The Centers for Medicare & Medicaid Services (CMS) is creating a voluntary demonstration program to support changes to Medicare Part D under the Inflation Reduction Act (IRA).
The agency also finalized bid information for contract year 2025, with a base beneficiary premium increase of $2.08 for people with Part D.
The IRA is designed to limit yearly premium increases from contract year 2024 to 2029. Because Part D and prescription drug plans can result in plan price variation for beneficiaries, CMS is creating the Part D Premium Stabilization Demonstration to “improve premium stability for participating stand-alone prescription drug plans,” according to a news release.
This should result in a smoother rollout in how the IRA requires Medicare to support Part D prescription plans. The program will test whether even more financial requirements would improve the Part D program, a senior CMS official said Monday afternoon.
The new program will reduce the base beneficiary premium by $15 for all participating stand-alone prescription drug plans, in some cases decreasing Part D premiums to $0. A yearly $35 increase limit will be imposed on a plan’s total Part D premium. Finally, risk corridors can be changed to “provide for greater government risk sharing for potential plan losses” the agency said,
CMS said the national average monthly bid amount (NAMBA) for 2025 is $179.45, while the preliminary estimated average government subsidy to plans will be $142.67.
The NAMBA, which is an enrollment-weighted average of all Part D plan bids and used to calculate subsidies to plans, in 2024 was $64.28, an increase of $115.17.
CMS noted the NAMBA looks different this year than in previous years because of Part D changes. It is also finding plan variation to be greater in stand-alone plans than Medicare Advantage plans.
A CMS fact sheet said the IRA’s changes stresses a risk-adjusted government subsidy payment upfront, instead of cost reconciliation through reinsurance payments. However, NAMBA increases do not mean premiums will increase the same amount.
Participation in the voluntary program must be declared by Aug. 5. Plans do not need to rebid, and plan sponsors have until Aug. 7 to complete Medicare Advantage rebate reallocation. Plans have until Aug. 13 to tell CMS if they will participate in the voluntary de minimis program, which refers to the low-income subsidy program.
The program will last for three years, though the program could be modified after one year.
Under the IRA, all people enrolled in Medicare Part D will have out-of-pocket prescription drug prices capped at $2,000, and beneficiaries will be able to manage prescription drug costs over through smaller payments. Manufacturers will soon wrap up negotiations with CMS through its new drug price negotiation program.