HHS Issues Guidance for Medicare Prescription Drug Payment Plan

The U.S. Department of Health and Human Services has released the final part one guidance for the Medicare Prescription Drug Payment plan. Beginning in 2025, people with Medicare Part D drug coverage will have the option to pay out-of-pocket costs in monthly payments spread out over the year.

The guidance outlines the operational requirements for Medicare Part D plan sponsors as they prepare for the new program. Sponsors will be required to notify both patients and pharmacies information about who meets a $600 out-of-pocket threshold based on a single prescription at the point-of-sale. Additionally, plans are required to make notifications during the coverage year. HHS officials said this approach will help ensure that those most likely to benefit from the program get the information.

In this final guidance the $600 threshold for a single prescription was established. HHS officials said this helps to identify Part D enrollees with a very high likelihood of benefiting from the program.

The guidance also finalizes the requirement that Part D sponsors must process election requests within 24 hours during the plan year. It provides guidance on how to handle monthly billing and provides procedures for termination and reinstatement, as well as protections for participants and dispute resolution requirements.

The Drug Payment Plan complements the Inflation Reduction Act’s other efforts. One such effort for people who have high out-of-pocket drug costs began Jan. 1, 2024. People enrolled in Medicare Part D no longer have to pay a cost sharing in the catastrophic phase of the program. Also beginning this year was an expansion of who qualifies for the Low-income Subsidy Program.

Also starting Jan. 1, 2025, the IRA will cap out-of-pocket drug costs at $2,000.

HHS has also released a draft guidance for part two and is accepting comments through March 16, 2024. The part two guidance aims to provide additional information for sponsor about outreach and education with participants. It also provides operational requirements Part D plan sponsors, including guidance for non-retail pharmacies, Part D bidding, and medical loss ratio instructions.