Oct 5 -- Centers for Medicare & Medicaid Services, Health and Human Services (HHS), invites comments by December 5, 2022 on the Bid Pricing Tool (BPT) for Medicare Advantage (MA) Plans and Prescription Drug Plans (PDP).
Bid Pricing Tool (BPT) for Medicare Advantage (MA) Plans and Prescription Drug Plans (PDP) -- Medicare Advantage organizations (MAO) and Prescription Drug Plans (PDP) are required to submit an actuarial pricing “bid” for each plan offered to Medicare beneficiaries for approval by CMS. The MAOs and PDPs use the Bid Pricing Tool (BPT) software to develop their actuarial pricing bid. The competitive bidding process defined by the “The Medicare Prescription Drug, Improvement, and Modernization Act” (MMA) applies to both the MA and Part D programs. It is an annual process that encompasses the release of the MA rate book in April, the bid's that plans submit to CMS in June, and the release of the Part D and RPPO benchmarks, which typically occurs in August.
Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), and implementing regulations at 42 CFR, Medicare Advantage organizations (MAOs) and Prescription Drug Plans (PDPs) are required to submit an actuarial pricing “bid” for each plan offered to Medicare beneficiaries for approval by the Centers for Medicare & Medicaid Services (CMS).
Title I of the MMA established a program to offer prescription drug benefits to Medicare enrollees through Prescription Drug Plans. MMA Title II revised several aspects of the Medicare+Choice program (renamed Medicare Advantage), including the payment methodology and the introduction of “Regional” MA plans. CMS payments to PDPs and MA plans are on a market-based competitive approach.
MAOs and PDPs use the Bid Pricing Tool (BPT) software to develop their actuarial pricing bid. The information provided in the BPT is the basis for the plan’s enrollee premiums and CMS payments for each contract year. The tool collects data such as medical expense development (from claims data and/or manual rating), administrative expenses, profit levels, and projected plan enrollment information. By statute, completed BPTs are due to CMS by the first Monday of June each year.
CMS reviews and analyzes the information provided on the Bid Pricing Tool. Ultimately, CMS decides whether to approve the plan pricing (i.e., payment and premium) proposed by each organization. CMS is requesting to continue its use of the BPT for the collection of information for CY2023 through CY2026. This iteration updates labels/parameters and removes/adds input cells to mirror contract year 2023 information.
BPT draft information collection instruments and technical documentation: https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing-items/cms-10142