On February 29, 2024, the Centers for Medicare & Medicaid Services issued its final part one guidance implementing procedures for the Medicare Prescription Payment Plan established by the Inflation Reduction Act of 2022. The payment plan begins January 1, 2025, and it provides Medicare Part D enrollees the option of paying out-of-pocket (OOP) drug costs in monthly installments by having their Part D plan sponsor pay the OOP costs in full and then request monthly payment from the enrollee. The guidance provides an overview of how the plan works, supplies regulatory parameters and articulates key rights and responsibilities for Part D sponsors, enrollees and pharmacies. Although the plan and guidance establish requirements almost exclusively for Part D sponsors and prohibit them from altering pharmacy reimbursements because of the plan, pharmacies should understand how the plan works and should consider the practical effects it may have on their reimbursement and their relationships with sponsors.
For pharmacies, the guidance's key value is that it outlines how the payment plan works. Once a Medicare Part D member enrolls in the plan, the enrollee will pay $0 at the point of sale for any covered Part D drugs. The enrollee's Part D sponsor pays the pharmacy all OOP costs. The sponsor then bills the enrollee in monthly installments over the remainder of the year to repay the OOP costs. The monthly bills cannot exceed a statutorily set cap, and the enrollee's total OOP costs must not change. Sponsors are responsible for nearly the entire administration of this plan: Paying pharmacies the OOP costs, calculating monthly payments, billing patients for those monthly payments, etc.
The guidance establishes parameters sponsors must follow to effectuate this process. One key parameter is the point-of-sale threshold, which the guidance sets at $600. If a Part D member has an OOP cost of $600 or more for a single drug and is not already enrolled in the plan, the sponsor must notify the pharmacy, and the pharmacy must inform the member about the plan.
The guidance also elaborates on Inflation Reduction Act requirements for sponsors and describes corresponding rights that they create for third parties. Most notably for pharmacies, the Inflation Reduction Act prohibits sponsors from charging enrollees fees related to the payment plan, and sponsors must ensure that the plan does not affect the amount paid to pharmacies or the timing of such payments. Therefore, Part D sponsors may not charge pharmacies any fees related to the plan. And since the plan is an arrangement between a sponsor and an enrollee only, pharmacies cannot be held responsible for enrollee nonpayments. That also means that Part D prompt pay requirements still apply, so sponsors must pay electronic claims within 14 days and other claims within 30 days. Sponsors must also ensure that any third parties with whom they contract comply with these requirements.
Another key right clarified by the guidance is that pharmacies may include as dispensing fees any costs created by the payment plan. Any transaction fees or other costs pharmacies incurred because of the plan count as allowable pharmacy costs associated with the dispensing of covered Part D drugs, and a drug's negotiated price must include any dispensing fees.
Though this guidance creates many rights for pharmacies and the responsibilities it creates lie almost exclusively with sponsors, pharmacies should still consider the practical effects the plan may have. Implementing the plan will increase costs for payors: It will require extra manpower to administer, and sponsors will be effectively providing enrollees with interest-free loans. As a legal matter, sponsors may not pass along these costs to enrollees or pharmacies. But as a practical matter, sponsors must find some means of covering those costs. What those means will be remains to be seen, but one example may involve dispensing fees: Fees that pharmacies incur from the plan get included in a drug's dispensing fees, but those dispensing fees are included in thenegotiatedprice of a drug. The advent of the Medicare Prescription Payment Plan in 2025, along with Part D sponsors' corresponding increased costs, may change those negotiations.
Therefore, although the plan and guidance themselves establish few requirements for pharmacies, pharmacies should understand how the plan works and should consider the practical effects it may have on them before it goes into effect next year.
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