CMS May Use 2022 Savings to Lower 2023 Medicare Part B Premiums

CMS is considering using savings from low Medicare spending in Medicare Part B to offset beneficiaries’ 2023 Medicare Part B premiums.

The agency released a report examining whether CMS should apply the savings from the Aduhelm price change toward lowering the 2023 Part B premium.

“At the Secretary’s direction, CMS reassessed the Medicare Part B premium and recommends that the identified savings be incorporated into the Medicare Part B premium for 2023,” CMS Administrator Chiquita Brooks-LaSure said in the press release. 

“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 considered three options regarding how to return the excess savings to beneficiaries: a mid-year administrative redetermination, a direct refund to beneficiaries, or putting the savings toward the following year’s premium.

If the agency were to conduct a redetermination of the current Medicare Part B premium, it would be taking an unprecedented step and one that might place a significant strain on CMS and other agencies. For example, it would require reprogramming the Social Security Administration systems.

The report found that CMS does not have the authority to send refunds to beneficiaries. The process also would be very complex and require reprogramming certain systems. Beneficiary communication and customer service volume would be strained.

As a result, the report recommended consolidating savings into the 2023 Part B premium.

“Because spending factors other than Aduhelm could be higher or lower than assumed during development of the 2022 premium, reflecting 2022 experience in premium calculations results in a more accurate recommendation and helps safeguard the Part B account of the SMI Trust Fund by accounting for unexpected costs and greater-than anticipated utilization of Part B services due to the current public health emergency for the COVID-19 pandemic or other unforeseen factors,” the report concluded.

CMS had originally fixed the Part B monthly premium at $170.10 for 2022. This was a 14.5 percent increase from the year prior, in which the premium was $148.50 per month. The press release noted that most Medicare beneficiaries experienced an increase overall in social security benefits in 2022 due to a higher cost of living adjustment.

The report noted that if all factors remained the same except the Aduhelm drug was completely removed from the calculations for the 2022 Part B premium projections, the 2022 Part B premium would have been about ten dollars lower than the actual, current rate at $160.30.

If all of the factors remained the same but the premium had been established with the halved Aduhelm price instead of the full Aduhelm price, the premium would have been $166.50, still about four dollars short of the current price.

If all of the factors remained the same except that both the drug’s price and coverage determination were updated, the 2022 Part B premium would have been $160.40.

The agency had established such a high premium in order to cover the high cost of the Alzheimer’s drug Aduhelm, which originally cost $56,000. However, since publishing the 2022 Part B premium, the drug’s manufacturer halved the price of Aduhelm to $28,200.

Moreover, CMS started a national coverage determination for Aduhelm. The CMS report noted that a national coverage determination creates more certainty about the drug’s usage, although industry experts have expressed concerns that the construction of the national coverage determination may limit access to Alzheimer’s treatment.

After the price of Aduhelm dropped, CMS reevaluated the 2022 Medicare Part B premium, which had been impacted by the contingency reserves for Aduhelm, the press release explained.

Since beneficiaries will no longer need as much funding to cover Aduhelm treatment, CMS has stated that it might return the savings to Medicare beneficiaries.