2024

GOP On Attack On Questionable CMS Part D Demonstration The GOP is on the attack over the Centers for Medicare and Medicaid Services’ (CMS) announcement of a demonstration project to stabilize 2025 Part D premiums. CMS hurriedly put together the demo after it saw huge increases in Part D premiums come in during the 2025 bid cycle. This was due to the Inflation Reduction Act’s (IRA) shifting of huge costs from the government to health plans and out-of-pocket cost reductions. CVS, the biggest standalone Part D plan, apparently recommended that CMS create the program, although one already exists in law covering just a piece of the benefit. The conservative Paragon Health Institute says the program could cost $10 billion over three years to limit premiums by bailing out insurers. The IRA approach on Part D was flawed and the public will be hurt by high premiums, but I continue to

CVS Struggles Financially; Undertakes $2 Billion In Cost-Cutting CVS slashed its full-year guidance in its Q2 investor call and has begun a multi-year initiative to generate as much as $2 billion in savings. CVS has been hit by very high utilization in its Medicare Advantage (MA) line and plans to shed about 10% of its Medicare lives in 2025. Its overall medical loss ratio (MLR) is about 90% through 1H 2024. Its Aetna line is performing so poorly that it terminated its recently-hired Aetna president and CVS Health CEO Karen Lynch will take over day-to-day control. She formerly was president of the unit and knows it well. CVS missed its revenue target but exceeded its margin expectations with $1.8 billion in Q2. CVS’ MA line has negative margins now, but the benefit reductions and contraction it plans in 2025 will return it to 4% to 5% MA margins over time. Lynch

Republicans Ask GAO If CMS’ Proposed Part D Premium Stabilization Program Is Legal A group of House and Senate Republicans are asking the congressional Government Accountability Office (GAO) if the Centers for Medicare and Medicaid Services’ (CMS) proposed additional premium stabilization program for standalone Part D (PDP) plans is legal. CMS announced the creation of the program after it received bids that showed premiums would skyrocket despite some protections in the Inflation Reduction Act (IRA). The Part D changes in the IRA were much touted as protecting consumers by lowering out-of-pocket (OOP) costs. It also shifted huge costs to plans. These changes were not adequately funded by the government and thus plans had to reduce benefits in other areas and increase premiums. CMS was caught flat-footed and quickly created the program recently to avoid an October Surprise during open enrollment. I have issues with whether CMS has the statutory authority