Medicare Managers to Adjust 2023 Part B Premiums for Alzheimer's Drug

Medicare program managers plan to build a cost reduction related to a new Alzheimer´s drug into the premiums for 2023 Medicare Part B coverage, rather than trying to provide a 2022 premium cut this year, officials announced Friday.

Medicare may not have the legal authority to send enrollees refunds, and doing so would be very difficult, officials warned.

Medicare Part B is a program that covers physician care and outpatient services for Medicare enrollees. The 2022 monthly premium for Part B coverage is $170.10, up from $148.50 in in 2021.

What It Means

Next year, Medicare Part B premiums could cost about $10 per month less than they would if officials had not tried to build the cost of the new Alzheimer´s drug, Aduhelm, into Part B premiums this year.

Aduhelm

Alzheimer´s disease is a neurological condition that now affects about 5.8 million U.S. residents ages 65 and older, and 250,000 people under 65.

Researchers have estimated that Medicare paid $155 billion for Alzheimer’s-related care in 2020, and that Medicaid, people with Alzheimer’s and other payers paid another $250 billion for care related to the condition.

Biogen developed Aduhelm in an effort to reduce the impact of Alzheimer’s, by clearing up a wax-like substance called amyloid that builds up in the brains of people with Alzheimer’s. The drug is one of the few drugs ever shown to do anything to slow the progression of the disease, and Biogen was planning to charge $56,000 per year for the drugs.

Originally, actuaries at the Centers for Medicare and Medicaid Services, the federal agency that oversees Medicare, expected Medicare to pay for Aduhelm for many Medicare enrollees in 2022.

But Aduhelm can cause serious side effects, and CMS ended up deciding to cover the drug only for Medicare enrollees involved in clinical trials. Biogen cut the annual cost to $28,200.

If Aduhelm had not existed, CMS would probably have set the monthly Part B premium at just $160.30, or $9.80 below the current premium, according to an analysis by Paul Spitalnic, the Medicare program’s chief actuary.

If CMS actuaries had included the effects of Aduhelm, but they knew when they set Medicare Part B prices what they know now, they would have set the monthly premium at $160.40, or $9.70 below the current premium, Spitalnic estimated.

CMS Administrator Chiquita Brooks-LaSure said the agency will take the actuaries’ recommendations and build the adjustment into the 2023 premiums.

“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,” Brooks-LaSure said.

Mid-Year Changes

Spitalnic noted that Part B costs are usually somewhat higher or lower than expected.

CMS has always built surpluses and shortfalls into future years’ premiums, and it’s not clear that the agency has the authority to provide refunds in the middle of the year, Spitalnic said.

The Social Security Administration helps CMS collect Part B premiums, and it would have to reprogram its systems to provide any refunds. A midyear price change “would require the retroactive reprocessing of millions of claims, which would take over a year,” he predicted.

Pictured: Chiquita Brooks-LaSure (Photo: CMS)