Proposed Rule2024-27939
Medicare and Medicaid Programs; Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly
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Published
December 10, 2024
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This proposed rule would revise the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicaid, Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to Star Ratings, marketing and communications, agent/broker compensation, health equity, drug coverage, dual eligible special needs plans (D-SNPs), utilization management, network adequacy, and other programmatic areas, including the Medicare Drug Price Negotiation Program. This proposed rule also includes proposals to codify existing subregulatory guidance in the Part C and Part D programs.
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[Federal Register Volume 89, Number 237 (Tuesday, December 10, 2024)]
[Proposed Rules]
[Pages 99340-99579]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-27939]
[[Page 99339]]
Vol. 89
Tuesday,
No. 237
December 10, 2024
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 417, 422, et al.
Medicare and Medicaid Programs; Contract Year 2026 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription Drug
Benefit Program, Medicare Cost Plan Program, and Programs of All-
Inclusive Care for the Elderly; Proposed Rule
Federal Register / Vol. 89, No. 237 / Tuesday, December 10, 2024 /
Proposed Rules
[[Page 99340]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 417, 422, 423, and 460
[CMS-4208-P]
RIN 0938-AV40
Medicare and Medicaid Programs; Contract Year 2026 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare Advantage (Part
C), Medicare Prescription Drug Benefit (Part D), Medicaid, Medicare
cost plan, and Programs of All-Inclusive Care for the Elderly (PACE)
regulations to implement changes related to Star Ratings, marketing and
communications, agent/broker compensation, health equity, drug
coverage, dual eligible special needs plans (D-SNPs), utilization
management, network adequacy, and other programmatic areas, including
the Medicare Drug Price Negotiation Program. This proposed rule also
includes proposals to codify existing subregulatory guidance in the
Part C and Part D programs.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. Eastern Time on
January 27, 2025.
ADDRESSES: In commenting, please refer to file code CMS-4208-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. Comments, including mass comment
submissions, must be submitted in one of the following three ways
(please choose only one of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-4208-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-4208-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Matthania Volmy, (667) 290-8662--General Questions.
Naseem Tarmohamed, (410) 786-0814--Part C and Cost Plan Issues.
Matthania Volmy, (667) 290-8662--Part D Issues.
Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and Appeal
Issues.
Alissa Stoneking, (410) 786-1120--Parts C and D Payment Issues.
Hunter Coohill, (720) 853-2804--Enforcement Issues.
Lauren Brandow, (410) 786-9765--PACE Issues.
Sara Klotz, (410) 786-1984--D-SNP Issues.
<a href="/cdn-cgi/l/email-protection#4f1f2e3d3b0c2e212b0b1c3b2e3d1d2e3b2621283c0f2c223c6127273c61282039"><span class="__cf_email__" data-cfemail="e8b8899a9cab89868cacbb9c899aba899c81868f9ba88b859bc680809bc68f879e">[email protected]</span></a>--Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this proposed rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.
I. Executive Summary
A. Purpose
The primary purpose of this proposed rule is to amend the
regulations for the Medicare Advantage (Part C) program, Medicare
Prescription Drug Benefit (Part D) program, Medicaid program, Medicare
cost plan program, and Programs of All-Inclusive Care for the Elderly
(PACE). This proposed rule includes a number of new policies that would
improve these programs for contract year 2026 as well as codify
existing Part C and Part D subregulatory guidance.
We note that, as with previous rules, the new marketing and
communications policies in this rule are proposed to be applicable for
all contract year 2026 marketing and communications, beginning October
1, 2025. However, to operationalize the proposed Format Provider
Directories for Medicare Plan Finder provision at Sec. 422.111(m), we
anticipate that 2025 plan year directory data will need to be made
available online for testing purposes in the summer of 2025, and 2026
plan year data would need to be available online on October 1, 2026.
Therefore, we propose an applicability date of July 1, 2025, for this
provision.
B. Summary of the Key Provisions
1. Vaccine Cost Sharing Changes
This proposal would implement section 11401 of the Inflation
Reduction Act of 2022 (IRA), which amends section 1860D-2 of the Act to
require that, effective for plan years beginning on or after January 1,
2023, the Medicare Part D deductible shall not apply to, and there is
no cost-sharing for, an adult vaccine recommended by the Advisory
Committee on Immunization Practices (ACIP) covered under Part D.
2. Insulin Cost Sharing Changes
This proposal would implement section 11406 of the IRA, which
amends section 1860D-2 of the Act to require that, effective for plan
years beginning on or after January 1, 2023, the Medicare Part D
deductible shall not apply to covered insulin products, and the Part D
cost-sharing amount for a one-month supply of each covered insulin
product must not exceed the statutorily defined ``applicable copayment
amount'' for all enrollees. The applicable copayment amount for 2023,
2024, and 2025 is $35. For 2026 and each subsequent year, in accordance
with the statute, we are proposing that, with respect to a covered
insulin product covered under a prescription drug plan (PDP) or a
Medicare Advantage prescription drug
[[Page 99341]]
(MA-PD) plan prior to an enrollee reaching the annual out-of-pocket
threshold, the ``covered insulin product applicable cost-sharing
amount'' is the lesser of--
<bullet> $35;
<bullet> An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of subchapter XI; or
<bullet> An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
3. Medicare Prescription Payment Plan
We propose regulatory changes to codify agency guidance
implementing section 11202 of the IRA, which establishes the Medicare
Prescription Payment Plan and requires each PDP sponsor offering a
prescription drug plan and each MA organization offering an MA-PD plan
to provide to any enrollee of such plan, including an enrollee who is
subsidy eligible, the option to elect with respect to a plan year to
pay cost-sharing under the plan in monthly amounts that are capped.
Specifically, we propose to add new Sec. 423.137, add several new Part
D required materials and content at Sec. 423.2267, add Medicare
Prescription Payment Plan information to the list of required content
for Part D sponsor websites at Sec. 423.2265, and add the Medicare
Prescription Payment Plan to the list of Part D requirements waived for
the Limited Income Newly Eligible Transition (LI NET) program at Sec.
423.2536.
4. Part D Coverage of Anti-Obesity Medications (Sec. 423.100) and
Application to the Medicaid Program
The statutory definition of a covered Part D drug at section 1860D-
2(e)(2) of the Social Security Act (the Act) excludes certain drugs and
uses--specifically, those that may be excluded by Medicaid under
section 1927(d)(2) of the Act. This includes, at section 1927(d)(2)(A)
of the Act, ``agents when used for anorexia, weight loss, or weight
gain.'' Historically, drugs used for weight loss have been excluded
from the definition of covered Part D drug, regardless of their use for
treatment of individuals with obesity, and have been an optional drug
benefit for Medicaid programs. Increases in the prevalence of obesity
in the United States and changes in the prevailing medical consensus
towards recognizing obesity as a disease since the beginning of the
Part D program in 2006 have compelled CMS to re-evaluate Part D
coverage of anti-obesity medications (AOMs) for Medicare Part D
enrollees with obesity where the drug's prescribed use is not for a
medically accepted indication (MAI) that is currently covered under
Part D. We are proposing to reinterpret the statutory exclusion of
agents when used for weight loss to allow Part D coverage of AOMs when
used to treat obesity by reducing excess body weight or maintaining
weight reduction long-term for individuals with obesity who do not have
another condition for which the prescribed use is an MAI that is
covered under the current Part D policy. The proposed reinterpretation
would also apply to the Medicaid program. Thus, AOMs could not be
excluded from Medicaid coverage under this interpretation when used for
weight loss or chronic weight management for the treatment of obesity.
Coverage of AOMs and drugs that contain the same active ingredient as
AOMs that meet the definition of a covered outpatient drug are already
subject to section 1927 requirements when used for an indication, other
than weight loss, that is an MAI, and Medicaid must cover those
products when they are medically necessary. Under our proposed
reinterpretation, AOMs approved for weight loss and chronic weight
management that are used for weight loss in individuals who do not have
obesity or another condition that is an MAI for the AOM would remain
excluded from the definition of covered Part D drug and would remain
optional benefit for Medicaid programs.
5. Promoting Informed Choice--Format Provider Directories for Medicare
Plan Finder
We are proposing to require MA provider directory data, as required
under Sec. 422.111(b)(3)(i) be submitted for use to populate Medicare
Plan Finder (MPF). In addition, we are proposing to require MA
organizations to attest that this information is accurate and
consistent with data submitted to comply with CMS's MA network adequacy
requirements at Sec. 422.116(a)(1)(i) when it is submitted to CMS for
the purpose of incorporating into MPF. The proposed regulatory changes
would further promote informed beneficiary choice and transparency
found in online resources, empowering people with Medicare to make
informed choices about their coverage. In addition, the proposal will
help ensure that provider directory information, including the
provider's cultural and linguistic capabilities, which are currently
required for MA provider directories, and are especially important to
underserved communities, will be more readily available when
considering an MA plan.
6. Promoting Informed Choice--Expand Agent and Broker Requirements
Regarding Medicare Savings Programs, Extra Help, and Medigap
To ensure beneficiaries are well informed about and have an
accurate picture of their MA and Part D enrollment options, we are also
proposing to add the following topics to the existing list of
requirements that agents and brokers must discuss with their customers:
the availability of low-income supports including the Part D Low-Income
Subsidy (also known as ``Extra Help'') and Medicare Savings Programs;
for beneficiaries enrolling into MA when first eligible for Medicare or
dropping a Medigap plan to enroll in an MA plan for the first time,
general information on Medigap Federal guaranteed issue (GI) rights,
the practical implications of switching from Medicare Advantage to
Traditional Medicare, and, when applicable, provide information on
state laws regarding Medigap GI rights for those states where the agent
or broker is licensed and appointed to sell; and requiring that agents
pause to address remaining questions the beneficiary may have related
to enrollment in a plan prior to moving forward with an enrollment. As
Medicare enrollees consider their coverage options, it is essential
that agents and brokers provide adequate information to ensure
beneficiaries can make fully informed choices, both to support
enrollees and promote a functioning, competitive marketplace.
7. Promoting Informed Choice--Enhancing Review of Marketing and
Communications
We are proposing to broaden the marketing definition in Sec. Sec.
422.2260 and 423.2260, in order to expand CMS oversight of Medicare
Advantage and Part D communications materials and activities and
strengthen beneficiary protections against misleading and confusing
advertising tactics. Currently, communications materials and activities
only fall within the regulatory definition of marketing if they meet
certain content and intent standards. To satisfy the content portion of
the current regulatory definition of marketing, communications
materials and activities must include or address content regarding: (1)
the plan's benefits, benefits structure, premiums or cost sharing; (2)
measuring or ranking standards (for example, Star Ratings or plan
comparisons); or (3), for MA plans only, rewards and incentives as
defined
[[Page 99342]]
under Sec. 422.134(a). In order to broaden the definition of
marketing, CMS is proposing to eliminate this content standard and rely
solely on an intent standard to determine whether communications
material and activities are considered marketing. Broadening the
definition of marketing would expand the scope of materials that must
be prospectively submitted to CMS for review, which would allow CMS to
better ensure that MA organizations, Part D sponsors, and their
downstream entities are not providing misleading, inaccurate, or
confusing information to current or potential enrollees, or engaging in
activities that could misrepresent the MA organization or Part D
sponsor, in accordance with Sec. Sec. 422.2262 and 423.2262. We are
also proposing conforming edits to the definition of ``Advertisement
(Ad)'' in Sec. Sec. 422.2260 and 423.2260 to align with the proposed
updates to the definition of marketing.
8. Promoting Transparency for Pharmacies and Protecting Beneficiaries
From Disruptions
We are proposing to require Part D sponsors (or first tier,
downstream, or related entities (FDRs), such as pharmacy benefit
managers (PBMs), on the sponsors' behalf) to notify network pharmacies
which plans the pharmacies will be in-network for in a given plan year
by October 1 of the year prior to that plan year and to require
sponsors to provide pharmacies a list of these plans to network
pharmacies on request after October 1. We are also proposing to require
contracts with pharmacies for participation in Part D networks that
allow the Part D sponsor or FDR to terminate the contract without cause
to also allow pharmacies to terminate the contracts without cause after
providing the same notice that the contract requires the sponsor or FDR
to provide the pharmacy. We believe these policies will address
concerns raised by pharmacies about their ability to provide accurate
information to beneficiaries and will help protect beneficiaries from
disruptions in care that occur when network pharmacies stop providing
services before formally terminating their contracts.
9. Administration of Supplemental Benefits Coverage Through Debit Cards
This provision would codify existing requirements and new
protections for supplemental benefits that are administered using debit
cards by MA organizations. Specifically, we are proposing to: (1)
describe when, how, and in what manner debit cards can be used by an MA
organization and enrollee; (2) introduce additional disclosure
requirements to increase transparency, including additional disclosure
rules around supplemental benefits and plan debit cards (3) further
protect access to plan-covered services for MA enrollees by requiring
MA organizations to allow an enrollee to receive covered benefits
through an alternative process if there is an issue with a plan debit
card, (4) ensure debit cards are electronically linked to plan covered
items and services through a real-time identification mechanism, and 5)
clarify what types of over the counter (OTC) products are acceptable.
Finally, we are proposing to prohibit MA organizations from marketing
the dollar value of a supplemental benefit or the method by which a
supplemental benefit is administered, such as use of a debit card by
the enrollee to provide the plan's payment to the provider for the
covered item or service.
10. Improving Access--Enhancing Rules on Internal Coverage Criteria
In the final rule titled ``Medicare Program; Contract Year 2024
Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, and Medicare Cost Plan
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care
for the Elderly,'' which appeared in the April 12, 2023, Federal
Register (88 FR 22120) (hereinafter referred to as the ``April 2023
final rule''), we codified regulations that clarified the obligations
and responsibilities for MA organizations in covering basic benefits
and established guardrails for MA organizations to develop and use
coverage criteria in a way that aligns with Traditional Medicare. These
rules were applicable to coverage for MA organizations beginning
January 1, 2024. Through CMS account manager engagement with MA
organizations, incoming inquiries from industry stakeholders, and our
ongoing 2024 program audits, we have learned a great deal about common
misunderstandings related to these new rules. In order to further
clarify these rules, we are proposing to build upon and enhance the
regulations from the April 2023 final rule, specifically those related
to the use of internal coverage criteria, by defining the meaning of
``internal coverage criteria,'' establishing policy guardrails to
ensure access to benefits, and adding more specific rules about
publicly posting internal coverage criteria content on MA organization
websites.
11. Ensuring Equitable Access to Behavioral Health Benefits Through
Section 1876 Cost Plan and MA Cost Sharing Limits (Sec. Sec. 417.454
and 422.100)
Addressing the nation's behavioral health crisis and ensuring
equitable access to behavioral health services are key priorities for
CMS.\1\ Beneficiaries with severe mental illness experienced
substantial disruptions in care during the COVID-19 pandemic and these
disruptions were greater among disadvantaged populations (including
historically underserved racial and ethnic groups and low-income
populations).\2\ As a result, CMS is pursuing policies to address
barriers individuals may face in accessing mental health and substance
use disorder care. This includes using the authority under sections
1852(a)(1)(B)(iv), 1856(b)(1), 1857(e)(1), 1876(c)(2)(A), and
1876(i)(3)(D) of the Act to add to the list of Part A and Part B
benefits (items and services) for which Medicare Advantage (MA) and
Section 1876 Cost Plans' (Cost Plans) in-network cost sharing may not
exceed the cost-sharing levels in Traditional Medicare.
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\1\ CMS's behavioral health strategy is available at: <a href="https://www.cms.gov/cms-behavioral-health-strategy">https://www.cms.gov/cms-behavioral-health-strategy</a>.
\2\ Busch AB, Huskamp HA, Raja P, Rose S, Mehrotra A.
Disruptions in Care for Medicare Beneficiaries with Severe Mental
Illness During the COVID-19 Pandemic. JAMA Netw Open. 2022 Jan
4;5(1):e2145677. doi: 10.1001/jamanetworkopen.2021.45677. PMID:
35089352; PMCID: PMC8800078. Retrieved from: <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8800078/">https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8800078/</a>.
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We propose to require MA and Cost Plans' in-network cost sharing
for categories of mental health and substance use disorder services
(collectively called ``behavioral health services'') be no greater than
that in Traditional Medicare beginning January 1, 2026.
We are proposing behavioral health cost-sharing standards for MA
and Cost Plans that strike a balance between: (1) improving the
affordability of these services for enrollees in a timely manner; and
(2) minimizing disruption to enrollees' access to care and coverage
options. We also propose several changes to the cost-sharing
regulations for MA and Cost Plans at Sec. Sec. 417.454 and 422.100.
Additionally, we solicit comment on: (1) whether CMS should apply these
proposed changes to the behavioral health cost-sharing standards
beginning in contract year 2026 or 2027; (2) whether there should be a
transition period from the existing contract year 2025 behavioral
health cost-sharing standards in current regulations for select service
categories (such as, the standards at Sec. 422.100(f)(6)(i), (iii), or
[[Page 99343]]
(iv) for MA plans), to the proposed cost-sharing standard; and (3) how
long any transition should be. We also solicit comment regarding this
behavioral health cost-sharing proposal's potential impact on how MA
plans would satisfy existing requirements that cost sharing be
actuarially equivalent to Traditional Medicare cost sharing at Sec.
422.100(j)(1) and (2).
12. Improving Experiences for Dually Eligible Enrollees
Dually eligible individuals face fragmentation in many parts of the
health care system, including their experiences as enrollees of
Medicare and Medicaid managed care plans. One way in which we seek to
address such fragmentation is though policies that integrate care for
dually eligible individuals. ``Integrated care'' refers to delivery
system and financing approaches that (1) maximize person-centered
coordination of Medicare and Medicaid services; (2) mitigate cost-
shifting incentives between the two programs; and (3) create a seamless
experience for dually eligible individuals. We are proposing to
establish new Federal requirements for D-SNPs that are applicable
integrated plans to: (1) have integrated member identification (ID)
cards that serve as the ID cards for both the Medicare and Medicaid
plans in which an enrollee is enrolled; and (2) conduct an integrated
health risk assessment (HRA) for Medicare and Medicaid, rather than
separate HRAs for each program. We are also proposing to codify
timeframes for special needs plans to conduct HRAs and individualized
care plans (ICPs) and prioritize the involvement of the enrollee or the
enrollee's representative, as applicable, in the development of the
ICPs.
13. Medical Loss Ratio (MLR)
To improve medical loss ratio (MLR) reporting and oversight and to
better align MA and Part D MLR requirements with commercial MLR and
Medicaid MLR requirements, we are proposing to make certain changes to
the regulations that govern MLR requirements for MA and Part D.
Specifically, we are proposing to establish clinical and quality
improvement standards for provider incentives and bonus arrangements
included in the MA MLR numerator in order to help align such bonus
payments with care outcomes and avoid excess premium transfer to
providers. We also propose to prohibit administrative costs from being
included in quality improvement activities in both the MA and Part D
MLR numerator. Additionally, we propose to adopt additional
requirements for the allocation of expenses in the MLR. We also propose
to establish new audit and appeals processes for MLR compliance. In
addition, we propose to amend the Medicare MLR regulations authorizing
the release of Part C and Part D MLR data. We propose to codify the
rules we established in the CY 2025 Part D Redesign Program
Instructions for the treatment for MLR purposes of Medicare
Prescription Payment Plan unsettled balances for 2026 and subsequent
years. We also propose to explicitly provide that the Medicare MLR
reporting include detailed information regarding provider payment
arrangements. In addition to the proposed changes, we are issuing a
request for information on potential policies that CMS could adopt
regarding how the MA and Part D MLRs are calculated in order to enable
policymakers to address concerns surrounding vertical integration in MA
and Part D.
