On August 21, 2023, the Centers for Medicare & Medicaid Services (CMS) released draft guidance on a new program that will allow individuals with Medicare to pay out-of-pocket (OOP) prescription drug costs in monthly payments. CMS explains that the Inflation Reduction Act gives people with Medicare part D the option to pay out-of-pocket costs in monthly payments spread out over the year starting in 2025. In the draft guidance, CMS provides information on topics such as identifying Medicare Part D enrollees likely to benefit from the program, the opt-in process for Part D enrollees, program participant protections, and the data collection needed to evaluate the program.
More on Guidance
“For people with Medicare Part D who face high costs early in the year, today’s announcement will ease the burden of out-of-pocket prescription drug costs,” said Department of Health and Human Services Secretary Xavier Becerra in a statement. “This is one more example of how the president’s prescription drug bill is reducing costs and increasing access to life-saving medicines for our Medicare beneficiaries.”
The program requires prescription drug plans to offer their beneficiaries the option to pay their OOP drug costs through monthly payments over the course of the plan year instead of at the pharmacy point of sale (POS) beginning January 1, 2025. Once a beneficiary opts into this program, they will pay $0 at the pharmacy counter for the remainder of the year. The prescription drug plan must then send monthly bills to the beneficiary that spreads their copayments out over the plan year. CMS provides the specific formulas to calculate the monthly costs and multiple examples in its Part One Guidance. For Part D beneficiaries who elect to participate in the program, particularly early in the year, the program essentially redesigns the Part D plan to be effectively a zero-cost share plan with a higher premium.
The prescription drug plan must also reimburse the network pharmacy the beneficiaries’ OOP amount. A key impact of this program is that prescription drug plans are now assuming the risk of beneficiaries’ non-payment of copayments. If a beneficiary fails to make monthly payments, the prescription drug plan can remove them from participation in the program following a two-month grace period and prevent the beneficiary from enrolling in the program for the following year. However, the prescription drug plan may not charge late fees or interest and it may not disenroll the beneficiary from the drug plan.
Further, prescription drug plans must begin making numerous system and operational updates to meet the billing, marketing, and claims processing requirements necessary to operationalize this program. Additionally, drug plans would need to develop outreach and educational material in compliance with the Part One Guidance. This includes undertaking targeted outreach to Part D enrollees “who are likely to benefit from the Program.” Such outreach includes direct outreach to beneficiaries, as well as establishing a mechanism to notify the pharmacy at POS when a beneficiary who is not enrolled in the program incurs OOP costs and would likely benefit from the program.
CMS intends to release Part Two of the Guidance by early 2024.