Inflation Reduction Act Spurs CMS to Stabilize Medicare Part D Premiums

The Centers for Medicare & Medicaid Services (CMS) is launching a voluntary demonstration program to implement changes to Medicare Part D under the Inflation Reduction Act (IRA). This initiative includes the finalized bid information for the 2025 contract year, which sees a $2.08 increase in the base beneficiary premium for Part D enrollees.

The IRA aims to cap annual premium hikes from 2024 to 2029, and CMS is introducing the Part D Premium Stabilization Demonstration to enhance premium stability for standalone prescription drug plans. This program will lower the base beneficiary premium by $15 for participating plans, potentially reducing some premiums to zero, and will impose a yearly $35 limit on total premium increases.

CMS has set the national average monthly bid amount (NAMBA) for 2025 at $179.45, with an estimated average government subsidy of $142.67. The program, which could adjust after one year but is set to run for three, will also shift to a risk-adjusted government subsidy payment upfront, rather than through reinsurance payments.

Participation in this voluntary program must be declared by August 5, with various deadlines for related actions extending to mid-August. The IRA mandates that out-of-pocket prescription drug costs for Medicare Part D enrollees will be capped at $2,000, allowing beneficiaries to spread their costs through smaller payments, and that drug manufacturers conclude price negotiations with CMS.

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