CMS on July 31 released the Medicare Part D payment benchmarks and other bid-related information for the 2019 plan year, signaling significant declines in both the national average monthly bid amount and the average projected basic Part D premium.
While the average monthly premium for basic Part D coverage rose between 2013 and 2017, the basic Part D premium dropped slightly from 2017 to 2018 and is projected to decrease again from the 2018 actual average premium of $33.59 to $32.50 for 2019, or $1 less than last year’s estimated amount. The figure takes into account the effect of enrollees switching from higher-premium plans to lower ones. The base beneficiary premium before such switches is $33.19, down half a percent, compared with a 1.7% decrease between 2017 and 2018.
The lowering of premiums is driven by changes in the reinsurance amount that funds 80% of all Part D costs for beneficiary expenses above the catastrophic threshold. For 2019, the national average reinsurance subsidy amount will drop slightly by 0.7% to $78.88, estimates Shelly Brandel, a principal and consulting actuary in the Milwaukee-area office of Milliman. This amount for several years climbed by double-digit percentages until 2018, when it rose only 1% to $79.40.
She suggests two factors are likely driving down reinsurance: (1) Sponsors anticipate continued reductions in the utilization of hepatitis C treatments; and (2) Sensipar (cinacalcet), a costly drug used to treat members with end-stage renal disease, was moved from Part D to Part B for the ESRD indication.
Meanwhile, the Part D national average monthly bid amount for 2019 fell 11.5% to $51.28, compared with a 5% drop between 2017 and 2018. That’s partly because the BBA required manufacturers to provide bigger discounts for brand-name drugs in the Part D coverage gap, or “donut hole,” as well as extend discounts to biosimilars. In addition, the removal of the Affordable Care Act health insurer fee for 2019 likely impacted bids, says Brandel.