Dropping Part D Bids May Mean Plan Underpayment in 2021

In its annual release of Medicare Part D payment benchmarks and other bid-related information for the coming plan year, CMS on July 29 reported that the average monthly premium for basic Part D coverage will increase just 50 cents in 2021, while the national average monthly bid amount will continue its downward trajectory, dropping nearly 10% to $43.07.

Tom Kornfield, senior consultant with Avalere Health, explains that relative to prior yearly changes, the reinsurance subsidy — which funds 80% of all Part D costs for beneficiary expenses above the catastrophic threshold — went up more than the bid amount went down. “Essentially what we’re seeing is, plans had been projecting relatively flat or very small increases in the reinsurance, but for next year [CMS] projected a 7% increase in the reinsurance amount,” he says.

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