Rule2025-06008
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
April 15, 2025
Effective
June 3, 2025
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule revises the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to prescription drug coverage, the Medicare Prescription Payment Plan, dual eligible special needs plans (D-SNPs), Part C and D Star Ratings, and other programmatic areas, including the Medicare Drug Price Negotiation Program. This final rule also codifies existing sub-regulatory guidance in the Part C and Part D programs.
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<title>Federal Register, Volume 90 Issue 71 (Tuesday, April 15, 2025)</title>
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[Federal Register Volume 90, Number 71 (Tuesday, April 15, 2025)]
[Rules and Regulations]
[Pages 15792-15921]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-06008]
[[Page 15791]]
Vol. 90
Tuesday,
No. 71
April 15, 2025
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, 423, 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; Final Rule
Federal Register / Vol. 90, No. 71 / Tuesday, April 15, 2025 / Rules
and Regulations
[[Page 15792]]
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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-F]
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: Final rule.
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SUMMARY: This final rule revises the Medicare Advantage (Part C),
Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and
Programs of All-Inclusive Care for the Elderly (PACE) regulations to
implement changes related to prescription drug coverage, the Medicare
Prescription Payment Plan, dual eligible special needs plans (D-SNPs),
Part C and D Star Ratings, and other programmatic areas, including the
Medicare Drug Price Negotiation Program. This final rule also codifies
existing sub-regulatory guidance in the Part C and Part D programs.
DATES:
Effective date: These regulations are effective June 3, 2025.
Applicability dates: The provisions in this rule are applicable to
coverage beginning January 1, 2026, except as otherwise noted. The
updates to marketing and communication provisions at Sec. Sec.
422.2267(e)(30) and 423.2267(e)(32) for integrated member ID cards are
applicable for all contract year (CY) 2027 marketing and communications
beginning October 1, 2026. The requirements related to eligibility and
election, targeted outreach, and general outreach regarding
participation in the Medicare Prescription Payment Plan for 2026 at
Sec. Sec. 423.2267(e)(45) through (51), 423.2265(b)(16), and
423.137(d), (e), and (m) are applicable beginning October 1, 2025. The
health risk assessment (HRA) provision that we are finalizing at Sec.
422.101(f)(1)(v) is applicable beginning October 1, 2026, for HRAs
conducted for effective dates of enrollment on or after January 1,
2027. The addition of the updated Part C Breast Cancer Screening
measure as described in section III.E. of the final rule is applicable
for 2029 Star Ratings beginning January 1, 2027.
FOR FURTHER INFORMATION CONTACT:
Lucia Patrone, (410) 786-8621--General Questions.
Naseem Tarmohamed, (410) 786-0814--Part C and Cost Plan Issues.
Lucia Patrone, (410) 786-8621--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#c393a2b1b780a2ada78790b7a2b191a2b7aaada4b083a0aeb0edababb0eda4acb5"><span class="__cf_email__" data-cfemail="c898a9babc8ba9a6ac8c9bbca9ba9aa9bca1a6afbb88aba5bbe6a0a0bbe6afa7be">[email protected]</span></a>--Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose
The primary purpose of this final rule is to amend the regulations
for the Medicare Advantage (Part C) program, Medicare Prescription Drug
Benefit (Part D) program, Medicare Cost Plan Program, and Programs of
All-Inclusive Care for the Elderly (PACE). This final rule includes a
number of new policies that will improve these programs for contract
year 2026, as well as codify existing Part C and Part D sub-regulatory
guidance.
In this final rule, CMS codifies certain Part D requirements from
the Inflation Reduction Act of 2022 (IRA). Specifically, this rule
codifies the IRA's vaccine and insulin cost-sharing requirements and
codifies the program instruction for the Medicare Prescription Payment
Plan program. Additionally, CMS is finalizing two IRA-related
provisions that are needed to help ensure that selected drugs with
maximum fair prices (MFPs) in effect under the Negotiation Program are
available to beneficiaries at the point of dispensing and that the MFPs
are effectuated for dispensing entities timely.
B. Summary of the Major Provisions
1. Vaccine Cost-Sharing Changes
We are finalizing as proposed this provision to implement section
11401 of the Inflation Reduction Act of 2022 (IRA), which amends
section 1860D-2 of the Social Security Act (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
We are finalizing as proposed this provision to 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 finalizing
that, with respect to a covered insulin product covered under a
prescription drug plan (PDP) or a Medicare Advantage prescription drug
(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 title 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 proposed 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 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 proposed to add new Sec. 423.137 establishing
requirements for the Medicare Prescription Payment Plan, 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
[[Page 15793]]
Limited Income Newly Eligible Transition (LI NET) program at Sec.
423.2536. We also proposed to codify the requirements we established in
the Final CY 2025 Part D Redesign Program Instructions for the
treatment for Medical Loss Ratio (MLR) purposes of Medicare
Prescription Payment Plan unsettled balances for 2026 and subsequent
years.
We are finalizing all requirements for 2026 and future years as
proposed with a few exceptions:
<bullet> Modified the timing and content requirements for the
renewal notice at Sec. 423.137(d)(10)(iv).
<bullet> Modified the requirements for the telephonic notice of
election approval at Sec. 423.137(d)(10)(ii).
<bullet> Modified the requirements for voluntary termination
effective date at Sec. 423.137(f)(2)(i)(A)(1).
<bullet> Modified timing requirements for the involuntary
termination notice at Sec. 423.137(f)(2)(ii)(D)(1).
<bullet> Modified Sec. 423.137(i)(2) to state that Part D plan
sponsors should require long-term care pharmacies to provide the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' to the
Part D enrollee (or their authorized representative) at the time of the
pharmacy's typical enrollee cost-sharing billing process.
<bullet> Modified Sec. 423.137(m)(1) to exempt dual eligible
special needs plans (D-SNPs) from certain general outreach and
education requirements.
<bullet> Modified Sec. 423.137(j)(7) to remove the requirements
for Part D sponsors to ensure that pharmacies are prepared to provide
information regarding out-of-pocket (OOP) costs for the Medicare
Prescription Payment Plan to a participant at the point of sale (POS).
4. 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 through 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 finalizing 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 finalizing provisions 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.
5. Timely Submission Requirements for Prescription Drug Event (PDE)
Records
We are finalizing as proposed PDE submission timeframes similar to
those timeframes described in the October 2011 guidance on the timely
submission of PDE records and refer to those timeframes as the General
PDE Submission Timeliness Requirements. CMS is codifying PDE submission
timeframes that initial PDE records are due within 30 calendar days
following the date the claim is received by the Part D sponsor (or its
contracted first tier, downstream, or related entity). Adjustment and
deletion PDE records are due within 90 calendar days following
discovery of the issue requiring a change to the PDE. Resolution of
rejected PDE records are due within 90 calendar days following the
receipt of rejected record status from CMS. In addition, we are
finalizing as proposed regulatory changes at Sec. 423.325(b) to
establish a distinct PDE submission timeliness requirement for selected
drugs, in which CMS requires that a Part D sponsor must submit initial
PDE records for selected drugs (as described at section 1192(c) of the
Act) within 7 calendar days from the date the Part D sponsor (or its
contracted first tier, downstream, or related entity) receives the
claim.
