In August 2022, President Biden signed the Inflation
Reduction Act of 2022 (P.L. 117-169) into law. The new
drug law makes improvements to Medicare by expanding
benefits, lowering drug costs, and improving the
sustainability of the Medicare program for generations to
come. The new drug law provides meaningful financial
relief for millions of people by improving access to
aordable treatments and strengthening Medicare, both
now and in the long run.
For the first time, beginning in 2025, the new drug
law requires all Medicare prescription drug plans
(Medicare Part D plans) — including both stand-
alone Medicare prescription drug plans and Medicare
Advantage plans with prescription drug coverage
— to oer enrollees the option to pay out-of-pocket
prescription drug costs in the form of capped monthly
installment payments instead of all at once at the
pharmacy. This will be helpful for people with Medicare
Part D who have high cost-sharing earlier in the plan
year by spreading out those expenses over the course of
the year. While this program is available to anyone with
Part D, CMS will be developing tools that will help Part D
enrollees decide whether the program is right for them,
as not all enrollees may benefit from the program.
For simplicity, CMS has renamed the Maximum Monthly
Cap on Cost-Sharing Payments Program, established
by section 11202 of the Inflation Reduction Act, to
the Medicare Prescription Payment Plan. External
parties should also use this name in any guidance and
communications for the implementation of this program.
On August 21, 2023, CMS released dra guidance
that is the first of two parts of guidance detailing
the requirements and parameters of the Medicare
Prescription Payment Plan. This dra guidance includes
requests for public comment on key elements. CMS
will issue the final version of the part one guidance and
a dra version of part two guidance that addresses
additional program elements in early 2024. These
guidance documents build upon the technical
memorandum CMS issued on July 17, 2023.
Q: What is the Medicare Prescription Payment
Plan?
The Medicare Prescription Payment Plan is a new
program required under the Inflation Reduction Act
under which Part D sponsors must provide enrollees the
option to pay out-of-pocket prescription drug costs in the
form of monthly payments over the course of the plan
year, instead of all at once at the pharmacy, beginning in
2025. The Part D sponsor would then bill these program
participants monthly for any cost-sharing they incur
while in the program. The dra part one guidance,
along with the technical memorandum and forthcoming
dra part two guidance, outline the requirements and
procedures of the Medicare Prescription Payment Plan.
Q: What does the dra part one guidance
include?
The dra part one guidance contains:
• Program calculations for the monthly payment
amounts and detailed examples demonstrating the
calculations.
• Instructions for Part D sponsors on how to handle
monthly billing, including specific information that
must be included in the monthly bill.
• Requirements for Part D sponsors to promptly
reimburse pharmacies the cost-sharing amount that
would otherwise have been collected from Medicare
Prescription Payment Plan participants.
• A proposal for discussion on the claims processing
workflow and a process for claims adjudication for
prescription drug transactions under the program
that ensures participants are charged $0 at the
pharmacy.
• Proposed thresholds for identification of Part D
enrollees who are likely to benefit from the program
and Part D sponsor requirements for notifying
these individuals through the pharmacy about the
program.
• A discussion on the program’s interaction with
the Part D Low-Income Subsidy (LIS) program and
Fact Sheet: Medicare
Prescription Payment Plan
comment solicitation on how to ensure appropriate
outreach and education to enrollees who may be
eligible for low-income assistance programs.
• Requirements related to Part D enrollee election
into the program, including the various election
mechanisms that must be made available; standards
for how quickly election requests must be processed;
how the program interacts with mid-year plan
election changes; and rules regarding the types of
information that may and may not be collected
during the election process.
• Procedures for termination of Medicare Prescription
Payment Plan participation (both voluntary and
involuntary), reinstatement aer a prior termination,
and preclusion from future participation in the
program for failure to pay the monthly bills.
• Participant protections under the program, including
notice and grace period requirements if a monthly
bill has not been paid on time.
• Participant dispute resolution process requirements.
• Data submission requirements.
Q. What will the dra part two guidance
include? When will it be released?
The dra part two guidance will be released in early 2024
and have a 30-day comment period. It will contain, but
not be limited to:
• Part D enrollee outreach and education.
• Medicare Part D plan bid information.
• Monitoring and compliance requirements.
Q: How will Part D enrollees benefit under the
Medicare Prescription Payment Plan?
