The average monthly bid submitted by insurers for 2026 prescription drug plans increased 33% from last year, according to data released by the CMS.
Medicare beneficiaries have two options for receiving outpatient prescription drug insurance: They can enroll in a Medicare Advantage plan that includes drug coverage or a standalone Part D plan that supplements traditional Medicare.
Insurers contract with the federal government to administer Part D plans. Each summer, health plans submit a bid to the CMS, estimating their benefit payments and administrative costs for the average Medicare beneficiary.
Regulators use this data to calculate the nationwide average bid and the base premium — what beneficiaries have to pay, plus the difference between their plan’s bid and the nationwide average bid.
The CMS also pays a direct subsidy to plans, which fills the gap between average benchmark and the base premium. The direct subsidy for 2026 will be $200.28, rising from $142.67 this year, according to TD Cowen analysts.
In a fact sheet on the bid data published Monday, the CMS said it took “unprecedented action” to hold insurers accountable for premium increases, including by negotiating bid terms and conditions, and denying bids that included significant increases in cost sharing or a decrease in benefits.
Additionally, the CMS announced it would make some changes to the Part D Premium Stabilization Demonstration, which was first put in place in 2025 to keep premiums steady and give more predictable options to enrollees.
The demonstration initially included a uniform reduction of $15 to the base beneficiary premium, a year-over-year increase limit of $35 on a plan’s total Part D premium and narrowed risk corridors. For next year, regulators will decrease the uniform reduction to $10 and increase the Part D limit to $50, as well as cutting the narrowed risk corridor thresholds entirely. “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,” the CMS wrote.