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Despite Huge Cut in Cost of Controversial Alzheimer’s Drug, You Won’t See a Medicare Part B Premium Reduction This Year

Anybody remember an Alzheimer’s drug called Aduhelm? That’s the highly controversial drug from biotech giant Biogen which was approved in 2021. While some in the treatment community lauded the new drug as one more step toward gaining at least some control over the scourge of Alzheimer’s disease, others cried foul, believing that the U.S. Food and Drug Administration had given its stamp of approval to an extremely expensive drug whose results in clinical trials seemed to many to be sketchy at best.

But one of the reasons the name “Aduhelm” is so controversial is that the high cost of the drug was cited as a major reason why Medicare Part B premiums jumped so much from 2021 to 2022. After the higher premium was set in stone, drug maker Biogen stunned the marketplace by cutting the price of the drug in half. Medicare subsequently changed the rules to make it harder for Aduhelm recipients to qualify for Part B coverage. Many assumed these moves might have triggered a mid-year rollback in Part B premiums.

Well, guess what? In this article from CNBCreporter Sarah O’Brien basically says, “Don’t hold your breath.” Medicare officials have just announced that Part B premiums now in effect will stay that way through the end of the year, and any adjustment will have to wait until 2023. Let’s examine this disappointing news and see what’s behind it.

CMS Says Rate Cut “Not Feasible”

In her CNBC article, O’Brien cuts to the chase. “Your Medicare Part B premiums won’t be reduced this year, the government has announced,” she writes. The hefty hike in premiums that caught many by surprise – a jump that officials said was related at least in part to the cost of Aduhelm – will remain in place.

O’Brien writes that Health and Human Services Secretary Xavier Becerra had directed CMS earlier this year to “reassess” the 2022 Part B premium, which had jumped from $148.50 in 2021 to $170.10 per month, a larger-than-expected 14.5 percent increase. Now, says O’Brien, CMS “has released a report determining that a mid-year correction is not feasible. Instead, any savings that result from lower-than-estimated spending this year will be applied to the calculation for the 2023 Part B premium.”

Aduhelm Triggered Half the Premium Hike

It’s hard to get our minds around the fact that one single drug could affect so many people, but in the case of Biogen’s Aduhelm, it’s true. “About half of the larger-than-expected 2022 premium increase, set last fall, was attributed to the potential cost of covering Aduhelm,” CNBC reports, “despite actuaries not yet knowing the particulars of how it would be covered because Medicare officials were still determining that.”

Under normal Medicare rules, Part D covers prescription drugs. But medicines that are administered in a doctor’s office, like Aduhelm, fall under different rules. Because Aduhelm is delivered intravenously, it falls under Part B coverage which pays for outpatient care and medical equipment.

“By law, CMS is required to set each year’s Part B premium at 25 percent of the estimated costs that will be incurred by that part of the program,” says the article. “So in its calculation for 2022, the agency had to account for the possibility of broadly covering Aduhelm.”

Price Cut Would Have Reduced Part B Premiums

Originally when Biogen announced the availability of Aduhelm, the per-patient price tag was $56,000 per year. That’s the figure that the CMS actuaries had used in their cost calculations. But there were two significant changes that took place after the Part B premium was set in place. First, CNBC explains, the cost of the drug was cut in half by manufacturer Biogen, to $28,200 annually. Second, O’Brien writes, “CMS officials announced in April that Medicare will only cover Aduhelm for beneficiaries who receive it as part of a clinical trial.”

What would have been the result if these critical adjustments had been factored into Part B premiums? “The 2022 premium would have been set at $160.40 if the Aduhelm cost was what it is now and the determination of coverage had already occurred, the CMS report said.” That would have represented an 8 percent premium hike instead of the 14.5 percent boost that was imposed for 2o22.

Part B Premium Not Yet Set for 2023

It’s premature to speculate on how premiums might change next year. CNBC reports that President Joe Biden’s 2023 budget projections show the Part B premium remaining at $170.10. However, “the CMS report notes that when the amount is set later this year, it will reflect additional information such as actual 2022 claims data and is likely to differ somewhat from what’s shown in the budget.” The agency promises that extra premiums collected due to the Aduhelm fiasco would be used – potentially – to hold the line on future rate hikes.

“It is certain, however, that any additional funding caused by including the uncertainty of potential Aduhelm costs in the 2022 premium will be used to reduce the necessary financing in 2023 and later,” CNBC writes, quoting the CMS report. Here at the AgingOptions Blog, we’ll believe it when we see it! Stay tuned for further developments.

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When it comes to retirement planning, most people focus on one fairly narrow issue: money. Financial planning is an important component of retirement planning. However, people heading towards retirement often make the mistake of thinking that a little financial planning is all that’s required, when in fact most financial plans are woefully inadequate. What about your medical coverage? What if you have to make a change in your housing status – will that knock your financial plan off course? Are you adequately prepared legally for the realities of retirement and estate planning? And is your family equipped to support your plans for the future as you age?

The best way we know of to successfully blend all these elements together – finance, medical, housing, legal and family – is with a LifePlan from AgingOptions. Thousands of people have discovered the power of LifePlanning and we encourage you to the same. Simply visit our website and discover a world of retirement planning resources.  Make certain your retirement planning is truly comprehensive and complete with an AgingOptions LifePlan.  Age on!

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