CMS Issues Guidelines for Medicare Prescription Payment Plan for IRA



The Centers for Medicare and Medicaid Services (CMS) released the Medicare Prescription Payment Plan Draft Part Two Guidance on February 15, 2024, as part of the Inflation Reduction Act’s efforts to reduce high prescription drug costs. This act encourages Part D members to opt for monthly capped payments for their out-of-pocket prescription drug costs instead of paying all at once at a pharmacy. The Part Two Guidance focuses on outreach, education, and communication requirements for Part D plans (PDPs), requiring them to provide educational materials about the benefits of the program to their members, and to adopt various methods of identifying and communicating with the enrollees likely to benefit from the program.

Updated Guidance on Medicare Prescription Payment Plan Released by CMS

In its ongoing effort to combat high prescription drug costs, the Centers for Medicare and Medicaid Services (CMS) announced the Medicare Prescription Payment Plan Draft Part Two Guidance on February 15, 2024. This is the next chapter of the Inflation Reduction Act’s (IRA) ‘Out-of-Pocket (OOP) Smoothing Program’, which allows Part D members to pay for their prescription costs in monthly installments rather than upfront at the pharmacy.

After the Part One Guidance covered operational requirements, Part Two focuses on outreach, education, and communication, detailing how PDPs should inform and educate members about the Program.

Outreach and Education Requirements for PDPs

The IRA mandates PDPs to provide Part D members with educational materials about the Program, effective in 2025. According to the Part Two Guidance, PDPs must:

  • Send new members program information and an ‘election request form’ alongside their membership ID cards;
  • Display Program information on their websites, including a simple explanation of the Program’s workings and complaint filing process;
  • Identify existing Part D members who could benefit from the Program based on their prescription costs;
  • Communicate with identified members using the CMS standardized ‘Medicare Prescription Payment Plan Likely to Benefit Notice’, due to be released in summer 2024.

CMS also advises Part D sponsors to share Program information with contracted providers and network pharmacies. It assures that all necessary educational materials will be made available to Plan D sponsors.

Marketing materials relevant to the Program will be updated, and new ones developed. This includes updating the model Evidence of Coverage, Annual Notice of Change, and Explanation of Benefits. Furthermore, CMS is developing a model ‘Medicare Prescription Payment Plan Participation Request Form’ for members and a ‘Part D Sponsor Notice to Acknowledge Acceptance of Election into the Medicare Prescription Payment Plan’ for PDPs to inform members of their program enrolment.

Pharmacy Processes

As critical partners in the Program, pharmacies are required to notify members who could benefit from the Program at the point of sale. PDPs will have to update all network contracts to include this requirement. In retail pharmacies, a hard copy of the ‘Medicare Prescription Payment Plan Likely to Benefit Notice’ should be provided when prescriptions are picked up. For mail order pharmacies, the member must be notified via phone call or their preferred method.

Additional PDP Operational Requirements

Operational changes and requirements necessary for implementing these changes are also addressed in the Guidance. The bid pricing tool will be updated in 2025 to reflect unsettled balances associated with the Program as plan losses in the administrative expense portion of the Part D bid. CMS clarifies that these losses must be excluded from the numerator in calculating the medical loss ratio. Also, there will be no changes to Direct and Indirect Remuneration reporting due to the Program.

Public comments for the Part Two Guidance will be accepted until March 16, 2024 at PartDPaymentPolicy@cms, with the subject line “Medicare Prescription Payment Plan Guidance – Part Two.”

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