From Draft to Final: Key Takeaways from Medicare Prescription Payment Plan Comments

The Medicare Prescription Payment Plan enables Medicare Part D beneficiaries to spread the costs of their prescriptions over the year rather than paying at the point of sale. For seniors with high prescription drug costs early in the year, it helps limit the up-front costs at the pharmacy. In doing so, it could increase medication adherence, improving medical outcomes.

The Centers for Medicare and Medicaid Services (CMS) released guidance in August of 2023 and asked for comments as it finalizes that guidance, which should be available shortly. Here is a roundup of some of those Medicare Prescription Payment Plan comments that have been publicly published by affected trade organizations and our opinion:

Point-of-Sale Election

In the draft guidance, CMS did not require a point-of-sale (POS) enrollment mechanism on the proposed go-live date, 1/1/2025, and only suggested such a mechanism may exist in 2026.

A coalition of organizations representing people living with severe and chronic health conditions – including the Arthritis Foundation, the Cystic Fibrosis Foundation, and the American Lung Association – strongly urged CMS to implement a POS enrollment mechanism in 2025. They recommended processes built on the existing transition fill or Best Available Evidence processes or a new process that automatically notifies the plan of the opt-in.

Our Take

For the MPPP program to be successful from a beneficiary perspective, those who would benefit from the program need to enroll. A point-of-sale enrollment method would likely result in the greatest number of beneficiaries enrolling in the program. The sooner beneficiaries can enroll at the point of sale, the more likely beneficiaries are to benefit.

Payment Options

The American Cancer Society also submitted Medicare Prescription Payment Plan comments. In the initial draft guidance, CMS encouraged plan sponsors to offer beneficiaries multiple payment methods and flexibility around the specific day of the month of withdrawals for recurring payments.

The American Cancer Society felt CMS should clarify that these two elements – multiple payment methods and the ability to select a specific day for program charges – should be required, not encouraged.

Our Take

Plan sponsors may balk at the requirement to offer cards because CMS indicated related transactional fees may not be transferred to the consumer. However, options like a retail cash payment option – which Certifi offers as part of its MPPP billing solution – may be a favorable payment method for consumers despite a small transaction fee.

Billing solutions like Certifi can easily manage the requirement to choose a withdrawal date. This design benefits Part D members and should not be onerous for plan sponsors to implement.

Simplifying the Monthly Billing Calculation

The American Academy of Actuaries also submitted comments about the MPP draft guidance. In the initial draft guidance, the MPP used two calculations to determine the monthly bill. They were:

First Month Cap = (Annual Out-of-Pocket Threshold – Incurred Participant Costs)/Number of Months Remaining in Plan Year

For subsequent months, the calculation is:

Monthly Cap = (Sum of Remaining Unbilled Out of Pocket Costs + Additional Incurred Out of Pocket Costs)/ Number of Months Remaining in Plan Year

Plans and pharmacists may struggle to explain how they calculate the monthly payment amount to participants. The American Academy of Actuaries presented a new approach that treats each month as a distinct no-interest loan, calculating the payment as 

Out of Pocket Costs/# of months remaining in the year

Additional costs would be considered additional loans and leverage the calculation above for each. This approach smooths the amounts more than the draft guidance calculation, which may result in higher payments in the first month than in subsequent months.

Our Take

This proposal makes sense. It is easier to explain and does lead to more consistent payments, which likely will lead to fewer questions directed at plan sponsors. From a software perspective, billing solutions like Certifi use configurable rules that should be able to manage either solution.

Timing

The Association for Community Affiliated Health Plans (ACAP) also submitted comments about the Medicare Prescription Payment Plan draft guidance. Because ACAP is an association of 80 not-for-profit, community-based Safety Net Health Plans (SNHPs), they provide coverage to dually eligible individuals. As a result, they may not have robust billing capabilities.

Finding a billing solution and building the billing-related processes by 1/1/2025 may be difficult for those plans. As a result, ACAP would like CMS to allow plans to modify bids through the summer of 2024 to account for billing-related costs. They also asked CMS to finalize all guidance by February 2024 to give plans time to implement the requirements.

Our Take

ACAP makes valid points regarding timing. For plans lacking robust billing functionality, sourcing and implementing even relatively turnkey solutions like Certifi can take time and has an associated expense. 

Information on Billing Statements

CMS also identified information that plan sponsors must include on the monthly billing statements sent to participants. The American Cancer Society suggested CMS include the following information in billing statements:

  • Information about Medicare.gov and 1-800-MEDICARE and how to contact a Medicare State Health Insurance Assistance Program (SHIP) counselor who can provide one-on-one information about Medicare and the Prescription Payment Plan.  
  • How the participant can change their method of payment.
  • For individuals who have met their annual out-of-pocket cap, clear information noting that the individual’s monthly out-of-pocket costs will not increase over the year. 
  • For individuals who have not met their annual out-of-pocket cap, clear information noting that the individual’s monthly out-of-pocket costs may increase if the individual takes additional prescription drugs, but in no case will their out-of-pocket costs exceed the value of the annual cap (which is $2,000 in 2025). 

Our Take

Though the information above is useful, CMS’ draft guidance included a significant amount of required information. CMS should be thoughtful about what information to include because overloading billing statements with information will make it more likely to be ignored. 

Certifi’s health insurance billing and payment solutions help Medicare Advantage payers improve member satisfaction while reducing administrative costs.

 

Navigating the Medicare Prescription Payment Plan

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