The “Medicare Prescription Payment Plan” and You

The Center for Medicare and Medicaid Services (CMS) has announced a new program designed to even the keel of beneficiary spending on prescription drugs. Historically, Part D has been known for creating a turbulent pricing situation for those with high-dollar prescription drug needs. And while steps have been taken time and time again, none have seemed to quell the problem yet. But how will this be any different, exactly? Let’s give it a go.

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Starting in 2025, CMS will require Part D sponsors to allow beneficiaries the option to pay their Part D prescription drug costs in monthly installments, a style similar to renting a DVD from Netflix back in the days of yore. The beneficiary would then be absolved of any out-of-pocket (OOP) payments at the time the drug is received at the pharmacy counter. The responsibility of payment to that pharmacy is transferred to the Part D plan sponsor.

CMS will require sponsors to make this program available for all Part D beneficiaries through an opt-in process. Sponsors also will be required to reach out to pharmacies with prospective patients for this program.

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The stand-out feature, however, is the dynamic monthly pricing. Plan sponsors will have to calculate the specifics of the beneficiary’s Part D drug costs and divide it between the number of months left in the plan year. This will provide a more flexible billing experience without allowing any slips into nonpayment status. Because of this unique design, bills might differ from month to month or person to person, depending on factors such as what drug is needed and which phase of coverage the beneficiary is currently in.

But if the number changes from month to month depending on all that information, how is it any different? Enter the spending cap. Plan sponsors will be required to set a monthly cap on the amount a beneficiary can pay each month. These two policies will work together to help make payments more predictable and manageable for beneficiaries.

Nitty-gritty

It is important to point out to those already enrolled in Part D that participating in this new endeavor does not affect their enrollments in any way. This program, likely to be named the “Medicare Prescription Payment Plan”, also does not change how the beneficiary will move through the coverage phases.

Those who order their prescriptions over longer supply periods will have that month’s payment calculated only over the month the prescription is filled. The total will not be pro-rated over the course of the time the beneficiary will be taking that medication.

Will it work?

While these payment plans coupled with the monthly cap will not lower the cost of prescription drugs, it should help those with high-cost drugs avoid the tidal wave of high costs coming for them every January and February. Interested beneficiaries already enrolled in Part D will be happy to know their coverage will not be affected, either. Starting late 2024, Medicare agents should start spreading the news to their Part D clients about the new--and improved--payment plans available.