14. Medicare Transaction Facilitator Requirements for Network Pharmacy
Agreements
We propose to amend Sec. 423.505 by adding paragraph (q) to
require that Part D sponsors' network contracts with pharmacies require
such pharmacies to be enrolled in the Medicare Drug Price Negotiation
Program's (``Negotiation Program'') Medicare Transaction Facilitator
Data Module (``MTF DM''). We believe the requirement among Part D
sponsors' network pharmacies to be enrolled in the MTF DM that would be
added to Part D sponsors' network contracts with pharmacies, if
finalized, would facilitate continued beneficiary access to selected
drugs that are covered Part D drugs, promote access to negotiated
maximum fair prices under the Negotiation Program for both
beneficiaries and dispensing entities, and help ensure accurate Part D
claims information and payment.
15. Enhancing Health Equity Analyses: Annual Health Equity Analysis of
Utilization Management Policies and Procedures
We propose at Sec. 422.137(d)(6)(iii)(A) through (H) to revise the
required metrics for the annual health equity analysis of the use of
prior authorization to require the metrics be reported by each item or
service, rather than aggregated for all items and services.
In the April 2024 final rule, CMS added health equity related
requirements to Sec. 422.137, including a requirement at Sec.
422.137(d)(6) that the Utilization Management committee must conduct an
annual health equity analysis of the use of prior authorization. The
analysis must examine the impact of prior authorization at the plan
level, on enrollees with one or more of the specified social risk
factors (SRF). The analysis must use the outlined metrics, aggregated
for all items and services, calculated for enrollees with the specified
SRFS, and for enrollees without the specified SRFs, from the prior
contract year, to conduct the analysis.
During the public comment period, CMS received a significant number
of comments on the requirement that the metrics for the health equity
analysis be aggregated for all items and services (89 FR 30569).
Commenters recommended that CMS require a further level of granularity
to ensure that potential disparities could be identified. Specifically,
commenters suggested that CMS require disaggregation by item and
service to ensure that CMS can identify specific services that may be
disproportionately denied. We are proposing to revise the required
metrics for the annual health equity analysis of the use of prior
authorization to require the metrics be reported by each item or
service, rather than aggregated for all items and services.
16. Ensuring Equitable Access to Medicare Advantage Services--
Guardrails for Artificial Intelligence (AI)
On October 30, 2023, the Biden-Harris Administration released an
Executive Order, ``Executive Order on the Safe, Secure, and Trustworthy
Development and Use of Artificial Intelligence,'' directing agencies to
ensure that artificial intelligence tools do not impede the advancement
of equity and civil rights, and that the use of AI within health care
organizations does not deny equal opportunity and justice for the
American people.\3\ Given the growing use of AI within the healthcare
sector, such as, but not limited to, AI-based patient care decision
support tools, vision transformer-based AI methods for lung cancer
imaging applications, and AI and machine learning based decision
support systems in mental health care settings, we believe it is
necessary to ensure that the use of AI does not result in inequitable
treatment, bias, or both, within the healthcare system, and instead is
used to promote equitable access to care and culturally competent care
for all enrollees. As such, we propose to revise
[[Page 99344]]
Sec. 422.112(a)(8) to ensure services are provided equitably
irrespective of delivery method or origin, whether from human or
automated systems. We also clarify that in the event that an MA plan
uses AI or automated systems, it must comply with section 1852(b) of
the Act and Sec. 422.110(a) and other applicable regulations and
requirements and provide equitable access to services and not
discriminate on the basis of any factor that is related to the
enrollee's health status.
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\3\ <a href="https://www.federalregister.gov/documents/2023/11/01/2023-24283/safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence">https://www.federalregister.gov/documents/2023/11/01/2023-24283/safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence</a>.
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17. Promoting Community-Based Services and Enhancing Transparency of
In-Home Service Contractors
CMS has become aware that some entities that provide covered
benefits may not be included in an MA organization's provider
directory. These concerns relate to safety and a lack of transparency
regarding supplemental benefit service providers and their access to an
enrollee's home, as well as ensuring individuals know which providers
are deeply rooted within the communities they serve. This is
particularly of concern when the enrollee may not have information
about who may have access to their home, personally identifiable
information (PII), or protected health information (PHI). As such, to
strengthen beneficiary protections and transparency, we propose to: (1)
codify definitions of community-based organizations (CBOs), in-home or
at-home supplemental benefit providers and direct furnishing entities;
(2) require plans to identify, within the provider directory, which
providers and direct furnishing entities meet the proposed definition
of a CBO; (3) require plans to identify in-home or at-home supplemental
benefit providers and direct furnishing entities, including those that
provide a hybrid of services (both in-home or at-home, and in-office
services), either through a subset list within the provider directory
or through a separate list comprising in-home or at-home supplemental
benefit providers and direct furnishing entities; and (4) clarify
existing policy by stating that all direct furnishing entities must be
included within the provider directory.
C. Conclusion
Finally, we are clarifying and emphasizing our intent that if any
provision of this rule, once finalized, is held to be invalid or
unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, it shall be
severable from this rule and not affect the remainder thereof or the
application of the provision to other persons not similarly situated or
to other, dissimilar circumstances. Through this rule, we propose
provisions that are intended to and will operate independently of each
other, even if each serves the same general purpose or policy goal.
Where a provision is necessarily dependent on another, the context
generally makes that clear (such as by a cross-reference to apply the
same standards or requirements).
D. Summary of Costs and Benefits
BILLING CODE 4120-01-P
[[Page 99345]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.000
[[Page 99346]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.001
[[Page 99347]]
[GRAPHIC] [TIFF OMITTED] TP10DE24.002
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[GRAPHIC] [TIFF OMITTED] TP10DE24.003
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[GRAPHIC] [TIFF OMITTED] TP10DE24.004
BILLING CODE 4120-01-C
II. Implementation of IRA Provisions for the Medicare Prescription Drug
Benefit Program
A. Coverage of Adult Vaccines Recommended by the Advisory Committee on
Immunization Practices Under Medicare Part D (Sec. Sec. 423.100 and
423.120)
1. Background
Section 11401 of the Inflation Reduction Act (IRA) amended section
1860D-2 of the Act by adding new paragraph (8) to subsection (b) and
new paragraph (5) to subsection (c) and making other conforming
amendments to require that, effective for plan years beginning on or
after January 1, 2023, the Medicare Part D deductible shall not apply
to, and there is no cost-sharing for, an adult vaccine recommended by
the Advisory Committee on Immunization Practices (ACIP) covered under
Part D.
Section 11401(e) of the IRA directed the Secretary to implement
section 11401 of the IRA for 2023, 2024, and 2025 by program
instruction or other forms of program guidance. In accordance with the
law, CMS issued memoranda via the Health Plan Management System (HPMS)
that outlined requirements for Part D sponsors regarding the
implementation of section 11401.
On September 26, 2022, CMS released an HPMS memorandum titled
``Contract Year 2023 Program Guidance Related to Inflation Reduction
Act Changes to Part D Coverage of Vaccines and Insulin.'' \4\ In this
memorandum, we provided guidance that for any new ACIP-recommended
adult vaccine that becomes available during a plan year, Part D
sponsors must apply the $0 cost-sharing requirements in section 1860D-
2(b)(8) of the Act to applicable claims with dates of service after
ACIP's issued recommendation.
---------------------------------------------------------------------------
\4\ <a href="https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf">https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf</a>.
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On April 4, 2023, CMS issued an HPMS memorandum titled ``Final
Contract Year (CY) 2024 Part D Bidding Instructions'' in which we
explained that, in order for a vaccine to be considered ACIP-
recommended for adult use, it must be both adopted by the Director of
the Centers for Disease Control and Prevention (CDC) and published in
the CDC's Morbidity and Mortality Weekly Report (MMWR).\5\
---------------------------------------------------------------------------
\5\ <a href="https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf">https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf</a>.
---------------------------------------------------------------------------
On July 24, 2023, CMS issued a revision to the April 4, 2023
memorandum in which we clarified that the effective date of the $0
cost-sharing requirement for an ACIP-recommended adult vaccine must be
aligned with the date on which the CDC Director adopts the respective
ACIP vaccine recommendation, as posted on the CDC's website at <a href="https://www.cdc.gov/vaccines/acip/recommendations.html">https://www.cdc.gov/vaccines/acip/recommendations.html</a>, not the date on which
the recommendation is published in the MMWR.\6\
---------------------------------------------------------------------------
\6\ <a href="https://www.cms.gov/files/document/acip-recommended-vaccines-july-2023.pdf">https://www.cms.gov/files/document/acip-recommended-vaccines-july-2023.pdf</a>.
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In this rule, we propose to codify the requirements related to $0
cost-sharing for adult vaccines recommended by ACIP under Part D for
2026 and each subsequent plan year.
[[Page 99350]]
2. Definition of ACIP-Recommended Adult Vaccine
Section 1860D-2(b)(8)(B) of the Act specifies that for purposes of
section 1860D-2(b)(8) of the Act, the term ``adult vaccine recommended
by the Advisory Committee on Immunization Practices'' means a covered
Part D drug that is a vaccine licensed by the U.S. Food and Drug
Administration (FDA) under section 351 of the Public Health Service Act
(PHSA) for use by adult populations and administered in accordance with
recommendations of the CDC's ACIP as adopted by the CDC Director. We
propose to refer to these vaccines as ``ACIP-recommended adult
vaccines'' and to codify this definition at Sec. 423.100. CMS is not
proposing to specify a particular age for a vaccine to be considered
``adult'' for the purposes of determining if a Part D vaccine is
subject to $0 cost sharing under section 11401 of the IRA. We defer to
how the CDC and ACIP categorize such a recommendation. Part D sponsors
must use the information provided by the CDC and ACIP to determine if
the vaccine is recommended for, and being administered to, an adult.
Consistent with the September 26, 2022 HPMS memorandum, we propose
to define an ``ACIP-recommended adult vaccine'' as a vaccine licensed
by the FDA for use in adults and administered in accordance with ACIP
recommendations. In some cases, the vaccine may be included on the ACIP
``Adult Immunization Schedule'' \7\ and, in other cases, the vaccine
may be recommended under a separate ACIP recommendation that is not
part of the Adult Immunization Schedule. In alignment with the
September 26, 2022 HPMS memorandum, we interpret the term
``recommendation'' to refer to a recommendation under any one of ACIP's
categories of recommendations, including routine, catch-up, risk-based,
and shared clinical decision-making immunization recommendations. As
described by ACIP, the different categories of recommendations can be
distinguished based on the default decision to vaccinate. Routine,
catch-up, and risk-based immunization recommendations include a default
decision to vaccinate an individual based on their age or other
indication, unless contraindicated. For shared clinical decision-making
recommendations, the decision of whether or not to vaccinate is
determined based on the ``best available evidence of who may benefit
from vaccination; the individual's characteristics, values, and
preferences; the health care provider's clinical discretion; and the
characteristics of the vaccine being considered.'' \8\
---------------------------------------------------------------------------
\7\ <a href="https://www.cdc.gov/vaccines/schedules/hcp/imz/adult.html">https://www.cdc.gov/vaccines/schedules/hcp/imz/adult.html</a>.
\8\ <a href="https://www.cdc.gov/vaccines/acip/acip-scdm-faqs.html">https://www.cdc.gov/vaccines/acip/acip-scdm-faqs.html</a>.
---------------------------------------------------------------------------
Some vaccines that are not on the ACIP Adult Immunization Schedule
for routine immunization are included on the ACIP Vaccine
Recommendations and Guidelines web page.\9\ This web page describes
ACIP recommendations for vaccines that are used in limited populations
and under limited circumstances. For example, ACIP recommends certain
vaccinations for travelers prior to travelling to certain countries.
Therefore, consistent with the September 26, 2022 HPMS memorandum, as
long as the vaccine is an FDA-licensed vaccine for use by adults that
is recommended by ACIP for use by adults, such vaccine would meet our
proposed definition of an ACIP-recommended adult vaccine, when provided
in accordance with ACIP recommendations.
---------------------------------------------------------------------------
\9\ <a href="https://www.cdc.gov/vaccines/hcp/acip-recs/index.html">https://www.cdc.gov/vaccines/hcp/acip-recs/index.html</a>.
---------------------------------------------------------------------------
As described in the September 26, 2022 HPMS memorandum, a Part D
vaccine would not meet our proposed definition of an ACIP-recommended
adult vaccine and, therefore, would not be subject to the requirements
implemented in this proposed rule, if the vaccine is: (1) not licensed
by the FDA under section 351 of the PHSA for use by adults; (2) not
recommended by ACIP for use by adults; (3) administered to an
individual who is not an adult, even if such use in the non-adult is
supported by ACIP recommendations (for example, recommendations in the
ACIP child and adolescent immunization schedule); or (4) not
administered in accordance with ACIP recommendations.
In summary, we propose to add at Sec. 423.100 a definition of
``ACIP-recommended adult vaccine'' that means a covered Part D drug, as
defined at Sec. 423.100, that is a vaccine licensed by the FDA under
section 351 of the Public Health Service Act for use by adult
populations and administered in accordance with recommendations of ACIP
of the CDC as adopted by the CDC Director.
3. No Deductible or Cost-Sharing for ACIP-Recommended Adult Vaccines
Section 1860D-2(b)(8)(A) of the Act specifies that the deductible
shall not apply and there shall be no coinsurance or other cost-sharing
with respect to ACIP-recommended adult vaccines. Generally, Part D
vaccines that have ACIP-recommended uses in the adult population and
are administered to an adult must be provided with no enrollee cost-
sharing. As described in the September 26, 2022 HPMS memorandum, this
means that enrollees must not be subject to cost sharing on the
ingredient cost of the vaccine submitted on the prescription drug event
(PDE) record, or any associated sales tax, dispensing fee, or vaccine
administration fee, regardless of the vaccine's formulary tier
placement or the benefit phase that the enrollee is in.
We are also proposing at Sec. 423.120(g)(3) that enrollees who
submit direct member reimbursement (DMR) requests for ACIP-recommended
adult vaccines accessed at either out-of-network pharmacies or
providers (in accordance with Sec. 423.124(a) and (c)), or at in-
network pharmacies or providers, that a Part D sponsor determines are
coverable under their benefit must not be subject to cost sharing.
While Part D sponsors generally may charge the enrollee for the
difference between the cash price and plan allowance for DMRs for
covered Part D drugs accessed from both out-of-network and in-network
pharmacies, neither Sec. 423.124(b) nor Chapter 14 of the Prescription
Drug Benefit Manual directly addresses covered Part D drugs that have
statutorily limited cost sharing.\10\ Because there can be no cost
sharing for ACIP-recommended adult vaccines accessed at either out-of-
network pharmacies or providers (in accordance with Sec. 423.124(a)
and (c)), or at in-network pharmacies or providers, that a Part D
sponsor determines are coverable under their benefit, the Part D
sponsor must reimburse the enrollee for the full cash price paid to the
pharmacy or provider for an ACIP-recommended adult vaccine.
---------------------------------------------------------------------------
\10\ Section 423.124(b) currently states that a Part D sponsor
that provides its Part D enrollees with coverage other than defined
standard coverage may require its Part D enrollees accessing covered
Part D drugs at out-of-network pharmacies to assume financial
responsibility for any differential between the out-of-network
pharmacy's (or provider's) usual and customary price and the Part D
sponsor's plan allowance. Section 50.4.3 of Chapter 14 of the
Medicare Prescription Drug Benefit Manual (<a href="https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf">https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf</a>)
provides detailed guidance on how Part D sponsors must process DMR
requests that are submitted by enrollees who paid cash at an out-of-
network (or an in-network) pharmacy (or provider) and where the
pharmacy (or provider) did not submit the claim to the Part D plan.
---------------------------------------------------------------------------
The total gross covered drug cost (TGCDC) is usually reported
differently on PDEs depending on whether the drug was accessed at an
out-of-network or in-
[[Page 99351]]
network pharmacy or provider. Specifically, Part D sponsors report the
cash price that the enrollee paid to the pharmacy or provider as the
TGCDC for out-of-network DMRs but only report the negotiated price as
the TGCDC for in-network DMRs. However, we are clarifying here that
with respect to ACIP-recommended adult vaccines, as an exception to the
Chapter 14 guidance, the sponsor should report the cash price paid to
the pharmacy or provider as the TGCDC on the PDE for both out-of-
network and in-network DMRs. Regardless, there is no true out-of-pocket
(TrOOP) cost accumulation for these claims because the beneficiary has
no cost sharing for ACIP-recommended adult vaccines under the basic
Part D benefit.
Under our proposed policy at Sec. 423.120(g), and as described in
the September 26, 2022 HPMS memorandum, new Part D vaccines that become
available during the plan year and meet the definition of an ACIP-
recommended adult vaccine are subject to the cost-sharing requirements
of section 1860D-2(b)(8)(A) of the Act. Consistent with the definition
of a covered Part D drug at Sec. 423.100, the statutory cost-sharing
requirements apply regardless of whether a Part D sponsor adds the
vaccine to the formulary midyear, or the enrollee obtains the vaccine
via a formulary exception. In addition, we propose at Sec.
423.120(g)(2) that if ACIP issues a new or revised recommendation for a
vaccine, related to its use in adults during the plan year, Part D
sponsors must apply the cost-sharing requirements of this proposed
rule, as applicable, to any ACIP-recommended adult vaccine claims with
dates of service after the proposed ``Effective date of the ACIP
recommendation'' discussed later in this proposed rule.
Consistent with the April 4, 2023, HPMS memorandum, Part D sponsors
may place ACIP-recommended adult vaccines on any tier, including a
vaccine tier, and apply utilization management strategies (for example,
prior authorization), insofar as such tier placement or utilization
management strategy is consistent with the requirements of CMS's
formulary review and approval process under Sec. 423.120(b).
As described in section 30.2.7 of Chapter 6 of the Medicare
Prescription Drug Benefit Manual, Part D sponsors may only use
utilization management strategies to assess the necessity of vaccines
that are less commonly administered in the Medicare population,
facilitate the use of vaccines in line with ACIP recommendations, and
evaluate potential reimbursement of vaccines that could be covered
under Part B.\11\ For example, utilization management strategies may be
used to ensure an enrollee meets the age or clinical requirements
recommended by ACIP for a particular vaccine, such as the respiratory
syncytial virus (RSV) vaccine which is currently recommended by ACIP
for adults aged 75 years of age and older and adults aged 60-74 who are
at increased risk for severe RSV disease. However, regardless of an
ACIP-recommended adult vaccine's tier placement or applicable
utilization management strategies, the statutory zero cost-sharing
limits required under this proposed rule would still apply.
