Leading Republicans are looking toward the Government Accountability Office (GAO) to ensure CMS’ new premium stabilization demonstration program is legal and in the best interest of seniors.
In a recent letter written by House Energy and Commerce Committee Chair Cathy McMorris Rodgers, R-WA, Senate Finance Committee Ranking Member Mike Crapo, R-ID, and House Ways and Means Committee Chair Jason Smith, R-MO, the lawmakers said the program seems arbitrarily created. Though designed to limit premium increases, they say CMS has not shown evidence or analysis the program will be legal and effective and would transfer responsibility from plans and members to taxpayers.
“In response to the Inflation Reduction Act’s (IRA) problematic design features and rushed legislative process, the proposed demonstration employs arbitrary policy levers to achieve short-term objectives,” the letter reads. “The initiative lacks any budgetary analysis, clear statutory basis or credible research goals. The integrity of the Medicare program and the taxpayer dollars that finance its benefits demand more than partisan aspirations to justify extra-statutory, eleventh-hour policy changes.”
The lawmakers said CMS is attempting to “sidestep Congress.” They believe the IRA’s poor implementation is causing havoc in the market in the form of fewer plan options and higher premiums.
Blue Cross and Blue Shield of Kansas City is leaving Medicare Advantage by the end of the year because the plan is unable to “economically compete” and is struggling in the current regulatory environment.
The letter asks the GAO to ensure the program is legal, request CMS’ budgetary analysis, confirm whether the program is budget neutral and if the program is likely to be successful.
Updated: July 29
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.