Premiums

‘Sleeper Issue:’ How Part B Drugs May Be Impacted by Medicare Part D Redesign

Physician-administered drugs could catch some windfall due to the Inflation Reduction Act’s Medicare Part D redesign.

Much time and energy has been focused on thinking about how drug pricing, rebating and Part D plan design may shift due to changes set to finish taking effect in 2025, including new caps on enrollee out-of-pocket spend and more liability falling on plans rather than taxpayers.

But a “sleeper issue here is what all of this is going to mean for Medicare Part B drugs,” said Avalere’s Kesley Lang on a January webinar on the health policy outlook for the new year.

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Premium Rate Review: A Look at State Authority

Most states have authority to review premium rates for comprehensive, Affordable Care Act-compliant health plans in the individual and small group markets, while only a few have such authority in the large group market, according to an analysis published by the Georgetown University Center on Health Insurance Reforms. Additionally, the analysis found that while a “healthy minority of states” have the authority to question the rates that insurers negotiate with providers and suppliers, many struggle to actually do so.

The ACA, enacted in 2010, established the health insurance rate review program that requires the review and disclosure of “unreasonable” rate increases. As of August 2023, 43 states have authority to review and require changes to or disapprove proposed rates in the individual market, whereas only 26 states had such authority in 2010. Eight states — Arizona, California, Idaho, Indiana, Missouri, Montana, Texas and Wisconsin — have authority to require insurers to review proposed rates in the individual market, but they cannot require changes or disapprove the rates. Thirty-eight states currently have prior authority over rates in the small group market.

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Many States Can Conduct Robust Rate Reviews; Why Aren’t More Doing So?

Although a “healthy minority” of states have the authority to conduct enhanced reviews of proposed premium rates — in which they evaluate the rates that health insurers negotiate with providers — just a small handful are doing so, according to a new analysis.

A variety of barriers are preventing state regulators from fully flexing their rate-review muscles, including industry opposition, according to one of the researchers who produced the analysis. And although that opposition historically has included insurers, there’s an argument to be made that the sector should change its tune.

“I think the health plans should embrace this kind of regulation, because when you look at the hospital sector and how increasingly consolidated it is, and how so many hospitals and health systems are using their market power to demand ever-higher reimbursement rates in the commercial market…health plans are really powerless to push back, because these hospitals are must-have participating providers” in health plan networks, says Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms (CHIR).

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A Closer Look at the Medicare Part D Landscape

As of 2023, about 50.5 million Medicare beneficiaries are enrolled in a plan with Part D prescription drug coverage, with 44% in stand-alone Prescription Drug Plans (PDPs) and 56% in Medicare Advantage Prescription Drug Plans (MA-PDs), according to a KFF analysis.

The three largest Part D insurers by market share — UnitedHealth Group, CVS Health Corp. and Humana Inc. — account for 57% of enrollment in 2023. More than half of UnitedHealth’s and Humana’s Part D enrollees chose MA-PDs, while the majority of CVS Health, Centene Corp. and The Cigna Group Part D enrollees are in PDPs.

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Employer Plans in 2023: Average Premium Rises 7%, Abortion Coverage Remains Limited

The average annual premium for employer-sponsored health insurance in 2023 was $8,435 for single coverage and $23,968 for family coverage, a 7% increase from 2022, according to the Kaiser Family Foundation 2023 Employer Health Benefits Survey. On average, premiums for single and family coverage grew 22% since 2018. Over the past 10 years, the growth seen in the average premium for family coverage outpaced the rate of inflation (47% vs. 30%), whereas the average family premium and average wages grew at comparable rates (47% vs. 42%).

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News Briefs: Benchmark ACA Premium to Rise 4% in 2024

In 2024, the average monthly premium for a benchmark silver plan on the federal Affordable Care Act exchange will rise by 4% compared to 2023, CMS revealed on Oct. 25. Premiums for a benchmark plan, or the average second-lowest-cost silver tier plan, are used to calculate advance premium tax credits (APTC) that rise in tandem with premium rates. CMS noted that the year-over-year benchmark plan premium increase of 4% between 2023 and 2024 is the same as the increase seen between 2022 and 2023. Also continuing next year will be enhanced subsidies that make ACA exchange plans much more affordable than they were before the American Rescue Plan Act (ARPA) of 2021. To that end, the average benchmark plan rate after premium tax credits are applied, for a 40-year-old at 150% of the federal poverty level, will continue to be $0 in 2024 — compared to $55 before ARPA was enacted.

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News Briefs: Average Employer Plan Premium Set to Rise 7%

The average annual premium for employer-sponsored health insurance this year increased by 7% for single coverage and family coverage, reaching $8,435 and $23,968, respectively, according to the KFF Employer Health Benefits Survey. The report, released on Oct. 18, noted that workers’ wages increased by 5.2% and inflation rose by 5.8% in 2023. The average annual increase last year was 2% for single coverage and 1% for family coverage. KFF’s survey, now in its 25th year, includes private and non-federal public employers with three or more workers.

Customer satisfaction with health insurance increased to a record-high score, according to the American Customer Satisfaction Index (ASCI) Insurance and Health Care Study published on Oct. 17. Humana Inc. had the highest score (82 out of 100), followed by UnitedHealthcare (78) and CVS Health Corp.-owned Aetna (77). ASCI’s report was based on interviews with 12,849 customers between October 2022 and September 2023 on subjects such as the range of plans available, ease of submitting a claim and access to doctors and hospitals. ASCI was founded in 1994 by researchers at the University of Michigan as well as the American Society for Quality in Milwaukee, Wisconsin, and CFI Group in Ann Arbor, Michigan.

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Enrollees Will Face Fewer Medicare PDP Options, Higher Average Premiums in 2024

During the 2024 Medicare Annual Election Period that starts on Oct. 15, a total of 708 stand-alone Prescription Drug Plans will be available for beneficiaries in 2024 nationwide, a 12% drop from 2023. Only 126 PDPs will be offered without a premium to enrollees receiving the Low-Income Subsidy (LIS) in 2024, compared with 191 PDPs in 2023.

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Stand-Alone PDP Options Continue to Dwindle for 2024, While Premiums Rise

The stand-alone Prescription Drug Plan (PDP) market — which was already in decline — is poised to take even more hits due to regulatory and legislative changes that are taking effect in 2024 and beyond, according to industry observers. Indeed, one expert who analyzed data from CMS’s 2024 Medicare Advantage and Part D “landscape files” predicts that “a lot of people are faced with pretty significant premium increases” next year.

There’s a complicated calculus driving that trend, explains Tom Kornfield, a senior consultant at Avalere Health. But both he and equities analyst George Hill agree that the Inflation Reduction Act of 2022 (IRA) is a major factor.

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Enrollees Will Face Fewer Medicare PDP Options, Higher Average Premiums in 2024

During the 2024 Medicare Annual Election Period that starts on Oct. 15, a total of 708 stand-alone Prescription Drug Plans will be available for beneficiaries in 2024 nationwide, a 12% drop from 2023. Only 126 PDPs will be offered without a premium to enrollees receiving the Low-Income Subsidy (LIS) in 2024, compared with 191 PDPs in 2023.

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