Being able to pay high cost-sharing amounts in the
form of monthly payments instead of all at once at the
pharmacy will improve access to and aordability of
prescription drugs for some people with Medicare Part
D. This option can help program participants who face
high cost-sharing for prescription drugs manage these
costs by spreading them out over the course of the plan
year. While this program is available to anyone with Part
D, CMS will develop tools that will help Part D enrollees
decide whether the program is right for them, as not all
Part D enrollees may benefit from the program.
Q: Who is likely to benefit from the Medicare
Prescription Payment Plan?
While this program is available to anyone with Medicare
Part D, enrollees with high cost-sharing earlier in the plan
year are more likely to benefit from the program. For
examples and more details about the monthly payment
calculations, please refer to the July 17, 2023 technical
HPMS memorandum and the dra part one guidance.
Tools, including easy-to-use monthly cost estimators,
which will help Part D enrollees and their families decide
whether to opt into this program, will be available in
time for open enrollment for plan year 2025.
Q. Will the Medicare Prescription Payment
Plan reduce individuals’ overall out-of-pocket
costs?
No, this program does not reduce the amount of
money that an individual pays in out-of-pocket costs;
it helps individuals with high costs spread those costs
out throughout the plan year. The Medicare Savings
Programs and Medicare’s Part D Low Income Subsidy
(also called LIS/Extra Help) are programs that help
reduce costs for individuals who qualify based on
income and resource limits, and we strongly encourage
individuals to check their eligibility for these programs
before they consider enrolling in the Medicare
Prescription Payment Plan.
Q: When can Part D enrollees opt into the
Medicare Prescription Payment Plan?
Starting with plan year 2025, Part D enrollees may opt
into the program prior to the beginning of a plan year, or
in any month during a plan year.
Q: How do Part D enrollees opt into the
Medicare Prescription Payment Plan?
Any Part D enrollee can opt into the program. Starting
with plan year 2025, Part D enrollees may opt into
the program by contacting their Part D sponsor and
completing the Medicare Prescription Payment Plan
election process. The dra part one guidance specifies
that the enrollee or their legal representative must
complete an election request to opt into the program,
and Part D sponsors must consider the election request
regardless of the mechanism, which may include the use
of a paper form, toll-free telephone number, or website
application process, all of which must be made available
by the Part D sponsor. Part D sponsors must process
election requests within 24 hours when an enrollee is
already enrolled in a Part D plan, and requests to opt
into the program during the plan year, to prevent drug
dispensing delays.
Q. What do plan sponsors need to tell Part
D enrollees who opt into the Medicare
Prescription Payment Plan?
When an election into the program has been approved,
the Part D sponsor must provide the participant with
an overview of the program, the eective date of the
enrollee’s participation in the program and examples of
the monthly cap calculations. The Part D sponsor must
also provide the participant with general information
about the LIS program under Part D, also known as Extra
Help, because LIS enrollment, for those who qualify, is
more advantageous than participation in the Medicare
Prescription Payment Plan alone. As discussed below,
CMS is developing outreach and educational materials to
share with people with Part D prior to the plan year.
Q: Are individuals in the Extra Help program
eligible to participate in the Medicare
Prescription Payment Plan?
Yes, Part D sponsors must provide all Part D enrollees
with the option to opt into the program, including those
in the Extra Help program. Individuals facing high cost-
sharing earlier in the plan year are more likely to benefit
from the program.
Q: For Part D enrollees who have opted
into the Medicare Prescription Payment
Plan, what cost-sharing will they pay at the
pharmacy, and how will they be billed for the
amounts due?
Part D enrollees who opt into the program, known as
program participants, will pay $0 at the pharmacy for a
covered Part D drug, instead of the cost-sharing amount
they would normally pay when filling a prescription. The
Part D sponsor must then bill program participants in
monthly installments for any cost-sharing incurred. A Part
D sponsor may not bill a participant who has opted into
the program but has not yet incurred any costs during
the plan year. CMS encourages Part D sponsors to oer
multiple means of payment, such as an electronic fund
transfer mechanism and payment by cash or check. In
the dra part one guidance, CMS also proposes several
requirements related to the information Part D sponsors
must include in their billing statements.
Q: Will opting into the program change
anything about Part D benefits?
