While Medicare Part B monthly premiums jumped almost 15% in 2022, unexpected savings on a new, expensive drug may mean a much smaller rise in rates for 2023.
Part B premiums rose by $21.60 – the largest real dollar year-over-year increase in the history of Medicare – to $170.10 per month for 2022, thanks in part to the high cost of Aduhelm, a newly-approved intravenous drug for Alzheiemer’s disease. However, at the end of 2021 after premiums were locked in, Biogen, the new drug’s manufacturer, essentially halved the price of the treatment. That savings could go toward lowering next year’s rate hike, according to a new report from the Centers for Medicare and Medicaid Services.
It’s still too early to tell for certain what next year’s premium will be, as Medicare premiums are generally announced during the fall of the preceding year. (The rate increase for 2022 wasn’t announced until the second week of November 2021.) An early clue, however, is President Biden’s proposed 2023 fiscal year budget, which lists Part B premiums as remaining at the same rate as 2022. This is not in any way a final determination, but the money saved from Aduhelm’s lower price could be rolled over into next year’s pricing.
“Previous years’ surpluses or shortfalls affect future years’ premiums,” reads the report. “An unexpected and large premium increase can occur if there is a shortfall of assets because the financing in such a situation would need to increase immediately to ensure that claims could be paid in full and on time. Alternatively, excess assets in the trust fund can allow for smaller and more gradual premium increases, thereby promoting predictability and stability in financing levels.”
Biogen cut the cost of Aduhlem from more than $50,000 per year for the average patient to approximately $28,200. Medicare is likely to be the primary purchaser of the newly approved drug, which has faced controversy since its approval and is still undergoing clinical trials.
CMS did consider the possibility of refunding Medicare recipients or lowering 2022 rates during the year, but the agency found it to be too complicated and involve too many different organizations—opting to instead roll the savings into next year’s premiums.
“CMS found that incorporating the premium effects of Aduhelm’s price reduction and the subsequent National Coverage Determination into the 2023 premium is the only practically feasible option, as implementing a mid-year administrative redetermination of the 2022 premium was not found to be operationally possible during 2022, and also determined CMS does not have sufficient authority to send premium refunds directly to beneficiaries unless there is excess payment relative to the established premium,” reads the report. “CMS determined that a mid-year administrative redetermination would be prohibitively complex and highly risky, requiring significant resources and unproven technical solutions from the varied entities which manage premium collection and payment.”
While Aduhelm is a medication, it falls under Medicare Part B, which covers outpatient and preventive treatments, instead of Medicare Part D, which generally covers prescription drugs, because Aduhelm is an IV treatment that requires a patient to go into a clinic for treatment.
An official Part B premium for 2023 will be announced in the Federal Register sometime this fall. Medicare enrollment is open each year from mid-October to early December for plans beginning Jan. 1 of the following year, but CMS has proposed more special enrollment periods starting in 2022 that may open enrollment at other times.