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CMS Issues Additional Guidance on Program to Allow People with Medicare to Pay Out-of-Pocket Prescription Drug Costs in Monthly Payments

February 20, 2024
The Inflation Reduction Act’s Medicare Prescription Payment Plan will allow people to pay Medicare Part D out-of-pocket costs over the course of the year starting in 2025
Today, the Centers for Medicare & Medicaid Services (CMS) released the second part of draft guidance for the Medicare Prescription Payment Plan that outlines requirements for Medicare Part D plan sponsors, including outreach and education requirements, pharmacy processes, and operational considerations, for the program’s first year, 2025. The draft guidance is part of the implementation of President Biden’s prescription drug law, the Inflation Reduction Act, which will help reduce the burden of high upfront out-of-pocket prescription drug costs for seniors and people with disabilities with Medicare prescription drug coverage by allowing them to spread out costs over the year rather than requiring they pay in one lump sum.
“Too many seniors and people with disabilities can’t afford to fill their prescriptions at the pharmacy – and that is unacceptable. Thanks to President Biden’s Inflation Reduction Act, certain Medicare patients will be able to spread their costs across smaller, monthly payments,” said Health and Human Services Secretary Xavier Becerra. “In addition to adding flexibility through a payment plan, the law cuts drug costs through provisions such as caps on out-of-pocket costs and the cost of insulin, and a mandate on drug companies to pay a rebate to Medicare if they raise prices faster than inflation. We are committed to ensuring that all people – including people with Medicare – receive the care they deserve at a cost they can afford.”
“One option under the Inflation Reduction Act is the Medicare Prescription Payment Plan, a program specially designed to help people with high drug costs have more predictable costs throughout the year,” said CMS Administrator Chiquita Brooks-LaSure. “People with Medicare prescription drug coverage should look at the Medicare Prescription Payment Plan as well as our Extra Help program to see what programs are right for them. CMS is continuing to implement the many important provisions of the Inflation Reduction Act on time to help older Americans and people with disabilities afford the care they need.”
Today’s draft guidance provides information on outreach, education, and communications requirements to ensure that people with Medicare Part D, particularly those who are most likely to benefit from this program, are aware of the Medicare Prescription Payment Plan. The guidance complements CMS’ forthcoming national education and outreach efforts to engage interested parties, including pharmacies, providers, and beneficiary advocates, on program implementation and ensure that they have the support and materials needed to communicate effectively on the program.
“Older Americans and people with disabilities who have experienced sticker shock from high prescription drug prices will have the option in 2025 to spread out-of-pocket costs out over the year, rather than paying all at once,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “This specifically helps alleviate cash flow issues for people who face high out-of-pocket costs early in the year that may prevent these individuals from taking a drug that could keep them healthy. The draft guidance we have released is a blueprint to help operationalize this program to ensure both health care organizations and people with Medicare are empowered and educated. That way, people in Medicare can make the best choices for their health and financial needs.”
The Medicare Prescription Payment Plan, which goes into effect in 2025, is part of the Inflation Reduction Act’s suite of provisions aimed at lowering prescription drug and health care costs. Other provisions of the law are already helping to lower costs for people with Medicare. On January 1, 2024, the law expanded eligibility for the Low-Income Subsidy program (LIS or “Extra Help”) under Medicare Part D. Nearly 300,000 people with low and modest incomes currently enrolled are now benefitting from the program’s expansion, and 3 million people are eligible for the program but not yet enrolled. In addition, as of January 1, 2024, for some people enrolled in Medicare Part D who have very high drug costs, for the first time, their out-of-pocket costs will be capped at about $3,300 to $3,800 for most people. The Medicare Prescription Payment Plan complements these provisions by allowing individuals to spread their spending over the year rather than paying the total out-of-pocket cost upfront.
CMS is seeking comments from the public on today’s draft part two guidance. The comment period is open for 30 days. Comments received by March 16, 2024 will be considered during development of the final guidance. Comments should be sent to PartDPaymentPolicy@cms.hhs.gov with the following subject line: “Medicare Prescription Payment Plan Guidance – Part Two.”
The draft part two guidance builds on the previously released draft part one guidance and fact sheet (released on August 21, 2023). Final part one guidance is forthcoming.
For an implementation timeline for the Medicare Prescription Payment Plan, please visit: https://www.cms.gov/files/document/medicare-prescription-payment-plan-timeline.pdf