The Medicare Prescription Payment Plan (M3P) was established by the Inflation Reduction Act of 2022 (IRA). Since then, the Centers for Medicare and Medicaid Services (CMS) has released guidance to help plan sponsors understand M3P requirements.
CMS issued two parts of draft guidance. It issued Part One in August of 2024. CMS finalized the guidance in late February of 2024. Part One guidance mainly focused on calculating monthly bills, billing requirements, enrollment, and some beneficiary outreach requirements. CMS released Part 2 draft guidance in February 2024 and focused primarily on enrollee outreach.
On July 16, 2024, CMS released the final Medicare Prescription Payment Plan Part 2 Guidance. Here’s an overview of the key clarifications and modifications:
Modifications Included in the Final M3P Part 2 Guidance
Plans That Only Offer $0 Cost Sharing Need Not Comply
Some plan sponsors only offer Programs for All-inclusive Care for the Elderly (PACE) or other programs without prescription cost-sharing. As a result, no beneficiaries would benefit from the M3P program. Sending members plan information may be confusing. As a result, CMS clarified that plans that exclusively offer $0 cost-sharing need not comply with Medicare Prescription Payment Plan requirements.
CMS No Longer Requires Plan Sponsors to Send a Paper Election Form with the Membership ID Card Requirement
The Part 2 draft guidance indicated that plan sponsors must send a paper M3P election form with the membership ID card. Commenters objected to this for several reasons, including that sending the paper M3P election form with the member ID to those that are not likely to benefit from the program – like those in the LIS program, those in Employer Group Waiver Plan (EGWP) or those in dual-eligible special needs plans (D-SNP) – would confuse members. Additionally, some felt it may confuse those who had already enrolled.
As a result, CMS eliminated the requirement that plan sponsors send a M3P election form with membership ID cards. Plan sponsors may decide to do so , but if they don’t, they must send the M3P election form separately but within the same timeframe as the membership ID cards. Because plan sponsors typically send membership ID cards only to new members, plan sponsors may send M3P election forms and materials only to new enrollees or may choose to send them to all enrollees.
Likely to Benefit Determinations During the Plan Year Need Not Be Based on Prior Authorization Processes Specifically
M3P Part 2 draft guidance required plan sponsors to identify those likely to benefit from the M3P program. It specifically required that “…if Part D sponsors have prior authorization or other utilization management edits in place for a drug that, based on their benefit structure, would result in OOP costs above the pharmacy POS notification threshold, then the Part D sponsor must undertake outreach to the Part D enrollee, informing them of the Medicare Prescription Payment Plan and of the opportunity to opt into the program.”
Commenters indicated operational challenges exist because prior authorization is a clinical determination, not a financial one, and therefore often those systems lack cost information.
Recognizing the operational challenges of relying on prior authorization requests, CMS struck that requirement from the final guidance. However, plans must still develop strategies for ensuring outreach to those likely to benefit from the M3P program based on information gathered during the plan year, which may include prior authorizations. CMS indicated it may revisit this requirement in future guidance.
Clarifying Communication Requirements to Program Participants
CMS created several M3P model documents to help plan sponsors communicate the program to participants. Some plans may not leverage those model documents, instead developing their own.
In the final M3P Part 2 guidance, CMS added necessary information for plan sponsors that develop communication documents. For example, if a plan creates an election request form, it must include all the fields in the model request form and specific language.
CMS made modifications throughout Section 30.3 related to specific requirements for plan-developed communications.
Clarifying What Happens if Supplemental Coverage Modifies the Patient Payment Amount
Some beneficiaries have supplemental coverage that modifies the out-of-pocket amount and may lower it below Likely to Benefit notification requirements. However, in rare circumstances, the final patient payment amount returned to the pharmacy by a supplemental payer may be higher than the original cost-sharing amount.
CMS clarified in the final guidance that sponsors may only include the amount of the original cost-sharing (i.e., the lower amount) as determined by their plan-specific benefits.
Clarifying Whether Sponsors Have Discretion In Ensuring Long-Term Care Pharmacies Provide the Likely to Benefit Notice
Long-term care pharmacies typically don’t have a point-of-sale encounter with an enrollee, who is usually a resident of a long-term care facility. Instead, the care facility uses post-consumption billing.
Draft M3P Part 2 guidance indicated that the plan sponsor “is not required” to ensure the pharmacy provides the Likely to Benefit notice before dispensing the prescription. The final guidance modified the language to state that the plan sponsor “should not require” the pharmacy to provide the Likely to Benefit notice. Instead, the sponsor should require the notice when billing the enrollee.
Re-adjudicating Prescription Drug Claims for New Participants
Beneficiaries may visit the pharmacy to pick up a high-cost drug. At the pharmacy, they’ll receive a Likely to Benefit notice. They may leave the pharmacy without the prescription while considering opting into the M3P program. They may also exit the pharmacy without paying for other low-dollar prescriptions or pay for those low-dollar prescriptions.
In the draft guidance, should the beneficiary enroll and return to the pharmacy, the plan sponsor was required to have the pharmacy re-adjudicate all outstanding prescription claims – even the low-dollar ones that didn’t trigger an M3P notification – so they could be included in the M3P program. Commenters raised several objections to this process, including an additional burden for pharmacies, the potential for many pharmacies to be involved, a lack of visibility by plans for what has or hasn’t been paid, and more.
As a result, CMS modified its guidance. It only requires re-adjudication of the claim that triggered the Likely to Benefit notice. Enrollees may request any unpaid claims at the same pharmacy be re-adjudicated, but CMS only requires plan sponsors to re-adjudicate those claims upon request.
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