6. Medicare Transaction Facilitator Requirements for Network Pharmacy
Agreements
We are finalizing as proposed our proposal to amend Sec. 423.505
by adding paragraph (q), requiring that Part D sponsors' network
participation agreements with contracting pharmacies, including any
contracts with any first tier, downstream, and related entities require
such pharmacies to be enrolled in the Medicare Drug Price Negotiation
Program's (``Negotiation Program'') Medicare Transaction Facilitator
Data Module (``MTF DM'') and that such pharmacies certify the accuracy
and completeness of their enrollment information in the MTF DM. We
believe the inclusion of the requirement for Part D sponsors' network
pharmacies to be enrolled in the MTF DM that will be added to Part D
sponsors' network contracts with pharmacies will facilitate continued
beneficiary access to selected drugs that are covered Part D drugs,
promote access to negotiated MFPs under the Negotiation Program for
both beneficiaries and dispensing entities, and help ensure accurate
Part D claims information and payment.
7. Clarifying MA Organization Determinations To Enhance Enrollee
Protections in Inpatient Settings
We are finalizing our proposal to clarify that the definition of
``organization determination'' includes MA plan decisions made
concurrent to the enrollee's receipt of services. We are also
finalizing our proposals to codify existing guidance that requires
plans give a provider notice of a coverage decision, in addition to the
enrollee, whenever the provider submits a request on behalf of an
enrollee, as well as our proposal to modify existing regulations to
clarify that an enrollee's liability to pay for services cannot be
determined until an MA organization has made a claims payment
determination. Lastly, we are finalizing our proposal to restrict
plans' ability to use information gathered after the inpatient
admission has taken place when reviewing the appropriateness of the
admission itself.
8. Risk Adjustment Data Updates
We are finalizing a series of provisions related to risk adjustment
data updates. First, we are finalizing a technical change to the
definition of Hierarchical Condition Categories (HCCs) to remove the
reference to a specific version of the ICD, while maintaining a
reference to the ICD in general, to keep the HCC definition in Sec.
422.2 current as newer versions of the ICD become available and are
adopted by the Secretary, as well as substituting the terms ``disease
codes'' with ``diagnosis codes'' and ``disease groupings'' with
``diagnosis groupings'' to be consistent with ICD terminology.
Additionally, we are codifying the longstanding practice of requiring
the collection and mandatory submission of risk adjustment data by PACE
organizations (at Sec. 460.180(b)) and Cost plans (at Sec.
417.486(a)).
C. Summary of Costs and Benefits
[[Page 15794]]
Table 1--Summary of Costs and Benefits
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Provision Description Financial impact
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1. Vaccine Cost-Sharing Changes....... We are codifying section 11401 of the IRA to require that, effective for We do not expect these regulatory
plan years beginning on or after January 1, 2023, the Medicare Part D changes to have an impact on the
deductible shall not apply to, and there is no cost sharing for an adult Medicare Trust Funds.
vaccine recommended by the Advisory Committee on Immunization Practices
(ACIP) covered under Part D.
2. Insulin Cost-Sharing Changes....... We are codifying section 11406 of the IRA to require that the Medicare Part We estimate that this provision
D deductible shall not apply to covered insulin products, and the Part D will increase Federal transfers
cost-sharing amount for a one-month supply of each covered insulin product from the Medicare Supplementary
must not exceed the ``covered insulin product applicable cost-sharing Medical Insurance Trust Fund by
amount.'' approximately $1.2 billion from
2026-2035.
3. Medicare Prescription Payment Plan. We proposed to codify, with limited modifications, agency guidance We do not expect these regulatory
implementing section 11202 of the IRA, which establishes the Medicare changes to have an impact on the
Prescription Payment Plan and requires Part D sponsors to provide all Part Medicare Trust Funds.
D enrollees the option to pay their out-of-pocket (OOP) prescription drug
costs in monthly amounts over the course of the plan year, instead of
paying OOP costs at the point of sale (POS). We are finalizing all
requirements for 2026 and future years as proposed with a few exceptions:
<bullet> Modified the timing and content requirements for the renewal
notice at Sec. 423.137(d)(10).
<bullet> Modified the requirements for the telephonic notice of election
approval at Sec. 423.137(d)(10)(ii).
<bullet> Modified the requirements for voluntary termination effective
date at Sec. 423.137(f)(2)(i)(A)(1).
<bullet> Modified timing requirements for the involuntary termination
notice at Sec. 423.137(f)(2)(ii)(D)(1).
<bullet> Modified Sec. 423.137(i)(2) to state that Part D plan sponsors
should require long-term care pharmacies to provide the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' to the Part D
enrollee (or their authorized representative) at the time of the
pharmacy's typical enrollee cost-sharing billing process.
<bullet> Modified Sec. 423.137(m)(1) to exempt dual eligible special
needs plans (D-SNPs) from certain general outreach and education
requirements.
<bullet> Modified Sec. 423.137(j)(7) to remove the requirements for
Part D sponsors to ensure that pharmacies are prepared to provide
information regarding OOP costs for the Medicare Prescription Payment
Plan to a participant at the POS.
4. Improving Experiences for Dually We are finalizing new Federal requirements for D-SNPs that are applicable The integrated HRA provisions may
Eligible Enrollees. integrated plans (AIPs) to--(1) have integrated member ID cards that serve cause a small number of AIPs to
as the ID cards for both the Medicare and Medicaid plans in which an incur some upfront costs to make
enrollee is enrolled; and (2) conduct an integrated HRA for Medicare and administrative updates. We do not
Medicaid, rather than separate HRAs for each program. We are also expect the provisions regarding
finalizing provisions to codify timeframes for special needs plans to integrated member ID cards and
conduct HRAs and ICPs and prioritize the involvement of the enrollee or the ICPs to have any financial
enrollee's representative, as applicable, in the development of the ICPs. impact.
5. Timely Submission Requirements for We are codifying at Sec. 423.325 PDE submission timeliness requirements. We do not expect these regulatory
Prescription Drug Event (PDE) Records. Specifically, CMS is codifying timeframes at Sec. 423.325(a) to require changes to have an impact on the
that--(1) initial PDE records be submitted within 30 calendar days Medicare Trust Funds.
following the date the claim is received by the Part D sponsor (or its
contracted first tier, downstream, or related entity); (2) adjustment and
deletion PDE records are due within 90 calendar days following discovery of
the issue requiring a change to the PDE; and (3) resolution of rejected PDE
records are due within 90 calendar days following the receipt of rejected
record status from CMS. In addition, we are finalizing regulatory changes
at Sec. 423.325(b) to establish a distinct PDE submission timeliness
requirement for selected drugs, in which CMS requires that a Part D sponsor
must submit initial PDE records for selected drugs (as described at section
1192(c) of the Act) within 7 calendar days from the date the Part D sponsor
(or its contracted first tier, downstream, or related entity) receives the
claim.