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\11\ <a href="https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf">https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf</a>
---------------------------------------------------------------------------
In summary, we propose to codify at Sec. 423.120(g)(1) the
requirement that Part D sponsors must not apply the deductible or
charge cost sharing on ACIP-recommended adult vaccines. We also propose
to codify at Sec. 423.120(g)(2) that once a new or revised
recommendation is posted on the CDC website, Part D sponsors must
provide coverage consistent with Sec. 423.120(g)(1) for dates of
service on or after the ``Effective date of the ACIP recommendation''
as discussed later in this proposed rule. Finally, we propose to codify
at Sec. 423.120(g)(3) that these cost-sharing requirements apply for
ACIP-recommended adult vaccines obtained from either in-network or out-
of-network pharmacies or providers (in accordance with Sec. 423.124(a)
and (c)).
4. Effective Date of ACIP Recommendations
In the July 24, 2023, HPMS memorandum, we stated that Part D
sponsors must provide $0 cost sharing for an ACIP-recommended adult
vaccine as of the date the CDC Director adopts the ACIP's
recommendation, and it is posted on the CDC's website. Accordingly, we
propose to add at Sec. 423.100 a definition of ``Effective date of the
ACIP recommendation'' that means the date specified on the CDC website
noting the date the CDC Director adopted the ACIP recommendation.
In the July 24, 2023 HPMS memorandum, we also stated that in the
event that the CDC Director's adoption of an ACIP recommendation for an
adult vaccine is posted on the CDC's website but an adoption date is
not specified, the effective date of the ACIP recommendation is the day
after the last day of the ACIP meeting at which the recommendation was
approved. However, we are not including this requirement in our
proposed definition of ``Effective date of the ACIP recommendation'' at
Sec. 423.100 as it is highly unlikely that an ACIP recommendation will
be posted without the date on which it was adopted by the CDC Director.
In the event that a recommendation is posted without an effective date,
CMS will consult with the CDC to obtain the date the recommendation was
adopted by the CDC Director and provide guidance.
The ACIP holds three regular meetings annually, generally in
February, June, and October, in addition to emergency sessions, for the
purpose of reviewing scientific data and voting on vaccine
recommendations. We note that the proposed ``Effective date of the ACIP
recommendation'' and the date on which it is published on the CDC's
website may not always be the same date (if, for example, the website
posting occurs after the date specified as the date the CDC Director
adopted the recommendation). Nevertheless, the proposed ``Effective
date of the ACIP recommendation'' determines when the cost-sharing
requirements apply. Consequently, if an enrollee paid cost sharing for
an ACIP-recommended adult vaccine after the ``Effective date of the
ACIP recommendation'' (for example, the enrollee received the vaccine
after the ``Effective date of the ACIP recommendation,'' but prior to
the recommendation being posted on the CDC website), once the
recommendation has been posted to the CDC website, the Part D sponsor
will need to reimburse the enrollee for any cost sharing they paid for
the vaccine.
In instances where ACIP expands a previous recommendation, narrows
a previous recommendation, or removes a previous recommendation, the
``Effective date of the ACIP recommendation'' is the date the CDC
Director adopted the changed recommendation once the recommendation is
posted on the CDC's website. We note that a change to an ACIP
recommendation alone does not affect a vaccine's status as a Part D
drug. Specifically, a Part D drug is defined at Sec. 423.100, in
relevant part, as including a vaccine, if used for a medically accepted
indication, as defined in section 1860D-2(e)(4) of the Act. Since an
ACIP recommendation does not affect what is considered a medically
accepted indication, as defined under section 1860D-2(e)(4) of the Act,
for a particular vaccine, an ACIP recommendation alone does not affect
a vaccine's status as a Part D drug. However, if the FDA labeling
changes to
[[Page 99352]]
align with a narrowed ACIP recommendation, this may change what is
considered a medically accepted indication and may change what
indications are coverable under Part D for a particular vaccine. In
other words, if an ACIP recommendation is narrowed or removed, the
vaccine may still be coverable under Part D, but an enrollee may be
subject to cost-sharing for the vaccine if it is not administered in
accordance with the revised ACIP recommendation.
When an ACIP recommendation for a particular vaccine is narrowed
(for example, additional restrictions are added or the vaccine is
recommended for a more limited patient population), Part D sponsors may
implement prior authorization (PA) to determine whether the vaccine is
being administered in accordance with ACIP recommendations and whether
the enrollee should be subject to cost-sharing. For example, if an ACIP
recommendation is amended to raise the age for which a vaccine is
recommended to be administered, Part D sponsors may implement PA to
ensure a beneficiary meets this new age requirement. However, Part D
sponsors are not required to implement PA for vaccines to determine if
a vaccine is being used for an ACIP-recommended use and is therefore
subject to $0 cost-sharing.
When an ACIP recommendation is narrowed and a Part D sponsor does
not currently have a PA in place for that vaccine, the plan must submit
a negative formulary change request to add a PA requirement for that
vaccine that aligns with the newly narrowed recommendation, consistent
with Sec. 423.120(e)(1). As specified in Sec. 423.120(e)(3)(i),
negative change requests for maintenance changes are considered to be
approved after 30 days unless the Part D sponsor is notified otherwise.
Once the request is approved, Part D sponsors may implement the PA
requirement and, if the plan determines that the vaccine is not being
used for an ACIP--recommended use, may charge the enrollee the
applicable cost-sharing. Part D sponsors are permitted, but not
required, to make retroactive determinations for claims that were
processed with $0 cost-sharing after the ``Effective date of the ACIP
recommendation'' and before the date on which the PA requirement went
into effect.
If ACIP withdraws a recommendation for a previously recommended
vaccine such that the vaccine no longer meets the definition of an
ACIP-recommended adult vaccine, Part D sponsors are not required to
submit a negative change request and may immediately apply cost sharing
for the vaccine for dates of service after the ``Effective date of the
ACIP recommendation.''
Because the cost-sharing limits for vaccines outlined in this
proposal have been in place since 2023 through program instruction
authority and we have annually reviewed cost sharing in plan benefit
package submissions, we believe the impacts of our proposed
codification of these requirements should have minimal impact on Part D
sponsors and beneficiaries.
B. Appropriate Cost-Sharing for Covered Insulin Products Under Medicare
Part D (Sec. Sec. 423.100 and 423.120)
1. Background
Section 11406 of the Inflation Reduction Act (IRA) amended section
1860D-2 of the the Act by adding new paragraph (9) to subsection (b)
and new paragraph (6) to subsection (c) and making other conforming
amendments to require that, effective for plan years beginning on or
after January 1, 2023, the Medicare Part D deductible shall not apply
to covered insulin products, and the Part D cost-sharing amount for a
1-month supply of each covered insulin product must not exceed the
statutorily defined ``applicable copayment amount'' for all enrollees.
For 2023, 2024, and 2025, the applicable copayment amount is $35. For
2026 and each subsequent year, the applicable copayment amount is the
lesser of: (1) $35, (2) an amount equal to 25 percent of the maximum
fair price (MFP) established for the covered insulin product in
accordance with part E of subchapter XI of the Act, or (3) an amount
equal to 25 percent of the negotiated price of the covered insulin
product under the PDP or MA-PD plan.
Section 11406(d) of the IRA directed the Secretary to implement
section 11406 of the IRA for 2023, 2024, and 2025 by program
instruction or other forms of program guidance. In accordance with the
law, CMS issued several memoranda related to cost-sharing for covered
insulin products via the Health Plan Management System (HPMS) that
outlined expectations for Part D sponsors regarding the implementation
of section 11406. On September 26, 2022, CMS released an HPMS
memorandum titled ``Contract Year 2023 Program Guidance Related to
Inflation Reduction Act Changes to Part D Coverage of Vaccines and
Insulin,'' in which we provided program instructions for the
implementation of the requirements in section 11406.\12\ On April 4,
2023, we released additional guidance in the ``Final Contract Year (CY)
2024 Part D Bidding Instructions'' in which we provided instructions
for Part D sponsors as they prepared to submit bids for CY 2024.\13\
Lastly, on April 1, 2024, we released ``Final CY 2025 Part D Redesign
Program Instructions.'' \14\
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\12\ <a href="https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf">https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf</a>.
\13\ <a href="https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf">https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf</a>.
\14\ <a href="https://www.cms.gov/files/document/final-cy-2025-part-d-redesign-program-instructions.pdf">https://www.cms.gov/files/document/final-cy-2025-part-d-redesign-program-instructions.pdf</a>.
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In this rule, we propose to codify the requirements related to
appropriate cost-sharing for covered insulin products under Part D for
2026 and each subsequent plan year.
2. Definition of Covered Insulin Product
Section 1860D-2(b)(9)(C) of the Act defines a covered insulin
product as ``an insulin product that is a covered Part D drug covered
under a PDP or MA-PD plan and that is approved under section 505 of the
Federal Food, Drug, and Cosmetic Act (FFDCA) or licensed under section
351 of the Public Health Service Act (PHSA) and marketed pursuant to
such approval or licensure, including any covered insulin product that
has been deemed to be licensed under section 351 of the PHSA pursuant
to section 7002(e)(4) of the Biologics Price Competition and Innovation
Act of 2009 and marketed pursuant to such section.''
We are proposing to codify the statutory definition of ``covered
insulin product'' at Sec. 423.100 and, in alignment with the guidance
in CMS's September 26, 2022 HPMS memorandum, we clarify that a covered
insulin product includes drug products that are a combination of more
than one type of insulin. We are also proposing, consistent with the
September 26, 2022 HPMS memorandum, that the definition of a covered
insulin product include drug products that are a combination of both
insulin and a non-insulin drug or biological product. Our proposed
definition of covered insulin product would not, however, include
medical supplies associated with the injection of an insulin product,
unless such medical supplies are a device constituent part of a
combination product (as defined in 21 CFR 3.2(e)) containing insulin
and such combination product is licensed under section 351 of the PHSA.
While our proposed definition of ``covered insulin product''
includes drug products that are a combination of more than one type of
insulin or both insulin and non-insulin drug or biological products,
the definition would be limited to those drug products
[[Page 99353]]
that are FDA-licensed products. Consequently, because a compounded drug
product, as described in Sec. 423.120(d), is not FDA-licensed, it
would not meet the definition of ``covered insulin product''. As such,
a compounded drug product would not be subject to the requirements for
a ``covered insulin product'' under our proposed definition at Sec.
423.100.
Section 1860D-2(b)(9)(C) of the Act specifies that a ``covered
insulin product'' is an insulin product that is a covered Part D drug
covered under a PDP or MA-PD plan. Section 423.100 defines a covered
Part D drug to be a Part D drug that is included on a Part D sponsor's
formulary, treated as being included in a Part D plan's formulary as a
result of a coverage determination or appeal, and obtained at a network
pharmacy or an out-of-network pharmacy in accordance with Sec.
423.124(a) and (c). Accordingly, we specify in our proposed definition
at Sec. 423.100 that a ``covered insulin product'' is a covered Part D
drug as defined in Sec. 423.100.
Additionally, we propose at Sec. 423.100 that a ``covered insulin
product'' is licensed under section 351 of the Public Health Service
Act and marketed pursuant to such licensure. We clarify that this
proposed definition, in accordance with the statute, includes any
covered insulin product that had an approved marketing application that
was deemed to be a license for the insulin product (that is, an
approved biologics license application) under section 351 of the PHSA
pursuant to section 7002(e)(4) of the Biologics Price Competition and
Innovation Act of 2009 and marketed pursuant to such license. We also
note that outside of these situations where the insulin had an approved
marketing application under section 505 of the Federal Food, Drug, and
Cosmetic Act, that was deemed to be a license for the insulin product
(that is, an approved biologics license application) under section 351
of the Public Health Service Act pursuant to section 7002(e)(4) of the
Biologics Price Competition and Innovation Act of 2009, there is no
need to reference section 505 of the Federal Food, Drug, and Cosmetic
Act since a biological product can no longer be approved under section
505 and must be licensed in a biologics license application under
section 351 of the Public Health Service Act. As such, a reference to
section 505 is not included in our proposed definition of a ``covered
insulin product''.
3. Definition of Applicable Cost-Sharing Amount for Covered Insulin
Products
Section 1860D-2(b)(9)(D) of the Act defines ``applicable copayment
amount'' with respect to a covered insulin product under a PDP or an
MA-PD plan dispensed during plan year 2026, and each subsequent plan
year, as the lesser of--
<bullet> $35;
<bullet> An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of subchapter XI, or;
<bullet> An amount equal to 25 percent of the negotiated price of
the covered insulin product under the PDP or MA-PD plan.
We interpret the section 1860D-2(b)(9)(D) reference to ``applicable
copayment amount'' as an amount that could be either a fixed copayment
or a coinsurance percentage. Therefore, we propose to define this
``applicable copayment amount'' as an ``applicable cost-sharing
amount'' at Sec. 423.100. In addition, to ensure that the reference to
``applicable cost-sharing amount'' is specific to the cost-sharing for
covered insulin products described under proposed Sec. 423.120(h), and
discussed later in this proposed rule, we propose to define the term
``covered insulin product applicable cost-sharing amount.''
Specifically, we propose to add at Sec. 423.100 a definition of
``covered insulin product applicable cost-sharing amount'' that means,
with respect to a covered insulin product covered under a PDP or an MA-
PD plan prior to an enrollee reaching the annual out-of-pocket
threshold during plan year 2026 and each subsequent plan year, the
lesser of--
<bullet> $35;
<bullet> An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of subchapter XI, or;
<bullet> An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
For example, the August 15, 2024 publication ``Medicare Drug Price
Negotiation Program: Negotiated Prices for Initial Price Applicability
Year 2026'' establishes the maximum fair price for the covered insulin
product Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog
FlexPen; NovoLog PenFill as $119 for a 30-day supply in CY 2026.\15\ An
amount equal to 25 percent of the maximum fair price for this product
is $29.75, which is lower than the cost-sharing amount of $35.
Therefore, the covered insulin product applicable cost-sharing amount
for Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen;
NovoLog PenFill would be the lesser of: (1) $29.75; or (2) an amount
equal to 25 percent of the negotiated price, as defined in Sec.
423.100, of the covered insulin product under the PDP or MA-PD plan.
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\15\ <a href="https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf">https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf</a>.
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4. Cost Sharing for Covered Insulin Products
Section 1860D-2(b)(9)(A) of the Act specifies that for plan year
2023 and subsequent plan years, the deductible, as described in section
1860D-2(b)(1) of the Act, shall not apply with respect to any covered
insulin product. Section 1860D-2(b)(9)(B)(ii) of the Act further
specifies that for 2025 and subsequent plan years, the coverage
provides benefits for any covered insulin product, prior to an
individual reaching the out-of-pocket threshold, with cost-sharing for
a month's supply that does not exceed the applicable copayment amount.
We are proposing to codify these requirements at Sec. 423.120(h)(1)
and (2).
In alignment with the guidance in our September 26, 2022 HPMS
memorandum, we propose to interpret the section 1860D-2(b)(9) cost-
sharing requirements to apply separately to each prescription fill that
is dispensed. For a prescription fill dispensed in an amount up to a 1-
month supply, $35 (or a lower amount specified by the sponsor) is
considered a copayment for purposes of determining the ``covered
insulin product applicable cost-sharing amount.'' Under our proposal,
and consistent with our current policy in the September 26, 2022 HPMS
memorandum, Part D sponsors would not be required to prorate the $35
copayment if less than a 1-month supply is dispensed. We believe this
proposed policy is supported by section 1860D-2(b)(9)(D) of the Act,
which does not explicitly require prorating the applicable copayment
amount for less than a 1-month supply. It also aligns with current
regulations because insulin is not a solid oral dosage form subject to
daily cost-sharing requirements at Sec. 423.153(b)(4). Under our
proposal, if the ``covered insulin product applicable cost-sharing
amount'' is a coinsurance, the coinsurance percentage would be
[[Page 99354]]
applied to the negotiated price regardless of the days' supply
dispensed.
With respect to extended-day supplies (that is, greater than a 1-
month supply) of covered insulin products, we are proposing that cost
sharing must not exceed the cumulative ``covered insulin product
applicable cost-sharing amount'' that would apply if the same days'
supply was dispensed in the fewest number of 1-month supply increments
necessary. For example, if a covered insulin product is dispensed for
greater than a 1-month supply, but less than a two-month supply, the
lesser of $70 or 25 percent of MFP or negotiated price, whichever
applies, would remain the maximum cost-sharing amount. Similarly, the
lesser of $105 or 25 percent of the MFP or negotiated price, whichever
applies, would apply for a covered insulin product that is dispensed
for greater than a two-month supply up to a three-month supply. If the
``covered insulin product applicable cost-sharing amount'' is a
coinsurance, the coinsurance percentage would be applied to the
negotiated price regardless of the days' supply dispensed.
While Part D sponsors must not charge cost-sharing that exceeds the
``covered insulin product applicable cost-sharing amount,'' Part D
sponsors may charge cost-sharing that is equal to or less than the
``covered insulin product applicable cost-sharing amount.'' This means
that Part D sponsors have the flexibility to specify cost-sharing that
is equal to or lower than the lesser of: a $35 copayment, or 25 percent
coinsurance based on the MFP (if established for such product under the
Medicare Drug Price Negotiation Program for that year), or 25 percent
coinsurance based on the negotiated price. Part D sponsors could meet
this cost-sharing requirement by establishing a copayment amount that
is equal to or lower than $35 for a 1-month supply, establishing a
coinsurance percentage that is equal to or lower than 25 percent of the
product's MFP or negotiated price, or establishing both a copayment
amount equal to or lower than $35 and a coinsurance percentage equal to
or lower than 25 percent of the product's MFP or negotiated price.
In the September 26, 2022 HPMS memorandum, we provided guidance on
managing out-of-network claims. We are now proposing that enrollees who
submit direct member reimbursement (DMR) requests for covered insulin
products accessed at either out-of-network pharmacies or providers (in
accordance with Sec. 423.124(a) and (c)), or at in-network pharmacies
or providers, must not pay more than the ``covered insulin product
applicable cost-sharing amount.'' While Part D sponsors generally may
charge the enrollee for the difference between the cash price and plan
allowance for DMRs for covered Part D drugs accessed from both out-of-
network and in-network pharmacies, neither Sec. 423.124(b) nor Chapter
14 of the Prescription Drug Benefit Manual directly addresses covered
Part D drugs that have statutorily limited cost sharing.\16\ Therefore,
for covered insulin products accessed at either out-of-network
pharmacies or providers (in accordance with Sec. 423.124(a) and (c)),
or at in-network pharmacies or providers, we propose at Sec.
423.120(h)(4) that the Part D sponsor must reimburse the enrollee for
the full cash price paid to the pharmacy or provider for a covered
insulin product minus the ``covered insulin product applicable cost-
sharing amount.''
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\16\ Section 423.124(b) currently states that a Part D sponsor
that provides its Part D enrollees with coverage other than defined
standard coverage may require its Part D enrollees accessing covered
Part D drugs at out-of-network pharmacies to assume financial
responsibility for any differential between the out-of-network
pharmacy's (or provider's) usual and customary price and the Part D
sponsor's plan allowance. Section 50.4.3 of Chapter 14 of the
Medicare Prescription Drug Benefit Manual (<a href="https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf">https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf</a>)
provides detailed guidance on how Part D sponsors must process DMR
requests that are submitted by enrollees who paid cash at an out-of-
network (or an in-network) pharmacy (or provider) and where the
pharmacy (or provider) did not submit claim to Part D plan.
