Reassessing the 2022 Medicare premium hike

As many retirees struggle to pay higher monthly Medicare premiums, several leading advocacy groups are urging the federal government to lower those premiums now that use of a new Alzheimer’s drug — the primary driver of the record hike in the 2022 premium — is under review.

Back in October, many retirees cheered the announcement that Social Security benefits would increase by 5.9% in 2022, marking the largest cost-of-living adjustment in 40 years. But their enthusiasm was soon tempered by the November announcement that Medicare Part B premiums, which are usually deducted directly from monthly Social Security benefits, would jump 15% to $170.10 per month in 2022. The $21.60 monthly hike was the largest dollar increase in the basic Part B premium since the health insurance program began in 1966.

Higher-income retirees are subject to additional monthly surcharges, officially known as income-related monthly adjustment amounts or IRMAA, when an individual’s total income exceeds $91,000 or a married couple’s joint income tops $182,000. IRMAA surcharges range from an extra $68 per month to an extra $578.30 per month per person on top of the standard Part B premium, depending on income.

At the time of the 2022 premium announcement, the Centers for Medicare & Medicaid Services attributed about half of the large monthly increase in Part B costs to “additional contingency reserves due to the uncertainty regarding the potential use of the Alzheimer’s drug Aduhelm by people with Medicare.” Medicare Part B covers doctors’ fees and outpatient services, including drugs, such as Aduhelm, that are administered intravenously in an outpatient setting.

The FDA's approval of the drug last year was controversial; while Aduhelm has been shown to lower levels of a brain protein linked to Alzheimer's, so far it has not been shown to slow cognitive decline. There was also controversy about the price: Initially, the drug’s manufacturer, Biogen, had estimated that Aduhelm would cost $56,000 per year per patient. After considerable pushback over the exorbitant price tag, Biogen said it would cut the drug’s cost in half, to $28,200 a year, effective Jan. 1.

In an unprecedented move, earlier this month Department of Health and Human Services Secretary Xavier Becerra ordered CMS to reassess the Part B premium increase, which had already taken effect, in light of the Aduhelm price drop.

“Today, I’m instructing the Centers for Medicare and Medicaid Services to reassess the recommendation for the 2022 Medicare Part B premium given the dramatic price change of the Alzheimer’s drug Aduhlem,” Becerra said in a one-paragraph statement issued Jan. 10. “With the 50% price drop of Aduhlem on January 1, there is a compelling basis for CMS to reexamine the previous recommendation.”

The next day, CMS issued a proposal to cover Aduhelm only on a limited basis, for people enrolled in clinical trials, significantly reducing the number of people who may use the drug, and therefore shrinking projected program costs. CMS is expected to make a financial decision in April on rules about who is eligible to use the controversial drug.

But there's no announced deadline for reconsidering the Medicare Part B premium or how any potential refund of premiums might be distributed, through either a reduction in future premiums or a lump-sum rebate.

“CMS is reassessing the recommendation for the 2022 Medicare Part B premium and the effect that the price drop of Aduhelm may have on its amount,” a CMS spokesperson said via email Wednesday. “We will announce further information when it is available.”

Advocacy groups applauded Becerra’s announcement about possibly reducing the Part B premium increases that took effect on Jan. 1 and are already being deducted from monthly Social Security checks.

In a Jan. 25 letter to Becerra, AARP called the historically high increase in the Medicare Part B monthly premium “unsupportable” and said it should be lowered given the dramatic cut in the price of Aduhelm.

“We strongly urge CMS to reassess the 2022 premium calculation and provide immediate relief to seniors who are paying higher premiums," AARP executive Nancy LeaMond wrote.

A few weeks earlier, the Medicare Rights Center issued a statement supporting a revised Part B premium based on the price reduction or coverage decision.

“But doing so would not solve the underlying problem of high and rising drug prices,” the nonprofit Medicare Rights Center wrote.

“Without more systemic reforms, future drugs could have similar impacts on Medicare costs and affordability,” the advocacy group stated. “Accordingly, we urge policymakers to pursue meaningful solutions, including those in the latest version of the budget reconciliation bill that would allow Medicare to negotiate drug prices, limit annual price hikes and out-of-pocket costs, and realign financial incentives.”

[Questions about Social Security rules? Find the answers in Mary Beth Franklin’s ebook at Maximizing Social Security Retirement Benefits]