CMS has added a new feature to Part D prescription drug plans (PDPs) for 2025: the Medicare Prescription Payment Plan, or M3P as we'll call it here. M3P will be a part of all Medicare PDPs for 2025, whether it's a standalone PDP or a PDP that's included in your Medicare Advantange (Part C) plan.
Think of M3P as an interest-free installment payment plan for those with high drug costs. PDP plans must provide enrollees the option to pay out-of-pocket prescription drug costs in the form of monthly payments over the course of the plan year, instead of all at once at the pharmacy, beginning in 2025. The PDP plan will then bill their members monthly for any cost-sharing they incur while in the program.
Here's an example of how this might work: Let's say you take an expensive name-brand prescription drug, for example, any of those being advertised on TV all the time. On Medicare, the most expensive name-brand drugs are assigned to cost tier 5, the specialty drug tier, with a typical coinsurance amount in the range of around 33% depending on the plan. Let's also say that the cost of the drug to the plan is $7,000 per month. (That's not unusual, by the way, and conservative considering the price of some of those drugs.) In 2025, your maximum out-of-pocket for filling that prescription is $2,000. You can see then two things:
The first month you fill this prescription, your cost is going to be 33% of $7,000, or $2,310.
With the first fill of this prescription, you will have met your $2,000 annual out-of-pocket for prescription drug costs.
Without M3P, you would need to come up with a coinsurance amount of $2,000 right at the pharmacy counter. With M3P, you walk away from the pharmacy counter paying nothing. Your plan sends you a monthly bill of $166.67 (assuming your first fill is in January) and you pay it monthly over the plan year.
This is a simplified explanation, but it does give you an outline of how M3P works. Here are some additional details:
PDP plan members will need to opt in to the program via approved methods that will be provided and promoted to members by the plan.
PDP plan members may opt out of M3P at any time.
Opting in to M3P does not change anything about your Part D plan benefits or the actual cost sharing of the plan. It merely changes when and how the cost sharing is paid.
CMS has established a threshold for identification of Part D enrollees who are likely to benefit. This threshold is a $600 pharmacy point-of-sale threshold based on a single prescription. This approach identifies Part D enrollees with a very high likelihood of benefiting from M3P and will trigger notifications to be sent to the plan member if they have not already opted in.
For additional information, click here to see the CMS information page for the Medicare Prescription Payment Program.
M3P will no doubt go a long way to ease the pain of high prescription drug costs to those on Medicare. Questions? I'm just a phone call away!
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