CMS has decided not to unveil preliminary Medicare Part D premiums as it normally does in July, hoping a new voluntary demonstration it unveiled Monday (July 29) will bring premiums down even though average plan bids more than doubled for next year. The agency announced the bid increases Monday and warned that based on that information, the base beneficiary premium could increase by $2.08 to $36.78 for Part D enrollees in 2025.
CMS hopes the new voluntary Part D Premium Stabilization Demonstration will stabilize premiums by facilitating premium stability and addressing plan bid variation thatâs likely to be greater among stand-alone prescription drug plans (PDPs) due to a redesign of the Part D benefit set to take effect in 2025, and the agency hopes to get plans to quickly commit to the demonstration by Monday (Aug. 5).
The announcement comes roughly a month after Biden administration domestic policy advisor Neera Tanden said HHS was working to identify ways to address the potential increases in Part D premiums.
CMS revealed its decision not to release the preliminary premium information this month in a quietly issued frequently asked questions document it put out Monday.
The FAQ says CMS will calculate preliminary information later this summer, and the final premium information will be released in September. That timing of the revised preliminary data potentially could coincide with the Democratic National Convention, during which industry sources speculate the administration might unveil its negotiated prices for the first tranche of Part D drugs as part of speeches touting the new drug negotiation program in Medicare and Democratsâ steps to lower drug prices.
In the FAQ, CMS says plan premium information will be impacted by participation in the newly unveiled voluntary demonstration. âTherefore, CMS must wait until plans inform CMS of their intent to participate in the demonstration by August 5, 2024. CMS will then work to calculate preliminary average premiums.â
The FAQ adds that once offerings are finalized, CMS will release final Part D premiums at the individual plan level in September, as it has in the past, through the 2025 MA and Part landscape after Part D plan sponsors have completed all steps to finalize their 2025 bids.
Joel White, president of the Council for Affordable Health Coverage (CAHC), says that while politicians had said the IRA would limit the growth of the base beneficiary premium in Part D to 6% per year from 2024 through 2029, thatâs not whatâs taking place.
âCMS is using extraordinary measures to ensure premiums donât skyrocket before the election. To do so, they are using questionable regulatory authority to raid Medicareâs trust fund (SMI) to buy down premiums. Itâs a band aid that only temporarily solves the problem by shifting costs onto taxpayers,â White told Inside Drug Pricing.
âHad Congress not raided Medicare to pay for other programs, it might have avoided the need to launch this last-minute demo now. Congress should ensure that any Medicare savings stays in the Medicare program and start lowering drug plan costs, not raising them,â White added.
A report published earlier this month by CAHC found that standalone Part D plan premiums have already jumped by about 21% on average in 2024 due to Part D redesign removing 5% beneficiary cost sharing above the catastrophic level and placing that risk onto plans. The report says $35 cap on monthly insulin costs and requirements for plans to add pharmacy price concessions to the negotiated prices are also contributing to premium increases.
CMS says the new voluntary demo will help manage year-over-year changes to the base premium for Medicare Part D enrollees once the Part D redesign is effective.
The agency announced the demo on Monday as it released preliminary technical Part D bid information for 2025 to assist Part D plan sponsors as they finalize plan offerings for Part D and Medicare Advantage (MA) and prepare for open enrollment in Medicare.
The national average bid amount will more than double from $64.28 in 2024 to $179.45 in 2025, an increase CMS says aligns with its expectations due to the Part D redesign encouraging âbetter cost management Part D plan sponsors through a larger risk-adjusted government Part D subsidy payment upfront rather than cost reconciliation on the back end based on beneficiary costs.â
But CMS says the increase in the average bid amount doesnât mean Part D premiums will increase by a similar amount. The agency notes that most of the increase represents funds moving from reinsurance payments to upfront payments in the form of the government subsidy to plans– and the preliminary estimated average subsidy to plans will be $142.67 in 2025.
The voluntary demonstration will test whether additional changes to policy help to steady premiums for stand-alone PDPs in a way that lends to more predictable options for people with Medicare Part D coverage, more gradual plan enrollment changes and the accumulation of experience plan sponsors may use for bidding in future years.
The demonstration will also test whether more premium stabilization and financial protection for stand-alone Part D plan sponsors improves the efficiency and economy of the Part D program as it transitions into the revamped benefit model.
âThe Part D Premium Stabilization Demonstration will enable people with Medicare prescription drug coverage to make enrollment decisions best suited to their prescription drug needs,â CMS says. âGiven the meaningful protection offered to consumers, this voluntary demonstration is structured to encourage all stand-alone Part D plan sponsors offering Part D prescription drug plans to participate to provide stability across the entire Part D market.â
The demonstration will involve three elements, CMS says.
The first element is a uniform reduction of $15 CMS will apply to the base beneficiary premium for all participating stand-alone PDPs. In the event this reduction would result in a planâs total Part D premium, or the sum of the Part D basic and supplemental premiums, going below $0, the planâs basic Part D premium will be reduced only to the point where the planâs total Part D premium equals $0.
The second element is a year-over-year increase limit of $35 that will be placed on a planâs total Part D premium and is meant to target variation.
The third element is a change to risk corridors to provide for greater government risk sharing for potential plan losses.
A major concern from the drug industry and its supporters about the Inflation Reduction Actâs Part D redesign provisions has been that it will raise premiums for seniors and produce the opposite effect on drug prices Democrats sought when the law was enacted in 2022.
