Medicare Part D participants will have payment options in 2025

CMS released additional guidance regarding Medicare Prescription Payment Plan (MPPP) outreach and education, www.medicarerights.org reported July 25, 2024. The MPPP, sometimes referred to as “smoothing,” was established in the Inflation Reduction Act (IRA) and allows Medicare beneficiaries with Part D to opt into an alternative payment structure for their cost-sharing for covered Part D medications.

Starting in 2025, people enrolled in a Part D plan will have the option to spread their out-of-pocket Part D costs over the calendar year rather than paying directly at the pharmacy counter. It is critical to keep in mind that the program does not reduce or increase a person’s Part D cost-sharing obligations–it only shifts them. This program launches at the same time as other Part D restructuring changes included in the IRA, most notably the establishment of a $2,000 out-of-pocket cap.

As described by the IRA and CMS, when someone opts into the MPPP, his or her plan will communicate that election to their chosen pharmacy as part of their payment transaction. At the point of sale, the person will not be charged. Instead, the plan will pay the beneficiary’s cost-sharing obligation–deductible, coinsurance or copay, depending on their plan details–to the pharmacy. Then, using a formula set forth in the IRA statute, the plan will send the beneficiary a monthly bill. Opting into the program does not change how enrollees move through the Part D benefit or what counts toward their deductible or $2,000 out-of-pocket cap.

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Whether the MPPP will be a good choice for a particular beneficiary will depend on a variety of individual circumstances and preferences. In the most recent guidance, CMS requires plans to identify and conduct outreach to individuals who are likely to benefit from the program–those who incurred $2,000 in Part D cost-sharing expenses between January 1 and September 30 of 2024, and those who, in 2025, incur out-of-pocket costs for a single prescription that equal or exceed $600. The guidance also provides some examples of beneficiaries who are less likely to benefit from the MPPP. Read more about the MPPP here, including the most recent guidance, here.