Each year, the Centers for Medicare & Medicaid Services (CMS) uses market and industry factors to determine the annual Medicare Part B premium. Among the details that CMS must account for, there are the projected costs that the Medicare program is likely to incur in the next year to keep the program solvent. This can include the costs of specific medications and services. Actual costs can differ with market changes, and sometimes, CMS’ projections can be off. For 2022, Medicare expects to see sizable savings, and CMS has announced it will pass these savings on to Medicare beneficiaries.
Any claims, facts, or figures in this article are taken from CMS’ May 27, 2022, press release, unless linked elsewhere.
Two things occurred after CMS set the 2022 Part B premium that led to expected savings for Medicare beneficiaries. First, Aduhelm, an expensive Alzheimer’s disease medication covered by Medicare Part B, saw a price drop of over 50 percent. The drug had cost an average cost of $56,000 per patient annually but dropped to an average of $26,200 annually. Next, CMS finalized Medicare coverage for Aduhelm and similar FDA-drugs in the future. Previously, there had not been a national coverage determination for this drug, so there was no set coverage.
In early 2022, U.S. Department of Health & Human Services (HHS) Secretary Xavier Becerra instructed CMS to reassess the 2022 Part B premium as a result of these actions. During their reexamination of the premium, CMS found that the program should see lower-than-anticipated spending.
I’m instructing [CMS] to reassess the recommendation for the 2022 Medicare Part B premium, given the dramatic price change of the Alzheimer’s drug, Aduhelm. With the [50 percent] price drop of Aduhelm on January 1, there is a compelling basis for CMS to reexamine the previous recommendation. — HHS Secretary Xavier Becerra
On May 19, 2022, CMS released a report on their Part B reexamination. They determined that the Part B premium would have been between $160.30 to $166.50 (instead of $170.10), factoring in the Aduhelm-related changes. The organization also looked at three ways they could return these program savings to beneficiaries.
After weighing each option, CMS recommended reflecting savings in the 2023 Medicare Part B premium as the only feasible option.
Due to changes in the cost of Aduhelm™ and coverage since the premium was established, CMS recommends that the lower-than-anticipated spending in 2022 be incorporated into the 2023 Part B premium determination. The Biden-Harris Administration remains committed to lowering health care costs for beneficiaries by increasing price transparency, lowering the cost of prescription drugs, and connecting people to savings programs. — CMS Administrator Chiquita Brooks-LaSure
The HHS agreed with this assessment after review. Secretary Becerra noted that they had initially hoped for consumers to see the savings earlier (options 1 or 2), though the department found the explanations to be satisfactory.
“After receiving CMS’s report reevaluating the 2022 Medicare Part B premiums, we have determined that we can put cost-savings directly back into the pockets of people enrolled in Medicare in 2023. We had hoped to achieve this sooner, but CMS explains that the options to accomplish this would not be feasible. CMS and HHS are committed to lowering health care costs – so we look forward to seeing this Medicare premium adjustment across the finish line to ensure seniors get their cost-savings in 2023.” — HHS Secretary Xavier Becerra
So, what does this mean for consumers? Given these developments, the Medicare Part B premium may decrease for the first time since 2012!
We can’t say for certain that the Part B premium will drop or by how much. There are a number of facets CMS considers when making the determination each year, and things can change. That said, this is a good sign for consumers. We’ll know the Part B premium when the Original Medicare costs are announced later this year, usually between mid-October to early-November. You can be sure that, as soon as we have the 2023 Original Medicare costs, Medicareful Living will have them published!
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It’s announcements like these that remind consumers that Medicare isn’t a for-profit business. When it can, the Medicare program tries to make sure that its beneficiaries are getting the most out of their coverage.