Why Medicare enrollees must wait for premium relief

Earlier this year, there were reports of a potential reduction in Medicare Part B premiums. But the premium reduction isn’t happening and here is some information on why.

Medicare increased its Medicare Part B premium by 14.5% for 2022. This was the largest rate increase in the history of Medicare. The increase was partly driven by coverage of an expensive and experimental Alzheimer’s disease drug, Aduhelm, which must be administered in a doctor's office.

Why was a Part B premium cut predicted?

Biogen, which manufactures Aduhelm, announced in December that it would cut the drug’s price by nearly 50%. This lowered the annual drug cost to $28,200. The price cut is what prompted the Secretary of Health and Human Services to ask for the Part B premium to be re-evaluated.

In addition to the price cut, the Centers for Medicare and Medicaid Services finalized its decision to limit coverage of Aduhelm to those in clinical trials. Doing so significantly lowers the drug’s use.

Why isn't the premium reduction happening?

CMS investigated three options regarding Part B premiums. Those options were: to adjust the premium midyear, to refund Medicare beneficiaries’ part of their 2022 premium, and to apply the savings into the premiums for 2023.

Upon the completion of the CMS investigation, the agency indicated that it would be too risky and complex to make the change this year. Due to various legal and logistical hurdles, CMS has decided not to reduce Part B premiums in the middle of 2022, as many had hoped.

CMS also stated they don't have the authority to send refunded premium amounts directly to the beneficiaries. The exception would be if someone paid more than the established premium.

So CMS decided that the savings will be reflected in the 2023 premium. However, there is no word yet on how much the premium will be, although that information may be released before the midterm elections.

While a reduction seems likely, there is no guarantee that it will happen. The expected reduction in Aduhelm costs will be rolled over into premiums for next year. Things can come up, just as happened with the Food and Drug Administration’s approval of Aduhelm and its original annual price tag of $56,000.

What happens next? Will premiums be reduced at some other point?

Only time will tell. As mentioned previously, there is no way to predict what will happen. If nothing unforeseen occurs, savings should be applied to the 2023 Medicare Part B premium.

What impact does all of this have on current Medicare beneficiaries?

Before the FDA’s approval of Aduhelm, the 2022 Part B monthly premium was expected to be $160.40. After Aduhelm was approved with an annual price of $56,000, the monthly Part B premium jumped to its current $170.10.

President Joe Biden's 2023 budget prediction shows the Medicare Part B monthly premium remaining at $170.10 for 2023. However, Medicare prices generally are finalized in the fall. The premium reflects additional information such the 2022 claims information, which could differ from what's in the projection.

Medicare beneficiaries are feeling the impact of Part B premiums this year. Until premiums are addressed, beneficiaries will have to do the best they can. We hope there will be some relief on the horizon for next year, but we'll have to wait and see.

Lindsay Malzone is a Medicare expert at Medigap.com. Contact Lindsay at lindsay.malzone@innfeedback.com.

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