CMS Punts Part D Premium Announcement, Hopes New Demo Will Bring Down Rates
bgov.com
August 1, 2024 3:50 pm
CMS has decided not to unveil preliminary Medicare Part D premiums as it normally does in July, hoping a new voluntary demonstration it unveiled Monday (July 29) will bring premiums down even though average plan bids more than doubled for next year. The agency announced the bid increases Monday and warned that based on that information, the base beneficiary premium could increase by $2.08 to $36.78 for Part D enrollees in 2025.
CMS hopes the new voluntary Part D Premium Stabilization Demonstration will stabilize premiums by facilitating premium stability and addressing plan bid variation thatâs likely to be greater among stand-alone prescription drug plans (PDPs) due to a redesign of the Part D benefit set to take effect in 2025, and the agency hopes to get plans to quickly commit to the demonstration by Monday (Aug. 5).
The announcement comes roughly a month after Biden administration domestic policy advisor Neera Tanden said HHS was working to identify ways to address the potential increases in Part D premiums.
CMS revealed its decision not to release the preliminary premium information this month in a quietly issued frequently asked questions document it put out Monday.
The FAQ says CMS will calculate preliminary information later this summer, and the final premium information will be released in September. That timing of the revised preliminary data potentially could coincide with the Democratic National Convention, during which industry sources speculate the administration might unveil its negotiated prices for the first tranche of Part D drugs as part of speeches touting the new drug negotiation program in Medicare and Democratsâ steps to lower drug prices.
In the FAQ, CMS says plan premium information will be impacted by participation in the newly unveiled voluntary demonstration. âTherefore, CMS must wait until plans inform CMS of their intent to participate in the demonstration by August 5, 2024. CMS will then work to calculate preliminary average premiums.â
The FAQ adds that once offerings are finalized, CMS will release final Part D premiums at the individual plan level in September, as it has in the past, through the 2025 MA and Part landscape after Part D plan sponsors have completed all steps to finalize their 2025 bids.
Joel White, president of the Council for Affordable Health Coverage (CAHC), says that while politicians had said the IRA would limit the growth of the base beneficiary premium in Part D to 6% per year from 2024 through 2029, thatâs not whatâs taking place.
âCMS is using extraordinary measures to ensure premiums donât skyrocket before the election. To do so, they are using questionable regulatory authority to raid Medicareâs trust fund (SMI) to buy down premiums. Itâs a band aid that only temporarily solves the problem by shifting costs onto taxpayers,â White told Inside Drug Pricing.
âHad Congress not raided Medicare to pay for other programs, it might have avoided the need to launch this last-minute demo now. Congress should ensure that any Medicare savings stays in the Medicare program and start lowering drug plan costs, not raising them,â White added.
A report published earlier this month by CAHC found that standalone Part D plan premiums have already jumped by about 21% on average in 2024 due to Part D redesign removing 5% beneficiary cost sharing above the catastrophic level and placing that risk onto plans. The report says $35 cap on monthly insulin costs and requirements for plans to add pharmacy price concessions to the negotiated prices are also contributing to premium increases.
CMS says the new voluntary demo will help manage year-over-year changes to the base premium for Medicare Part D enrollees once the Part D redesign is effective.
The agency announced the demo on Monday as it released preliminary technical Part D bid information for 2025 to assist Part D plan sponsors as they finalize plan offerings for Part D and Medicare Advantage (MA) and prepare for open enrollment in Medicare.
The national average bid amount will more than double from $64.28 in 2024 to $179.45 in 2025, an increase CMS says aligns with its expectations due to the Part D redesign encouraging âbetter cost management Part D plan sponsors through a larger risk-adjusted government Part D subsidy payment upfront rather than cost reconciliation on the back end based on beneficiary costs.â
But CMS says the increase in the average bid amount doesnât mean Part D premiums will increase by a similar amount. The agency notes that most of the increase represents funds moving from reinsurance payments to upfront payments in the form of the government subsidy to plans– and the preliminary estimated average subsidy to plans will be $142.67 in 2025.
The voluntary demonstration will test whether additional changes to policy help to steady premiums for stand-alone PDPs in a way that lends to more predictable options for people with Medicare Part D coverage, more gradual plan enrollment changes and the accumulation of experience plan sponsors may use for bidding in future years.
The demonstration will also test whether more premium stabilization and financial protection for stand-alone Part D plan sponsors improves the efficiency and economy of the Part D program as it transitions into the revamped benefit model.
âThe Part D Premium Stabilization Demonstration will enable people with Medicare prescription drug coverage to make enrollment decisions best suited to their prescription drug needs,â CMS says. âGiven the meaningful protection offered to consumers, this voluntary demonstration is structured to encourage all stand-alone Part D plan sponsors offering Part D prescription drug plans to participate to provide stability across the entire Part D market.â
The demonstration will involve three elements, CMS says.
The first element is a uniform reduction of $15 CMS will apply to the base beneficiary premium for all participating stand-alone PDPs. In the event this reduction would result in a planâs total Part D premium, or the sum of the Part D basic and supplemental premiums, going below $0, the planâs basic Part D premium will be reduced only to the point where the planâs total Part D premium equals $0.
The second element is a year-over-year increase limit of $35 that will be placed on a planâs total Part D premium and is meant to target variation.
The third element is a change to risk corridors to provide for greater government risk sharing for potential plan losses.
A major concern from the drug industry and its supporters about the Inflation Reduction Actâs Part D redesign provisions has been that it will raise premiums for seniors and produce the opposite effect on drug prices Democrats sought when the law was enacted in 2022.