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The total gross covered drug cost (TGCDC) usually is reported
differently on prescription drug events (PDEs) depending on whether the
drug was accessed at an out-of-network or in-network pharmacy or
provider. Specifically, Part D sponsors report the cash price that the
enrollee paid to the pharmacy or provider as the TGCDC for out-of-
network DMRs but only report the negotiated price as the TGCDC for in-
network DMRs. However, we are clarifying here that with respect to
covered insulin products, as an exception to the Chapter 14 guidance,
the sponsor should report the cash price paid to the pharmacy or
provider as the TGCDC on the PDE for both out-of-network and in-network
DMRs. Additionally, true out-of-pocket (TrOOP) cost accumulation for
covered insulin products would be limited to the beneficiary's cost-
sharing amount, which cannot exceed the ``covered insulin product
applicable cost-sharing amount.''
As described in the April 4, 2023 HPMS memorandum, Part D sponsors
may place covered insulin products on any tier, and apply utilization
management strategies (for example, prior authorization and step
therapy), insofar as such tier placement or utilization management
strategy is consistent with the requirements of CMS's formulary review
and approval process under Sec. 423.120(b). However, regardless of a
covered insulin product's tier placement or applicable utilization
management strategy, the statutory cost-sharing limits under this
proposed rule still apply.
We propose to codify at Sec. 423.120(h)(1) and (2) that with
respect to coverage of a covered insulin product, as we propose to
define such term at Sec. 423.100, prior to an enrollee reaching the
annual out-of-pocket threshold, a Part D sponsor must not apply a
deductible and must ensure any enrollee cost-sharing for each
prescription fill up to a 1-month supply does not exceed the ``covered
insulin product applicable cost-sharing amount'' as defined at Sec.
423.100. We also propose to codify at Sec. 423.120(h)(3) that Part D
sponsors must ensure that any enrollee cost sharing for each
prescription fill greater than a 1-month supply does not exceed the
cumulative ``covered insulin product applicable cost-sharing amount,''
that would apply if the same days' supply was dispensed in the fewest
number of 1-month supply increments necessary. Finally, we propose to
codify at Sec. 423.120(h)(4) that these cost-sharing requirements
apply for covered insulin products obtained from either in-network and
out-of-network pharmacies and providers.
C. Medicare Prescription Payment Plan (Sec. Sec. 423.137, 423.2265,
423.2267, and 423.2536)
1. Background
The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169) made
several additions and amendments to the Social Security Act (the Act)
that affect the structure of the defined standard Part D drug benefit.
Section 11202 of the IRA (Maximum Monthly Cap on Cost-Sharing Payments
under Prescription Drug Plans and MA-PD Plans) added a new section
1860D-2(b)(2)(E) to the Act requiring all Medicare prescription drug
plans to offer their Part D enrollees the option to pay out-of-pocket
(OOP) Part D drug costs through monthly payments over the course of the
plan year instead of at the pharmacy point of sale (POS) beginning
January 1, 2025.
CMS undertook consumer focus group testing to select a name for the
program
[[Page 99355]]
established at section 1860D-2(b)(2)(E) of the Act that would resonate
with Medicare Part D enrollees. After multiple rounds of consumer
testing fieldwork and evaluation of the results, CMS announced the
official name of the program as the ``Medicare Prescription Payment
Plan.'' We refer to the program herein using this name.
Section 11202(c) of the IRA directs the Secretary to implement the
Medicare Prescription Payment Plan for 2025 by program instruction or
other forms of program guidance. In accordance with the law, CMS
released guidance establishing critical operational, technical, and
communication requirements for the Medicare Prescription Payment Plan
for 2025. To provide Part D sponsors with sufficient time to implement
the program, CMS released the guidance in two parts: the first
addressed critical operational and technical requirements and the
second addressed communications-related requirements.\17\ In order to
solicit the feedback of interested parties, CMS initially published
both parts as draft guidance and voluntarily solicited comment. After
consideration of the comments, we then released final versions of each
part.
---------------------------------------------------------------------------
\17\ See: Medicare Prescription Payment Plan: Final Part One
Guidance on Select Topics, Implementation of Section 1860D-2 of the
Social Security Act for 2025, and Response to Relevant Comments;
Medicare Prescription Payment Plan: Final Part Two Guidance on
Select Topics, Implementation of Section 1860D-2 of the Social
Security Act for 2025, and Response to Relevant Comments.
---------------------------------------------------------------------------
CMS released the draft part one guidance in August 2023, which
covered topics such as how incurred OOP pharmacy costs should be re-
calculated into monthly billed amounts (``program calculations'');
participant billing requirements; pharmacy payment obligations and
claims processing; requirements related to Part D enrollee outreach;
requirements related to Part D enrollee election; procedures for
termination of election; reinstatement and preclusion; participant
disputes; and data submission requirements. CMS also provided examples
of the program calculations to help Part D sponsors program their
claims and billing systems correctly for 2025. After consideration of
comments received on the draft part one guidance, CMS released the
final part one guidance (hereinafter referred to as ``final part one
guidance'') in February 2024.
CMS released the draft part two guidance in February 2024, which
covered topics such as outreach, education, and communications
requirements for Part D sponsors; CMS Part D enrollee education and
outreach; pharmacy processes; and Part D sponsor operational
requirements. After consideration of comments received on the draft
part two guidance, CMS released the final part two guidance
(hereinafter referred to as ``final part two guidance'') in July 2024.
In addition to the final part one and final part two guidance, CMS
released a technical memorandum in July 2023 providing examples to
demonstrate the calculations of the maximum monthly cap on cost sharing
payments under the program in different scenarios, a second technical
memorandum in April 2024 providing additional examples of calculations
that reflect IRA-related changes to the incurred costs that count
toward true out-of-pocket costs (TrOOP), and a set of frequently asked
questions in October 2024 providing clarifications on the final part
one and final part two guidance.
CMS also developed model and standardized materials to be used by
Part D sponsors in meeting the statutory requirement for Part D
sponsors to communicate with enrollees about the program. The materials
developed by CMS include a model election request form, a model notice
of election approval, a standardized likely to benefit notice, a model
notice of voluntary termination, a model notice of failure to pay, and
a model notice of involuntary termination. Where possible, CMS based
development of the Medicare Prescription Payment Plan model materials
on Part D plan enrollment and disenrollment notices to promote
consistency across the Part D program. CMS issued the model materials
through the Office of Management and Budget's Information Collection
Request (ICR) process and released final model materials in July 2024
after consideration of public comments received on the ICR package.
CMS does not have authority to implement the Medicare Prescription
Payment Plan through program instruction authority beyond 2025. As
such, we are pursuing rulemaking to codify the requirements of the
program for 2026 and subsequent years.
With only a few exceptions, we are proposing to codify, without
modification, the requirements established in the final part one and
final part two guidance at Sec. 423.137 for 2026 and subsequent years.
Because we are codifying existing guidance, these provisions are not
expected to impact the baseline.
Instances where we are making modifications to the requirements
previously finalized for 2025 include--
<bullet> Proposing to modify the requirements for how Part D
sponsors handle adjustments for Part D claims under the Medicare
Prescription Payment Plan; and
<bullet> Proposing to modify the timing requirements for the grace
period and initial notice of failure to pay.
We are also proposing new requirements for three additional topics:
<bullet> Requirements related to year-over-year participation for
existing participants in the Medicare Prescription Payment Plan and
addition of a renewal notice to the required notices related to
election into the program;
<bullet> Requirements for the effective date of voluntary
terminations from the program;
<bullet> Requirements for Part D plans to provide pharmacies with
easily accessible information on a Part D enrollee's costs incurred
under the program.
We are also proposing to modify Sec. 423.2267(e), which lists CMS-
required materials and content for Part D sponsors, to include model
and standardized materials for the Medicare Prescription Payment Plan,
and to modify the list of required content for Part D sponsor websites
at Sec. 423.2265 to include Medicare Prescription Payment Plan
information. Finally, we are proposing to modify Sec. 423.2536 to
waive requirements related to the Medicare Prescription Payment Plan
for the Limited Income Newly Eligible Transition (LI NET) program.
2. Provisions of the Proposed Regulation
(a) Basis, Scope, and General Rule
Section 1860D-2(b)(2)(E)(i) of the Act requires that each PDP
sponsor offering a prescription drug plan and each MA organization
offering an MA-PD plan must provide to any enrollee of such plan,
including an enrollee who is a subsidy eligible individual (as defined
in paragraph (3) of section 1860D-14(a) of the Act), the option to
elect, with respect to a plan year, to pay cost sharing under the plan
in monthly amounts that are capped in accordance with section 1860D-
2(b)(2)(E) of the Act.
In the final part one guidance, CMS stated that, for calendar year
2025, the provision applies to all Part D sponsors, including both
stand-alone PDPs and MA-PDs, as well as Employer Group Waiver Plans
(EGWPs), cost plans, and demonstration plans.
In the final part two guidance, CMS stated that while the Medicare
Prescription Payment Plan is applicable to all Part D plans, it has no
practical
[[Page 99356]]
application for PACE participants or enrollees in plans that
exclusively charge $0 cost sharing for Part D covered drugs. As such,
CMS does not expect Part D plans that exclusively charge $0 cost
sharing for covered Part D drugs to all plan enrollees to offer
enrollees the option to pay their OOP costs through monthly payments
over the course of the plan year or otherwise comply with the final
part one guidance or the final part two guidance for calendar year
2025. CMS further stated that, if a Part D plan has any enrollees that
could pay any cost sharing, even a nominal amount, under the Part D
plan at any point during the year, then this clarification would not be
applicable to such a plan.
For the reasons articulated in the final part two guidance, we
intend to continue to not expect such plans to offer enrollees the
option to pay their OOP costs through monthly payments over the course
of the plan year or otherwise comply with the Medicare Prescription
Payment Plan requirements set forth in this proposed rule and in the
proposed new regulation at Sec. 423.137.
In this proposed rule, we propose to codify at Sec. 423.137(a) the
rules we established in the 2025 guidance to apply to plan year 2026
and subsequent years and, in the case of a plan operating on a non-
calendar year basis, for the portion of the plan year starting on
January 1, 2026. CMS recognizes that implementing the proposed
modifications to the requirements established in the final part one and
final part two guidance and the new requirements in this proposed rule
could be operationally challenging for plans operating on a non-
calendar year basis to implement midway through a plan year. As such,
we intend to not expect plans operating on a non-calendar year basis to
comply with the Medicare Prescription Payment Plan requirements set
forth in this proposed rule and in the proposed new regulation at Sec.
423.137 to the extent that those requirements differ from those
established in the final part one and final part two guidance during
any portion of the non-calendar plan year that starts in 2025 and
continues into 2026.\18\ However, such plans would be expected to
comply with all requirements set forth in this proposed rule and in the
proposed new regulation at Sec. 423.137 for non-calendar plan years
beginning in 2026 and subsequent non-calendar plan years.
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\18\ Specifically, during any portion of the non-calendar plan
year that starts in 2025 and continues into 2026, we intend to not
expect plans operating on a non-calendar year basis to comply with
the proposed modifications to the requirements for how Part D
sponsors handle adjustments for Part D claims under the Medicare
Prescription Payment Plan and the timing requirements for the grace
period and initial notice of failure to pay. During any portion of
the non-calendar plan year that starts in 2025 and continues into
2026, we also intend to not expect plans operating on a non-calendar
year basis to comply with proposed new requirements related to year-
over-year participation for existing participants in the Medicare
Prescription Payment Plan and addition of a renewal notice to the
required notices related to election into the program; for the
effective date of voluntary terminations from the program; and for
Part D plans to provide pharmacies with easily accessible
information on a Part D enrollee's costs incurred under the program.
---------------------------------------------------------------------------
In our final part one guidance, we also established definitions of
key terms related to the Medicare Prescription Payment Plan for plan
year 2025. We now propose to codify our existing definitions at Sec.
423.137(b) for plan year 2026 and subsequent years with certain
clarifications. Specifically, at Sec. 423.137(b)(1), we propose to
define ``OOP costs for the Medicare Prescription Payment Plan'' as the
cost sharing amount the Part D enrollee is directly responsible for
paying. In the final part one and final part two guidance, we referred
to these costs simply as ``OOP costs.' '' We propose to codify the more
specific definition of ``OOP costs for the Medicare Prescription
Payment Plan'' to avoid confusion with other uses of the term OOP
costs, which may be inconsistent with the use of that term in the final
part one and final part two guidance.
As described in section (b) of this proposed rule, the formula for
calculating the maximum monthly cap differs for the first month of
participation in the program versus the remaining months of the year.
The cap for the first month for which the Part D enrollee has opted
into the Medicare Prescription Payment Plan incorporates an enrollee's
TrOOP prior to election into the program. However, the subsequent month
calculation is determined by calculating the sum of any remaining OOP
costs owed by the participant from a previous month that have not yet
been billed and any additional OOP costs for the Medicare Prescription
Payment Plan in the subsequent month. As such, for the subsequent month
calculation of the Part D cost sharing incurred by the Part D enrollee,
the term ``OOP costs for the Medicare Prescription Payment Plan''
includes those Part D cost sharing amounts that the enrollee is
responsible for paying after accounting for amounts paid by third-party
payers. Specifically, the OOP costs for the Medicare Prescription
Payment Plan do not include the covered plan pay amount or other TrOOP-
eligible amount(s), such as any amount paid by potential third-party
payers, such as State Pharmaceutical Assistance Programs or charities.
Additionally, within the definition of OOP costs for the Medicare
Prescription Payment Plan, we propose to define ``remaining OOP costs
owed by the participant'' to be the sum of OOP costs for the Medicare
Prescription Payment Plan that have not yet been billed to the program
participant. For example, if a Medicare Prescription Payment Plan
participant incurs $2,000 in January and is billed $166.67, the
remaining OOP costs owed by the participant are $2,000 - $166.67 =
$1,833.33.
Finally, in the final part two guidance, CMS stated that it does
not expect the LI NET program to offer enrollees the option to pay
their OOP costs through monthly payment over the course of the plan
year or to comply with the final part one guidance or final part two
guidance for calendar year 2025. CMS clarified that, consistent with
the agency's longstanding interpretation and implementation of the LI
NET program, participants in the LI NET program are considered to be
enrolled in a PDP. However, because the LI NET program is limited to
offering Part D-eligible individuals with temporary coverage during a
limited, transitional period, CMS stated it does not expect the LI NET
program to comply with the requirements of the final part one guidance
or the final part two guidance for calendar year 2025 in connection
with the offering of such transitional coverage. Pursuant to our
authority under section 1860D-14(e)(5)(B) of the Act to waive such
requirements of title XI and title XVIII of the Act as may be necessary
to carry out the purposes of the LI NET program, we propose to codify
in this rule a waiver for the LI NET program with respect to the
requirements of the Medicare Prescription Payment Plan for plan year
2026 and subsequent years. The LI NET program is limited to temporary
coverage during a limited, transitional period and applying the
Medicare Prescription Payment Plan to the LI NET program would be
inconsistent with the purposes of such transitional coverage and would
raise various operational challenges for the program. Accordingly, we
are proposing to revise Sec. 423.2536 to redesignate paragraphs (c)
through (k) as paragraphs (d) through (l) and add new paragraph (c) to
include the proposed Medicare Prescription Payment Plan requirements at
Sec. 423.137 discussed in this section to the list of Part D
requirements waived for the LI NET program. In addition, we
[[Page 99357]]
are proposing to revise newly redesignated paragraphs Sec.
423.2536(i)(1) and (i)(4) to add the materials proposed at Sec. Sec.
423.2265(b)(16) and 423.2267(e)(45) through (51) (discussed previously)
to the list of communication requirements waived for the LI NET
program.
(b) Calculation of the Maximum Monthly Cap on Cost-Sharing Payments
Section 1860D-2(b)(2)(E)(iv) of the Act specifies how the monthly
caps on OOP cost sharing payments are to be calculated. The formula for
calculating the cap differs for the first month of participation in the
program, versus the remaining months of the year. The maximum monthly
cap calculations include specifics of a participant's Part D drug costs
(previously incurred costs and new OOP costs), as well as the number of
months remaining in the plan year; as such, the amount can vary from
person-to-person and month-to-month. Assuming a program participant
remains in the Medicare Prescription Payment Plan through the end of
the plan year, the total amounts billed monthly through the December
payment (which would be billed and paid in the following year) will
equal the total OOP costs for the Medicare Prescription Payment Plan
during the year.
Under section 1860D-2(b)(2)(E)(iv)(I) of the Act, for the first
month for which the Part D enrollee has opted into the Medicare
Prescription Payment Plan, the term ``maximum monthly cap'' means an
amount calculated by taking the annual OOP threshold minus any Part D
costs the Part D enrollee incurred during the year before opting into
the program, divided by the number of months remaining in the plan
year. The number of months remaining in the plan year includes the
current reference month (for example, for a calendar year plan, the
months remaining in the calculation for the January maximum cap would
be 12).
Additionally, incurred costs for the Medicare Prescription Payment
Plan (as used in the statutory definition of the first month's maximum
cap calculation) means the incurred costs, with the meaning set forth
at section 1860D-2(b)(4)(C) of the Act and described in section 30 of
the Final CY 2025 Part D Redesign Program Instructions (Final 2025
Program Instructions), that were incurred prior to effectuation of an
election into the Medicare Prescription Payment Plan, including all
TrOOP-eligible costs.\19\ If election into the program occurs mid-
month, this would include Part D costs incurred within the calendar
month of election but prior to election.
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\19\ Final CY 2025 Part D Redesign Program Instructions: <a href="https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements">https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements</a>.
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Under section 1860D-2(b)(2)(E)(iv)(II) of the Act, for each
subsequent month for which the Part D enrollee has opted into the
program, the maximum monthly cap is determined by calculating the sum
of any remaining OOP costs owed by the participant from a previous
month that have not yet been billed and any additional OOP costs for
the Medicare Prescription Payment Plan in the subsequent month, divided
by the number of months remaining in the plan year. The number of
months remaining includes the month for which the cap is being
calculated. This calculation repeats for each month in which the
participant remains in the Medicare Prescription Payment Plan. The
resulting maximum monthly cap will change if additional OOP costs for
the Medicare Prescription Payment Plan are incurred.
Under section 1860D-2(b)(4)(B)(i)(VII) of the Act, the annual OOP
cost threshold for 2025 is $2,000. Under section 1860D-
2(b)(4)(B)(i)(VII) of the Act, for 2026 and subsequent years, the
annual OOP cost threshold is equal to the amount specified for the
previous year, increased by the annual percentage increase described in
section 1860D-2(b)(6). ``Incurred costs'' means any costs incurred or
treated as incurred under section 1860D-2(b)(4)(C) of the Act.
In the final part one guidance, we established standards for
calculating the maximum monthly cap for the Medicare Prescription
Payment Plan. The participant will not have any monthly bills to pay
under this program until opting into the program and incurring OOP
costs for covered Part D drugs. Once a participant incurs an OOP Part D
drug cost, all their OOP costs for all covered Part D drugs will be
billed on a monthly basis as long as the participant remains in the
program. Program calculations apply to all OOP costs for the Medicare
Prescription Payment Plan, including those in the deductible phase.
