EXAMINING PLAN-LEVEL BID DEVIATIONS IN MEDICARE PART D: EVIDENCE FROM 2016-2025
Author(s)
Angela Liu, PhD, Minji Kim, PharmD, ScM, Jeromie Ballreich, MS, PhD;
Johns Hopkins Bloomberg School of Public Health, Baltimore, MD, USA
Johns Hopkins Bloomberg School of Public Health, Baltimore, MD, USA
OBJECTIVES: In 2026, Medicare stand-alone prescription drug plans (PDPs) submitted bids reflecting a 35% increase in expected per-enrollee costs, far exceeding projections. Proposed explanations include beneficiary responses to reduced cost sharing, increased insurer overhead, administrative changes, and broader drug spending trends. This study characterizes plan-level bidding behavior over time and examines factors associated with bid deviations and market exits.
METHODS: Using publicly available Centers for Medicare & Medicaid Services (CMS) PDP landscape, bid, and premium files, we constructed plan-contract-state “unit plans” for each year from 2016 to 2025. Bid deviation was defined as the difference between each plan’s bid and the national average bid (NAB). We conducted descriptive analyses to assess temporal trends, geographic variation, and differences between standard and enhanced plans. We compared bid deviations among plans that exited, entered, or remained in the market between 2024 and 2025, and examined geographic and market competition characteristics among plans that changed the sign of their bid deviation.
RESULTS: In 2025, 704 PDPs were observed; 24.6% submitted bids above the NAB, similar to 2024 (23.2%) but substantially lower than 2023 (38.9%). Enhanced plans comprised the majority of PDPs across years. Among 1,226 plans active in both 2024 and 2025, most maintained consistent bid positions relative to the NAB (82.1%), while 14.0% shifted from below- to above-average bids and 3.9% shifted in the opposite direction. Plans exiting the market in 2025 had lower premiums in 2024 than plans that remained (median $41.9 [IQR 16.9-99.2] vs. $54.6 [IQR 39.6-78.8]).
CONCLUSIONS: PDP bidding behavior exhibits substantial heterogeneity across plans, years, and geographic markets. Tracking plan-level bid deviations over time provides critical context for understanding the unexpected 2026 bid increase and may help identify policy-relevant drivers of insurer behavior, including market exits and pricing strategies.
METHODS: Using publicly available Centers for Medicare & Medicaid Services (CMS) PDP landscape, bid, and premium files, we constructed plan-contract-state “unit plans” for each year from 2016 to 2025. Bid deviation was defined as the difference between each plan’s bid and the national average bid (NAB). We conducted descriptive analyses to assess temporal trends, geographic variation, and differences between standard and enhanced plans. We compared bid deviations among plans that exited, entered, or remained in the market between 2024 and 2025, and examined geographic and market competition characteristics among plans that changed the sign of their bid deviation.
RESULTS: In 2025, 704 PDPs were observed; 24.6% submitted bids above the NAB, similar to 2024 (23.2%) but substantially lower than 2023 (38.9%). Enhanced plans comprised the majority of PDPs across years. Among 1,226 plans active in both 2024 and 2025, most maintained consistent bid positions relative to the NAB (82.1%), while 14.0% shifted from below- to above-average bids and 3.9% shifted in the opposite direction. Plans exiting the market in 2025 had lower premiums in 2024 than plans that remained (median $41.9 [IQR 16.9-99.2] vs. $54.6 [IQR 39.6-78.8]).
CONCLUSIONS: PDP bidding behavior exhibits substantial heterogeneity across plans, years, and geographic markets. Tracking plan-level bid deviations over time provides critical context for understanding the unexpected 2026 bid increase and may help identify policy-relevant drivers of insurer behavior, including market exits and pricing strategies.
Conference/Value in Health Info
2026-05, ISPOR 2026, Philadelphia, PA, USA
Value in Health, Volume 29, Issue S6
Code
HPR128
Topic
Health Policy & Regulatory
Topic Subcategory
Pricing Policy & Schemes
Disease
No Additional Disease & Conditions/Specialized Treatment Areas