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Inflation Reduction Act: Healthcare Provisions

Client Alert

On August 16, 2022, President Joe Biden signed into law the Inflation Reduction Act (the “Act”), a landmark climate, healthcare, and tax bill. Though the Act’s climate provisions have received most of the media attention, the healthcare aspects of the Act present some of the most significant changes to the American healthcare system since the passage of the Affordable Care Act. Below is a summary of some of the most important healthcare aspects of the Act and how Ohioans will be impacted based on a state-specific impact report from the White House: 

  • Negotiation of Drug Pricing: For the first time, the U.S. Secretary of Health and Human Services will be required to negotiate directly with drug manufacturers over the price of some of the highest-cost drugs. This negotiation process is designed for drugs that have experienced a market failure; those drugs that have been approved by the FDA for at least nine years (or 13 years for biologics), have no approved generics or biosimilars, and are one of the 50 most expensive drugs on the market. Starting in 2026, the government will be able to negotiate the price of a small number of Part D drugs. The number of negotiable drugs will increase each year, and Part B drugs will become eligible for negotiation in 2029. As a reminder, Part D is the outpatient prescription drug benefit offered through private companies to anyone with Medicare. Part B is the Medicare outpatient benefit and covers drugs that would be administered by a healthcare provider in an outpatient setting or through durable medical equipment at home. Some drugs are covered under Part D and Part B but, generally, Part D plans cover a much wider array of drugs. If drug manufacturers choose not to negotiate at any time, they will be subject to an excise tax. Additionally, to prevent disincentivizing pharmaceutical companies from funding research and development for new drugs, new drugs coming to market will not be eligible for negotiation. 
  • Prescription Drug Inflation Rebates: To better regulate the rate at which drug prices increase, the Act requires drug companies to pay a rebate to Medicare for certain Medicare Part B & D drugs when the price of a drug increases faster than inflation. If a manufacturer does not pay the mandated rebate, they shall be subject to a civil monetary penalty of at least 125-percent of the rebate amount for that calendar quarter. 
  • Cap on Out-Of-Pocket Spending: Starting in 2025, the Act will establish a $2,000 annual cap on out-of-pocket spending for Part D plans. The cap includes a patient’s deductible. 
  • Limit on Monthly Cost-Sharing for Insulin Products: The Act limits monthly cost sharing for insulin products to $35 per month per prescription for people with Medicare Part D plans starting 2023. The original version of the Act contained a provision that would have limited cost-sharing for insulin to commercially insured patients as well. However, that provision was struck in the Senate and did not make it into the final version of the bill. The White House report shows that 140,000 Ohio Medicare beneficiaries used insulin in 2020. 
  • Extending ACA Subsidies: The Act would extend for three years (until 2025) the enhanced Affordable Care Act premium tax credits Congress passed last year as part of the American Rescue Plan Act (ARPA). If the Act had not passed, premiums would have increased by over 50-percent per year. Right now, about 260,000 Ohioans with ACA coverage are saving an average of about $810 annually from the ARPA subsidies that the Act continues. 
  • Increasing Access to Adult Vaccines: To increase the rate of vaccination for adults, the Act requires coverage of certain adult vaccinations under the Medicaid and CHIP programs in addition to eliminating or reducing cost-sharing for these vaccines. Additionally, zero coinsurance will apply for vaccines recommended by the Advisory Committee on Immunization Practices under Medicare Part D. About 181,000 Ohio Medicare beneficiaries received a Part D vaccine in 2020. 

The ramifications of the full Inflation Reduction Act will be apparent over the next 5-10 years as each provision becomes effective. According to projections from the Department of Health and Human Services (HHS), the White House did report that about 55,000 more Ohioans will have health insurance next year compared how many would have insurance without the provisions in the Inflation Reduction Act. 

BMD Healthcare attorneys will continue to provide updates on how each part of the Act is implemented and how providers will be impacted. For questions, please reach out to Daphne Kackloudis at, or Ashley Watson at

Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.