The Advantages of New Medicare Rx Payment Plan

Amy Niles

Many of the over 53 million people enrolled in Medicare Part D plans struggle to afford their out-of-pocket (OOP) prescription costs each year, sometimes leading them to delay or go without their needed medications. That’s why the Medicare Prescription Payment Plan (MPPP)—a new voluntary payment option going into effect Jan. 1, 2025—is such an important change that beneficiaries should be aware of.

Unfortunately, there has been limited public outreach and education on the MPPP, which is likely why a recent poll¹ from the PAN Foundation’s Center for Patient Research found that nearly nine out of 10 people on Medicare are not aware of it.

Enacted into law through the 2022 Inflation Reduction Act, all Part D plans (both standalone and Medicare Advantage plans) must offer the opportunity for plan enrollees to opt-in to the program, which will spread their OOP drug payments throughout the year. And while it has the potential to make drug costs more affordable for many on Medicare, it is not for everyone.

Who will the MPPP benefit?

The individuals most likely to benefit from the MPPP are those who: have faced $2,000+ in OOP costs during the first nine months of the year; have had a one-time prescription fill of at least $600; have difficulty affording one lump upfront payment for their prescription medications; opt-in to the program prior to or at the start of the plan year so there are more months for the costs to be spread out over; and are not eligible for assistance through the federal Extra Help Program and other assistance programs, such as those offered by charitable foundations.

How are costs determined?

Calculating monthly costs when participating in the MPPP is not straightforward. Monthly costs may vary based on prescription needs and when prescriptions are filled. The program also uses a formula that, each month, evaluates one’s current drug costs, previous months’ balance, and number of months left in the year. What is certain for patients, is by the time they get to Dec. 31, they will not have paid more than $2,000, due to the Part D cap also taking effect Jan. 1.

Medicare.gov’s PlanFinder tool² allows patients to input their medication needs to calculate monthly costs. It is a good place to start when patients are deciding if the Medicare Prescription Payment Plan is right for them.

How will this new program change patient behavior?

Unlike the Medicare Part D cap, which is automatic, an individual on a Part D plan must opt-in to the MPPP to benefit from the opportunity to spread costs. The best way to opt-in to the program is by calling their Part D plans or requesting participation through their plans’ website. Anyone, regardless of their OOP drug costs, can participate.

When opting-in to the MPPP, patients will no longer pay for their prescriptions at the pharmacy counter. Instead, they will receive monthly bills from their Part D plans that highlight what is owed that month for their medications and when payment is due. Patients enrolled in the program will begin receiving two bills from their plans—one for their premium, and one for their medication costs.

What to watch out for in 2025?

The MPPP is good for patients, especially the few million who face high OOP costs for the medications they need to treat their serious illnesses. But like any major reform, the roll-out and implementation of the Plan may not be smooth and require us to ask the following questions, including but not limited to:

• Are patients and healthcare providers aware of the MPPP? What additional outreach is needed?
• Who are the patients opting-in to the MPPP, and how can we translate learnings to help boost participation?

In the meantime, let’s all do our part to educate the patients and healthcare providers about this important reform. The PAN Foundation recently launched a Medicare reforms educational campaign to do just that.³ And as 2025 brings big changes to the Medicare Part D program, the stakeholder community will be monitoring successes and opportunities for improvements.

About the Author

Amy Niles is chief mission officer at PAN Foundation.

References

1. . Most Patients Enrolled in Medicare Are Unaware of Upcoming Part D Changes. PAN Foundation. https://www.panfoundation.org/most-patients-enrolled-in-medicare-are-unaware-of-upcoming-part-d-changes/

2. Medicare.gov PlanFinder Tool. Mediare.gov. https://www.medicare.gov/plan-compare/#/?year=2025&lang=en

3. Everything You Need to Know About Medicare Reforms. PAN Foundation. https://www.panfoundation.org/everything-you-need-to-know-about-medicare-reforms/