Citing rising drug prices and costs from the Covid-19 pandemic, Medicare will hike Part B premiums next year. The minimum premium will increase by 14.5% to $170.10, far above the $158.50 estimated by the Medicare Board of Trustees this summer.
Medicare Part B covers several crucial services, including physician services, outpatient hospital services and durable medical equipment. It’s a complement to Medicare Part A, which covers inpatient care in a hospital, and care received in a nursing home, hospice facility or at home.
By law, premiums must cover 25% of the estimated Part B costs for enrollees ages 65 and older. Last year, premiums didn’t go up much because Congress limited increases for 2021 as part of the Continuing Appropriations Act, but now the Centers for Medicare and Medicaid Services must make up for those reduced premiums.
CMS also cited rising drug costs as a factor. The agency is currently reviewing Aduhelm — the controversial Alzheimer’s drug with an estimated $56,000 price tag — to determine whether to establish a national Medicare coverage policy for the medication. While the agency indicated that there was “significant uncertainty” around future coverage of Aduhelm, it’s still required to set aside a contingency reserve to cover unexpected spending increases, including drug costs.
Deductibles will also increase next year. The Part A deductible for inpatient hospital stays of up to two months will increase by $72 to $1,556. For Part B plans, the average deductible will increase by $30 to $233.
“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,” CMS Administrator Chiquita Brooks-LaSure said in a news release. “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.”
One provision of the Build Back Better Act would let Medicare negotiate prices for some medications and would penalize drug companies for price hikes that are higher than inflation. After failing to drum up the needed votes earlier this month, the House is revisiting the bill again.
In the meantime, CMS said the increased Medicare premiums for most people should be offset by a 6% increase to the cost of living adjustment in Social Security benefits. Someone who had received $1,565 per month from Social Security would see an additional $70.40 per month.
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