Part D sponsors must include all covered Part D drugs in the program.
However, non-covered drugs are excluded. Part D sponsors are
responsible for correctly calculating the monthly caps based on the
statutory formulas, determining the amount to be billed (not to exceed
the cap), and sending monthly bills to program participants.
In the final part one guidance, we also established that opting
into the program will not impact how a program participant moves
through the Part D benefit or what counts towards their TrOOP costs.
Under section 1860D-2(b)(4)(F) of the Act, a participant's TrOOP-
eligible costs under the Medicare Prescription Payment Plan will still
be treated as incurred based on the date each Part D claim is
adjudicated. Opting into the program only provides participants with
the ability to spread OOP costs over the year--the total incurred costs
and the timing of TrOOP accumulation do not change.
In the final part one guidance, we also established standards for
how to incorporate extended day supplies of medications in the
calculations. For participants who fill prescriptions for an extended
day supply, their OOP costs for those prescriptions will be attributed
to the month the prescription was filled and will not be pro-rated over
the months covered by the prescription. For example, if a participant
in the program has $300 in OOP costs for the Medicare Prescription
Payment Plan for a 90-day supply dispensed in January, the full $300
will be counted as incurred in January.
In addition, we stated that when an individual opts into the
Medicare Prescription Payment Plan during the plan year, the
individual's incurred costs used to calculate the first month maximum
cap are equal to the individual's accumulated TrOOP before opting into
the program. If election into the program occurs mid-month, this would
include Part D costs incurred within the calendar month of election but
prior to election (refer to example B4 in Appendix B of the final part
one guidance for an illustration of a mid-month election). The number
of months remaining in the plan year includes the month when an
individual opts into the program. When an individual opts into the
Medicare Prescription Payment Plan prior to the start of the plan year
(such as during open enrollment), the first month maximum monthly cap
calculation applies to their first month of active coverage within the
plan year.
The final part one guidance also stated that in scenarios where the
OOP costs for the Medicare Prescription Payment Plan in the first month
of participation in the program are less than the maximum monthly cap,
a Part D sponsor cannot bill the participant more than their actual
incurred OOP costs. Specifically, a Part D sponsor must bill the
participant the lesser of the participant's OOP costs for the Medicare
Prescription Payment Plan or the first month's maximum monthly cap.
Section 1860D-2(b)(2)(E)(iv)(I) of the Act clearly states that the
first month maximum cap calculation applies to the
[[Page 99358]]
first month an enrollee has elected to participate in the Medicare
Prescription Payment Plan; in scenarios in which a participant incurs
$0 in OOP costs for the Medicare Prescription Payment Plan in the first
month, the Part D sponsor must not bill the participant for the first
month and would use the subsequent month maximum monthly cap
calculation for all succeeding months in the year in which the
participant remains in the program.
Finally, the final part one guidance established that ``OOP costs''
(defined as ``OOP costs for the Medicare Prescription Payment Plan''
for the purposes of this rule) refers only to the patient pay portion
for covered Part D drugs that a program participant would have paid at
the POS if they had not opted into the Medicare Prescription Payment
Plan, not to all incurred costs as defined under section 1860D-
2(b)(4)(C) of the Act. For these calculations, the OOP costs for the
Medicare Prescription Payment Plan do not include the covered plan paid
amount or amounts paid by third parties, such as qualified State
Pharmaceutical Assistance Programs (SPAPs) or charities. OOP costs for
the Medicare Prescription Payment Plan also do not include any amounts
paid by enrollees for monthly premiums.
In this proposed rule, we propose to codify the standards we
established in the final part one guidance for plan year 2026 and
subsequent years at Sec. 423.137(c).
(c) Eligibility and Election
Under section 1860D-2(b)(2)(E)(i) of the Act, Part D sponsors must
provide the option to opt into the Medicare Prescription Payment Plan
to all Part D enrollees, including enrollees who are eligible for the
Low-Income Subsidy (LIS). For 2026 and subsequent years, we propose to
codify the statutory requirement that Part D sponsors must offer the
program to all Part D enrollees, including those who are LIS eligible,
at Sec. 423.137(d).
In the final part one guidance, we explained that while the statute
requires that an LIS enrollee must have the option to become a Medicare
Prescription Payment Plan participant, individuals with low, stable
drug costs (such as LIS enrollees) are not likely to benefit from the
program. Further, LIS enrollment, for those who qualify, is more
advantageous than participation in the Medicare Prescription Payment
Plan. We are aware that there may be limited circumstances in which an
LIS enrollee would benefit from participation in the Medicare
Prescription Payment Plan, but, in general, participation in the
Medicare Prescription Payment Plan is unlikely to benefit LIS
enrollees. It is important that Part D sponsors inform any individual
interested in the Medicare Prescription Payment Plan of potential
eligibility for the LIS program. In this rule, for 2026 and subsequent
years, we propose to require Part D sponsors to include information on
the availability of the LIS program and other financial assistance
programs in the election-related materials described at proposed Sec.
423.137(d)(10) with the goal of alerting Part D enrollees to the
availability of these programs that can lower costs.
In addition, under section 1860D-2(b)(2)(E)(v)(III)(aa) of the Act,
Part D sponsors may not restrict the application of the Medicare
Prescription Payment Plan benefit to specific covered Part D drugs. To
minimize potential confusion and operational challenges, in the final
part one guidance, we stated that for 2025, once an individual has
opted into the program, OOP cost sharing for all covered Part D drugs
must be included in program bills until the participant reaches the OOP
threshold, opts out of the Medicare Prescription Payment Plan, or is
terminated from the Medicare Prescription Payment Plan due to failure
to pay. The program must apply to all of a program participant's
prescriptions for covered Part D drugs. We propose to codify this
requirement for 2026 and subsequent years at Sec. 423.137(d)(5).
Section 1860D-2(b)(2)(E)(v)(II) of the Act states that a Part D
enrollee may opt into the Medicare Prescription Payment Plan prior to
the beginning of the plan year or in any month during the plan year. In
the final part one guidance, we established requirements for a process
for enrollees to opt into the Medicare Prescription Payment Plan in
2025, consistent with the statutory requirement cited previously. The
final part one guidance set forth the following requirements for 2025:
<bullet> Part D sponsors must allow Part D enrollees to opt into
the Medicare Prescription Payment Plan prior to the plan year
(including the Annual Election Period for the subsequent plan year, the
Part D initial enrollment period, and Part D special election periods)
or at any point during the plan year.
<bullet> Part D sponsors must allow Part D enrollees to opt into
the Medicare Prescription Payment Plan after the conclusion of an
enrollment period and before the new plan enrollment effective date
(for example, an enrollee could opt into the program for the upcoming
plan year after the conclusion of the Annual Election Period and in
advance of the January 1 new plan enrollment effective date).
In this proposed rule, for 2026 and subsequent years, we propose to
codify these requirements at Sec. 423.137(d)(4)(1).
In the final part one guidance, we also established requirements
for election into the program in 2025, which were designed to reduce
administrative burden by aligning with existing requirements and
procedures for Part D plan enrollment and to provide a uniform
experience for Part D enrollees by reducing potential variation in
program administration across Part D plans. We required the Part D
enrollee, or their authorized legal representative, to complete an
election request, provide the required information to the Part D
sponsor, and be approved by the Part D sponsor to opt into the Medicare
Prescription Payment Plan. Part D sponsors must have the following
mechanisms available to Part D enrollees who wish to opt into the
Medicare Prescription Payment Plan:
<bullet> A paper election request form that can be mailed.
<bullet> A toll-free telephone number that must provide the
individual with evidence the election request was received (for
example, a confirmation number).
<bullet> A website application that must provide the individual
with evidence the election request was received (for example, a
confirmation number).
Part D sponsors must consider Medicare Prescription Payment Plan
election requests regardless of the election mechanism or format (for
example, a handwritten letter). For an election request to be
considered complete, the Part D sponsor must receive the name of the
Part D enrollee, their Medicare ID number, and the signature (or verbal
attestation, in the case of telephonic requests)
of the Part D enrollee or their authorized legal representative
validating that the requestor understands and accepts the Part D
sponsor's terms and conditions for the program. In this proposed rule,
for 2026 and subsequent years, we propose to codify these requirements
at Sec. Sec. 423.137(d)(2) and 423.137(d)(3).
We are committed to ensuring that Part D enrollees, once they
request to participate, are able to access the benefits of the program
as timely as possible and recognize the importance of timely access to
prevent enrollees from not filling prescriptions due to affordability
challenges. To that end, we requested comment in the draft part one
guidance on real-time or POS election approaches that would require
Part D sponsors to effectuate election into the
[[Page 99359]]
Medicare Prescription Payment Plan without any delay or with only a
nominal delay between the election request and effectuation. As we
clarified in the final part one guidance, real-time election refers to
a process that would enable a Part D enrollee to request election and
be effectuated into the program in one instance from any setting (and
so is not limited to only the pharmacy POS setting). POS election,
rather, is limited to the pharmacy POS setting and would require
updates to pharmacies' claims processing systems.
In response to the request for comment in the draft part one
guidance, many commenters expressed support for real-time election,
noting that it would prevent dispensing delays and prescription
abandonment. However, due to a number of policy and operational
barriers and the restricted lead-up time to the statutory
implementation date of January 1, 2025, we did not require real-time or
POS election for 2025. In the final part one guidance for 2025, we
required a 24-hour effectuation timeframe for election requests made
during the plan year, to reduce the likelihood of dispensing delays and
prescription abandonment while reducing operational burden for plans
and pharmacies. Specifically, we stated that when a Part D sponsor
receives a program election request for the next, upcoming plan year
(or in advance of a new plan enrollment effective date during a plan
year) through either an election request form or through other means,
the Part D sponsor must process the request within 10 calendar days of
receipt, or the number of calendar days before the plan enrollment
starts, whichever is shorter. When a current Part D enrollee requests
to opt into the Medicare Prescription Payment Plan during the plan
year, Part D sponsors must process the election request within 24
hours.
Since publication of the final part one guidance, we have conducted
extensive outreach with a variety of stakeholders and conducted in-
depth research to assess the feasibility of real-time or POS election
options for 2026 or future years. Our research indicates that there is
no mechanism for program election information to be passed through the
current National Council for Prescription Drug Programs (NCPDP)
Telecommunication Standard and easily integrated into Part D sponsor
and/or pharmacy benefit manager (PBM) systems; updates to current
standards would also be needed to support POS election. These updates
would require significant lead time and coordination with industry
standards committees that have existing processes and timelines outside
of CMS's purview. However, real-time election (facilitated by Part D
sponsors outside of the POS) is operationally feasible and need not
involve changes to the current Telecommunication Standard; in fact,
some Part D sponsors have indicated to CMS that they plan to offer
real-time election to their enrollees in 2025. We also note that real-
time election facilitated by Part D sponsors could still take place at
the POS; for example, an individual who receives the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' while picking up a
high-cost prescription could step away from the pharmacy counter to
call their Part D plan or submit an online election request, and then
return to the counter, request that the pharmacist re-process the
claim, and pay $0 at POS for the prescription.
In this rule, for 2026 and subsequent years, we propose to codify
the 24-hour effectuation requirement at Sec. 423.137(d)(4), but
request comment on a potential requirement for Part D sponsors to
effectuate election requests received via phone or web in real-time for
2026 or future years. In particular, we are interested in the
operational feasibility of implementing a real-time election
requirement for 2026, what technology and processes would be required
to enable a real-time election requirement for 2026, implications for
Part D enrollees, and potential burden on interested parties. We are
also interested in opportunities for pharmacists to support enrollees
in using any future Part D sponsor-adjudicated real-time election
mechanisms at the POS.
In the final part two guidance, we stated that for 2025, paper
election requests are considered received on the date and time--
<bullet> The Part D sponsor initially stamps a document received by
regular mail (that is, U.S. Postal Service); or
<bullet> A delivery service that has the ability to track when a
shipment is delivered (for example, U.S. Postal Service, UPS, FedEx, or
DHL) delivers the document.
A telephonic election request is considered received on the date
and time:
<bullet> The verbal request is made by telephone with a customer
service representative; or
<bullet> A message is left on the Part D sponsor's voicemail system
if the Part D sponsor utilizes a voicemail system to accept requests or
supporting statements after normal business hours.
An electronic election request is considered received on the date
and time a request is received through the Part D sponsor's website
and/or portal. This is true regardless of when a Part D sponsor
ultimately retrieves or downloads the request. In this rule, for 2026
and subsequent years, we propose to codify these processing time
requirements at Sec. 423.137(d)(2).
In the final part one guidance, we stated that in 2025, if a Part D
sponsor receives an election request that does not have all necessary
elements required to consider it complete, the sponsor must not
immediately deny the request. For requests received prior to the plan
year, the Part D sponsor must contact the individual to request the
additional documentation necessary to process the request within 10
calendar days of receipt of the incomplete election request. For
requests received during the plan year, the Part D sponsor must contact
the individual to request the additional documentation necessary to
process the request within 24 hours of receipt of the incomplete
election request. Additional documentation to make the program election
request complete must be received by the Part D sponsor within 21
calendar days of the request for additional information. The Part D
sponsor may deny the election request if the requisite information is
not received from the individual in that timeframe. If a Part D
enrollee has fulfilled all program election requirements, but the Part
D sponsor is unable to process the election into the program in the
required amount of time due to no fault of the individual, the Part D
sponsor must process a retroactive election back to the original date
when the individual should have been admitted into the Medicare
Prescription Payment Plan (that is, within 24 hours of the individual
providing the requisite information for election into the program). In
addition, the Part D sponsor must reimburse the participant for any OOP
cost sharing paid on or after that date and include those amounts, as
appropriate, in a monthly bill under the program within 45 calendar
days. In this rule, for 2026 and subsequent years, we propose to codify
these requirements for how Part D sponsors must process program
election requests, including timing and notice requirements, procedures
for collecting missing information on election requests, and
requirements for retroactive election in the event the Part D sponsor
fails to process an election within 24 hours at Sec. 423.137(d)(4).
Section 423.137(d)(4)(i) includes proposed requirements for processing
election requests made prior to the plan year, and Sec.
423.137(d)(4)(ii) includes proposed requirements for processing
[[Page 99360]]
election requests made during the plan year.
In the final part one guidance, we also included requirements for
Part D sponsors to process retroactive election requests in cases where
an enrollee cannot have immediate election into the program and
believes that any delay in filling a prescription due to the 24-hour
timeframe required to process a program election request may seriously
jeopardize their life, health, or ability to regain maximum function
and so must pay out-of-pocket to the pharmacy. In the final part one
guidance, we state that in this situation in 2025, the enrollee must
request retroactive election within 72 hours of the date and time when
the claim was adjudicated. In this rule, for 2026 and subsequent years,
we propose to codify these requirements at Sec. 423.137(d)(6). These
requirements ensure that enrollees can participate in the program in
cases where they believe that a delay in filling a prescription would
seriously jeopardize their life, health, or ability to regain maximum
function and can be reimbursed for costs they paid for the prescription
before being effectuated in the program.
At Sec. 423.137(d)(7), for 2026 and subsequent years, we propose
to codify requirements for Part D sponsors to develop standardized
procedures for determining and processing reimbursements for excess
program payments made by participants who become LIS eligible,
consistent with the final part one guidance for 2025. CMS regulations
at 42 CFR 423.800(c) apply to all subsidy eligible individuals and
require Part D sponsors to reimburse subsidy-eligible individuals, and
any organizations paying cost sharing on behalf of such individuals,
any excess premium or OOP cost sharing paid by the individual or
organization after the effective date of the individual's eligibility
for a subsidy. This requirement applies to any OOP cost sharing paid
under the Part D benefit, including cost sharing paid by or on behalf
of an enrollee who has participated in the Medicare Prescription
Payment Plan. Under the timeframes specified at 42 CFR 423.800(e) and
423.466(a), Part D sponsors must process retroactive claims and premium
adjustments for LIS-eligible individuals and make any resulting refunds
and recoveries within 45 calendar days of the Part D sponsor's receipt
of complete information regarding these adjustments.\20\ These same
requirements apply to enrollees who have elected into the Medicare
Prescription Payment Plan and later become LIS-eligible.
---------------------------------------------------------------------------
\20\ Refer to Medicare Prescription Drug Benefit Manual; Chapter
13--Premium and Cost-Sharing Subsidies for Low-Income Individuals.
---------------------------------------------------------------------------
Section 1860D-2(b)(2)(E)(v)(II) of the Act requires Part D sponsors
to offer the Medicare Prescription Payment Plan to all Part D enrollees
in any month during the year. At Sec. 423.137(d)(8), for 2026 and
subsequent years, we propose to codify requirements for mid-year plan
switches, consistent with the requirements included in the final part
one guidance for 2025. If a Part D enrollee who opted into the Medicare
Prescription Payment Plan switches plans (Plan Benefit Package (PBP))
during the plan year or is reassigned by CMS, regardless of whether the
new plan is offered by the same or a different Part D sponsor, the Part
D sponsor of the prior Part D plan must offer the participant the
option to repay the full outstanding amount in a lump sum. If the
individual chooses to continue paying monthly, the Part D sponsor must
continue to bill the participant monthly based on the participant's
accrued OOP costs while in the program under that sponsor's Part D
plan. The Part D sponsor cannot require full immediate repayment.
The Part D sponsor is not permitted to automatically sign up the
individual for the Medicare Prescription Payment Plan under the new
plan. However, an individual must be able to opt into the program
regardless of whether they had participated in the program under the
prior plan. If an individual opts into the Medicare Prescription
Payment Plan under their new plan after switching plans mid-year, the
new Part D sponsor must calculate the individual's monthly cap for the
first month of participation under the new plan using the formula for
the calculation of the maximum monthly cap in the first month. This is
the case even when the first plan and the second plan are administered
by the same Part D sponsor.
As outlined in section (e) of this proposed rule, preclusion is
only permitted in plans that are offered by the same Part D sponsor and
may extend beyond the immediately subsequent plan year if a Part D
enrollee remains in a plan offered by the same Part D sponsor and
continues to owe an overdue balance. If an individual pays off the
outstanding balance during a subsequent year, the enrollee is eligible
to request to participate in the Medicare Prescription Payment Plan
program again.
At Sec. 423.137(d)(9), for 2026 and subsequent years, we propose
to codify requirements related to participation renewal year-over-year,
a topic CMS did not address in the final part one or final part two
guidance because the IRA limited CMS program instruction for a single
year of the program (CY 2025). To streamline the process for Part D
enrollees and Part D sponsors, we propose an automatic election renewal
process, wherein program participation continues into the next upcoming
year automatically, provided the participant remains in the same PBP in
the upcoming year, unless the program participant indicates otherwise.
