The Inflation Reduction Act (IRA) was signed into law in August 2022 with the goal of expanding Part D benefits, lowering drug costs, and improving the sustainability of the Medicare program. Medicare Part D sponsors have spent the last one and half years implementing various provisions (i.e., cap on insulin cost-sharing, $0 cost-share for ACIP-recommended vaccines, $0 cost-share in the catastrophic phase of the prescription drug benefit, and expansion of the low-income subsidy full benefit) of the IRA. One of the most significant operational challenges facing Part D sponsors in 2025 is the implementation and administration of the Medicare Prescription Payment Plan. To assist plan sponsors in implementing the Medicare Prescription Payment Plan, CMS issued the following guidance:
- Medicare Prescription Payment Plan Implementation Timeline
- Medicare Prescription Payment Plan Final Part One Guidance Fact Sheet
- Medicare Prescription Payment Plan Final Part One Guidance
- Summary and Sample Calculations Technical Memo
- Medicare Prescription Payment Plan Draft Part Two Guidance Fact Sheet
- Medicare Prescription Payment Plan Draft Part Two Guidance
Additionally, CMS has issued Information Collection Requests for the following aspects of the Medicare Prescription Payment Plan:
- Medicare Advantage and Prescription Drug Programs: Part C and D Explanation of Benefits
- Collection of Prescription Drug Data from MA-PD, PDP, and Fallout Plans/Sponsors for Medicare Part D Payments
- Medicare Advantage and Prescription Drug Programs: Part C and Part D Medicare Advantage Prescription Drug (MARx) System Updates for the Medicare Prescription Payment Plan Program
- Medicare Part D Reporting Requirements
- Medicare Advantage and Prescription Drug Programs: Part C and Part D Medicare Prescription Payment Plan Model Documents
- Part D Sponsor Notice to Acknowledge Acceptance of Election into the Medicare Prescription Payment Plan
- Medicare Prescription Payment Plan Participation Request Form
- Part D Sponsor Initial Notice for Failure to Make Payments under the Medicare Prescription Payment Plan
- Part D Sponsor Notification of Voluntary Removal from the Medicare Prescription Payment Plan
- Medicare Prescription Payment Plan Likely to Benefit Notice
- Part D Sponsor Notice for Failure to Make Payments under Medicare Prescription Payment Plan – Notification of Termination of Participation in the Medicare Prescription Payment Plan
BluePeak published a summary of the Medicare Prescription Payment Plan Final Part One guidance along with next steps for Part D sponsors to consider. With the release of the draft part two guidance, CMS provides additional information (with a request for feedback) on Part D enrollee education, outreach and communications related to the Medicare Prescription Payment Plan. Additionally, CMS addresses its expectations regarding providing the likely to benefit point-of-sale notification at pharmacies that do not directly interact with Part D enrollees. Finally, CMS provides Part D sponsors with instructions related to the 2025 bid, medical loss ratio, and monitoring/compliance and audits.
Decision Points to Consider
With so much available information and guidance, it can be difficult for Part D sponsors to determine what they should be considering and what decisions need to be made. Below are some decision points that Part D sponsors should consider in light of the release of the draft Medicare Prescription Payment Plan part two guidance.
- Will the Part D sponsor contract with a third party, rely on the pharmacy benefit manager, or develop the Medicare Prescription Payment Plan program themselves?
- Has the Part D sponsor engaged its actuaries to determine potential losses from the Medicare Prescription Payment Plan and incorporate the potential losses into the administrative costs of the bid?
- What member marketing and communication materials need to be updated to meet the educational requirements of the Medicare Prescription Payment Plan? Will the Part D sponsor use CMS-developed education materials or create their own?
- How does the new member enrollment process need to adjust to ensure that information regarding the Medicare Prescription Payment Plan and a participation request form is provided with the membership ID card hard copy mailing?
- Does additional time need to be built in the Part D sponsors marketing material review process to account for updates to the website and existing model documents, the introduction of new model documents, and the development of educational materials?
- What will oversight and compliance for the Medicare Prescription Payment Plan look like not only for implementation but also ongoing?
These are just a small set of questions that Part D sponsors need to think about as they prepare for the Medicare Prescription Payment Plan. It is also important for Part D sponsors to remember that although the program is effective January 1, 2025, Part D sponsors must be ready by September 30, 2024, to send updated Annual Notices of Change that include information about the Medicare Prescription Payment Plan and to begin to provide education about and election into the program by the beginning of the Annual Election Period (open enrollment).
Overwhelmed by the Medicare Prescription Payment Plan requirements?
Let BluePeak help you take those next steps to set your plan up for success in 2025.
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