The Definitive ‘Part One Guidance’ For Medicare Prescription Payment Plan: A Comprehensive Breakdown

Prescription drugs© fstop123 / Getty Images Signature / Canva

WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services (CMS) recently issued the final ‘Part One Guidance‘ for the incoming Medicare Prescription Payment Plan. This directive is set to smooth the path for Medicare Part D plan sponsors, paving the way for a frictionless transition for people within the Medicare Part D scheme when they opt to partake in this plan.

This breakthrough in prescription drug law is already cutting down high upfront out-of-pocket prescription drug costs for seniors and the disabled with coverage under Medicare. This includes a cap on out-of-pocket costs for a month’s supply of each covered insulin product at $35 under Medicare, alongside ensuring Advisory Committee on Immunization Practices (ACIP)-recommended vaccines are provided at no cost for those with Medicare prescription drug coverage.

The Medicare Prescription Payment Plan, all set to commence in 2025, provides an option for those with Medicare prescription drug coverage (Medicare Part D) to pay their out-of-pocket costs in monthly installments spread across the year. This is a marked shift from the current requirement where they have to pay in full at the pharmacy counter each time they fill a prescription.

Health and Human Services Secretary Xavier Becerra commented, “No one should have to choose between paying for medicine or putting food on the table.” Thanks to President Biden’s low cost prescription drug law, the Inflation Reduction Act, fewer seniors and people with disabilities are having to make this arduous choice.

Chiquita Brooks-LaSure, the CMS Administrator, adds that the guidance is a critical step to help people with high upfront drug costs distribute their cost-sharing over the year. The CMS remains steadfast in implementing the historic Inflation Reduction Act to help reduce costs and ensure access to necessary prescriptions for those under Medicare.

The final “part one” guidance—after taking into account public comments on the draft guidance—primarily discusses the operational requirements for Medicare Part D plan sponsors as they gear up for the new program. The discussions revolve around identifying likely beneficiaries from the program, the enrolment process, protection for program participants, and the data collection required to assess the program’s effectiveness.

It also imposes a requirement on Part D sponsors to alert a pharmacy to give information on the program to anyone who meets a $600 out-of-pocket threshold on a single prescription at the point-of-sale. This notification complements the communications to be provided to people with Medicare Part D before and during the coverage year.

People under Medicare facing high out-of-pocket costs at the year’s start will find the drug pricing law has made those costs more manageable with the introduction of the Medicare Prescription Payment Plan. This ‘part one’ guidance will ensure a seamless experience by setting a clear expectation for plans to create a uniform experience for those opting into the program.

The issuance of this guidance has been paralleled by the release of an Information Collection Request (ICR) for the Plan, including model materials for Medicare Part D plan sponsors to use in their interactions with Part D enrollees about the program. Feedback on these materials is invited through the ICR public comment process. Comments must be received by April 29, 2024, to be considered. The draft ‘part two’ guidance for the program is open for comment until March 16, 2024.

The Medicare Prescription Payment Plan is designed to work in tandem with the Inflation Reduction Act’s other provisions to reduce prescription drug and health care costs. This two-pronged approach aims to lower drug costs and make them more manageable for those under Medicare.

From January 1, 2024, people under Medicare Part D with very high drug costs will no longer have to pay cost sharing for their prescription drugs in the catastrophic phase of the system. By 2025, the out-of-pocket prescription drug costs for all individuals with Medicare Part D will be capped at $2,000.

The law has also expanded eligibility for full benefits under the Low-Income Subsidy program (LIS or “Extra Help”) under Medicare Part D from January 1, 2024. Nearly 300,000 people with low and modest incomes currently enrolled in LIS are benefiting from the program’s expansion, including lower 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.

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