CMS Releases Final Part Two Guidance to Help People with Medicare Prescription Drug Coverage Manage Prescription Drug Costs

President Biden’s Lower Cost Prescription Drug Law Will Allow People with Medicare to Spread Out-of-Pocket Prescription Drug Costs into Monthly Payments

The Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), continues to deliver on President Biden’s commitment to reduce the burden of high, upfront out-of-pocket prescription drug costs through the implementation of the President’s Inflation Reduction Act. Today, CMS is releasing the final part two guidance regarding plan outreach and education for the Medicare Prescription Payment Plan, which aims to ensure that people with Medicare prescription drug coverage, especially those most likely to benefit, are aware of the payment option. Starting in 2025, the Medicare Prescription Payment Plan provides the option to people with Medicare prescription drug coverage to spread the costs of their prescription drugs over the calendar year rather than paying in full at the pharmacy counter each time they fill a prescription. People with Medicare must opt into the Medicare Prescription Payment Plan to utilize the new benefit. Notably, this payment option launches at the same time that all individuals with Medicare prescription drug coverage will begin to have their annual out-of-pocket prescription drug costs capped at $2,000, providing needed financial relief for high prescription drug costs.

“The Medicare Prescription Payment Plan is one more way that President Biden is delivering on his promise of more predictable monthly costs for the American people,” said HHS Secretary Xavier Becerra. “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 have to make such difficult decisions and instead can focus on improving their health.”

“This new payment option provides people the option to spread out the costs of their prescription drugs over the calendar year and eliminate the burden of paying the total out-of-pocket cost upfront,” said CMS Administrator Chiquita Brooks-LaSure. “CMS is continuing to implement the many important provisions of the Inflation Reduction Act to help people with Medicare access the prescriptions they need.”

This final part two guidance complements CMS’ forthcoming national education and outreach efforts to engage interested parties, including Part D plans, pharmacies, providers, drug manufacturers, and beneficiary advocates, on program implementation. The goal of this effort is to provide the support and materials necessary to determine who may benefit from the program and guidance on how to educate them about this new payment option. This guidance updates and finalizes requirements proposed in the draft part two guidance released in February 2024.

Today’s Medicare Prescription Payment Plan final part two guidance, which complements the final part one guidance released on February 29, is also accompanied by the release of the final Medicare Prescription Payment Plan model materials. Medicare Part D plans can use the model materials when communicating to Part D enrollees about the Medicare Prescription Payment Plan.

“At CMS, we are working hard to empower and educate people with Medicare to make the best choices for their health and financial needs,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “The Medicare Prescription Payment Plan complements other important changes to prescription drug coverage within the Inflation Reduction Act, and we encourage people with Medicare prescription drug coverage to look at this payment option and our other programs, such as Extra Help, to see what is right for them.”

The Inflation Reduction Act is already helping to reduce the burden of high upfront out-of-pocket prescription drug costs for people with Medicare, including:

• Capping out-of-pocket costs for a month’s supply of each covered insulin product at $35;

• Making Advisory Committee on Immunization Practices (ACIP)-recommended vaccines available at no cost for people with Medicare prescription drug coverage. (Over 10 million people with Medicare Part D received a free vaccine in 2023 thanks to the Inflation Reduction Act).

• Expanding eligibility for the Extra Help program under Medicare Part D, which provides prescription drug coverage with no deductible, no premiums, and fixed, lowered copayments for certain medications to certain individuals.

• As of January 1, 2024, some enrollees now have their out-of-pocket drug costs capped at about $3,500. Additional savings arrive in 2025 when yearly Part D out-of-pocket costs will be capped at $2,000.

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

For the updated Information Collection Request (ICR) for the Medicare Prescription Payment Plan model plan materials, please visit: https://www.cms.gov/files/zip/medicare-prescription-payment-plan-model-materials.zip

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

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