On July 31, 2017, the Centers for Medicare and Medicaid Services (CMS) announced that Medicare Part D premiums will drop in 2018. The announcement states that the Part D national average monthly bid amount for 2018 will be $57.93, the 2018 Part D base beneficiary premium will be $35.02, and the de minimis amount will be $2.
This decrease is the first drop in five years, in part because of the bids submitted by drug plans for basic coverage in Part D and because rebates and other price concessions are projected to grow faster than drug costs. The decline comes amid reports of surging spending in Medicare on specialty drugs.
“This is encouraging news for the nearly 43 million seniors who are enrolled in the program,” said Health and Human Services Secretary Tom Price.
Part D offers “an abundance of competing choices in each region and uses cutting edge, cost-saving tools like pharmacy networks and home delivery,” Mark Merritt, president and chief executive officer of the Pharmaceutical Care Management Association, told Bloomberg BNA after the announcement.
National Average Monthly Bid Amount
The national average monthly bid amount is a weighted average of the standardized bid amounts for each stand-alone prescription drug plan and MA-PD plan described in section 1851(a)(2)(A)(i) of the Act. The weights are based on the number of enrollees in each plan. The reference month for the 2018 calculation was June 2017. As noted above, the national average monthly bid amount for 2018 is $57.93.
Base Beneficiary Premium
The base beneficiary premium is equal to the product of the beneficiary premium percentage and the national average monthly bid amount. The beneficiary premium percentage (“applicable percentage”) is a fraction, with a numerator of 25.5 percent and a denominator equal to 100 percent minus a percentage equal to (i) the total reinsurance payments that CMS estimates will be paid for the coverage year, divided by (ii) that amount plus the total payments that CMS estimates will be paid to Part D plans based on the standardized bid amount during the year, taking into account amounts paid by both CMS and plan enrollees.
De Minimis Amount
Plans will have from Monday, July 31, 2017 until 11:59 PM Pacific Daylight Time on Monday, August 7, 2017 to complete rebate reallocation. Starting Tuesday, August 8, 2017 until 11:59 PM Pacific Daylight Time on Friday, August 11, 2017, plans can inform CMS of their intent to participate in the de minimis program.
Under the Affordable Care Act (ACA) §3303(a), a prescription drug plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD) may volunteer to waive the portion of the monthly adjusted basic beneficiary premium that is a de minimis amount above the low income subsidy (LIS) benchmark for a subsidy eligible individual. The law prohibits CMS from reassigning LIS members from plans who volunteered to waive the de minimis amount. As noted above, the de minimis amount for 2018 will be $2.
This announcement is further evidence that Part D continues to provide beneficiaries with access to affordable prescription drug coverage. Year after year, the monthly premiums have been and continue to be regularly stable. Stable premiums combined with a wide range of plan choices ensure that Part D coverage remains available and affordable for seniors and people living with disabilities.
Medicare will release the actual premiums in mid-September, in time for the Oct. 15 to Dec. 7 open enrollment period. Beneficiaries should be on the lookout then for 2018 information from their own plan to see if their premiums are going up or down. They can decide whether they want to switch to a different company.