6. Medicare Transaction Facilitator We are codifying at Sec. 423.505(q) a requirement on Part D sponsors (or We do not expect these regulatory
Requirements for Network Pharmacy first tier, downstream, or related entities, such as PBMs, acting on the changes to have an impact on the
Agreements. sponsors' behalf) to include in their network pharmacy agreements a Medicare Trust Funds.
provision that requires such pharmacies to be enrolled in the MTF DM (or
any successor to the MTF DM) and to certify to CMS that the enrollment
information provided by such pharmacies in the MTF DM is accurate,
complete, and up to date.
7. Clarifying MA Organization We are finalizing changes to clarify the definition of organization We anticipate that these changes
Determinations to Enhance Enrollee determination, codify requirements related to delivery of notices to could decrease the number of
Protections in Inpatient Settings. providers, clarify that an enrollee's liability to pay for services cannot inpatient downgrades which could,
be determined until an MA organization has made a claims payment in turn, create a non-quantified
determination, and restrict plans' ability to use information gathered cost to MA organizations that
after the inpatient admission has taken place when reviewing the could be passed on to the
appropriateness of the admission itself. Medicare Hospital Insurance Trust
Fund.
8. Risk Adjustment Updates............ We are finalizing a technical change to the definition of Hierarchical We do not expect these regulatory
Condition Categories (HCCs) to remove the reference to a specific version changes to have an impact on the
of the ICD, while maintaining a reference to the ICD in general. Medicare Trust Funds.
Additionally, we are codifying the longstanding practice of requiring the
collection and mandatory submission of risk adjustment data by PACE
organizations (at Sec. 460.180(b)) and Cost plans (at Sec. 417.486(a)).
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[[Page 15795]]
D. Publication of the Proposed Rule, Responding to Public Comments, and
the Finalization of Proposed Provisions
The proposed rule titled ``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'' appeared
in the December 10, 2024 Federal Register (89 FR 99340) (hereinafter
referred to as the ``Contract Year 2026 proposed rule'').
In response to the Contract Year 2026 proposed rule, we received
approximately 31,227 timely pieces of correspondence containing
multiple comments on the proposed rule. We note that some of the public
comments were outside of the scope of the proposed rule. These out-of-
scope public comments are not addressed in this final rule. Summaries
of the public comments within the scope of the proposed rule and our
responses to those public comments are set forth in the various
sections of this final rule under the appropriate heading. We are
finalizing several of the provisions from the proposed rule, some with
minor clarifications based on comments received. In this final rule, we
are not summarizing or responding to comments received with respect to
the provisions of the proposed rule that we are not addressing or
finalizing at this time. Rather, as appropriate, and if applicable, we
will address those comments at a later time in a subsequent rulemaking
document.
With respect to the section of the proposed rule entitled
``Formulary Inclusion and Placement of Generics and Biosimilars,'' CMS
continues to encourage Part D sponsors to prioritize formulary
placement for generics and biosimilars through favorable tier placement
relative to branded and reference products. As we noted in the proposed
rule, CMS currently conducts an extensive formulary review process to
ensure Part D sponsors provide an adequate formulary consistent with
Sec. 423.120(b)(2). In addition, as also noted in the proposed rule,
we have been monitoring beneficiary access to generics and biosimilars,
utilization of multi-source brand drugs when generics are available,
and situations where the brand drug is situated more favorably in
comparison to the generic with regard to tiering and UM, and we will
continue to do so. While we are not adding the additional step in our
formulary review process described in the proposed rule, the policy
reminders and clarifications with respect to Part D plan formularies
providing broad access to generics and biosimilars as part of a cost-
effective drug utilization program still apply. CMS may consider
codifying additional requirements regarding formularies in future
rulemaking if necessary.
CMS will continue to review regulations and policies in the
Medicare program and make necessary and appropriate changes to ensure
consistency with the Executive Order 14192, ``Unleashing Prosperity
Through Deregulation.. Such regulations and policies currently under
review include but are not limited to--
<bullet> Health Equity Index Reward for the Parts C and D Star
Ratings;
<bullet> Annual health equity analysis of utilization management
policies and procedures;
<bullet> Requirements for MA plans to provide culturally and
linguistically appropriate services; and
<bullet> Quality improvement and health risk assessments (HRAs)
focused on equity and social determinants of health (SDOH).
We also do not intend to finalize the following provisions from the
proposed rule: Enhancing Health Equity Analyses: Annual Health Equity
Analysis of Utilization Management Policies and Procedures, Part D
Coverage of Anti-Obesity Medications (AOMs) and Application to the
Medicaid Program, and Ensuring Equitable Access to Medicare Advantage
Services-- Guardrails for Artificial Intelligence (AI). CMS, however,
does want to acknowledge the broad interest in regulation of AI and
will continue to consider the extent to which it may be appropriate to
engage in future rulemaking in this area.
E. Conclusion
Finally, we are clarifying and emphasizing our intent that if any
provision of this rule 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 are finalizing 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).
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 (ACIP) Under Medicare Part D (Sec. Sec. 423.100
and 423.120)
1. Background
Section 11401 of the Inflation Reduction Act of 2022 (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.'' \1\ 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.
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\1\ <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'' which 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).\2\
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\2\ <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>.
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On July 24, 2023, CMS issued a revision to the April 4, 2023
memorandum, which clarified that the effective date of the $0 cost-
sharing requirement for an ACIP-recommended
[[Page 15796]]
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, not the date on which the recommendation is published in
the MMWR.\3\
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\3\ <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 are finalizing our proposal 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.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: Many commenters supported CMS' proposal to codify the
statutory $0 cost-sharing requirement for ACIP-recommended adult
vaccines that was added to section 1860D-2 of the Act by section 11401
of the Inflation Reduction Act.
Response: We thank the commenters for their support of our
proposal.
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
proposed to refer to these vaccines as ``ACIP-recommended adult
vaccines'' and to codify this definition at Sec. 423.100. We did not
propose 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 deferred
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 proposed
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 alignment with the September 26, 2022 HPMS
memorandum, we interpreted 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.
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.\4\ 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 visiting certain countries.
Therefore, consistent with the September 26, 2022 HPMS memorandum, as
long as the vaccine is an FDA-licensed vaccine 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.
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\4\ <a href="https://www.cdc.gov/acip-recs/hcp/vaccine-specific/index.html">https://www.cdc.gov/acip-recs/hcp/vaccine-specific/index.html</a>.
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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 final 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 proposed 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.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: A few commenters requested that we release a HPMS
memorandum that includes a list of ACIP-recommended adult vaccines and
the dates on which these vaccines should be covered with no cost
sharing.
