Health Reform WK-EDGE 2020 average bid amount, benchmarks, due dates, and guidelines announced
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Thursday, August 15, 2019

2020 average bid amount, benchmarks, due dates, and guidelines announced

By Cathleen Calhoun, J.D.

CMS has released 2020 bid amounts, beneficiary premiums, subsidy amounts, guidelines and other information for all Medicare Advantage organizations and Medicare prescription drug plan sponsors.

The annual release of the 2020 Part D national average monthly bid for Medicare Part D, along with the 2020 Part D base beneficiary premium, and the de minimis amount (including instructions and a timeline for volunteering to waive the de minimis amount and completing rebate reallocation) are available. Detailed information is also available on the Part D regional low-income premium subsidy amounts, the Medicare Advantage regional PPO benchmarks, Medicare Advantage employer group waiver plan (EGWP) regional payment rates, and information on the income-related monthly adjustment amounts for enrollees in Part D prescription drug plans who have incomes above certain threshold amounts (CMS Letters, July 30, 2019).

Part D national average monthly bid amount. For 2020, the national average monthly bid amount is $47.59. The national average monthly bid amount is defined as a weighted average of the standardized bid amounts for each stand-alone prescription drug plan and MA-PD plan described in §1851(a)(2)(A)(i) of the Social Security Act. The month of June 2019 was used as the reference month for the 2020 calculation.

Part D base beneficiary premium. For 2020, the Part D base beneficiary premium is $32.74. The base beneficiary premium is equal to the product of the beneficiary premium percentage and the national average monthly bid amount. To determine the premium percentage, a fraction is created—with a numerator of 25.5 percent and a denominator equal to 100 percent minus a percentage equal to (1) the total reinsurance payments that CMS estimates will be paid for the coverage year, divided by (2) that amount plus the total payments that CMS estimates will be paid to Part D plans based on the standardized bid amount during the year.

As required in 1860D-13(a) of the Social Security Act, codified in 42 CFR §423.286, Part D beneficiary premiums are calculated as the base beneficiary premium adjusted by the following factors:

  • the difference between the plan’s standardized bid amount and the national average monthly bid amount;
  • an increase for any supplemental premium;
  • an increase for any late enrollment penalty;
  • a decrease for Medicare Advantage Prescription Drug Plans (MA-PDs) that apply MA A/B rebates to buy down the Part D premium; and
  • elimination or decrease with the application of the low-income premium subsidy.

Regional low-income premium subsidy amounts. CMS announced that regional low-income premium subsidy amounts are provided in the file Regional Rates and Benchmarks 2020, and are available on its website. Full low-income subsidy (LIS) individuals are entitled to a premium subsidy equal to 100 percent of the premium subsidy amount under 42 CFR §423.780, and regional low-income premium subsidy amounts (LIPSAs) are the greater of the low-income benchmark premium amount for a PDP region or the lowest monthly beneficiary premium for a prescription drug plan that offers basic prescription drug coverage in the PDP region.

Medicare Advantage regional PPO benchmarks and EGWP payment rates. The statutory and plan-bid components of the Medicare Advantage (MA) regional standardized benchmarks for 19 of the 26 MA regions are available from CMS: Regional Rates and Benchmarks 2020. The 2020 employer group waiver plan (EGWP) regional payment rates are also available with the 2020 MA regional benchmark release.

De Minimis amount and operational guidance. The de minimis amount for 2020 will be $2, and it will also be $2 for a plan participating in the Part D Payment Modernization Model.

Under the Affordable Care Act (ACA) §3303(a), a prescription drug plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD) may volunteer to waive the portion of the monthly adjusted basic beneficiary premium that is a de minimis amount above the low-income subsidy (LIS) benchmark for a subsidy eligible individual.

From Tuesday, July 30, 2019, until 11:59 PM Pacific Daylight Time on Tuesday, August 6, 2019, plans may complete rebate reallocation. Starting Wednesday, August 7, 2019 until 11:59 PM Pacific Daylight Time on Monday, August 12, 2019, plans can inform CMS of their intent to participate in the de minimis program.

ReportsLetters: CMSLetters DrugNews MedicarePartCNews MedicarePartDNews

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