If an enrollee is switching Part D plans, including switching between
two PBPs offered by the same Part D sponsor, the automatic election
renewal process would not apply. We propose requiring Part D sponsors
to send a notice alerting the Part D enrollee that their participation
in the program will continue into the next year unless they indicate
that they would like to opt out for the upcoming year. This notice
would be required to be sent out to program participants by the end of
the Annual Election Period (no later than December 7) and must include
the Part D sponsor's program terms and conditions for the upcoming
year. This proposed automatic renewal process reduces burden for Part D
enrollees who would like to remain in the program, as they would not
need to complete additional paperwork to renew their election, and it
is consistent with automatic renewal of Part D plan enrollment, which
provides a seamless experience for Part D enrollees. Automatic renewal
also entails less administrative burden for Part D sponsors, as they
are not required to process full election request forms again for
program participants and would not be required to perform ``likely to
benefit'' analyses (see section (d) of this proposed rule) for the
upcoming plan year on program participants. CMS also considered
requiring Part D enrollees to actively re-elect into the program each
year. Under this approach, Part D sponsors would be required to
terminate an enrollee's participation at the end of the contract year
and the enrollee would be required to opt back into the program (with
the standard election request form or a streamlined renewal form) in
order to participate in the following year. CMS opted to propose the
automatic election renewal, because the alternative active re-election
process places additional burden on both Part D enrollees and Part D
sponsors. In addition, this approach is consistent with the existing
Part D enrollment process, which automatically renews each year. We
request comment on the proposal for automatic election renewal,
including the process for enabling
[[Page 99361]]
automatic election and associated notification requirements.
In the final part two guidance, we addressed program election
communications and notice requirements for Part D sponsors, including
timing, content, and supplemental information requirements for each
required notice in 2025. We required Part D sponsors to make an
election request form available throughout the plan year and during the
Part D plan enrollment periods.
Part D sponsors must send a paper election request form within the
same timeframe as the membership ID card mailing specified at 42 CFR
423.2267(e)(32)(i).
The election request form may be sent in the membership ID card
mailing, or in a separate mailing in the same timeframe. The election
request form must include all of the following:
<bullet> Fields for the Part D enrollees' first and last name,
Medicare Number, birth date, phone number, permanent residence street
address, and mailing address, if different from permanent residence
street address.
<bullet> A signature field, allowing the enrollee to attest that
they understand--
++ That the form is a request to participate in the Medicare
Prescription Payment Plan, and the Part D sponsor will contact them if
more information is needed to complete the request;
++ That by signing the form, they have read and understood the form
and the Part D sponsor's terms and conditions; and
++ That the Part D sponsor will inform the individual when their
participation in the program is active, and, until the individual
receives that notification, that they are not a participant in the
program.
<bullet> Instructions for how to submit the form to the Part D
sponsor.
<bullet> Instructions for how the Part D enrollee can contact the
Part D sponsor for questions or assistance.
A Part D sponsor may include the program terms and conditions on
the election request form or may include them on a separate attachment.
In this rule, we propose to codify these requirements for 2026 and
subsequent years at Sec. 423.137(d)(10)(i).
Once a program election request is accepted by the Part D sponsor,
the Part D sponsor must communicate to the Part D enrollee that the
request to participate in the Medicare Prescription Payment Plan has
been accepted and effectuated via written notice of election approval,
within the timeframes described at Sec. 423.137(d)(10)(ii)(A). For
requests received prior to the plan year, Part D sponsors are required
to send the written notice of election approval within the timeframe
described at Sec. 423.137(d)(10)(ii)(A)(1). For requests received
during the plan year, regardless of how the Part D enrollee submitted
the election request (paper, telephone, or electronic), the Part D
sponsor must deliver the notice of election approval within the
timeframe described at Sec. 423.137(d)(10)(ii)(A)(2) first
telephonically and then via a written notice. The call must include the
required elements for the notice of election approval described at
Sec. 423.137(d)(10)(ii)(B). The Part D sponsor must then deliver the
written notice of election approval to the program participant either
via mail or electronically, depending on the participant's preferred
and authorized communication method, within 3 calendar days of
delivering the initial telephone notice.
If a Part D sponsor is processing an election request over the
phone and is able to confirm in that phone call that the election
request is approved and the Part D enrollee's participation is active,
that same phone call can serve to meet the acceptance of election
telephone notification requirement. Similarly, if an electronic
election request is approved and effectuated in real time and the Part
D sponsor is able to provide a digital confirmation of program
participation, the Part D sponsor is not required to also deliver the
notice of election approval via phone call. In either case, the Part D
sponsor must still deliver the written notice within 3 calendar days.
In the final part two guidance, we set forth requirements for Part
D plan sponsors related to the contents of the notice of election
approval in 2025. The notice of election approval must include--
<bullet> The effective date of the individual's participation;
<bullet> A description of how payments for covered Part D drugs
under the program will work, including that the individual will pay $0
to the pharmacy for covered Part D drugs and the Part D plan will bill
the individual each month;
<bullet> An overview of how the monthly bill is calculated,
including a statement on how monthly bills may change each month, and a
statement outlining that under the program, the individual will not pay
more for covered Part D drugs than they would have paid without the
program or more than the Medicare Part D annual out-of-pocket maximum;
<bullet> Information about procedures for involuntary termination
due to failure to pay and how to submit an inquiry or file a grievance,
as well as a statement informing the individual that they can
voluntarily leave the program at any time;
<bullet> A statement describing that leaving the Medicare
Prescription Payment Plan, either involuntarily or voluntarily, will
not affect the individual's Medicare Part D coverage with the Part D
plan;
<bullet> A description of how if an individual leaves the program,
they may still owe a program balance, they can pay the balance all at
once or be billed monthly, and they will resume paying the pharmacy
directly for their Part D prescriptions after leaving the program; and
<bullet> An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and the Manufacturer's
Pharmaceutical Assistance Program, and how to learn more about these
programs.
In this rule, we propose to codify these requirements for 2026 and
subsequent years at Sec. 423.137(d)(10)(ii).
Part D sponsors are required to send a notice of denial upon denial
of an election request. In the final part one guidance, we set forth
the following requirements for 2025. For requests received prior to the
plan year, the notice of denial must be sent within 10 calendar days of
receipt of the election request. For requests received during the plan
year, the notice of denial must be sent within 24 hours of receipt of
the election request. For incomplete election requests, the notice of
denial must be sent within 10 calendar days of the expiration of the
timeframe for submission of additional information.
Finally, the notice of denial must explain the reason for denial
and provide a description of the grievance process available to the
individual. In this rule, for 2026 and subsequent years, we propose to
codify these requirements at Sec. 423.137(d)(10)(iii).
For 2026, we also propose to require Part D sponsors to send a
renewal notice alerting the program participant that their
participation in the program will continue into the next year unless
they indicate that they would like to opt out for the upcoming year.
This notice would be required to be sent out to program participants by
the end of the AEP (no later than December 7) and must include the Part
D sponsor's program terms and conditions for the upcoming year and a
reminder that the participant may opt out of the program at any time,
including for the upcoming plan year.
In this rule, for 2026 and subsequent years, we propose to codify
these requirements at Sec. 423.137(d)(10)(iv) and to add the election
request form, notice
[[Page 99362]]
of election approval, and renewal notice as required materials and
content for Part D sponsors at Sec. 423.2267(e)(45), (e)(46) and
(e)(51).
CMS issued model materials that Part D enrollees can use to fulfill
the election request and election approval requirements through the
Medicare Advantage and Prescription Drug Programs: Part C and Part D
Medicare Prescription Payment Plan Model Documents (CMS-10882; OMB
0938-1475) ICR package. As established in Sec. 423.2267(c), model
materials and content are required materials and content created by CMS
as an example of how to convey beneficiary information. If Part D
sponsors choose to not use a CMS-developed model version of a
particular required material or content, they must still accurately
convey the vital information in the required material or content to the
beneficiary.
For the required program election request form that CMS proposes to
codify at Sec. 423.2267(e)(45), this means that a Part D sponsor who
chooses to develop their own form must include or provide all of the
elements outlined at Sec. 423.137(d)(10)(i)(B). For the notice of
election approval that CMS proposes to codify at (e)(46), a Part D
sponsor who chooses to develop their own notice must include all of the
elements outlined at Sec. 423.137(d)(10)(ii)(B). Finally, for the
renewal notice that CMS proposes to codify at (e)(51), a Part D sponsor
who chooses to develop their own notice must include all of the
elements outlined at Sec. 423.137(d)(10)(iv)(B). These notification
and content requirements are consistent with the requirements outlined
in the final part two guidance for 2025, with the exception of the
renewal notice, which was not included in the program instructions.
Additionally, Part D sponsors are required to furnish additional
educational information on the Medicare Prescription Payment Plan with
the election request form and the notice of acceptance. Part D sponsors
are encouraged to use the CMS-developed program fact sheet available on
<a href="http://Medicare.gov">Medicare.gov</a> to satisfy these requirements. If the Part D sponsor
develops and uses alternative informational materials in lieu of the
CMS-developed fact sheet to satisfy these requirements, they must
ensure that these alternative materials accurately convey program
information and are compliant with existing Part D requirements
specified at 42 CFR part 423 subpart V. In this rule, for 2026 and
subsequent years, we propose to codify this requirement at Sec.
423.137(d)(10)(i)(C) and 423.137(d)(10)(ii)(C).
(d) Part D Enrollee Targeted Outreach
The statute establishes that some Part D enrollees will incur OOP
costs that make them likely to benefit from election into the Medicare
Prescription Payment Plan. As stated in the final part one guidance for
2025, by ``likely to benefit,'' we generally mean that a participant's
monthly costs would be lower under the program compared to any single
monthly amount they would have had to pay at the pharmacy without the
program. We acknowledge, however, that individuals may consider a
number of other factors in determining whether they, personally, would
benefit from the program.
While this program is open to all Part D enrollees, Part D
enrollees incurring high OOP costs earlier in the plan year are
generally more likely to benefit. Section 1860D-2(b)(2)(E)(v)(III)(dd)
of the Act requires that Part D sponsors have a mechanism in place to
notify a pharmacy when a Part D enrollee incurs OOP costs with respect
to covered Part D drugs that make it likely the enrollee may benefit
from participating in the program.
CMS recognizes, however, that notification of Part D enrollees
likely to benefit from the Medicare Prescription Payment Plan prior to
reaching the pharmacy POS will be a critical component to program
success. Early notification will streamline the election process and
prevent potential drug dispensing delays. As such, in addition to the
statutory requirement for pharmacy POS notification (as outlined in
section 1860D-2(b)(2)(E)(v)(III)(dd) of the Act), in the final part two
guidance, CMS also established requirements for 2025 for Part D
sponsors to undertake targeted outreach, both prior to and during the
plan year, directly to Part D enrollees likely to benefit from the
program.
While the statute requires a likely to benefit notification, it
does not outline the specific criteria or define the profile of someone
who is likely to benefit under the program. In the final part one
guidance, CMS developed a standardized, quantitative framework for
assessing ``likely to benefit,'' which was used to inform targeted
outreach requirements both prior to and during the plan year. However
as noted previously, CMS recognizes that an individual Part D enrollee
may find that they would personally benefit from the program even if
they would not be identified as likely to benefit under this particular
standardized framework. Those individuals are certainly permitted to
opt into the program, as are all Part D enrollees. The definition and
framework for ``likely to benefit'' described in the final part one
guidance is specifically for identifying Part D enrollees for targeted
outreach and communication in the absence of any information regarding
an individual's specific financial circumstances.
As described in the final part one guidance, in retrospective
modeling of prescription drug event (PDE) data, CMS found that to be
``likely to benefit'' from the program, the Part D enrollee would have
to incur some level of substantial OOP costs; further, the Part D
enrollee's highest monthly OOP cost incurred would have to be more than
the highest monthly paid amount under the Medicare Prescription Payment
Plan (if the program had applied). CMS used this approach to identify
``likely to benefit'' because it focuses on addressing Part D
enrollees' potential cash-flow concerns by lowering their maximum OOP
costs in a month (and limiting the potential for participants to be
faced with Medicare Prescription Payment Plan monthly payments that may
initially provide substantial financial relief but later, due to timing
constraints, result in monthly beneficiary payments that are higher
than they would have been absent the program). This approach strictly
compares the monthly OOP amounts with and without the Medicare
Prescription Payment Plan, without any subjective assessments of what
amount might be beneficial to an individual Part D enrollee. CMS used
the approach described previously to set thresholds for targeted
outreach criteria in the first year of the program (2025). In the final
part one guidance, we established a 2025 POS notification threshold of
$600 for a single prescription. Additional details regarding the POS
notification process are described in section (h) of this proposed
rule.
In the final part two guidance, we established a requirement for
Part D sponsors to notify enrollees who were likely to benefit prior to
the 2025 plan year. In setting criteria to identify Part D enrollees
likely to benefit prior to the plan year, CMS seeks to identify
individuals who have persistently high costs for covered Part D
prescription drugs. That is balanced, however, by a desire to limit
notifications to Part D enrollees who are not likely to benefit from
participation in the program (such as Part D enrollees for whom the
program would initially provide substantial financial relief but later,
due to timing constraints, would result in monthly payments that are
higher than they would have been absent the
[[Page 99363]]
program). With the goal of assessing the persistence of high OOP costs,
and thus, the likelihood of a prior year's OOP costs predicting future
OOP burden, CMS analyzed PDE records. CMS first identified Part D
enrollees who had incurred total OOP costs of at least $2,000 in the
first three quarters of 2021, then examined their total OOP costs in
the subsequent year, 2022. CMS's analysis was based on the patient
payment amount for covered Part D claims only, reflecting the actual
OOP financial burden for Part D enrollees.
In the final part two guidance, we established that to fulfill the
requirements for prior to the plan year notification, during the fourth
quarter of the year, Part D sponsors must review their Part D claims
history from the first three quarters of the year to identify Part D
enrollees likely to benefit in the upcoming year. For CY 2025, Part D
sponsors are required to conduct outreach to Part D enrollees who
incurred at least $2,000 in OOP costs for covered drugs through
September of 2024. Based on this analysis and any additional analysis
Part D sponsors conduct to identify enrollees who may be likely to
benefit from this program, the Part D sponsor must send the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' to identified
enrollees no later than the end of the Annual Election Period (open
enrollment), which is December 7 of each year. For example, for CY
2025, Part D sponsors assessed claims for covered Part D drugs with
dates of services from January through September 2024 and sent the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' in
October, November, or early December 2024 (no later than December 7,
2024). If Part D sponsors develop supplemental strategies for
identification of Part D enrollees likely to benefit prior to the plan
year, these notifications must be provided during the same timeframe.
In the final part two guidance, we established that prior to the
plan year, when a Part D sponsor identifies current Part D enrollees as
likely to benefit using the methods noted previously, it is then
required to notify each such Part D enrollee in writing that they are
likely to benefit from the Medicare Prescription Payment Plan, using
the standardized ``Medicare Prescription Payment Plan Likely to Benefit
Notice.'' This outreach may be done via mail or electronically (based
on the Part D enrollee's preferred and authorized communication
methods) and must include a Medicare Prescription Payment Plan election
request form. The outreach must also include additional information
about the Medicare Prescription Payment Plan; this additional
information requirement may be fulfilled by including with the notice
the CMS-developed fact sheet about the program. If Part D sponsors
develop and use alternative informational materials in lieu of the CMS-
developed fact sheet to satisfy this requirement, they must ensure that
these alternative materials accurately convey program information and
are compliant with existing Part D requirements specified at 42 CFR
part 423 subpart V and in the Medicare Communications and Marketing
Guidelines (MCMG) Additionally, the initial notice may be provided via
telephone, so long as the standardized ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' and additional information are sent
within 3 calendar days of the telephone notification.
In the final part two guidance, we established that while Part D
sponsors are required to notify all Part D enrollees who meet the
criteria outlined previously, Part D sponsors should be aware that
potential changes to a Part D enrollee's clinical condition, medication
status, or cost sharing (for example, discontinuation of therapy or
addition of supplemental payers) could affect the likelihood that a
Part D enrollee may benefit from the Medicare Prescription Payment
Plan. Part D sponsors should be aware of potential status changes when
contacted by an enrollee to discuss participation in the program and
should counsel enrollees accordingly.
In addition to the criteria for identification of Part D enrollees
likely to benefit from the program in advance of an upcoming plan year,
in the final part two guidance, CMS established a requirement for 2025
for Part D sponsors to put in place reasonable guidelines for ongoing
identification of Part D enrollees likely to benefit during the plan
year. For example, Part D sponsors may undertake targeted outreach to
Part D enrollees if they become aware in advance of a new high-cost
prescription for a Part D enrollee that would trigger the pharmacy POS
notification process. 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 could initiate
outreach to the Part D enrollee based on approved prior authorization
requests, informing them of the Medicare Prescription Payment Plan and
of the opportunity to opt into the program.
A Part D enrollee is less likely to benefit from opting in during
the last quarter of a year (for example, in December, the last month of
the plan year, because OOP costs for the Medicare Prescription Payment
Plan in that month cannot be spread over more than 1 month). As such,
in the final part one and final part two guidance, we established that
a Part D enrollee should not be notified that they are likely to
benefit in the last month of the plan year for that plan year; however,
Part D sponsors may choose to provide them with information on how to
opt into the program for the upcoming year. Participants who have
already opted into the Medicare Prescription Payment Plan should not be
notified about opting into the program while their participation is in
effect. Additionally, enrollees who are precluded from opting into the
program due to failed monthly payment after conclusion of the required
grace period should not be notified that they are likely to benefit
from the program during the plan years in which they are precluded from
participating in the program. Finally, PDPs that are non-renewing their
contracts or individual plan benefit packages are not required to
comply with the requirements at Sec. 423.137(e)(3)(i) related to prior
to plan year targeted outreach. Non-renewing PDPs must still comply
with the requirements at Sec. 423.137(e)(3)(ii) related to during the
plan year targeted outreach through the end of the plan year but are
not required to identify and outreach to Part D enrollees likely to
benefit from the program in the upcoming plan year.
In the final part two guidance, we established that Part D sponsors
may develop strategies other than the approach outlined previously for
identification of additional Part D enrollees likely to benefit during
the plan year. However, Part D sponsors must develop standardized
processes for implementing their criteria for identification of
enrollees likely to benefit from the program during the plan year,
including outreach timeframe and mode of communication, and must apply
any identification criteria to every Part D enrollee uniformly.
In the final part two guidance, we established that during the plan
year, when a Part D sponsor identifies current Part D enrollees as
likely to benefit from the program, it is required to provide the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' to the
identified Part D enrollee along with a Medicare Prescription Payment
Plan election request form and additional information about the
Medicare Prescription Payment Plan. This additional information
requirement may be fulfilled by including with the notice
[[Page 99364]]
the CMS-developed fact sheet about the program. If Part D sponsors
develop and use alternative informational materials in lieu of the CMS-
developed fact sheet to satisfy this requirement, they must ensure that
these alternative materials accurately convey program information and
are compliant with existing Part D requirements specified at 42 CFR
part 423 subpart V and in the MCMG. This outreach may be done via mail
or electronically (based on the Part D enrollee's preferred and
authorized communication methods). Additionally, the initial notice may
be provided via telephone, so long as the written ``Medicare
Prescription Payment Plan Likely to Benefit Notice,'' election request
form, and additional information are sent within 3 calendar days of the
telephone notification. Part D sponsors are encouraged to inform the
Part D enrollee that they are likely to benefit when contacting the
Part D enrollee for other reasons, such as while communicating a prior
authorization coverage determination.