Response: The most updated information regarding ACIP-recommended
adult vaccines and the effective date of ACIP recommendations is
available on the Centers for Disease Control and Prevention's (CDC's)
website at: <a href="https://www.cdc.gov/acip-recs/hcp/vaccine-specific/">https://www.cdc.gov/acip-recs/hcp/vaccine-specific/</a>. Given
that the CDC's website is the best source for this information, we
decline to accept the commenters' recommendation to issue separate
guidance.
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 also proposed 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.\5\
[[Page 15797]]
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.
---------------------------------------------------------------------------
\5\ 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-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
clarified in the proposed rule 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 proposed 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 final rule,
as applicable, to any ACIP-recommended adult vaccine claims with dates
of service after the proposed ``effective date of the ACIP
recommendation.''
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 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.\6\ 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 to 74 years of age 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 final rule would still apply.
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\6\ <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>.
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In summary, we proposed 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
proposed 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.''
Finally, we proposed 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)).
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: Several commenters provided feedback related to the
implementation of utilization management strategies for vaccines. A few
of these commenters opposed the use of utilization management
strategies to determine whether an enrollee meets the age or clinical
requirements recommended by ACIP for a particular vaccine. These
commenters stated that utilization management can limit or delay
beneficiaries' access to vaccines. A commenter urged CMS to ensure that
all commercially available Part D vaccines are included on Part D
formularies and that utilization management for vaccines is used
appropriately. Another commenter urged CMS to issue guidance to ensure
Part D plans are providing coverage and access to ACIP-recommended
vaccines and are not imposing restrictive utilization management
strategies. Finally, other commenters requested that CMS ensure Part D
sponsors are not implementing utilization management strategies that
prevent a provider or pharmacy from stocking or administering vaccines.
Response: We appreciate these commenters sharing their concerns
related to utilization management strategies for vaccines. As described
in Chapter 6, Section 30.2.7 of the Prescription Drug Benefit Manual,
CMS reviews all Part D sponsors' formularies to ensure they contain all
commercially available Part D vaccines and to ensure that Part D
sponsors are only using utilization management tools to--
<bullet> Assess the necessity of vaccines that are less commonly
administered in the Medicare population, such as anthrax and yellow
fever vaccines;
<bullet> Facilitate use of vaccines in line with ACIP
recommendations; and
<bullet> Evaluate potential reimbursement of those vaccines that
could be covered under Part B when directly related to the treatment of
an injury or direct exposure to a disease or condition (for example,
tetanus).
In order to ensure a vaccine meets the definition of an ``ACIP-
recommended adult vaccine'' and is therefore subject to the cost-
sharing requirements outlined in this rule, a Part D sponsor may
implement utilization management strategies to determine if the vaccine
is being administered in accordance with ACIP recommendations, which is
consistent with the Chapter 6 guidance outlined previously.
Given that our existing guidance in Chapter 6 of the Prescription
Drug Benefit Manual clearly outlines the situations in which Part D
sponsors may implement utilization management for vaccines, we decline
to issue additional guidance on this topic.
Comment: Several commenters expressed concern about Part D sponsors
restricting coverage for specific vaccine products and having a
``preferred'' brand of a particular
[[Page 15798]]
vaccine. Commenters stated that these restrictions have been
implemented using utilization management strategies (for example, step
therapy), $0 reimbursement to pharmacies for less preferred vaccine
products, and National Drug Code (NDC) blocks. Commenters emphasized
the negative impact these strategies may have on beneficiary access to
vaccines. For example, the commenters asserted that a beneficiary may
present to a pharmacy to receive a vaccine and, if the vaccine product
in stock is not the ``preferred'' brand on the beneficiary's Part D
plan's formulary, the beneficiary would need to return to the pharmacy
once the ``preferred'' brand is in stock or find another pharmacy with
the ``preferred'' brand currently in stock. Commenters also stated how
difficult and costly it would be to keep every brand of a vaccine in
stock to avoid these situations. A commenter noted that this would be
particularly costly in primary care settings where providers are not
paid until after a vaccine is administered, and they cannot receive
reimbursement for unused vaccines. All commenters requested that CMS
not allow these strategies to be implemented.
Response: We appreciate the concerns these commenters shared about
the potential negative impacts of Part D sponsors restricting coverage
for certain brands of a vaccine. We reiterate our rules outlined in
Chapter 6, Section 30.2.7, of the Prescription Drug Benefit Manual
which state that Part D sponsors' formularies must contain all
commercially available Part D vaccines and, as discussed earlier in
this preamble, the only allowable uses of utilization management for
vaccines are 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. Given that these are
the only situations in which utilization management can be used for
vaccines, Part D sponsors may not implement utilization management,
including step therapy and NDC blocks, to prefer one brand of a vaccine
over another.
Comment: A few commenters expressed concerns about beneficiaries
receiving Part D vaccines in primary care settings. The commenters
stated that because these settings are not considered in-network,
beneficiaries must pay for the vaccine and wait to be reimbursed, which
can disincentivize them from receiving recommended vaccines. The
commenters emphasized that being considered out-of-network can
negatively affect primary care providers' relationships with their
patients as they navigate vaccine coverage requirements for each
patient and must often refer patients to network pharmacies to receive
recommended vaccines. A commenter stated that having to refer patients
to network pharmacies for vaccine administration can lead to confusion
and increased vaccine hesitancy and may disproportionately affect
patients who may have difficulty obtaining transportation to an in-
network pharmacy. They also noted that individuals without Part D
coverage are not able to receive ACIP-recommended adult vaccines with
no cost sharing.
Another commenter requested that we describe our expectations for
applying utilization management strategies when vaccines are
administered at an out-of-network pharmacy, such as a primary care
setting, as Part D sponsors do not have direct relationships with
providers in these settings. The commenter stated that there can be
operational barriers to imposing utilization management in these
settings and requested guidance on how to implement utilization
management when vaccines are administered by providers, such as
physicians, in out-of-network settings.
Response: We appreciate the commenters sharing their concerns about
Part D enrollees receiving ACIP-recommended vaccines out-of-network.
Part D sponsor networks are generally defined as pharmacy networks;
therefore, if an enrollee receives a vaccine at a physician's office,
this is most often out-of-network. As noted in the preamble to the
final rule titled ``Medicare Program; Medicare Prescription Drug
Benefit'' which appeared in the Federal Register on January 28, 2005
(70 FR 4194), a Part D enrollee receiving a vaccine in a physician's
office constitutes a situation in which out-of-network access would be
permitted because a beneficiary could not reasonably be expected to
obtain that vaccine at a network pharmacy. We refer the commenters to
our current regulations and guidance regarding claims for vaccines
administered out-of-network. Specifically, Sec. 423.124(a)(2)
establishes that Part D sponsors must ensure that Part D enrollees have
adequate access to vaccines and other covered Part D drugs
appropriately dispensed and administered by a physician in a
physician's office. In Chapter 5, Section 60.2, of the Prescription
Drug Benefit Manual, we note that it may be challenging for enrollees
to pay upfront and be reimbursed by their Part D plan after receiving a
vaccine in their physician's office.
