Biden-Harris Administration Issues Final Guidance to Help People with Medicare Prescription Drug Coverage Manage Prescription Drug Costs

Continuing the ongoing implementation of President Biden’s prescription drug pricing law, the Inflation Reduction Act of 2022, the Centers for Medicare & Medicaid Services (CMS) released the final part one guidance – PDF for the new Medicare Prescription Payment Plan. This guidance helps ensure that Medicare Part D plan sponsors can successfully implement the Medicare Prescription Payment Plan and effectively build the necessary infrastructure to provide a seamless experience for people enrolled in a Medicare Part D prescription drug plan who elect to participate in this program.

The drug law is already helping reduce the burden of high upfront out-of-pocket prescription drug costs for seniors and people with disabilities with Medicare, including by capping out-of-pocket costs for a month’s supply of each covered insulin product at $35 under Medicare, and making Advisory Committee on Immunization Practices (ACIP)-recommended vaccines available at no cost for people with Medicare prescription drug coverage. The Medicare Prescription Payment Plan, which begins in 2025, will give people with Medicare prescription drug coverage (Medicare Part D) the option to pay out-of-pocket costs in monthly payments spread out over the year rather than requiring they pay in full at the pharmacy counter each time they fill a prescription.

“No one should have to choose between paying for medicine or putting food on the table. Thanks to President Biden’s lower cost prescription drug law, the Inflation Reduction Act, fewer seniors and people with disabilities are making this difficult decision,” said Health and Human Services Secretary Xavier Becerra. “For people who get their prescriptions through Medicare Part D and face high costs early in the year, we are easing the burden by allowing payments to be spread out over time. HHS will continue tackling high health care costs on all fronts so that every American can benefit from access to life-saving medicines.”

“The guidance released today is an important step in helping certain people with Medicare prescription drug coverage who have high upfront drug costs to spread out their cost sharing over the year,” said CMS Administrator Chiquita Brooks-LaSure. “CMS remains committed to implementing the historic Inflation Reduction Act in order to help people with Medicare lower costs and access the prescriptions they need.”

This final part one guidance — which considered public comments received in response to the draft part one guidance – PDF released on August 21, 2023 — focuses on outlining the necessary operational requirements for Medicare Part D plan sponsors as they prepare for the new program. The guidance addresses 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.

The final part one guidance requires Part D sponsors to notify a pharmacy to provide information on the program for anyone who meets a $600 out-of-pocket threshold based on a single prescription at the point-of-sale. This required notification is in addition to the communications that will be provided to people with Medicare Part D before and during the coverage year, as is outlined in the draft part two guidance – PDF for the program published on February 15, 2024. This multi-prong approach will help ensure that those most likely to benefit from the program get the information they need to determine whether to participate in the Medicare Prescription Payment Plan, while reducing the risk of identifying Part D enrollees for whom this program may not be as helpful. The guidance also finalizes the requirement that Part D sponsors must process election requests within 24 hours during the plan year.

“People in Medicare who face very high out-of-pocket costs at the start of the year will be relieved to hear that the drug pricing law will make those costs more manageable with the arrival of the Medicare Prescription Payment Plan,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “This part one guidance will ensure a seamless experience for people with Medicare by setting clear expectations for plans to create a uniform experience for people who opt into the program.”

Today’s guidance is accompanied by the release of an Information Collection Request (ICR) for the Medicare Prescription Payment Plan, which includes model materials for Medicare Part D plan sponsors to use when communicating to Part D enrollees about the program. CMS is seeking feedback on the materials through the ICR public comment process. The comment period is open for 60 days, and comments must be received by April 29, 2024 to be considered. In addition, the draft part two guidance – PDF for the program is open for comment until March 16, 2024.

The Medicare Prescription Payment Plan complements the Inflation Reduction Act’s other provisions that lower prescription drug and health care costs. The pieces of the law work together to lower drug costs and make them more manageable for people in Medicare.

• As of January 1, 2024, people enrolled in Medicare Part D who have very high drug costs will, for the first time, no longer have to pay cost sharing for their prescription drugs in the catastrophic phase of the program.
• Starting in 2025, all individuals with Medicare Part D will have their out-of-pocket prescription drug costs capped at $2,000.
• On January 1, 2024, the law also expanded eligibility for full benefits under the Low-Income Subsidy program (LIS or “Extra Help”) under Medicare Part D. Nearly 300,000 people with low and modest incomes currently enrolled in LIS are now benefiting from the program’s expansion including lowering drug costs such as no deductible, no premiums, and fixed, lowered copayments for certain medications. An additional 3 million people could benefit from the Extra Help program now who are not currently enrolled.
• The law also ensures people with Medicare Part D and people with Part B who receive insulin delivered through a pump pay no more than $35 for a month’s supply of each covered insulin product.
• It also provides coverage without patient cost sharing of recommended vaccines for people who have Medicare Part D.

For the fact sheet on the final part one guidance for the Medicare Prescription Payment Plan, please visit: https://www.cms.gov/files/document/fact-sheet-medicare-prescription-payment-plan-final-part-one-guidance.pdf – PDF

For the Information Collection Request (ICR) for the Medicare Prescription Payment Plan model plan materials, please visit: https://www.cms.gov/medicare/regulations-guidance/legislation/paperwork-reduction-act-1995/pra-listing/cms-10882

For the draft part two guidance fact sheet, please visit: https://www.cms.gov/files/document/fact-sheet-medicare-prescription-payment-plan-draft-two-guidance.pdf – PDF

For an updated implementation timeline for the Medicare Prescription Payment Plan, please visit: https://www.cms.gov/files/document/medicare-prescription-payment-plan-timeline.pdf – PDF