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Costly Alzheimer’s Drug Fuels Record Medicare Premium Hike

Costly Alzheimer’s Drug Fuels Record Medicare Premium Hike

The standard monthly premium for Medicare outpatient, or “Part B,” coverage, will be $170.10 in 2022, up from $148.50 in 2021, senior Biden administration officials said Friday.

The $21.60 increase is the largest annual dollar-amount rate hike ever for Part B coverage, while the 14.5% increase is the third-largest percentage increase since 2007.

The annual deductible for Medicare Part B beneficiaries will be $233 in 2022, up $30 from the annual deductible of $203 in 2021. Medicare Part B covers physician services, outpatient hospital services, durable medical equipment and some home health services.

Half of the unusually high rate increase is due to two factors: rising prices and use across the health-care system, and pandemic-related congressional action, which lowered Part B premiums in 2021. Congress directed the Centers for Medicare & Medicaid Services to pay it back the rate reductions over time, a senior administration official said during a briefing with reporters.

The other half of the increase is due to the need to build contingency reserves if Medicare decides to cover the costly Alzheimer’s drug, Aduhelm, manufactured by Biogen Inc. The CMS is making a determination on whether and how it will cover Aduhelm and other drugs to treat Alzheimer’s. If Medicare decides not to cover the controversial new drug, the rate hike can be lowered, officials said.

The FDA approved Aduhelm over the objections of the agency’s outside scientific advisers and after two large-scale trials to gauge the drug’s efficacy were halted early because they were deemed unlikely to work.

Later analysis by Biogen suggested patients in one trial getting a high dose had a slower rate of cognitive decline, while the other trial showed no effect.

Agency officials said the increased Part B premiums will be offset for most beneficiaries by a 5.9% cost of living increase in their monthly Social Security benefits. A retired worker, for example, who receives $1,565 per month from Social Security will likely receive a net increase of $70.40 per month next year after the Medicare Part B premium is deducted, the CMS estimated.

“CMS is committed to ensuring high quality care and affordable coverage for those who rely on Medicare today, while protecting Medicare’s sustainability for future generations,” said a statement from CMS Administrator Chiquita Brooks-LaSure. “The increase in the Part B premium for 2022 is continued evidence that rising drug costs threaten the affordability and sustainability of the Medicare program. The Biden-Harris Administration is working to make drug prices more affordable and equitable for all Americans, and to advance drug pricing reform through competition, innovation, and transparency.”

To contact the reporter on this story: Tony Pugh in Washington at tpugh@bloomberglaw.com

To contact the editors responsible for this story: Brent Bierman at bbierman@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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