The Department of Health and Human Services (HHS), in conjunction with the Centers for Medicare and Medicaid Services (CMS), is striving to alleviate the financial strain of medication costs on the elderly and disabled populations who rely on Medicare with the Medicare Prescription Drug Payment Plan. CMS has released final part two guidance for CY 2025 on July 16, 2024, to prepare stakeholders for its implementation.

The inception of this plan is rooted in the broader context of President Biden's Inflation Reduction Act, a legislative effort aimed at curbing the economic pressures faced by citizens across the nation. The Medicare Prescription Drug Payment Plan is a beacon of hope for those burdened by the high upfront costs of medications. Set to commence in 2025, the plan offers beneficiaries the option to spread their prescription drug expenses throughout the year, rather than facing steep costs at the pharmacy counter with each refill. This change not only eases the immediate financial burden but also aligns with the broader initiative to cap annual out-of-pocket prescription drug costs at $2,000.

The rollout of this plan is accompanied by comprehensive guidance and educational efforts spearheaded by CMS. These initiatives are designed to ensure that beneficiaries, particularly those poised to benefit the most, are well-informed about the new payment option. The final part two guidance released by CMS is a critical component of this educational framework, providing clarity and direction for the various stakeholders involved in the program's implementation. The guidance provides clarification, and the article below discusses the final guidance's updates on several policies and requirements for Part D sponsors, pharmacies, and enrollees regarding the program.

Requirements for Part D Plan Sponsors

The final part two guidance clarified several items, including that while the Medicare Prescription Drug Payment Plan is applicable to all Part D plans, it has no practical application for Programs for All-Inclusive Care for the Elderly (PACE) participants or enrollees in plans that exclusively charge $0 cost-sharing for Part D covered drugs. Additionally, CMS does not expect Part D plans that exclusively charge $0 cost-sharing for covered Part D drugs to all plan enrollees to offer enrollees the option to pay their out-of-pocket (OOP) costs through monthly payments over the course of the plan year or otherwise comply with the final part one guidance or this final part two guidance. If a Part D plan has any enrollees that could pay any cost-sharing, even a nominal amount, under the Part D plan at any point during the year, then this clarification would not be applicable to such a plan.

A key change in the final part two guidance concerns the requirements for Part D sponsors to establish mechanisms to identify Part D enrollees likely to benefit from the program throughout the plan year and notifications that occur at the pharmacy. The Medicare Prescription Drug Payment Plan requires sponsors to maintain a mechanism to notify pharmacies when an enrollee incurs OOP costs for covered Part D drugs that make it likely the enrollee may benefit from the program, and ensure that pharmacies inform the enrollee about the program. While Part D sponsors are still required to establish reasonable procedures for performing this identification, the final part two guidance no longer requires Part D Plan sponsors to base their criteria on prior authorization processes specifically. Instead, sponsors may develop their own methodology to make the determinations. Note, CMS did not change guidance on the point of sale (POS) identification and notification process. The final part two guidance reiterated that Part D plan sponsors are required to provide all Part D enrollees the option to participate in the program and to notify them of the program in promotional and educational materials. Model materials were also released with the revised guidance. The final guidance further requires sponsors to do the following:

• In addition to the required content under 42 CFR § 423.2265(b), Part D sponsors will be required to include information on the Medicare Prescription Drug Payment Plan on their websites. Section 70.3.1 of the Medicare Prescription Drug Payment Plan final part one guidance outlines the requirement for Part D sponsors to have available on their websites a Medicare Prescription Drug Payment Plan election request mechanism that Part D enrollees can use to opt into the program and that provides the individual with evidence the election request was received (e.g., a confirmation number). Section 30.3.1.4 of this final part two guidance outlines requirements for this website election request mechanism and additional information that must be displayed regarding the plan.
• Include information on the program with the membership ID card mailing or in a separate mailing within the same timeframe, and update the Evidence of Coverage (EOC), Annual Notice of Change (ANOC), and Explanation of Benefits (EOB) to include educational information about the program.
• Perform targeted outreach to enrollees likely to benefit from the program prior to and during the plan year, and provide them with a notice, a program election request form, and additional information about the program.
• Process election requests and communicate acceptance of the program election to the enrollee, and incorporate the program into their compliance programs and reporting requirements.

Plan sponsors may be subject to audits by CMS or its contractors regarding the implementation of the program.

Requirements for Pharmacies

Pharmacies are required to provide the notice to enrollees identified as likely to benefit from the program at the point of sale (POS), or in settings without in-person encounters, such as mail-order pharmacies, via telephone or their preferred contact method. Long-term care pharmacies should provide the notice at the time of their typical enrollee cost-sharing billing process. Indian Health Service (IHS), Tribe and Tribal Organization, and Urban Indian Organization (I/T/U) pharmacies are not required to return the pharmacy notification indicating the enrollee is likely to benefit from the program. The final guidance requires pharmacies to readjudicate prescription drug claims for new program participants if the prescriptions have not yet been picked up and paid for.

Requirements for CMS

The part two guidance requires CMS to provide educational materials to Part D enrollees on the option to participate in the program and is developing new Part D educational resources and updating existing Part D resources to include information on the program. CMS will work with interested parties to ensure they have sufficient support and materials needed to effectively communicate the availability and nuances of the program to individuals. CMS will also monitor sponsors' performance, including collecting data on plan grievances and beneficiary complaints entered in the Medicare Complaints Tracking Module (CTM). CMS may conduct specific audits of Part D sponsors' implementation of the program and may initiate audit activity that requires additional data collection or site visits.

Response to Comments Regarding Consumer Protections

In its response to comments, CMS acknowledged the importance of consumer financial protections in the context of plan sponsors and their dealings with Part D sponsors. According to Section 40 of the final part one guidance, these entities are required to adhere to all relevant federal and state laws when it comes to matters such as payment plans, credit reporting, and debt collection. This is particularly pertinent when collecting any unpaid balances that arise from the program.

Furthermore, the guidance clarifies that any unpaid balances are considered to be related to the provision of health care services to an individual. Consequently, such debts are classified as "medical information" under the Fair Credit Reporting Act (FCRA), which has implications for how this information is handled in credit reporting.

The part two guidance noted that the Consumer Financial Protection Bureau (CFPB) offers an Advisory Opinion Program. This program is designed to provide clarity to regulated entities about their legal and regulatory responsibilities through written guidance. Entities can request advisory opinions on a range of issues within the CFPB's jurisdiction, with the aim of these opinions being to offer interpretive rules to aid in compliance. Information about the Advisory Opinion Program is available on the CFPB's website.

The specific model materials that CMS developed for the Medicare Prescription Drug Payment Plan and that are outlined in this section were issued through the Medicare Advantage and Prescription Drug Programs: Part C and Part D Medicare Prescription Drug Payment Plan Model Documents (CMS-10882; OMB 0938-1475) ICR package.

The Medicare Prescription Drug Plan will start in 2025, and the regulatory and technical guidance is lengthy. Please review the final part 1 guidance and part 2 guidance in its entirety and reach out to counsel for further discussion of what is required to comply.