CMS Issues Draft Guidance on New Program to Allow People with Medicare to Pay Out-of-Pocket Prescription Drug Costs in Monthly Payments

New Medicare Prescription Payment Plan will help people pay Medicare Part D costs over the year instead of all at once

President Biden’s prescription drug law, the Inflation Reduction Act, gives people with Medicare prescription drug coverage (Medicare Part D) the option to pay out-of-pocket costs in monthly payments spread out over the year, starting in 2025. Today, the Centers for Medicare & Medicaid Services (CMS) released draft guidance for comment that outlines the requirements and procedures for certain aspects of the new Medicare Prescription Payment Plan. By enabling seniors and people with disabilities with Medicare Part D coverage to spread out cost sharing over the year, the program could reduce the burden of high upfront out-of-pocket prescription drug costs.

“For people with Medicare Part D who face high costs early in the year, today’s announcement will ease the burden of out-of-pocket prescription drug costs,” said HHS Secretary Xavier Becerra. “This is one more example of how the President’s prescription drug bill is reducing costs and increasing access to life-saving medicines for our Medicare beneficiaries.”

“People with Medicare are already feeling the benefits of the prescription drug law — such as free recommended vaccines and lower costs for insulin,” said CMS Administrator Chiquita Brooks-LaSure. “The draft guidance CMS is releasing today is an important step in standing up a new program that will help certain people with Medicare prescription drug coverage who have high upfront drug costs.”

Today’s draft guidance focuses on helping Medicare Part D plan sponsors and pharmacies prepare for the new program and build the necessary infrastructure for successful implementation. The draft guidance provides information on topics such as identifying Medicare Part D enrollees likely to benefit from the program, the opt-in process for Part D enrollees, program participant protections, and the data collection needed to evaluate the program. The draft guidance solicits comment on these topics and on strategies to help ensure eligible Part D enrollees benefit from programs like the Medicare Savings Programs and Extra Help to lower their out-of-pocket prescription drug costs.

Given the size of the new program, CMS is releasing the guidance in two parts, starting with the guidance released today. Additional draft guidance will be released for comment in early 2024. The second part of the guidance will focus on Medicare Part D enrollee outreach and education, Medicare Part D plan bid information, and monitoring and compliance. CMS also intends to develop tools, such as calculators, to help people with Medicare Part D and their caregivers learn what monthly payments may look like under the new program.

“The new Medicare Prescription Payment Plan helps those who struggle the most with high upfront prescription drug costs and provides a way to ensure people with Medicare can get the life-saving medications they need,” said Meena Seshamani, MD, PhD, CMS Deputy Administrator and Director of the Center for Medicare. “Public feedback, both through comments on this draft guidance and extensive engagement, continues to be instrumental in the implementation of the prescription drug law and delivering on the promise of more affordable drugs for people with Medicare.”

CMS is seeking comments from the public on today’s draft guidance. The comment period is open for 30 days, and comments received by September 20, 2023, will be considered during development of the final guidance. CMS anticipates issuing final part one guidance in early 2024.

CMS is committed to collaborating and engaging with the public on the implementation of the Inflation Reduction Act. CMS is working closely with patients and consumers, Medicare Part D plan sponsors and Medicare Advantage organizations, drug companies, hospitals and health care providers, wholesalers, pharmacies, and other interested parties. Public feedback contributes to the success of the Inflation Reduction Act, and this guidance is one tool, among many, that CMS will use to ensure interested parties know when and how they can make their voices heard on implementation of the drug law.

For a fact sheet on the Medicare Prescription Payment Plan, please visit: https://www.cms.gov/files/document/medicare-prescription-payment-plan-fact-sheet.pdf

For an implementation timeline for the Medicare Prescription Payment Plan, please visit: https://www.cms.gov/files/document/medicare-prescription-payment-plan-timeline.pdf

For the draft guidance, please visit: https://www.cms.gov/files/document/medicare-prescription-payment-plan-part-1-guidance.pdf