In late September, the Centers for Medicare & Medicaid Services (CMS) released the 2024 Medicare Advantage (MA) and Part D landscape files. These data show MA and Part D plan offerings and premiums for 2024 and highlight initial shifts in the Part D market under the Inflation Reduction Act (IRA).

Part D Bids and Beneficiary Premiums

In July, CMS released the Part D national average monthly bid amount (NAMBA) for 2024. The NAMBA represents an enrollment-weighted average of Part D plan bids for basic Part D benefits across selected MA Prescription Drug Plans (MA-PDs) and standalone Prescription Drug Plans (PDPs).¹ For 2024, the NAMBA is increasing by 85% from 2023.

This increase in average Part D plan bids for 2024 is likely being driven by:

• The elimination of beneficiary out-of-pocket costs in the catastrophic phase under the IRA, with plans taking on the additional 5% liability
• New requirements for Part D plans to include pharmacy price concessions in the Part D negotiated price
• Changes in list prices and likely subsequent lower rebates for some products in response to the average manufacturer price cap removal in Medicaid
• Implementation of the $35 monthly cost sharing cap for insulin products and $0-cost sharing for Advisory Committee on Immunization Practices -recommended vaccines²
• The absence of changes to the Part D risk adjustment model to reflect the changes in the 2024 benefit design under the IRA

Avalere estimates that 2024 MA-PD bids increased by 63% from 2023, while PDP bids more than doubled (Table 1). Higher PDP bids relative to those of MA-PDs, coupled with MA plans’ ability to use MA rebate dollars to buy down the Part D premium, are leading to oppositional premium trends for MA-PDs vs. PDPs in 2024. While the base beneficiary premium can only increase by 6% under the IRA, this does not mean that individual plan premiums will not increase by more than this amount.

Individual PDP and MA-PD Premiums

The average PDP premium—which includes enhanced PDPs—is increasing by 21% from 2023 to 2024. Additionally, 45% of PDP enrollees may face premium increases of more than 25% if they do not switch plans. Meanwhile, MA-PD premiums remain stable, with only 8% of enrollees in an MA-PD plan that will have a total premium increase of more than 25% (Figure 1). At the same time, 59% of enrollees in MA-PDs are in a $0-premium plan that will be offered in 2024.

Impact on Low-Income Subsidy (LIS) Benchmark Plans

Part D market and bid dynamics for 2024 are also already beginning to shift the availability of LIS benchmark plans. While MA-PDs cannot be LIS benchmark plans, MA-PD bids are included in CMS’s calculation of the LIS benchmark by statute. Lower MA-PD bids relative to PDPs depresses the LIS benchmark premium, making it more difficult for PDPs to achieve benchmark status.

The decrease in the total number of LIS benchmark plans (from 191 in 2023 to 126 in 2024) illustrates this dynamic. Avalere estimates that approximately 2 million LIS enrollees are currently in plans that will no longer qualify as benchmark plans in 2024. These enrollees will need to switch to another LIS benchmark plan in their region to avoid paying a premium. There are 10 states in which more than 60% of enrollees would need to leave their current plan or pay a premium (Figure 2).

Potential Effects on Beneficiary Enrollment Patterns

The Medicare annual enrollment period for 2024 is open October 15–December 7. The substantial shifts in premiums and changes in LIS benchmark plan availability may shape enrollee plan choices in 2024, with implications for patient affordability and access. These data provide initial insight into the potential enrollment and Part D market shifts that may be expected under the IRA in the coming years. More significant changes are expected in 2025 when Part D redesign goes into full effect.

For more information on how plan availability, premiums, and benefit designs for 2024 and beyond will impact your organization, connect with us.

Notes

1. The NAMBA calculation does not include Medical Savings Account plans, MA private fee-for-service plans, Special Needs Plans, cost plans, or Programs for All-Inclusive Care for the Elderly plans.
2. While these policies were applicable in 2023, the policies were not enacted in time to be reflected in plan bids for the 2023 plan year.