On July 31, 2023, Centers for Medicare & Medicaid Services (CMS) released the National Average Monthly Bid Amount (NAMBA) for contract year (CY) 2024. For 2024, the national average bid amount will be $64.28, which is a significant increase from the 2023 amount of $34.71 (+29.58, +85%). Due to provisions within the Inflation Reduction Act (IRA), the base beneficiary premium will only increase by 6%. As a result, the base beneficiary premium for 2024 will be $34.70, which is an increase from the 2023 amount of $32.74 (+1.97, +6%).
The IRA was signed into law on August 16, 2022, after the submission of the CY2023 bids. CY2024 was the first time plan sponsors could incorporate the IRA changes into the bid amount. These changes include the additional benefits for insulins ($35 maximum monthly enrollee cost-share), Advisory Committee on Immunization Practices (ACIP) recommended vaccines ($0 enrollee cost-share), and eliminating the enrollee cost-sharing in the catastrophic benefit.
Based on the NAMBA amounts, bid amounts have increased significantly across the industry, likely accounting for the additional IRA benefits. Both the plan sponsor’s bid amount and base beneficiary premium amount play a role in CMS’ calculation for the monthly direct subsidy amount. Based on these increases, and primarily the increase in the bid amount, the monthly direct subsidy premium is expected to increase significantly for CY2024.
Although plan sponsors will have an increased liability for insulins, ACIP vaccines, and catastrophic claims, they should receive additional premiums from CMS to subsidize these additional costs. In addition, during annual prescription drug event (PDE) reconciliation, CMS performs a risk-sharing calculation for applicable sponsors which compares the plan sponsor’s net claim costs with the total premiums collected. Based on this calculation, plan sponsors could receive additional CMS payments if it is determined the plan sponsor’s total premium amounts collected were not sufficient to cover the net claim costs.
BluePeak has been supporting plan sponsors, pharmacy benefit managers (PBMs), and pharmaceutical manufacturers throughout the implementation of the IRA provisions to understand the financial and operational impacts they can expect moving forward. The risk-sharing calculation is extremely complex and difficult to understand, and BluePeak has been providing ongoing education to help plans understand this calculation and potentially predict if they will receive additional payments during PDE reconciliation.
BluePeak can help!
Contact BluePeak at info@bluepeak.com for additional information and support options that would work best for your organization.
