CMS Issues Lowest Part D Premium Since 2013: AHIP Warns Rebate Rule Could Impact This

August 3, 2020

CMS has announced the average basic Part D premium for 2021 will be $30.50. This presents a slight uptick from the 2020 average basic Part D premium when premiums were around $30. Premium savings over the past three years have amounted to $1.9 billion, according to CMS, and savings are due to increased plan competition.

“In Medicare Part D, beneficiaries choose the prescription drug plan that best meets their needs, and plans have to improve quality and lower costs to attract beneficiaries. This competitive dynamic sets up clear incentives that drive towards value,” the July 29 press release from explained.

The Part D Payment Modernization Model, implemented in 2019 by CMS, incentivized lower drug prices as payers took on higher risk for beneficiaries in Part D’s catastrophic phase.  In 2021, nine plans in 4 states will participate in this Model.

America’s Health Insurance Plans (AHIP) warns that the rebate rule could affect the continuing savings on out-of-pocket healthcare costs. Last week, Trump signed three executive orders that placed restrictions on pharmacy benefit managers and sought to heighten drug importations. Through these measures, the executive orders aimed to lower drug prices. AHIP has argued, using CMS statistics, that these executive orders would instead cause Medicare premiums to rise by 25%, and increase drug spending in Medicare by almost $200 billion, and contribute about $100B toward bailing out the pharmaceutical industry.

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(Source:  Waddill K, Health Payer Intelligence, July 31, 2020)

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