We encourage the commenters to review the possible approaches
detailed in Section 60.2.2 of the Prescription Drug Benefit Manual to
improve access to Part D vaccines administered and dispensed by a
physician without requiring upfront beneficiary payment and subsequent
reimbursement by Part D sponsors. The two possible approaches are: (1)
a model vaccine notice for physicians (paper claim enhancement) where
Part D sponsors provide all enrollees with a vaccine-specific notice
that enrollees can bring to their physician with the information
necessary for a physician to receive authorization of coverage for a
particular vaccine and bill for the vaccine; and (2) web-assisted
electronic physician billing where a physician uses a commercially-
developed web-based system to electronically request out-of-network
reimbursement from Part D sponsors on behalf of enrollees. Both
approaches allow providers in primary care settings to administer ACIP-
recommended vaccines to Part D enrollees without requiring an upfront
payment.
Regarding utilization management for vaccines administered in out-
of-network settings, we would expect that any utilization management
requirements imposed on vaccines would need to be satisfied regardless
of whether the vaccine is being administered at a network or out-of-
network setting. However, we believe Part D sponsors are best situated
to determine how to operationalize the implementation of utilization
management requirements for out-of-network claims. As discussed earlier
in this preamble, the only allowable uses of utilization management for
vaccines are 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. We also note that,
consistent with Chapter 6, Section 10.14.3, of the Prescription Drug
Benefit Manual, in the absence of any information showing previous
immunization (that is, claims data), the Part D sponsor should make
payment available for a vaccine and its administration consistent with
ACIP recommendations. Therefore, if a Part D sponsor determines an
ACIP-recommended adult vaccine is coverable under their benefit, the
enrollee must not be subject to cost sharing regardless of whether they
received the vaccine in-network or out-
[[Page 15799]]
of-network. Alternatively, if a Part D sponsor determines a vaccine
does not meet the definition of an ``ACIP-recommended adult vaccine,''
the $0 cost-sharing requirement would not apply.
Comment: A commenter requested clarification on managing coverage
determinations in instances where a Part D sponsor requires a prior
authorization (PA) for a vaccine. The commenter stated that because
many vaccines are administered in pharmacies under standing orders,
there is not a physician writing an individual prescription for each
enrollee receiving a vaccine. Therefore, there is no physician who can
provide information in support of a PA or appeal. The commenter noted
that pharmacies are typically not involved in coverage determinations
and questioned whether a pharmacist is permitted to request a PA or
appeal and provide information in support of a PA or appeal.
Response: As described in Sec. 423.566(c), the only individuals
who can request a standard or expedited coverage determination are the
enrollee; the enrollee's representative, on behalf of the enrollee; or
the prescribing physician or other prescriber, on behalf of the
enrollee. However, as stated in Section 40.12.3 of the Parts C & D
Enrollee Grievances, Organization/Coverage Determinations, and Appeals
Guidance, Part D sponsors are permitted, but not required, to treat the
presentation of a prescription at the pharmacy as a coverage
determination. Therefore, a Part D sponsor can treat a transaction in
which a pharmacist explains to an enrollee that a drug is subject to
prior authorization as a request for a coverage determination. A
pharmacist may then communicate with the Part D sponsor and may be able
to override the point-of-sale prior authorization requirement and allow
the claim to process. As stated in Chapter 6, Section 30.2.2.1, of the
Prescription Drug Benefit Manual, Part D sponsors may decide that it is
reasonable to accept information from pharmacists in situations where
point-of-sale edits are applied. In these cases, if a network pharmacy
is able to provide the necessary information at the point-of-sale, it
negates the need for additional administrative review through the
coverage determination process and reduces delay in access to Part D
drugs, including vaccines. However, we note that a pharmacist's
involvement would occur at the initial coverage decision level,
consistent with Section 40.9 of the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, and not the
appeal level.
Comment: A commenter requested guidance on how to manage situations
in which PA requests are submitted for vaccines. The commenter
described a situation in which the Part D sponsor determines that a
vaccine is not being administered in accordance with ACIP's
recommendations and the enrollee is charged the applicable cost
sharing. The commenter questioned whether this would be considered a
fully favorable, partially unfavorable, or fully unfavorable decision.
If this is a partially or fully unfavorable decision, the commenter
questioned whether this decision should be classified as a denial due
to a lack of medical necessity. The commenter also requested guidance
for how plans should process requests in situations where a request is
submitted to the plan for a vaccine to be covered at $0 cost sharing,
but the plan determines the vaccine is not being administered in
accordance with ACIP recommendations. The commenter noted that CMS did
not propose allowing enrollees to request cost-sharing exceptions when
a vaccine is not being administered in accordance with ACIP
recommendations. Specifically, the commenter questioned whether these
requests should be dismissed or denied.
Response: If a request is submitted to a Part D plan asking for a
vaccine to be covered at $0 cost sharing, we would expect either: (1) a
fully favorable decision if the vaccine is covered at $0; (2) a
partially favorable decision if the vaccine is covered but subject to
cost sharing; or (3) an adverse decision if the vaccine is not covered.
If a request is submitted to a Part D plan asking for a vaccine to be
covered, but the request does not specify a preferred cost-sharing
amount, we would expect either: (1) a fully favorable decision if the
vaccine is covered but subject to cost sharing; or (2) an adverse
decision if the vaccine is not covered. In cases where a partially
favorable or adverse decision is made, an enrollee must be provided
proper notice and appeal rights, consistent with Sec. 423.568(g). We
note that it would not be appropriate to dismiss a request in any of
these scenarios. A partially favorable or adverse decision would be
considered a denial.
Comment: A commenter encouraged CMS to educate pharmacists about
direct member reimbursement (DMR) requests so they can inform their
patients that reimbursement is available for vaccines received out-of-
network.
Response: We thank the commenter for their suggestion. Part D plans
currently provide information to their enrollees regarding how to
request reimbursement when they use an out-of-network pharmacy or
provider in Chapter 5 of the Evidence of Coverage (EOC) document which
is provided to all Part D enrollees.
Comment: A commenter questioned whether direct member reimbursement
(DMR) requests for ACIP-recommended adult vaccines can only be
submitted by beneficiaries or also by providers, including physicians
and pharmacies. The commenter noted that they have seen provider-
submitted claims that charge more than the negotiated rates for
vaccines. If requests cannot be submitted by providers, the commenter
recommended that CMS issue separate guidance for provider-submitted
claims to ensure there is clarity on how these requests should be
managed. They also recommend that CMS limit reimbursement for these
claims to contracted rates. If requests can be submitted by providers,
the commenter recommended that CMS monitor claims for ACIP-recommended
vaccines as the $0 cost-sharing requirement for these vaccines may
increase both the plan and CMS' liability. The commenter also stated
that because there is no limit on the price of ACIP-recommended
vaccines, it is possible that pharmacies and providers may charge
higher cost sharing at the point-of-sale and, instead of processing
claims online, they would have the beneficiary submit the claim to
their Part D plan in order to receive a higher payment. Another
commenter questioned how, when DMR requests are submitted,
reimbursement to providers for the vaccine product and administration
fees should be addressed. The commenter noted that vaccinating
providers continue to face challenges with receiving adequate
reimbursement for providing vaccines.
