, under Medicare Part B, beneficiaries were responsible for 20% of the cost after they met the Part B deductible, which may have been covered for some beneficiaries by supplemental coverage, the analysis said.

Also examined by the HHS were out-of-pocket spending on insulin using 2019 survey data for individuals with Medicare, Medicaid, or private insurance, and for those without health coverage. Nationally, the average out-of-pocket cost was $58 per insulin fill, typically for a 30-day supply. The average cost per fill among people who were uninsured for the entire year was $123, more than double the national average in 2019. Patients with private insurance or Medicare paid about $63 per fill on average.

These provisions for out-of-pocket costs can now benefit current Medicare enrollees who make up the estimated 37 million Americans (11.3 %) that have diabetes. According to the analysis, the states with the most people with Medicare projected to benefit from the insulin cost savings are Texas (114,000 beneficiaries), California (108,000) and Florida (90,000). North Dakota ($805), Iowa ($725), and South Dakota ($725) have the highest average annual out-of-pocket savings.

Effective January 1, 2024, one year after the $35 cap, eligibility for the Part D Low Income Subsidy (LIS) will expand. The IRA raises the income limit for certain people covered by Medicare for the full LIS from 135% of the Federal Poverty Level (FPL) to 150% of FPL, which will allow these enrollees to further reduce their out-of-pocket costs for insulin and other medications.

Based on the research evidence, the HHS stated these changes may produce downstream health benefits. Future research is encouraged to monitor the impacts of these new provisions.