What the Medicare Prescription Payment Plan Means for Part D Outreach

As part of the Inflation Reduction Act of 2022, the federal government issued new drug laws to provide financial relief to Medicare beneficiaries with Part D coverage. These new laws called for the formation of the Medicare Prescription Payment Plan (M3P) through the Centers for Medicare & Medicaid Services (CMS). Under this new program, Part D plans will need to adjust how they educate members about cost sharing and their options under the M3P program.

Dive into the regulatory guidelines outlined in the M3P Part Two Guidance and discover how to address new outreach requirements in 2025.

What is the M3P Program?

Beginning with calendar year 2025, Medicare Advantage Part D plans are required to provide all Part D enrollees the option to pay their out-of-pocket Part D prescription drug cost in monthly amounts over the course of the plan year, instead of paying at the point of sale. Part D enrollees can voluntarily opt into the program prior to or at any time during the plan year.

Once opted into the program, the member will pay $0 at the point of sale. The Part D plan will send a monthly bill to the member. This amount cannot exceed a monthly cap established by CMS and detailed in the Part One Guidance.

The M3P Timeline

The M3P program will launch in Contract Year (CY) 2025, but there are actions plans must take before that date. CMS has produced guidance to help Part D plans prepare for the operational impact of the M3P program and develop outreach materials to educate members about their options.

The full timeline includes:

• CMS issued the Draft Part One Guidance on August 8, 2023.
• Draft Part Two Guidance came out on February 15, 2024.
• CMS is voluntarily soliciting comments on Part Two Guidance until March 16, 2024. Comments should be submitted to PartDPaymentPolicy@cms.hhs.gov with the subject line “Medicare Prescription Payment Plan Guidance – Part Two.”
• Final Part Two Guidance will be released in Summer 2024.
• CMS will also release model materials specific to the program in Summer 2024.
• The M3P program will go into effect on January 1, 2025.

Guidance Part One and Two Summary

Both Guidance Part One and Two pertain to the first year of the program for CY 2025. Guidelines may change in future years.

Part One Guidance outlines the basic principles of the M3P program, how monthly payments are calculated, billing requirements, pharmacy obligations, enrollee opt-in and outreach.

Part Two Guidance builds on information provided in Part One but focuses on Part D plans’ obligations for enrollees’ education, outreach and communications related to the program. This guidance requires plans to create both general educational materials and outreach for all members as well as targeted materials for members who would benefit from the program. CMS plans to prepare model member materials that explains the program and what is expected of plans in greater detail.

The Part Two Guidance also provides information on pharmacy processes and how to prepare for CY 2025 program implementation.

General Outreach, Education and Communications Requirements

Part D plans are required to educate members about the benefits of the M3P program according to specific requirements and timelines outlined by CMS.

Communication and Education Prior to the Contract Year

Plans must produce and share promotional materials with potential members before enrollment that informs them about their ability to participate in the program.

Upon enrollment, Part D plans are required to mail members a physical copy of their membership ID card and include:

• Information about the program
• A Medicare Prescription Payment Plan election request form

Members must also receive an updated explanation of coverage (EOC) and annual notice of coverage (ANOC). CMS will release a new version of the standard EOC and ANOC documents in spring 2024 with more information about the program for members.

Part D websites will need to be updated with information about M3P. Plans may use CMS developed educational material. The website should also allow members to opt into the program and generate a confirmation that the request is received.

During the Contract Year: Explanation of Benefits

CMS plans on sharing a final explanation of benefits (EOB) model for CY 2025 in spring 2024 as part of the general issuance of CY 2025 model materials.

The revised EOB will include information about the M3P program and will explain that enrollees who opt in will receive a separate monthly billing statement. The EOB also explains that costs included in the EOB might differ from what a M3P participant paid at the point of sale.

Targeted Outreach for Relevant Members

CMS will require Part D plans to perform targeted outreach directly to Part D enrollees who are likely to benefit from the program both prior to and during the CY. These enrollees include individuals who have had annual out-of-pocket costs of at least $2,000 in the first three quarters.

CMS is developing a standardized notice named “Medicare Prescription Payment Plan Likely to Benefit Notice” to share with these members. This notice should be sent to members in the following manner:

• By mail or email to members identified as most likely to benefit based on their utilization in 2024 prior to CY 2025.
• By mail, email or telephone any time a claims document is approved for a medication that would trigger a large out of pocket payment during CY 2025. This must follow the same timeframe as claims document approval notification.
• In person at the point of sale any time an out-of-pocket amount exceeds a certain amount, which will be determined by CMS at a later date.

Plans must assess their current Part D enrollees’ prescription costs from January to September of the current year during the fourth quarter. Based on these members’ incurred costs or any other analyses that identify members most likely to benefit from the program, plans must send these members a “Medicare Prescription Payment Plan Likely to Benefit Notice” by December 7, 2024.

Accepting Program Requests and Other Notices

Plans should be prepared to accept requests to participate in M3P via mail, phone and website submissions.

CMS is also developing model documents for the following to be released before open enrollment. These include:

• Election Request Form
• Notice of election approval
• Notice of failure to pay
• Notice on involuntary termination, which applies when a member is discharged from the program for non-payment
• Notice of voluntary termination

CMS does not plan to release a point-of-sale election option for 2025 but has not excluded the option for future years.

Part D Operational Requirements

Any unsettled balances owed by participants under M3P are treated as losses. As a result, the Part D bid pricing tool will be modified to reflect projected losses associated with the M3P. In addition, unsettled amounts owed to the plan will be considered administrative costs and will be excluded from the medical loss requirement numerator.

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