Response: We thank the commenter for sharing their questions and
recommendations regarding DMR requests. We note that our reference to
DMR requests in the proposed and final rules is specific to
beneficiary-submitted requests where a beneficiary is requesting
reimbursement for an ACIP-recommended adult vaccine for which they
incurred out-of-pocket costs. With respect to DMR requests submitted by
beneficiaries for prescriptions obtained from in-network pharmacies,
Sec. 423.120(c)(3) specifies that a Part D sponsor must require its
network pharmacies to submit claims to the Part D sponsor or its
intermediary whenever the card described in paragraph (c)(1) of this
section is presented or on file at the pharmacy unless the enrollee
expressly requests that a particular claim not be submitted to the Part
D sponsor or its
[[Page 15800]]
intermediary. Network pharmacies that decline to process network claims
online and instead recommend that beneficiaries submit paper claims
would be in violation of this requirement. We continue to expect DMR
requests for prescriptions obtained from network pharmacies to be
limited and submitted only for reasons, such as the claims processing
systems being temporarily unavailable for the pharmacy or the Part D
sponsor or its intermediary when the enrollee obtains their
prescription. Any post-reimbursement reconciliation between the network
pharmacy and plan sponsor would be a contractual matter between the
parties.
With respect to provider-submitted claims for vaccines, which we do
not consider DMR requests, CMS does not prohibit Part D sponsors from
establishing arrangements with out-of-network (OON) providers or
pharmacies to facilitate OON access in accordance with the requirements
specified in Sec. 423.124. As described earlier in this preamble,
Chapter 5, Section 60.2, of the Prescription Drug Benefit Manual
provides options that Part D sponsors and OON providers may use to
facilitate access to vaccines given that vaccines are often provided in
physician offices. While we encourage such arrangements for vaccine
access, CMS guidance makes it clear that it is not a requirement and
that such facilitated approaches to OON access for vaccines would need
to be agreed upon between the Part D sponsor and provider. Therefore,
it is up to Part D sponsors to establish their own policies on whether
to accept OON claims directly from providers or pharmacies, and, if
they do, to establish an agreed upon reimbursement amount with the OON
provider or pharmacy that could include a prohibition on balance
billing the enrollee.
Our guidance for provider-submitted claims for vaccines is provided
in Chapter 5 of the Prescription Drug Benefit Manual, as discussed
previously.
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
proposed 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 proposed rule, we noted that it is highly unlikely that an
ACIP recommendation will be posted without the date on which it was
adopted by the CDC Director; however, in the event that a
recommendation is posted without an effective date, we noted that CMS
would consult with the CDC to obtain the date the recommendation was
adopted by the CDC Director and provide guidance.
In the proposed rule, we noted that the ``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, we proposed that
the ``effective date of the ACIP recommendation'' would determine 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 would 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
proposed ``effective date of the ACIP recommendation'' would be the
date the CDC Director adopted the changed recommendation once the
recommendation is posted on the CDC's website. We noted in the proposed
rule 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 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.
In the proposed rule, we also noted that 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 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.
Additionally, we discussed in the proposed rule that when an ACIP
recommendation is narrowed and a Part D sponsor does not currently have
a PA requirement in place for that vaccine, the plan may 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). 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 our
proposed rule, and finalized in this final rule, have been in place
since 2023 through program instruction authority and we have annually
reviewed cost sharing in
[[Page 15801]]
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.
We received the following comments on this section of the proposed
rule, and our responses follow.
Comment: A few commenters requested that we change the definition
of the ``effective date of the ACIP recommendation.'' A commenter
recommended we use the date the recommendation is published in the
CDC's MMWR. Another commenter recommended we use the day after the last
day of the ACIP meeting at which the recommendation was approved.
Another commenter expressed concern about situations in which the CDC
Director does not adopt an ACIP recommendation.
Response: We thank the commenters for their suggestions, but we
decline to change our definition of the ``effective date of the ACIP
recommendation.'' As we explained in the proposed rule, in the April 4,
2023 HPMS memorandum titled ``Final Contract Year (CY) 2024 Part D
Bidding Instructions,'' we stated that the effective date for an ACIP
recommendation is the date on which it is adopted by the CDC Director
and published in the MMWR. However, on July 24, 2023, based on updated
instruction from the CDC, we issued a revision to the memorandum and
clarified that the effective date is the date on which the CDC Director
adopts the ACIP recommendation, as posted on the CDC's website, not the
date on which the recommendation is published in the MMWR. We noted
that if the date of publication in the MMWR was used, it is likely
there would be a delay in beneficiaries accessing new ACIP-recommended
vaccines at $0 cost sharing because of the delay in publication. For
example, on October 24, 2024, the CDC Director adopted recommendations
to update the dosing interval and schedule for a meningococcal
serogroup B vaccine (MenB-4C), but the recommendation was not published
in the MMWR until December 12, 2024.<SUP>7 8</SUP>
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\7\ <a href="https://www.cdc.gov/acip/vaccine-recommendations/">https://www.cdc.gov/acip/vaccine-recommendations/</a>.
\8\ <a href="https://www.cdc.gov/mmwr/volumes/73/wr/mm7349a3.htm?s_cid=mm7349a3_w">https://www.cdc.gov/mmwr/volumes/73/wr/mm7349a3.htm?s_cid=mm7349a3_w</a>.
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In the July 24, 2023 memorandum, we also stated that if the CDC
Director's adoption of an ACIP recommendation is posted as official on
the CDC website but an adoption date is not specified, the effective
date would be the day after the last day of the ACIP meeting at which
the recommendation was approved. However, we did not include this
requirement in the proposed rule. We understand from the CDC that there
may be situations in which the CDC Director amends or rejects a
recommendation after the ACIP meeting concludes. Therefore, if the day
after the last day of the ACIP meeting date was used as the ``effective
date of the ACIP recommendation,'' it is possible that a vaccine could
be inappropriately considered an ACIP-recommended adult vaccine for a
short period of time.
Our proposed definition of ``effective date of the ACIP
recommendation'' aligns with the CDC's current process for publishing
ACIP recommendations that have been adopted by the CDC Director. Based
on guidance from the CDC, 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 unlikely event this does occur, CMS will
consult with the CDC to obtain the date the recommendation was adopted
by the CDC Director and provide guidance.
