August 19, 2008
By Anne W. Hance*
On August 14, 2008, CMS announced several key figures relating to the 2009 benefit year, setting the stage for launching the Medicare Part D Program's fourth year.
- The national average monthly bid amount for PDPs and MA-PDs for 2009 is $84.33. At $3.81 more than the 2007 national average monthly bid amount, this amount reflects industry trends of rising drug costs as well as Part D Plans' higher-than-expected costs for providing drug coverage above the catastrophic limit.
Notably, this figure is a weighted average: for the first time since the Program's inception, it reflects the average monthly bid amount, adjusted to account for bidding Plans' enrollment. (For the first three years, CMS assigned equal weighting to bids for all PDP sponsors and assigned bids for MA-PD plans a weight based on their prior enrollments.)
- The base beneficiary monthly premium for 2009, the figure from which individual Part D Plan and Members' premiums are calculated, is $30.36. This figure reflects a $2.43 increase from the 2008 base premium but remains well below the estimated $44 monthly premium initially anticipated when the Part D Program was created in 2003. Note that the calculation does not include bids submitted by SMA plans, MA private fee-for-service plans, specialized Medicare Advantage plans, specialized MA plans for special needs individuals, PACE programs under section 1894, any "fall back" prescription drug plans, and plans established through reasonable cost reimbursement contracts under section 1876(h) of the Act.
- It is anticipated that, as a result of the increase in the national average monthly bid amount and the effect on the low-income premium subsidy amount, one out of every seven low-income subsidy-eligible individuals will be re-assigned to a new Part D Plan (offered by a different Part D plan sponsor than the Part D plan in which the individual currently is enrolled) for the 2009 benefit year.
Access CMS' announcement regarding these figures, as well as the Part D regional low-income premium subsidy amounts and Medicare Advantage regional benchmarks, at CMS' website.
*We would like to thank Anne W. Hance (McDermott Will & Emery LLP, Washington, DC) for providing this email alert.