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Sept 29 -- Centers for Medicare & Medicaid Services, Health and Human Services (HHS), invites comments by November 28, 2023 on the 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 CY2025 through CY2028. This iteration updates labels/parameters and removes/adds input cells to mirror contract year 2025 information.      

The purpose of the BPT is to collect the actuarial pricing information for each plan. It is an Excel workbook with multiple worksheets and special functions through which bidders present to CMS their plan pricing information. Bidders enter information, such as plan experience, projected enrollment, and risk profile, and the BPT calculates the plan premiums and other values that drive the bidding process. CMS maintains and updates each BPT file and releases new versions every April.

For CMS, the BPT is an organizational tool that is used to structure bid information into a common, standardized format, which helps to automate important tasks such as—bid review, bid audit, and even plan payment. The BPT calculates the plan’s bid, enrollee premiums, and payment rates. CMS publishes this beneficiary premium information using a variety of formats (https://www.medicare.gov/, the Medicare & You handbook, Summary of Benefits marketing information) for the purpose of beneficiary education and enrollment.

MA Data from BPTs: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/DataFiles
Draft BPT and technical documentation: https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing/cms-10142
FRN: https://www.federalregister.gov/d/2023-21523 #2

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