For the initial years of the program, we propose to maintain the
criteria for Part D sponsor outreach prior to the plan year, during the
plan year, and at the point of sale that were established in the final
part one and final part two guidance for 2025. More specifically, we
propose that Part D sponsors must notify a pharmacy when a Part D
enrollee incurs OOP costs for a single prescription that equal or
exceed the POS threshold of $600. To identify Part D enrollees likely
to benefit in advance of the plan year, we propose that Part D sponsors
be required to assess their current Part D enrollees' prescription drug
costs from the current year and conduct outreach to Part D enrollees
who incurred $2,000 in OOP costs for covered Part D drugs through
September of that year. We also propose that Part D sponsors will be
required to put in place reasonable guidelines for ongoing
identification of Part D enrollees likely to benefit during the plan
year. As described in this section, an example of a reasonable
guideline for ongoing identification during the plan year would be a
standardized approach in which a Part D sponsor undertakes targeted
outreach to Part D enrollees when they become aware in advance (such as
through the prior authorization process) of a new high-cost
prescription that would trigger the pharmacy POS notification process.
We remind Part D sponsors that they must develop standardized processes
for implementing their criteria for identification of enrollees likely
to benefit from the program during the plan year, including outreach
timeframe and mode of communication, and must apply any identification
criteria to every Part D enrollee uniformly.
We plan to revisit these requirements in future rulemaking, as CMS
gains program experience and can evaluate program data and operations.
In general, we expect to maintain the same overall framework for
targeted outreach, which will include a POS notification threshold
based on incurred OOP costs, prior to plan year criteria based on
incurred OOP costs in the current year, and requirements for Part D
sponsors to put in place reasonable guidelines for ongoing
identification of Part D enrollees likely to benefit during the plan
year. We would assess the targeted outreach requirements for the POS
notification threshold and prior to plan year criteria on an annual
basis and make modifications, if needed, based on review and analysis
of Medicare Prescription Payment Plan data and other Medicare data,
including: (1) analysis of program participation levels; (2) analysis
of the proportion of participants who met our definition of ``likely to
benefit,'' as established in the final part one guidance and described
in this section, based on actual OOP costs incurred and program
payments; (3) analysis of the proportion of Part D enrollees who would
have met our definition of ``likely to benefit'' if they had elected
into the Medicare Prescription Payment Plan but were not identified
based on current targeted outreach criteria; (4) program operations;
and (5) level of burden on pharmacies and Part D sponsors. After the
assessment and review of the aforementioned factors, CMS would then
publish the specific targeted outreach parameters for the upcoming plan
year. In this proposed rule, CMS is not codifying an approach to
modifying targeted outreach criteria for future years of the program;
however, we seek comment on the approach described here and will use
feedback from interested parties to support future policy development.
In addition to the agency's authorities with respect to the
Medicare Prescription Payment Plan under section 11202 of the IRA, CMS
also has authority under section 1860D-12(b)(3)(D) of the Act to impose
additional contractual terms and conditions on Part D plan sponsors
that are necessary and appropriate. Consistent with our authority under
section 11202 of the IRA and under section 1860D-12(b)(3)(D) of the
Act, in this proposed rule, we propose to codify the targeted outreach
framework and thresholds established in the final part one and final
part two guidance at Sec. 423.137(e).
Specifically, we propose to codify the likely to benefit criteria
at paragraph (e)(1), the requirements for the pharmacy POS notification
at paragraph (e)(2), and the requirements for Part D sponsor direct
outreach to identified likely to benefit enrollees prior to and during
the plan year at paragraph (e)(3). Additionally, we propose to codify
the targeted outreach notification and education requirements at
paragraph (e)(4) and to codify targeted outreach exclusions at
paragraph (e)(5). Finally, we propose to add the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' as a required
standardized communication material for Part D sponsors at Sec.
423.2267(e)(47).
As stated in the final part two guidance for 2025, the thresholds
published by CMS are a minimum requirement. Part D sponsors may develop
supplemental strategies for identification of additional Part D
enrollees likely to benefit prior to and during the plan year. If
supplemental strategies are implemented, then Part D sponsors must
apply any additional identification criteria to every enrollee of each
plan equally, which we propose to codify at paragraph (e)(1)(ii).
We are not scoring any aspects of this provision related to the
development and distribution of the ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' in the Collection of Information
section of this rule since we believe all information impacts of those
provisions have already been accounted for under OMB control number
0938-1475.
(e) Termination of Election, Reinstatement, and Preclusion
Section 1860D-2(b)(2)(E)(v)(IV)(aa) of the Act requires a Part D
sponsor to terminate an individual's Medicare Prescription Payment Plan
participation if that individual fails to pay their monthly billed
amount. In addition, under section 1860D-2(b)(2)(E)(v)(IV)(bb) of the
Act, Part D sponsors may preclude an individual from opting into the
Medicare Prescription Payment Plan in a subsequent year if the
individual fails to pay the amount billed for a month as required under
the program.
In the final part one guidance, we established standards for
termination of election, reinstatement, and preclusion in 2025
consistent with the statutory requirements. CMS established procedures
for voluntary termination of election, under which Part D sponsors are
required to have a process to allow a participant who has opted into
the
[[Page 99365]]
Medicare Prescription Payment Plan to opt out during the plan year. In
the final part two guidance, we stated that the Part D sponsor must
process the participant's voluntary termination request and send the
individual a notification confirming the termination within 10 calendar
days of receipt of the request but did not specify the effective date
of termination. For 2026 and subsequent years, we propose to maintain
the requirement for Part D sponsors to send the notice of voluntary
termination within 10 calendar days of receipt but require that the
effective date of termination must be within 24 hours of receipt of the
voluntary termination request. We believe this aligns with the required
timeframe for processing election requests during the plan year and
ensures timely response to opt out requests during the plan year. We
seek comment on this proposal.
When a participant opts out of the Medicare Prescription Payment
Plan, a Part D sponsor must provide the individual with a notice of
termination after the individual notifies the Part D sponsor that they
intend to opt out under the Part D sponsor's established process. The
notice of voluntary termination must include--
<bullet> Pertinent dates, including the date on which the
individual's participation in the program ends;
<bullet> An explanation that the individual is receiving the notice
either because they requested a voluntary termination or because they
changed Part D plans;
<bullet> A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan, and that the
individual's Part D drug coverage will not be impacted;
<bullet> A statement clarifying that the individual will continue
to be billed monthly or can choose to pay the amount owed all at once,
and that the individual will not pay interest or fees on the amount
owed;
<bullet> A statement clarifying that the individual can join the
Medicare Prescription Payment Plan again and instructions for how to do
so, which may differ depending on whether the voluntary termination was
requested by the individual or if it was because the individual changed
Part D plans; and
<bullet> An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and a Manufacturer's Pharmaceutical
Assistance Program, and how to learn more about these programs.
The Part D sponsor must also offer the participant the option to
repay the full outstanding amount in a lump sum. However, the Part D
sponsor is prohibited from requiring full immediate repayment from a
participant who has been terminated from the Medicare Prescription
Payment Plan. If the participant opts not to repay the full outstanding
amount in a lump sum, the sponsor must continue to bill amounts owed
under the program in monthly amounts not to exceed the maximum monthly
cap according to the statutory formula for the duration of the plan
year after an individual has been terminated. In this rule, for 2026
and subsequent years, we propose to codify these requirements at Sec.
423.137(f)(2)(i) and to add the voluntary termination notice as a
required material and content for Part D sponsors at Sec.
423.2267(e)(50).
CMS issued model material that Part D enrollees can use to fulfill
the voluntary termination notice requirement through the Medicare
Advantage and Prescription Drug Programs: Part C and Part D Medicare
Prescription Payment Plan Model Documents (CMS-10882; OMB 0938-1475)
ICR package. As established in Sec. 423.2267(c), model materials and
content are required materials and content created by CMS as an example
of how to convey beneficiary information. If Part D sponsors choose to
not use the CMS-developed model notice and develop their own voluntary
termination notice, they must include all of the required elements
outlined at Sec. 423.137(f)(2)(i)(A)(2)(ii). These notification and
content requirements are consistent with the requirements outlined in
the final part two guidance for 2025.
We also established standards for involuntary termination in 2025,
including requirements for the provision of a grace period of at least
two months when an individual has failed to pay the billed amount by
the payment due date. If an individual fails to pay the billed amount
within 15 calendar days of the payment due date, the Part D sponsor
must send the individual an initial notice of failure to pay. The
notice of failure to pay must include--
<bullet> Pertinent dates and key pieces of information, including
the date the missed monthly payment was due, the amount the individual
must pay to remain in the program, and the date by when payment must be
received, which is the date of the end of the grace period;
<bullet> A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan, and that the
individual's Part D drug coverage will not be impacted;
<bullet> Instructions for how to submit payment;
<bullet> Information about procedures for involuntary termination
due to failure to pay, including the date on which the participant
would be removed if payment is not received, and how to submit an
inquiry or file a grievance;
<bullet> A statement on how individuals should pay their Part D
plan premium first if they cannot afford both their premium and their
program balance; and
<bullet> An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and the Manufacturer's
Pharmaceutical Assistance Program, and how to learn more about these
programs.
If the individual fails to pay the amount due by the end of the
grace period, the Part D sponsor must send the individual an
involuntary termination notice explaining that the individual has been
terminated from the Medicare Prescription Payment Plan. The involuntary
termination notice must be sent within 3 business days following the
last day of the end of the grace period, and must include the
following:
<bullet> Pertinent dates, including the date the individual was
originally notified of the missed monthly payment and the due date for
that payment, as well as the date on which the individual's
participation in the program ends, which should be the same date as the
notice;
<bullet> A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan, and that the
individual's Part D drug coverage will not be impacted;
<bullet> Instructions for how to submit payment and the amount
owed;
<bullet> How to submit an inquiry or file a grievance;
<bullet> A statement clarifying that the individual can join the
Medicare Prescription Payment Plan again if they pay the amount owed;
and
<bullet> An overview of other Medicare programs that can help lower
costs, including Extra Help, the Medicare Savings Program, the State
Pharmaceutical Assistance Program, and the Manufacturer's
Pharmaceutical Assistance Program, and how to learn more about these
programs.
If either the notice of failure to pay or notice of involuntary
termination is returned to the Part D sponsor as undeliverable, the
Part D sponsor must immediately implement its existing procedure for
researching a potential change of address. In this rule, for 2026
[[Page 99366]]
and subsequent years, we propose to codify these notice requirement
standards at Sec. 423.137(f)(2)(ii) and to add the notice of failure
to pay and notice of involuntary termination as required model
materials and content for Part D sponsors at Sec. 423.2267(e)(48) and
(e)(49).
CMS issued model materials that Part D enrollees can use to fulfill
the failure to pay and involuntary termination notice requirements
through the Medicare Advantage and Prescription Drug Programs: Part C
and Part D Medicare Prescription Payment Plan Model Documents (CMS-
10882; OMB 0938-1475) ICR package. As established in Sec. 423.2267(c),
model materials and content are required materials and content created
by CMS as an example of how to convey beneficiary information. If Part
D sponsors choose to not use the CMS-developed models and develop their
own notice of failure to pay or involuntary termination notice, they
must include all of the required elements for each notice outlined at
Sec. 423.137(f)(2)(ii)(C)(2) and (D)(2), respectively. These
notification and content requirements are consistent with the
requirements outlined in the final part two guidance for 2025.
We also set forth requirements for 2025 related to the grace period
and reinstatement. When a program participant fails to pay a program
bill, the Part D sponsor must provide individuals with a grace period
of at least two months upon notifying the individual of the initial
missed payment.
We propose to make certain modifications to the timing requirements
for the grace period and initial notice of nonpayment established in
the final part one guidance. Specifically, in the final part one
guidance, we stated that the grace period must begin on the first day
of the month for which the balance is unpaid or the first day of the
month following the date on which the payment is requested, whichever
is later. In this proposed rule, we propose to change the date on which
the grace period must begin to the first day of the month following the
date on which the initial notice is sent. We believe this would
simplify the timing requirements for the notice of nonpayment and the
required grace period. We seek comment on whether to adopt this change
or continue with the approach described in the final part one guidance.
In the final part one guidance for 2025, we also stated that if a
participant fails to pay their monthly billed amount with fewer than
two full calendar months remaining in the calendar year, the grace
period must carry over into the next calendar year. If the program
participant is within their grace period from the prior year, the Part
D sponsor must allow the participant to opt into the program for the
next year, but if the participant fails to pay the amount due from the
prior year during the required grace period, the Part D sponsor may
terminate the individual's participation in the program in the new
year.
A participant must be allowed to pay the overdue balance in full
during the grace period to remain in the program. Additionally, Part D
sponsors must reinstate an individual who has been terminated from the
Medicare Prescription Payment Plan within a reasonable timeframe if the
individual demonstrates good cause for failure to pay the program
billed amount within the grace period and pays all overdue amounts
billed. In response to public comments received on the final part one
guidance, we clarified that CMS was adopting the same meaning of ``good
cause'' outlined in section 60.2.4 of the Medicare Prescription Drug
Benefit Manual, Chapter 3--Eligibility, Enrollment and Disenrollment
that applies to reinstatements when an enrollee fails to pay their Part
D premiums. CMS also described specific circumstances that constitute
good cause, including--
<bullet> A serious illness, institutionalization and/or
hospitalization of the program participant or their authorized
representative (that is, the individual responsible for the
participant's financial affairs), that lasted for a significant portion
of the grace period for Medicare Prescription Payment Plan payment;
<bullet> Prolonged illness that is not chronic in nature, a serious
(unexpected) complication to a chronic condition or rapid deterioration
of the health of the participant, a spouse, another person living in
the same household, a person providing caregiver services to the
participant, or the participant's authorized representative (that is,
the individual responsible for the participant's financial affairs)
that occurs during the grace period for the Medicare Prescription
Payment Plan payment;
<bullet> Recent death of a spouse, immediate family member, person
living in the same household, or person providing caregiver services to
the participant, or the participant's authorized representative (that
is, the individual responsible for the participant's financial
affairs);
<bullet> Home was severely damaged by a fire, natural disaster or
other unexpected event, such that the participant or the participant's
authorized representative was prevented from making arrangement for
payment during the grace period for the Medicare Prescription Payment
Plan;
<bullet> An extreme weather-related, public safety or other
unforeseen event declared as a Federal or state level of emergency
prevented premium payment at any point during the Medicare Prescription
Payment Plan grace period. For example, the participant's bank or U.S.
Post Office closes for a significant portion of the grace period; or
<bullet> For Part D plan disenrollments effectuated by CMS for
failure to pay Part D Income Related Monthly Adjustment Amount (IRMAA),
Federal government error (that is, CMS, SSA or the Railroad Retirement
Board (RRB)) caused the Medicare Prescription Payment Plan payment to
be incorrect or late, and the participant was unaware of the error or
unable to take action prior to the disenrollment effective date.
In addition, we stated that there may be circumstances other than
those listed which meet the definition of good cause, provided these
circumstances meet the standard of being outside of the participant's
control or are unexpected such that the participant could not have
reasonably foreseen their occurrence, and these circumstances are the
cause for the non-payment of past due program balances. Finally, we
stated that a Part D sponsor may reinstate an individual who has been
terminated from the Medicare Prescription Payment Plan and pays all
overdue amounts billed in full, at the sponsor's discretion and within
a reasonable timeframe, even if the individual does not demonstrate
good cause. In this rule, for 2026 and subsequent years, we propose to
codify these grace period and reinstatement requirements at Sec.
423.137(f)(3).
We also established standards for 2025 for preclusion of election
in a subsequent plan year. We clarified that, consistent with the
statute, a Part D sponsor may only preclude an individual from
participating in the Medicare Prescription Payment Plan in a subsequent
year if the individual owes an overdue balance to that plan sponsor. If
an individual enrolls in a Part D plan offered by a different Part D
sponsor than the Part D sponsor to which the individual owes an overdue
balance, that individual cannot be precluded from opting into the
Medicare Prescription Payment Plan in a subsequent year by that
different Part D sponsor. We also stated that preclusion may extend
beyond the immediate subsequent plan year if a Part D enrollee
[[Page 99367]]
remains in a plan offered by the same Part D sponsor and continues to
owe an overdue balance. While a Part D sponsor that offers more than
one Part D plan may have different preclusion policies for its
different plans, the Part D sponsor must apply its preclusion policy
consistently among all enrollees of the same Part D plan. In this rule,
for 2026 and subsequent years, we propose to codify requirements
related to preclusion of election in a subsequent plan year at Sec.
423.137(f)(4).
For 2025, we established a prohibition on Part D enrollment
penalties for failure to pay a Medicare Prescription Payment Plan
amount billed. We stated that a Part D plan sponsor is prohibited from
disenrolling a Part D enrollee from a Part D plan or declining future
enrollment into a Part D plan for failure to pay any amount billed
under the Medicare Prescription Payment Plan. In this rule, for 2026
and subsequent years, we propose to codify this requirement at Sec.
423.137(f)(5).
Finally, we clarified that, if a participant in the Medicare
Prescription Payment Plan is disenrolled voluntarily or involuntarily
from their Part D plan under the provisions at 42 CFR 423.44(b), the
participant is also terminated from the Medicare Prescription Payment
Plan in that plan. In this rule, for 2026 and subsequent years, we
propose to codify this requirement at Sec. 423.137(f)(6). We note that
nothing in proposed section Sec. 423.137(f) prohibits a Part D sponsor
from billing an individual for an outstanding Medicare Prescription
Payment Plan amount owed.
We are not scoring any aspects of this provision related to the
development and distribution of the notice of voluntary termination,
the notice of failure to pay, and the notice of involuntary termination
in the Collection of Information section of this rule since we believe
all information impacts of those provisions have already been accounted
for under OMB control number 0938-1475.
(f) Participant Billing Rights
Section 1860D-2(b)(2)(E)(iii) of the Act requires Part D sponsors,
on a monthly basis, to bill participants who are in the Medicare
Prescription Payment Plan and incur OOP costs for the Medicare
Prescription Payment Plan an amount that cannot exceed the applicable
maximum monthly cap.
In the final part one guidance, we established standards for
participant billing rights for 2025 consistent with the statute.
Specifically, we established that for each billing period after an
individual has opted into the program, a Part D sponsor must not bill a
participant who is in the program but has not yet incurred any OOP
costs for the Medicare Prescription Payment Plan during the plan year.
The Part D sponsor will calculate a monthly amount that takes into
account the OOP costs for the Medicare Prescription Payment Plan in
that month that were incurred on or after the date on which the
individual opted into the program, and that each billing period will be
a calendar month. In the final part one guidance, we further explained
that the billing period begins either on the effective date of a Part D
enrollee's participation in the Medicare Prescription Payment Plan (for
the first month a participant elects into the program during the plan
year) or the first day of the month (for each subsequent month or for
the first month of a participant who elects into the program prior to
the start of the plan year). The billing period ends on the last date
of that month. Additionally, in the final part one guidance, we
established that Part D sponsors must send a bill for the Medicare
Prescription Payment Plan that is separate from the bill for the
collection of premiums, if applicable, and continue to follow existing
regulations and guidance for the collection of premiums as described at
42 CFR 423.293.
We clarified that past due balances from prior monthly bills may
also be included in a billing statement, which could result in the
total amount on the billing statement exceeding the maximum monthly
cap. However, the amount billed for the month for which the maximum
monthly cap is being calculated cannot be higher than the cap for that
month as established in the statute.
