I’ve already brought it up . He said he should have some . Problem is if there plans suck will be tough to write
CMS Releases 2025 Medicare Part D Bid Information and Announces Premium Stabilization Demonst
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just-a-client
Expert
- 41
Right, but the full context of this is that this was expected and by design. Costs that Medicare previously paid for through Reinsurance are now being included in the up front plan bids - which Medicare also pays for, as a lump sum per member per month. The difference was, reinsurance was simply paid for by Medicare, no questions asked. Plans have to make sure their up front bids are good, though - otherwise they can have losses. Like any business, bidding on a contract - they have to place competitive bids, and if they win the contract, they have to manage their costs, or else they will lose money. That's free enterprise.
If Part D is supposed to hold down costs thanks to private plans competing, well we don't know if it has or can, because more than half of drug costs have been pushed into the catastrophic phase where Medicare directly paid most of the bills through reinsurance. That means half of drug spending did not involve competition, or risk, or the free market.
CMS is trying to change that - in essence, to more fully privatize Part D. (The ridiculous result is, the whining insurance industry is freaking out, because they don't want to actually be at risk. They want to keep that reinsurance handout covering half of drug spending with no questions asked.)
CMS writes:
The national average bid amount increased from $64.28 in 2024 to $179.45 in 2025. This increase is in line with expectations due to the redesign of the program that encourages better cost management of the Part D benefit by Part D sponsors through a larger risk-adjusted government Part D subsidy payment upfront rather than cost reconciliation on the back end based on beneficiary costs (i.e., reinsurance payments). Importantly, the amount of increase in the NAMBA does not mean that Part D premiums will increase by a similar amount. A significant portion of the NAMBA increase represents funds moving from reinsurance payments to upfront payments in the form of the government subsidy to plans. The preliminary estimated average subsidy to plans in 2025 is $142.67.
What has apparently gone wrong is that SOME plans freaked out more than others, resulting in a wide variation in bids. Plans with bids above the average bid have to make it up with higher premiums. The concern is that the resulting disparity in plan premiums would mean a chaotic AEP as people switched plans en masse. (If all plans freaked out, CMS wouldn't be describing the disruption in this way. So this means, some plans bid more reasonably showing they do have confidence that they can manage the increased risks, while other plans lack confidence and put in very high bids.)
True, but it's not that the plans simply eat the cost, and voluntarily lower the premiums just to be nice guys. In this demonstration project, Medicare will be changing the risk adjustments too, lowering the point at which Medicare shares in plan losses, and committing to paying 90% of those losses. They write:
The third element of the demonstration will be a change to the risk corridors regarding shared losses. The upper thresholds (applicable in instances where a PDP experiences losses) for the CY 2025 risk corridors will be set at 2.5 percent and 5 percent above the target amount rather than the current thresholds of 5 percent and 10 percent above the target amount. In addition, for CY 2025, CMS will increase the share of losses assumed by the government once the demonstration 5 percent threshold is reached. The government’s share of any losses beyond this threshold will be increased to 90 percent for CY 2025.
So they are saying lower the premium and we'll cover essentially 90% of your losses.
Will that be sufficiently enticing? It suggests plans can still lose money, but nowhere near as much.
Plans might opt in just to stay competitive. What good is it to try to stay in business but lose all your members to other plans?
CMS feels plans will do better after gaining experience. If they don't, CMS is prepared to continue to intervene.
And why shouldn't they? They are overpaying for MAPD already. The free market doesn't seem to be cost-effective when it comes to delivering health care. Oh well.
Maybe the Part D redesign is cynically intended to destroy the standalone PDP market and move everyone to MAPD, or maybe it's intended to prove once and for all that privatized delivery of Medicare benefits will never actually lower costs.
we haven't had a free market in health care in over 50 years.
just-a-client
Expert
- 41
Does that mean to start a "Conversation" with you? I haven't tried that yet.
She won't bite . . . unless you are talking through your butt (which some agents do). If you know your stuff she can be quite pleasant.
just-a-client
Expert
- 41
No, I just meant I literally don't know how to DM anyone here, and wonder if you do it by clicking someone's name and starting what is called a conversation. I mean - I'm not familiar with this kind of forum software.
I'm not an agent, so I don't know anything about the business of selling insurance. I've only been talking about what I think is going on with the changes to Part D.
I'm not an agent, so I don't know anything about the business of selling insurance. I've only been talking about what I think is going on with the changes to Part D.
@just-a-client click on the members "handle" then click "start a conversation"
And . . . welcome to the forum!
And . . . welcome to the forum!
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Give it a rest man jfc
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