No, total out-of-pocket Medicare Part D drug costs will
not change because of the program. Opting into the
program will not aect how people with Medicare move
through the Part D benefit or what counts toward their
deductible or annual out-of-pocket cost threshold. The
only dierence is how and when the program participant
pays their Part D cost-sharing (in monthly payments to
the plan instead of at the pharmacy).
Q: What types of drugs does the Medicare
Prescription Payment Plan apply to?
All covered Part D drugs are included in the program. Part
D sponsors may not exclude any covered Part D drugs,
and once a Medicare Part D enrollee has opted in, all of
their out-of-pocket Part D prescription drug costs will
be billed monthly, as required, while they remain in the
program.
Q: Can individuals opt out of the Medicare
Prescription Payment Plan once they have
opted in?
Yes. Part D sponsors must have a process in place to
allow their program participants to opt out during the
plan year. Part D sponsors are not permitted to require
a lump sum repayment if someone opts out, rather the
sponsor must continue to send monthly bills. However,
a person opting out of the program could choose to pay
o their remaining cost-sharing balance in one lump sum
or continue to pay the monthly amounts. Aer opting
out, the individual will pay any new out-of-pocket costs
directly to the pharmacy.
Q: Can an individual’s participation be
terminated from the Medicare Prescription
Payment Plan? And what program participant
protections will there be?
If a participant fails to pay the amount they are billed by
the Part D sponsor, their participation in the program
may be terminated. Importantly, while they would no
August 2023
longer be able to participate in the Medicare Prescription
Payment Plan, the Part D sponsor would not be permitted
to terminate their enrollment in the Part D plan for this
reason.
In the dra part one guidance, CMS is proposing a
number of protections for program participants. These
protections include requirements for Part D sponsors
to issue timely notices for missed payments, oer
a grace period of at least two months if a program
participant fails to pay a monthly billed amount, provide
a reinstatement process to allow individuals to resume
participation in the program in the same plan year if
they demonstrate good cause, and provide meaningful
procedures for the timely hearing and resolution of
grievances.
Q: What is the role of pharmacies in this new
Medicare Prescription Payment Plan?
For Part D enrollees who have already opted into the
Medicare Prescription Payment Plan, the Part D sponsor
will tell pharmacies that the program participant
does not need to pay anything when picking up their
prescription. Pharmacies will be paid in full by the Part
D sponsor, in accordance with Part D prompt payment
requirements.
The law requires Part D sponsors to notify a pharmacy
when one of their Part D enrollees incurs out-of-pocket
costs for covered Part D drugs that make it likely the
individual may benefit from the program. As provided in
the dra part one guidance, if a Part D enrollee has not
already opted into the program, the Part D sponsor will
notify the pharmacy to inform the individual about the
program if their cost-sharing for covered Part D drugs
exceeds a dollar threshold based on either an individual
prescription or all prescriptions filled on a single day. CMS
provided data for a range of thresholds in the dra part
one guidance but notes that above the $700 threshold,
there is minimal improvement in the proportion of those
notified who would actually benefit from the program.
CMS is seeking comment on the dollar threshold that
should trigger the notification to the pharmacy, including
the dollar amount within the range of $400-$700, and
whether a single prescription or all prescriptions filled in
a single day should count toward that threshold.
Q: How is CMS going to educate people with
Medicare Part D about this new program?
Outreach and education of people with Medicare Part D
and their caregivers is one of the most critical elements
of this program. This program will improve access to
Part D drugs for people with high cost-sharing but will
not benefit everyone. CMS will develop a broad range
of educational materials and tools for Part D enrollees,
pharmacies, prescribers, and others, that will be ready
in advance of open enrollment for plan year 2025. CMS
will also issue guidance for Part D sponsors concerning
targeted outreach prior to the plan year for their enrollees
who will likely benefit from the program.
Q: How can the public provide input on the
new Medicare Prescription Payment Plan?
CMS is using many tools to ensure interested parties’
voices are heard on implementation of the new program.
One such tool is the 30-day comment period for the dra
part one guidance, which opened on August 21, 2023, and
will conclude on September 20, 2023. Comments should
be sent to PartDPaymentP[email protected] with the
following subject line “Medicare Prescription Payment
Plan Guidance.” CMS will issue final part one guidance for
2025 in early 2024 aer considering the public comments
received in response to this dra guidance. In early 2024,
dra part two guidance will also be issued with a 30-
day comment period. Additionally, CMS will continue to
engage with stakeholders through meetings, listening
sessions, and other outreach activities.
