Part D Bid Will Fall in 2022, Reflecting Prior Years’ Trends

CMS’s annual release of Medicare Part D payment benchmarks and other bid-related information for the coming plan year tells pretty much the same story as in years past. The national average bid amount will continue to go down, while reinsurance amounts will continue to rise and premiums will see a slight increase.

“It’s just a continuation of things that we’ve seen for a while now. Reinsurance was relatively flat from 2018 to 2020, but it’s been going up” as the expanded use of high-cost therapies leads to higher catastrophic-phase spending, explains Tom Kornfield, senior consultant with Avalere Health. That trend has been closely tracked by the Medicare Payment Advisory Commission, which continues to advocate for a Part D redesign. As Congress considers drug pricing legislation, such information could provide “more support for folks who want to restructure the Part D benefit,” suggests Kornfield.

“If you look at the components of the direct subsidy and how they changed this year, it was very similar to how they changed from 2020 to 2021,” adds Shelly Brandel, a principal and consulting actuary with Milliman. “The increases in the national average reinsurance subsidy have been higher than the increase in total program costs, so that component of the direct subsidy has been trending higher than other components and the percentage increase was the same for both years.”

The national average reinsurance subsidy amount — which helps determine the average monthly premium and is designed to protect plan sponsors against unpredictable swings in pharmacy spending — jumped 7% from $80.80 in 2020 to $86.58 in 2021. For 2022, it will go up by another 7% to $92.68.

Meanwhile, the national average monthly bid amount will continue its downward trajectory. Marking the second-largest decrease in the last five years, the national average bid amount will drop by more than 11% to $38.18 (see table, below).

“I think the Part D market continues to be very competitive, and the increases in the reinsurance subsidy help to decrease the national average bids,” observes Brandel.

In a press release accompanying the benchmark information, CMS projected that the average monthly premium for basic Part D coverage next year will be “approximately $33” or 4.9% more than the average monthly premium of $31.47. CMS this time last year estimated that the average premium for 2021 would be $30.50.

While that looks like a notable increase, the Part D base beneficiary premium — which is the average expected premium based on plans’ bids — will go up by just 1% to $33.37. CMS’s projected premium of $33 accounts for the effect of enrollees switching from higher-premium plans to lower ones.

In other words, CMS doesn’t expect to see as much as switching as it did last year and “because of that thinks the premium is going to be pretty close to what was in the bids,” explains Kornfield. “But it’s all an estimate.”

Lauren Flynn Kelly Managing Editor, Radar on Medicare Advantage

Lauren has been covering health business issues, including drug benefits and specialty pharmacy, for more than a decade. She served as editor of Drug Benefit News (the predecessor to Radar on Drug Benefits) from 2004 to 2005 and again from 2011 to 2016, and now manages Radar on Medicare Advantage. Lauren graduated from Vassar College with a B.A. in English.

Related Posts

https://www.mmitnetwork.com/wp-content/uploads/2021/12/WordPress-Featured_AdobeStock_183561967.jpg
December 2

Obesity Management Targets Complex Disease via New Drugs, Better Awareness

Read More
https://www.mmitnetwork.com/wp-content/uploads/2021/12/AdobeStock_198051301-scaled.jpeg
December 2

HHS Rule Not Only Empowers Patients but Also Benefits Other Industry Stakeholders

Read More
https://www.mmitnetwork.com/wp-content/uploads/2021/10/WordPress-Featured-Image-payer-portrait.jpg
December 2

MMIT Payer Portrait: Cambia Health Solutions

Read More

GAIN THERAPEUTIC AREA-SPECIFIC INTEL TO DRIVE ACCESS FOR YOUR BRAND

Sign up for publications to get unmatched business intelligence delivered to your inbox.

subscribe today