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High Part D premium hikes in CMS' crosshairs for 2026 bids

CMS said it has, for the first time, rejected some standalone Medicare Part D standalone plan sponsors because they imposed significant premium increase.

Sara Heath
By
Published: 29 Jul 2025

The Centers for Medicare & Medicaid Services has published its preliminary technical Medicare Part D bid information for the 2026 contract year, with updates intended to limit significant increases in cost-sharing and premium hikes.

The changes in how CMS approves certain standalone prescription drug plan (PDP) sponsors have resulted in the first-ever rejections of standalone PDP bids. Rejected standalone PDP bids did not address the agency's concerns about significant year-over-year premium increases, CMS said, and they were also market outliers.

"CMS is committed to upholding affordability, choice and access for Medicare beneficiaries while safeguarding taxpayer dollars," the agency said in a statement. "As shown by the outcome of our bid negotiations, we are taking strong, proactive measures to ensure sponsors that choose to participate in the Medicare program by offering standalone PDPs are aligned with these goals, and we will continue to exercise CMS' bid negotiation authority again in future years."

Average bid amounts, base beneficiary premiums rise

In addition to outlining changes in how CMS will accept or reject standalone PDP bids, the agency unveiled cost increases in the national average monthly bid amount (NAMBA) and the base beneficiary premium (BBP) for 2026.

Both figures are expected to increase.

For the NAMBA, average monthly bid costs shake out to $239.27, up from $179.45 in 2025 and $64.28 in 2024. This figure is calculated by taking an average of all Part D plan bids for basic Part D benefits, weighted by the number of enrollees in each plan. CMS uses this number to determine the government subsidy to plans.

Growth in the BBP is more modest. The BBP represents the average Part D basic premium across most of the Part D market. For the 2026 contract year, the BBP will be $38.99, up from $36.78 in the 2025 contract year.

CMS retools Part D Premium Stabilization Demonstration for 2026

For 2026, CMS will be updating the parameters for the Part D Premium Stabilization Demonstration, a program that was designed to help standalone PDPs assess how Inflation Reduction Act changes will alter healthcare utilization and costs.

CMS stated that Part D plan sponsors have more experience with how the IRA affected utilization and costs and, therefore, that it would retool some of these Stabilization Demonstration parameters.

For the 2026 contract year, the agency will reduce the uniform base beneficiary premium reduction from $15 to $10, boost the limit on a plan's total Part D premium from $35 to $40 and eliminate narrowed risk corridor thresholds.

"By reducing the amount of premium stabilization from the government in 2026, we are facilitating the program's return to operating under regular market conditions," CMS said.

The agency reiterated that the Stabilization Demonstration is voluntary but noted that plan sponsors that did not participate for the 2025 contract year may not participate for the 2026 contract year. Exceptions include new plan benefit packages (PBPs) offered by a Part D sponsor that participated in 2025 and opts to participate in 2026 and new Part D sponsors entering the market for the first time this contract year.

Those intending to participate must inform CMS using the Health Plan Management system by August 4.

Sara Heath has reported news related to patient engagement and health equity since 2015.

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