It’s not often that the Medicare premium drops, but it will happen in 2023 because of a controversial Alzheimer’s drug that was a commercial failure.

By Al Norman

It’s not often that the Medicare premium drops, but it will happen in 2023 because of a controversial Alzheimer’s drug that was a commercial failure.

On Sept. 27 the federal Centers for Medicare & Medicaid Services (CMS) announced the 2023 premiums, deductibles and coinsurance amounts for the Medicare Part A and Part B and Part D programs. Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment, and certain other medical and health services not covered by Medicare Part A.

The monthly Medicare Part B premium will drop from $170.10 this year, to $164.90 for 2023 — a decrease of $5.20 a month, or $62.40 over the year. The annual deductible for Medicare Part B will also drop from $233 this year, to $226 in 2023 — a decrease of $84 for the year. The premium and deductible drops appear to save you a total of $146.40 in 2023.

But the Part B premium of $164.90 is actually 11 percent higher than the Part B premium of 2021 — because the Part B premium for 2022 rose from $148.50 per month in 2021, to $170.10 in 2022 — a 14.5 percent hike — costing beneficiaries $21.60 more per month. The Medicare B premium hike was the largest Part B premium increase in the 57-year history of the Medicare program

CMS explained on Sept. 27 that the Part B premium in 2022 included “a contingency margin to cover projected Part B spending for a new drug, Aduhelm. Lower-than-projected spending on both Aduhelm and other Part B items and services resulted in much larger reserves in the Part B account of the Supplementary Medical Insurance (SMI) Trust Fund, which can be used to limit future Part B premium increases. The decrease in the 2023 Part B premium aligns with the CMS recommendation in a May 2022 report that excess SMI reserves be passed along to people with Medicare Part B coverage.”

In November of 2021 CMS announced that the Part B premium for 2022 would rise $259.20 per year compared to 2021 rates. This historic increase in the Medicare B premium was caused in part by the action of another Federal Agency: the Food & Drug Administration (FDA).

 On June 7, 2021, the FDA granted “accelerated approval” for a new Alzheimer’s disease drug called Aduhelm, manufactured by the Biogen company of Cambridge, MA. But the FDA’s Advisory Committee recommended not to approve the new drug, after studies failed to show strong evidence of the drug’s effectiveness. Biogen announced that Aduhelm would carry a list price of $56,000 a year.

CMS admitted that one of the reasons for the historic Medicare Part B Premium increase in 2022, was caused by the need for “additional contingency reserves due to the uncertainty regarding the potential use of the Alzheimer’s drug, Aduhelm, by people with Medicare.” CMS has to calculate the Part B premium at 25 percent of the projected cost that will be incurred by that part of Medicare. In 2022, there were roughly 63 million Americans paying the Medicare Part B premium, and only 2 to 3 million people on Medicare who were actively using Alzheimer’s drugs as part of their therapy.

Members of Congress began complaining to CMS that “Medicare beneficiaries cannot afford to be saddled with a record increase in monthly premium costs — especially when those premium costs are being driven up by uncertain expectations of sky-high Medicare costs for an outrageously expensive drug called Aduhelm, that has presented limited clinical evidence of its effectiveness.” Less than two weeks later, Biogen announced that it was cutting the price of Aduhelm in half, from $56,000 to $28,000 a year.

But the months dragged on, and CMS decided not to lower the record-high Part B premium it had set in 2022 — even though the original projected cost of Aduhelm was way off.  “Certainly the rationale for an increase that high is gone,” a spokesman from the Brookings Institution told CNBC. “If I were administering this, I’d be concerned about setting a precedent for making changes in the middle of the year.”

63 million seniors kept being over-charged for a Part B premium that was based on inflated costs caused by Aduhelm calculations. Finally, on Sept. 27, CMS felt it was time to tell people on Medicare that a downward adjustment would be made in their Part B premium — but not until January of 2023.

Five months ago, in a Pushback column, I wrote: “The best advice at this point might be to just forget the idea of any cost cut in the Part B premium for this year. But do so after emailing this column to your members of Congress with a note which says: “Please remind CMS in 2023 that Medicare beneficiaries were over-charged on their Part B premium for the cost of Aduhelm coverage.”

Congress and CMS heard from enough voters, that the lower Part B premium is coming. But the truth is, Medicare beneficiaries are just getting a refund for bills they never should have been charged. It’s a case of “been up so long, it looks like down.”

Al Norman worked in the field of elderly services for 38 years.