Comment: A commenter questioned CMS's expectations when an existing
ACIP recommendation is narrowed. The commenter requested clarification
regarding whether Part D sponsors are required to add a PA requirement
with respect to the vaccine and to submit a negative formulary change
request to CMS when an ACIP recommendation is narrowed. The commenter
stated that if CMS requires plans to submit a negative formulary change
request to add a PA requirement in response to a narrowed ACIP
recommendation, this would result in delays in implementing the
narrowed ACIP recommendation. Finally, the commenter recommended that
if a plan does add a PA requirement for a vaccine, CMS should allow the
plan to implement the PA requirement immediately without submitting and
waiting for approval of a negative formulary change request.
Response: As stated in the proposed rule, Part D sponsors are not
required to implement PA requirements for vaccines to determine if they
are being used in accordance with ACIP recommendations. We clarify that
Part D sponsors are not required to add a PA requirement when an ACIP
recommendation is narrowed. However, if a Part D sponsor chooses to add
a PA requirement to determine if the vaccine is being used in
accordance with the narrowed ACIP recommendation, the sponsor must
comply with the applicable negative formulary change requirements at
Sec. 423.120(e) and applicable notice requirements at Sec.
423.120(f).
In the proposed rule, we stated that unless the Part D sponsor is
otherwise notified, the negative change request will be considered
approved after 30 days, as specified in Sec. 423.120(e)(3)(i).
However, we clarify that, depending on the nature of the narrowed ACIP
recommendation, the negative formulary change could be considered
either a maintenance change or a non-maintenance change as defined at
Sec. 423.100. If the change is a maintenance change, the requirements
in Sec. 423.120(e)(3)(i) will apply, meaning that the request is
deemed approved 30 days after submission unless CMS notifies the Part D
sponsor otherwise. If the change is a non-maintenance change, the
requirements in Sec. 423.120(e)(3)(ii) will apply, meaning that the
change must not be implemented until the Part D sponsor receives a
notice of approval from CMS.
Regardless of whether a negative formulary change is considered a
maintenance or non-maintenance change, Part D sponsors are not
permitted to immediately implement the PA requirement and must wait
until the negative formulary change request is approved. Once the PA
requirement is approved, the Part D sponsor may implement the PA
requirement and may 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.
Comment: A commenter expressed concern about potential delays in
implementing $0 cost sharing when a new ACIP recommendation is posted
to the CDC website by the CDC without an effective date. The commenter
was concerned about waiting for CMS to work with CDC to obtain the
effective date and issue guidance in instances where the CDC did not
specify the date on which the recommendation was adopted by the CDC
Director. The commenter requested that CMS allow a grace period for
Part D sponsors to implement all cost-sharing changes after an ACIP
recommendation is posted online, regardless of whether a date is
specified or not, as it takes some time to implement cost-sharing
changes.
Response: We appreciate the commenter's suggestion but note that,
based on guidance from the CDC, we expect that it is highly unlikely
that an ACIP recommendation will be posted without the date on which it
was adopted by the CDC Director. We also decline to make a change to
our proposed requirements to allow Part D sponsors to have a grace
period to implement cost-sharing changes after an
[[Page 15802]]
ACIP recommendation is posted. To ensure beneficiaries can immediately
benefit from a new ACIP recommendation, the ``effective date of the
ACIP recommendation'' is the date on which cost-sharing requirements
apply. If a Part D sponsor is not able to effectuate $0 cost sharing
for an ACIP recommended adult vaccine as of the ``effective date of the
ACIP recommendation'' and an enrollee pays cost sharing for the ACIP-
recommended adult vaccine after the ``effective date of the ACIP
recommendation,'' the Part D sponsor will need to reimburse the
beneficiary for any cost sharing paid for the vaccine.
After considering the public comments we received, and for the
reasons set forth in the proposed rule and in our responses to
comments, we are finalizing the changes to Sec. Sec. 423.100 and
423.120 as proposed.
B. 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 of 2022 (IRA) amended
section 1860D-2 of 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 title 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.\9\ 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.\10\ Lastly, on April 1, 2024, we released ``Final CY 2025 Part D
Redesign Program Instructions.'' \11\
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\9\ <a href="https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf">https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf</a>.
\10\ <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>.
\11\ <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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We proposed to codify the cost-sharing requirements for covered
insulin products under Part D for 2026 and each subsequent plan year.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: We received many comments that were supportive of our
proposal to codify the statutory cost-sharing requirements for covered
insulin products that were added to section 1860D-2 of the Act by
section 11406 of the IRA.
Response: We thank the commenters for their support of our
proposal.
Comment: A commenter requested that CMS publish technical
prescription drug event (PDE) reporting guidance for covered insulin
product claims.
Response: We thank the commenter for their recommendation. We have
released PDE reporting instructions for the implementation of
provisions of the IRA for contract years 2023, 2024, and 2025. Our most
recent guidance, entitled ``Prescription Drug Event Record Reporting
Instructions for the Implementation of the Inflation Reduction Act for
Contract Year 2025'' was published on April 15, 2024 and can be found
here: <a href="https://www.cms.gov/files/document/pderecordreportinginstructionsfortheimplementationoftheiraforcontractyear2025508g.pdf">https://www.cms.gov/files/document/pderecordreportinginstructionsfortheimplementationoftheiraforcontractyear2025508g.pdf</a>. We anticipate that additional guidance will be released
for contract year 2026.
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 proposed 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 clarified that a covered insulin
product includes products that are a combination of more than one type
of insulin. We also proposed, consistent with the September 26, 2022
HPMS memorandum, that the definition of a covered insulin product
include 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 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 products that are FDA-licensed
biological 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 specified 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.
[[Page 15803]]
Additionally, we proposed at Sec. 423.100 that a ``covered insulin
product'' is licensed under section 351 of the PHSA and marketed
pursuant to such licensure. We clarified 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 noted that outside
of these situations where the insulin had an approved marketing
application under section 505 of the FFDCA, 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, there is no need to reference section 505 of the FFDCA since a
biological product can no longer be approved under section 505 of the
FFDCA and must be licensed in a biologics license application under
section 351 of the PHSA. As such, a reference to section 505 is not
included in our proposed definition of a ``covered insulin product.''
We did not receive any comments on this section of the proposed
rule and are finalizing the definition of ``covered insulin product''
at Sec. 423.100 as proposed.
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 title XI of the Act; 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 interpreted the section 1860D-2(b)(9)(D) of the Act reference to
``applicable copayment amount'' as an amount that could be either a
fixed copayment or a coinsurance percentage. Therefore, we proposed 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 in this final rule, we proposed to define the
term ``covered insulin product applicable cost-sharing amount.''
Specifically, we proposed 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 title XI of the Act; 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.\12\
If, in this example, a plan's negotiated price, as defined in Sec.
423.100, is $95, then an amount equal to 25 percent of the maximum fair
price is $29.75 and an amount equal to 25 percent of the negotiated
price is $23.75. Therefore, the covered insulin product applicable
cost-sharing amount would be $23.75, as it is the lesser of $35,
$29.75, and $23.75.