We also encouraged Part D sponsors to offer multiple means of
payment, such as an electronic fund transfer mechanism (including
automatic charges of an account at a financial institution or credit or
debit card account) and payment by check and to offer participants
flexibility around requesting a specific day of the month for program
charges and withdrawals from a bank account. We reiterate that
encouragement here.
In addition, we stated that, because under section 1860D-
2(b)(2)(E)(iii) of the Act, Part D sponsors may not bill a participant
more than the maximum monthly cap, late fees, interest payments, or
other fees, such as for different payment mechanisms, are not permitted
under the Medicare Prescription Payment Plan. We also stated that plan
sponsors are responsible for ensuring that any third parties they
contract with also comply with such requirements.
We also reminded Part D sponsors (and any third parties Part D
sponsors contract with) that actions to collect unpaid balances related
to the Medicare Prescription Payment Plan may be subject to other
applicable Federal and state laws and requirements, including those
related to payment plans, credit reporting, and debt collection. These
requirements also apply in the event of a death of a program
participant.
We also stated that, while Part D sponsors may create their own
billing and payment procedures for the Medicare Prescription Payment
Plan, Part D sponsors are required to prioritize payments towards Part
D plan premiums to avoid a Part D enrollee losing their Part D coverage
when it is unclear whether a payment received from a participant is
intended by the participant to cover their outstanding Part D plan
premium or Medicare Prescription Payment Plan balance. Specifically, if
a Part D enrollee has opted into the program and makes payments
directly to the Part D sponsor, and it is unclear whether a payment
should go towards the participant's outstanding Part D plan premium or
Medicare Prescription Payment Plan balance, the Part D sponsor may
contact the enrollee to clarify the purpose of the payment. If the Part
D sponsor does not contact the enrollee or is not able to ascertain the
purpose of the payment, then the payment must be applied to the Part D
premium.
Under section 1860D-2(b)(2)(E)(v)(VI) of the Act, Part D sponsors
must treat any unsettled balances with respect to amounts owed by
participants under the Medicare Prescription Payment Plan as plan
losses. In addition, the statute requires that the Secretary shall not
be liable for any such balances outside of those assumed as losses
estimated in plan bids. In the final part two guidance, we stated that
if a Part D sponsor is compensated by or on behalf of the participant
for an unsettled balance or sells an unsettled balance as a debt, it
cannot treat the amount as a loss and cannot include it in its bid.
Only uncompensated unsettled balances can be included in the bid. We
also stated that the Part D bid pricing tool (BPT) has been modified to
reflect projected losses associated with the Medicare Prescription
Payment Plan. Specifically, these losses must be reflected as
administrative costs in the Part D BPT.
Under section 1860D-2(b)(2)(E)(v)(III)(gg) of the Act, Part D
sponsors must have a financial reconciliation process in place to
correct
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inaccuracies in billing and/or payments. In the final part one
guidance, we established standards for Part D sponsors related to
financial reconciliation for Medicare Prescription Payment Plan
payments. We stated that while a Part D sponsor may not bill a program
participant an amount for a month that is more than the maximum monthly
cap, a participant may pay more than the maximum monthly cap, up to the
annual OOP threshold. However, the participant cannot pay more than
their total OOP costs for the Medicare Prescription Payment Plan. If a
participant does pay more than their total OOP costs for the Medicare
Prescription Payment Plan, the Part D sponsor must reimburse the
participant the amount that is paid above the balance owed.
In addition, in the final part one guidance, we stated that, for
2025, CMS expects that Part D sponsors will develop standardized
procedures for determining and processing reimbursements for excess
Medicare Prescription Payment Plan payments made by program
participants and that Part D sponsors bear the responsibility for
timely financial reconciliation with Part D enrollees. Federal
regulations at 42 CFR 423.466(a) require sponsors to process the
adjustment and issue refunds or recovery notices within 45 calendar
days of receipt of LIS changes, Financial Information Reporting (FIR),
or Information Reporting (Nx) transactions necessitating the claims
adjustment. As such, Part D sponsors must make the retroactive
adjustments and promptly issue refunds or initiate recovery once
complete information regarding a claim's adjustment is received. In the
final part one guidance, we also stated that the plan must work with
the participant to determine if they should either refund the
difference directly to the Part D enrollee or apply the overpayment to
the remaining OOP costs owed. In addition, Part D sponsors are
responsible for appropriately updating TrOOP accumulators and
restacking claims.
We also stated that when reconciliation results in an increased
amount owed by the participant, plans should recalculate the maximum
monthly cap for the month(s) in question. As stated in the final part
one guidance, under section 1860D-2(b)(2)(E)(iv)(II) of the Act, for
each subsequent month for which the Part D enrollee has opted into the
program, the maximum monthly cap is determined by calculating the sum
of any remaining OOP costs owed by the participant from a previous
month that have not yet been billed and any additional OOP costs for
the Medicare Prescription Payment Plan in the subsequent month, divided
by the number of months remaining in the plan year. When Part D claims
adjustments result in increased amounts owed by the participant, and
these amounts have not yet been billed to the participant, they should
be included in the revised remaining OOP costs owed by the participant
and, thus, in the subsequent month maximum cap for the next billing
period. Finally, when a covered Part D drug claim adjustment occurs
after the end of a plan year, the Part D sponsor should use the general
guidance provided earlier in this section to appropriately recalculate
the amount owed to or by the participant and issue a final bill or
refund, as necessary.
In this proposed rule, we propose to codify the requirements
established for calendar year 2025 in the final part one guidance
discussed in this section for 2026 and subsequent years at Sec.
423.137(g) with an exception. In the final part one guidance, we stated
that the plan must work with the participant to determine if they
should either refund the difference directly to the Part D enrollee or
apply the overpayment to the remaining OOP costs owed by the
participant. In this proposed rule, we are proposing to modify that
requirement and instead require a plan follow its normal processes for
adjustments and issuing refunds. We believe this modification will
simplify operational processes on the part of Part D sponsors without
negatively impacting Medicare Prescription Payment Plan participants.
In addition, in this proposed rule, we are proposing to modify the
approach when Part D claims adjustments result in increased amounts
owed by the participant; instead of stating that Part D sponsors
``should'' include the additional costs in the revised remaining OOP
costs owed by the participant, we now propose that Part D sponsors
``must'' include the increased amount in this manner. This is
consistent with the requirement established in the final part one
guidance and included in section (b) of this proposed rule, which
states that once a participant incurs an OOP Part D drug cost, all
their OOP costs for all covered Part D drugs will be billed on a
monthly basis as long as the participant remains in the program as well
as the uniform benefits requirements at Sec. 423.104(b)(2). We seek
comment on whether we should finalize these proposed changes or adopt
the processes as established in the 2025 final part one guidance for
2026 and subsequent years.
We propose to codify the requirement that the Part D sponsor will
calculate a monthly amount that takes into account the OOP costs for
the Medicare Prescription Payment Plan in that month that were incurred
on or after the date on which the individual opted into the program at
paragraph (g)(1). We propose to define each billing period as a
calendar month at paragraph (g)(2). We propose to establish
requirements for the contents of a billing statement at paragraph
(g)(3). We propose to establish that unsettled balances with respect to
amounts owed under the program will be treated as plan losses at
paragraph (g)(4). We propose to establish requirements for
prioritization of premium payments at paragraph (g)(5). Finally, we
propose to establish general standards for Medicare Prescription
Payment Plan financial reconciliation at paragraph (g)(6).
(g) Participant Disputes
In the final part one guidance, we stated that Part D sponsors must
apply their established Part D coverage determination and appeals
procedures, as required under section 1860D-4(g) and (h) of the Act and
Sec. 423.566(a), to any dispute made by a Medicare Prescription
Payment Plan participant about the amount of Part D cost sharing owed
by that participant for a covered Part D drug. We also stated that Part
D sponsors must apply their established Part D grievance procedures,
which Part D sponsors are required to have in place under section
1860D-4(f) of the Act and Sec. 423.562, to any dispute made by a
Medicare Prescription Payment Plan participant related to any aspect of
the Medicare Prescription Payment Plan. This includes election
requests, billing requirements, and termination-related issues other
than disputes related to the amount of Part D cost sharing owed by a
participant for a drug. We also clarified that a decision on the amount
of cost sharing for a drug is a coverage determination and directed
readers to Sec. 423.566(b)(5) and to the latest Parts C & D Enrollee
Grievances, Organization/Coverage Determinations, and Appeals Guidance
for requirements related to grievances, coverage determinations, and
redeterminations. We stipulated that Part D sponsors must use their
existing coverage determination, appeals, and grievance procedures for
the Medicare Prescription Payment Plan to ensure that Part D enrollees
have the ability to contest copay amounts and any adverse decisions
related to participation in the Medicare Prescription Payment Plan.
Applying existing procedures required under Part D also reduces the
need for Part D sponsors to develop new processes and allows Part D
enrollees to use
[[Page 99369]]
procedures to which they are accustomed.
Consistent with the requirements established in the final part one
guidance, at Sec. 423.137(h), we propose to codify requirements for
Part D sponsors to apply their existing Part D coverage determination,
appeal, and grievance procedures to the Medicare Prescription Payment
Plan.
We are not scoring this provision in the Collection of Information
section of this rule because it codifies existing guidance, and because
the filing of an appeal is an information collection associated with an
administrative action pertaining to specific individuals or entities
and thus is exempt from Paperwork Reduction Act requirements under 5
CFR 1320.4(a)(2) and (c). We seek comment on this assumption.
(h) Pharmacy POS Notification Process
Under section 1860D-2(b)(2)(E)(v)(III)(dd) of the Act and discussed
in section (d) of this proposed rule, Part D sponsors must have a
mechanism to notify a pharmacy when a Part D enrollee incurs OOP costs
with respect to covered Part D drugs that make it likely the Part D
enrollee may benefit from participating in the program. Furthermore,
section 1860D-2(b)(2)(E)(v)(III)(ee) of the Act requires Part D
sponsors to ensure that a pharmacy, after receiving such a notification
from the Part D sponsor, informs the Part D enrollee that they are
likely to benefit from the Medicare Prescription Payment Plan. The
final part one and final part two guidance established standards for
2025 related to pharmacy POS notification processes.
In the final part two guidance, we established that all Part D
sponsors must use the standard codes developed by NCPDP for
communication with network pharmacies about enrollees' Medicare
Prescription Payment Plan status, as appropriate. This includes the
mechanism to notify the pharmacy that a Part D enrollee has been
identified as likely to benefit based on OOP costs at the POS.
As established in the final part two guidance, in pharmacy settings
in which there is direct contact with enrollees (for example, community
pharmacies where enrollees present in person to pick up prescriptions),
the Part D sponsor must ensure that a hard copy of the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' is provided to
enrollees identified as likely to benefit (or the person acting on
their behalf) at the time the prescription is picked up. This includes
pharmacies with a drive-through or curbside pick-up option. Pharmacies
should make available the CMS-developed Spanish-language version of the
notice, in lieu of the English-language version, to their patients upon
request. Identified enrollees who receive the notice from the pharmacy
and need the notice in another format or language are instructed to
call their Part D sponsor for assistance. The Part D sponsor should
ensure compliance with the language access and accessibility
requirements at Sec. 423.2267 in the delivery of the ``Medicare
Prescription Payment Plan Likely to Benefit Notice.'' CMS encourages
Part D sponsors to provide pharmacies with additional educational
material on the Medicare Prescription Payment Plan, such as the CMS-
developed fact sheet, which could also be distributed to Part D
enrollees along with the notice.
The final part two guidance established that the requirement to
provide the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' in no way obligates the pharmacy to provide additional
Medicare Prescription Payment Plan counseling or consultation to the
Part D enrollee. Pharmacies are encouraged, but not required, to
provide educational material related to the Medicare Prescription
Payment Plan at the time they provide an enrollee with the notice.
In the final part two guidance, CMS established that regardless of
the setting, if the pharmacy is in contact with a Part D enrollee
identified as likely to benefit and the enrollee declines to complete
the prescription purchase, the Part D sponsor must ensure that the
pharmacy provides the ``Medicare Prescription Payment Plan Likely to
Benefit Notice'' to the Part D enrollee. For example, if a Part D
enrollee visits a retail pharmacy to pick up their prescription but
then declines to complete the transaction because of the cost, the Part
D sponsor must still ensure that the pharmacy provides the standardized
``Medicare Prescription Payment Plan Likely to Benefit Notice'' to that
Part D enrollee.
In the final part two guidance, we also established that when a
Part D enrollee opts into the Medicare Prescription Payment Plan after
receiving the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' from the pharmacy, in addition to providing the notice of
election approval, as described in section (c) of this proposed rule,
the Part D sponsor is responsible for clearly communicating additional
necessary next steps to the Part D enrollee. Next steps may include,
but are not limited to, how to proceed with filling any outstanding
prescriptions.
In the final part one and final part two guidance, we established
that, in general, all Medicare Prescription Payment Plan requirements
are the same for every pharmacy type, including mail order, home
infusion, specialty, and long-term care pharmacies. However, CMS is
aware that some pharmacy types may not have direct contact with Part D
enrollees and/or may lack a practical means for providing the physical
standardized ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' directly to the Part D enrollee. Therefore, in the final part
one and final part two guidance, we established standards for unique
pharmacy scenarios and different pharmacy types.
In the final part two guidance, we noted that long-term care
pharmacies typically do not have a POS encounter between the pharmacy
and the enrollee (long-term care resident). In these cases, the
pharmacy may deliver medications that are kept in the custody of long-
term care facilities until time of administration. In addition, long-
term care pharmacies often use retrospective or post-consumption
billing (that is, billing after the drug is dispensed to the facility
for an enrollee). As such, when the POS notification is received by a
long-term care pharmacy, the Part D sponsor should not require that the
long-term care pharmacy provide the ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' prior to dispensing the medication.
Instead, the Part D sponsor should require the long-term care pharmacy
to provide the notice to the Part D enrollee (or their authorized
representative) at the time of its typical enrollee cost-sharing
billing process. Given our understanding of the variation in how long-
term care pharmacies dispense and bill covered Part D drugs, we are not
proposing specific timing requirements for provision of the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' via long-term care
pharmacies. We encourage Part D sponsors to assess the particular
circumstances of their network long-term care pharmacies when
establishing timing requirements for pharmacy distribution of the
notice.
The final part two guidance also described special approaches to
the POS notification requirements for Indian Health Service (IHS),
Tribe and Tribal Organization, and Urban Indian Organization (I/T/U)
pharmacies. I/T/U pharmacies provide no-cost prescription drugs to
eligible IHS enrollees. When IHS-eligible Part D enrollees fill a
prescription at an I/T/U pharmacy, their covered Part D prescription
drug cost sharing, as defined by their plan's benefit structure, is not
collected at the
[[Page 99370]]
POS. As such, if a high-cost prescription drug claim for a Part D
enrollee is submitted to a Part D sponsor from an I/T/U pharmacy, the
Part D sponsor is not required to return the pharmacy notification
indicating the enrollee is likely to benefit from the program. Part D
sponsors should also ensure that their customer service representatives
are aware of this situation regarding I/T/U pharmacies when receiving
inquiries from Part D enrollees regarding program election. In
discussing a Part D enrollee's prescription drug costs, customer
service representatives may need to review the primary pharmacy type
used by the Part D enrollee. Part D enrollees who solely use I/T/U
pharmacies, and thus have $0 in OOP costs for covered Part D drugs, may
not benefit from participation in the Medicare Prescription Payment
Plan.
In the final part two guidance, we established that for other
pharmacy types without in-person encounters (such as mail order
pharmacies), Part D sponsors must require the pharmacy to notify the
Part D enrollee via a telephone call or their preferred contact method.
This requirement should not, however, be interpreted as a requirement
to delay dispensing the medication. Pharmacies are encouraged to
utilize existing touchpoints with Part D enrollees, such as outreach to
review medication instructions or collect a method of payment, to
convey the content of the ``Medicare Prescription Payment Plan Likely
to Benefit Notice'' prior to processing payment for the prescription
that triggered the notice. As with retail pharmacies, CMS encourages
other pharmacy types to consider providing the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' via additional modes of
communication beyond the requirements in this section, such as through
a patient portal or secure email. CMS encourages Part D sponsors to
work with pharmacies to establish and maintain reasonable procedures
related to the timing and number of attempts for prompt notification of
identified Part D enrollees.
In addition to the notification mechanisms described in the final
part two guidance, we also stated that pharmacies may also choose to
develop additional strategies to provide the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' to enrollees identified as
likely to benefit.
In the final part two guidance, we established that, given the
statutory requirement for notification of enrollees likely to benefit
at the pharmacy point of sale, Part D sponsors must ensure that their
pharmacy network contracts include a provision requiring pharmacies to
provide this notification to Part D enrollees. This provision is
sufficient to meet the proposed requirements for Part D sponsors to
ensure that a pharmacy, after receiving such a notification from the
Part D sponsor, informs the Part D enrollee that they are likely to
benefit from the Medicare Prescription Payment Plan. Additional
tracking or documentation by the pharmacy or on behalf of the pharmacy
by the Part D sponsor that the notice has been delivered to the
identified enrollee is not required.
In the final part two guidance, CMS acknowledged that a small
portion of Part D enrollees will have supplemental coverage, such as
through an SPAP, charity, or other health insurance (OHI), that will
modify the final OOP amount the enrollee would otherwise owe at the
point of sale. The ``Medicare Prescription Payment Plan Likely to
Benefit Notice'' contains language directing enrollees with
supplemental coverage to seek advice related to their specific
situation prior to opting into the Medicare Prescription Payment Plan.
Part D sponsors should ensure that their customer service
representatives are aware of this possibility when receiving inquiries
from Part D enrollees regarding program election. When discussing a
Part D enrollee's prescription drug costs, customer service
representatives may need to review records for Information Reporting
(Nx) transactions, indicating supplemental coverage or OHI.
As specified by section 1860D-2(b)(2)(E)(iv) of the Act, the number
of months remaining in the plan year is an important component of the
maximum monthly cap calculation. As described in the final part one
guidance, the maximum monthly cap in the first month of program
participation is determined by calculating the annual OOP threshold
minus any Part D costs the Part D enrollee incurred during the year
before opting in, divided by the number of months remaining in the plan
year. Given that the pharmacy POS threshold is a static amount, this
may result in scenarios late in the plan year in which Part D enrollees
who receive the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' at the pharmacy based on their OOP costs, but whose costs are
below the maximum monthly cap, are then required to pay the full amount
as part of their first month's bill. For example, if a Part D enrollee
has not yet opted into the Medicare Prescription Payment Plan and fills
a new prescription with an OOP cost of $650 in October 2025, their
maximum monthly cap in the first month could be as high as $666.67
(assuming $0 in prior TrOOP accumulation). In this scenario, a Part D
enrollee could receive the POS notification based on their OOP costs
exceeding the threshold of $600 for 2025, but if they opted into the
Medicare Prescription Payment Plan, because their OOP costs are below
the maximum monthly cap, the Part D sponsor would bill them for the
entire $650 as part of their first month's bill. Part D sponsors should
ensure that customer service representatives a
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