Medicare Won’t Issue Refunds For Part B Premiums This Year
Rick Delaney, TSCL Chairman of the Board
Here’s a recent email that we received from a TSCL supporter in the state of Washington:
I must have missed TSCL’s response to The Biden Administration. It quietly announced last week that it will leave in place one of the largest-ever Medicare premium hikes for the remainder of 2022, despite federal health officials’ decision to restrict coverage of the expensive and potentially ineffective Alzheimer’s drug that drove the increase. They estimated that Medicare Part B’s monthly premiums in 2022 would have been $160.30 instead of $170.10 if Aduhelm were removed from the equation. — F.P.
As our reader points out, the Center for Medicare and Medicaid Services (CMS) recently announced their decision about coverage of the pricey Alzheimer’s drug, Aduhelm and whether Medicare recipients would receive a refund on a portion of their 2022 Part B premium. CMS agreed with TSCL that Medicare beneficiaries had been (unintentionally) overcharged but said that refunds would be virtually impossible to implement. Instead, the excess premium amounts will be used to lower the Part B premium for 2023.
While we were hoping for a refund given the League and its supporters’ outcry over the issue, we think TSCL members and supporters can still claim victory. The Congressional Budget Office recently said that Medicare outlays are projected to increase by an estimated 16% in 2023, but the delayed Part B refund could help offset a premium increase of that magnitude.
Like our writer from Washington state, a great many of you are fuming over the Medicare Part B premium increase that started in January of this year — one of the highest in program history. TSCL believes beneficiaries were overcharged and we were one of the first senior advocacy groups to give the issue public attention. TSCL calculates that Medicare beneficiaries are due a refund of about $9.80 per month ($117.60 year).
You may recall that in November of 2021, CMS announced the 2022 Medicare Part B premium rate of $170.10, a stunning 14.5% increase from the 2021 premium. The increase took everyone by surprise. It was double the amount that Medicare’s Trustees had forecast for 2022 that was published in their annual report just a few months earlier.
The increase was driven in large part by the potential costs of Aduhelm, a pricey and controversial new drug for the treatment of Alzheimer’s disease. The potential Aduhelm costs were responsible for about half of the $21.60 per month premium increase from $148.50 in 2021 to $170.10 in 2022. At the time, Aduhelm had a $56,000 per year price tag, and there was uncertainty over how often the drug would be prescribed to patients, given the fact that CMS had not yet approved the drug for coverage under Medicare. CMS at the time defended their decision stating that the Medicare Part B premium must allow for sufficient reserves to cover potential Medicare Part B costs during the year.
But just weeks after the announcement of the 2022 premium increase, the manufacturer of Aduhelm announced it was cutting its average price in half to $28,200 per year. Then early in 2022 CMS said it’s coverage decision for Aduhelm would only be for very limited use — only in clinical trials and only for certain types of Alzheimers patients. In January 2022, the Secretary of the Department of Health and Human Services instructed CMS to reassess the 2022 Medicare Part B premium. Such a redetermination of the existing Part B premium is unprecedented.
The Centers of Medicare and Medicaid Services (CMS) agreed that beneficiaries are being overcharged for their Part B premiums in 2022. However, it said refunds would not be feasible given the “operational complexity” of making such a refund.
Getting refunds out to close to more than 59 million beneficiaries, does present a host of challenges, including the risk that refunds could lead to improper payments.
It’s not as simple as just coordinating things between the Social Security Administration and CMS. The biggest challenge is the very long list of entities which manage Part B premium collection and payment. A Medicare Part B refund would also need to be coordinated with the Office of Personnel Management (for retired government workers), the Railroad Retirement Board, all 50 states and “other third-party payers” that could potentially include some Medicare Advantage plans that pay the Part B premium for their enrollees.
Consequently, CMS says it would do the next best thing it can, by using the excess premium charges to reduce the Part B premium increase for 2023. Although the Part B premium for 2023 won’t be announced until November of 2022, the Medicare trustees currently estimate that there will be no increase in the Part B premium in 2023. While that’s just an estimate that could change up or down, we take this as a hopeful sign. No increase in the monthly Part B premium would mean that most beneficiaries would get to keep most, or even all of their COLA to cover other rising costs.
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Sources: “Report to the Secretary, Reexamination of the 2022 Medicare Part B Premium,” Paul Spitalnic, Chief Actuary, Centers for Medicare and Medicaid Services, May 16, 2022. 2022 Medicare Trustee Report, June 2, 2022. The Budget and Economic Outlook: 2022 to 2032, Congressional Budget Office, May 2022.