28 Oct New Medicare Prescription Payment Plan: What You Need to Know
The Medicare Prescription Payment Plan is a brand-new payment option that will be available to people with Medicare beginning in 2025. It implements a concept often referred to as “smoothing,” which can improve prescription drug affordability by allowing patients to spread their out-of-pocket costs more evenly throughout the year. Participation is voluntary for Medicare patients, and the first opportunity to opt-in will be during annual open enrollment beginning on October 15, 2024.
Research suggests that if implemented properly, the Medicare Prescription Payment Plan could increase adherence to prescribed medicines.[1] The following Q&A and attached resources are meant to help patients and providers who are interested in learning more about the Medicare Prescription Payment Plan and how to enroll.
What is the Medicare Prescription Payment Plan?
The Medicare Prescription Payment Plan is a new, voluntary opt-in payment option that will help Part D beneficiaries manage their out-of-pocket prescription drug costs by spreading them out over the course of the plan year. The program takes effect Jan. 1, 2025, and applies to all covered Part D out-of-pocket drug costs, up to the maximum out-of-pocket cap ($2,000 for 2025).[2]
Who is eligible?
There are no restrictions on eligibility. All Part D and Medicare Advantage plans are required to notify beneficiaries about the program and allow them to participate. However, the program is most likely to help those beneficiaries with high out-of-pocket costs, especially those who would hit the maximum out-of-pocket cap early in the plan year.
How does it work?
Once a beneficiary opts into the program, they will pay $0 at the pharmacy for their prescription(s). They will then receive a monthly bill from their plan that uses the statutory formula to calculate a monthly payment based on incurred out-of-pocket costs. It’s important to note that monthly payments under the program are not fixed and can vary from month to month as an individual incurs additional prescription costs each month.[3]
Can beneficiaries leave the program?
Beneficiaries can voluntarily withdraw from the program if they decide they no longer wish to participate. However, they will still be responsible for any remaining costs owed to the plan. Beneficiaries can also be removed from the program by their Part D plan due to missed payments. However, any missed payments will not incur any interest or fees. Additionally, a plan cannot indefinitely “lock out” a beneficiary from re-enrolling due to missed payments. Once the beneficiary pays all owed costs to the plan, the plan must allow the beneficiary to re-enroll into the program if the beneficiary requests to do so.
Attached Resources:
- Medicare Prescription Payment Plan Open Enrollment One-Pager
- Medicare Prescription Payment Plan 101 for Providers
- Medicare Prescription Payment Plan 101 for Patients – English
- Medicare Prescription Payment Plan 101 for Patients – Spanish
[1] University of Pennsylvania. Monthly Out-Of-Pocket Cost Caps are Needed Under Medicare Part D to Improve Access to Specialty Drugs. September 2020. https://www.panfoundation.org/app/uploads/2021/09/Potential-impact-of-policies-to-modify-Medicare-Part-D.pdf
[2] For example, if a beneficiary receives a medicine that costs $2,000 out of pocket in January (hitting the out-of-pocket cap), instead of having to pay the pharmacy $2,000 immediately, the Part D plan would bill $167 ($2,000/12) monthly for the duration of the year.
[3] Beneficiaries can elect into the program through their plan at any time prior to or during the plan year through 3 different election options: telephone, the plan’s website, and a paper form