CMS Announces Monthly Payment Option for Out-of-Pocket Part D Costs

CMS has released draft guidance detailing a new program allowing Medicare beneficiaries to pay out-of-pocket Part D costs in monthly installments.

The Medicare Prescription Payment Plan is required under the Inflation Reduction Act and will take effect in 2025.

The program mandates Medicare Part D plan sponsors to offer Part D beneficiaries the option to pay their out-of-pocket costs for prescription drugs monthly over a year instead of at the point of sale. Part D sponsors must pay the pharmacy the out-of-pocket cost-sharing beneficiaries would have paid if they were not in the program. Sponsors will then bill beneficiaries monthly for the cost-sharing.

The program is available to all Medicare Part D beneficiaries, but CMS indicated that those incurring high out-of-pocket costs earlier in the plan year are more likely to benefit from the payment plan. The agency will develop tools to help beneficiaries decide if the program will be helpful.

While the program will not reduce beneficiaries’ overall out-of-pocket costs, spreading the costs throughout the year can help ease some cost-sharing burden, CMS said. Additionally, beneficiaries will owe $0 upfront when picking up medication at the pharmacy.

“People with Medicare are already feeling the benefits of the prescription drug law — such as free recommended vaccines and lower costs for insulin,” CMS Administrator Chiquita Brooks-LaSure said in the announcement. “The draft guidance CMS is releasing today is an important step in standing up a new program that will help certain people with Medicare prescription drug coverage who have high upfront drug costs.”

This is the first of two parts of draft guidance on the program. The part one guidance includes program calculations for the monthly payment amounts, instructions for Part D sponsors on handling monthly billing, requirements on reimbursing pharmacies for Part D sponsors, and proposed thresholds for identifying Part D beneficiaries who will likely benefit from the program.

In addition, the guidance details how the Part D Low-Income Subsidy (LIS) program will interact with the new program, participant protections, termination procedures, and participant dispute resolution requirements.

The second part of the guidance will be released in early 2024. It will focus on Medicare Part D beneficiary outreach and education, Medicare Part D plan bid information, and monitoring and compliance.

Part D beneficiaries can join the Medicare Prescription Payment Plan starting with plan year 2025 by contacting their Part D sponsor and completing the election process. Part D sponsors must also have a process to allow beneficiaries to opt out during the plan year.

CMS is gathering stakeholder feedback on the draft guidance until September 20, 2023, and plans to issue the final part one guidance in early 2024.