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\12\ <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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We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: Several commenters requested clarification regarding the
applicable cost-sharing amount for covered insulin products that are
selected drugs under the Medicare Drug Price Negotiation Program, as
established by sections 11001 and 11002 of the IRA and added to
sections 1191 through 1198 of the Act. As described in section 1860D-2
of the Act, and our proposed definition of ``covered insulin product
applicable cost-sharing amount'' at Sec. 423.100, this amount is the
lesser of $35, an amount equal to 25 percent of the maximum fair price
(MFP), or an amount equal to 25 percent of the negotiated price. Some
of these commenters expressed concern regarding the existing guidance
for managing situations in which the applicable cost-sharing amount is
determined to be equal to 25 percent of the MFP established for the
covered insulin product in accordance with Part E of title XI of the
Act. A few commenters noted that the MFP only includes the ingredient
cost of a covered insulin product and does not include taxes and
dispensing fees and requested guidance on how plan sponsors should
treat these costs. A commenter, referring to dispensing fees but not
sales tax, noted that if reimbursement for covered insulin product
claims does not include reimbursement for the ingredient cost of the
insulin product and a dispensing fee, below cost or inadequate
reimbursement may harm pharmacies and limit beneficiary access to
insulin. Other commenters, referring to both sales tax and dispensing
fees, requested that these costs be included as part of the applicable
copayment amount when it is equal to 25 percent of the MFP, which they
note would be consistent with how cost sharing is calculated when 25
percent of the negotiated price is the applicable cost-sharing amount.
Response: We thank the commenters for their comments. The MFP
established for a covered insulin product in accordance with Part E of
title XI of the Act only includes the ingredient cost of the insulin
product. As such, the amount paid by an enrollee for a 1-month supply
of a covered insulin product cannot exceed 25 percent of the MFP, if
this amount is lower than $35 or 25 percent of the negotiated price.
Therefore, Part D plans are responsible for covering the cost of the
dispensing fee and any applicable sales tax. If the applicable covered
insulin product applicable cost-sharing amount is determined to be 25
percent of the negotiated price, we note that, consistent with the
definition of negotiated price Sec. 423.100, this price includes all
price concessions from network pharmacies or other network providers as
well as dispensing fees. If the applicable covered insulin product
applicable cost-sharing amount is determined to be $35, the amount paid
by an enrollee cannot exceed $35.
[[Page 15804]]
Comment: A commenter recommended that CMS consider allowing the
establishment of a copayment amount for insulin products that provides
flexibility for Part D plan sponsors. Specifically, the commenter
recommended that CMS permit plans to set a copayment that is equal to
no more than 25 percent of the MFP or the negotiated price, while also
allowing for a $35 copay when it is less than 25 percent of the MFP or
the negotiated price. The commenter asserted that this approach would
provide flexibility for Part D sponsors, ensure enrollees are subject
to predictable cost sharing, and encourage pharmaceutical manufacturers
to maintain or lower prices of covered insulin products.
Response: We appreciate the commenter's suggestion. In accordance
with the statute, plans are permitted to set a copayment that is less
than or equal to $35 so long as that copayment amount is no more than
25 percent of the MFP or 25 percent of the negotiated price. However,
it is not clear if the commenter is asking whether the copayment can be
greater than $35 as long as it is equal to no more than 25 percent of
the MFP or the negotiated price. While a plan may establish a copayment
that is equal to or less than $35, we clarify that the copayment cannot
exceed $35 even if such copayment would otherwise be equal to no more
than 25 percent of the MFP or the negotiated price. While we recognize
the importance of allowing Part D sponsors to have some flexibility in
how they structure their benefits, the covered insulin product
applicable cost-sharing amount that we are codifying in this rule is
statutorily defined in section 1860D-2(b)(9)(D) of the Act as the
lesser of $35, an amount equal to 25 percent of the MFP, and an amount
equal to 25 percent of the negotiated price. As noted in the proposed
rule, Part D sponsors have the flexibility to 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.
We clarify that if a Part D sponsor places a covered insulin
product on a formulary tier with a copayment or coinsurance that is
lower than the statutory maximum cost-sharing amount (that is, the
lesser of $35, 25 percent of the negotiate price, or 25 percent of the
MFP), the Part D sponsor will need to use the copayment or coinsurance
amount specified for the tier when determining the enrollee's cost-
sharing amount. For example, if a covered insulin product is placed on
a formulary tier with a copayment amount of $20, the enrollee's cost-
sharing amount would be the lesser of $20, 25 percent of the negotiated
price, or 25 percent of the MFP, if the insulin product is a selected
drug. Similarly, if a covered insulin product is placed on a formulary
tier with a coinsurance percentage of 20 percent, the enrollee's cost-
sharing amount would be the lesser of the 20 percent coinsurance or
$35.
We also clarify that if a Part D sponsor places a covered insulin
product on a formulary tier with a copayment or coinsurance that is
greater than the statutory maximum cost-sharing amount, the Part D
sponsor will still need to use the defined covered insulin product
applicable cost-sharing amount to ensure that the enrollee's cost
sharing does not exceed such amount. For example, if a covered insulin
product is placed on a formulary tier with a copayment amount of $50,
the enrollee's cost-sharing amount cannot exceed the covered insulin
product applicable cost-sharing amount, which is defined as the lesser
of $35, 25 percent of the negotiated price, or 25 percent of the MFP.
Similarly, if a covered insulin product is placed on a formulary tier
with a coinsurance percentage of 30 percent, the enrollee's cost-
sharing amount cannot exceed the covered insulin product applicable
cost-sharing amount, which is defined as the lesser of $35, 25 percent
of the negotiated price, or 25 percent of the MFP.
Comment: A commenter requested that CMS adjust how it describes the
applicable cost-sharing amount for covered insulin products. The
commenter stated that the current guidance stating that cost sharing is
equal to or lower than $35 or 25 percent of the MFP or the negotiated
price is unclear. The commenter recommended rewording this requirement
to state that cost sharing cannot exceed the maximum cost sharing of
the lower of $35 per month, 25 percent of the MFP, or the negotiated
price.
Response: We thank the commenter for their suggestion. However, we
decline to adopt this change as we believe the current language
describing the covered insulin product applicable cost-sharing amount
is sufficiently clear.
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 proposed to codify these requirements at Sec. 423.120(h)(1) and
(2).
a. Duration of Supply
In alignment with the guidance in our September 26, 2022 HPMS
memorandum, we proposed 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.'' In the proposed rule,
and consistent with our current policy in the September 26, 2022 HPMS
memorandum, we specified that 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). In the proposed rule, we stated that 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.
With respect to extended-day supplies (that is, greater than a 1-
month supply) of covered insulin products, we proposed 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 2-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,
[[Page 15805]]
whichever applies, would apply for a covered insulin product that is
dispensed for greater than a 2-month supply up to a 3-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.
b. Out-of-Network Claims
In the September 26, 2022 HPMS memorandum, we provided guidance on
managing out-of-network claims. Consistent with this guidance, we
proposed 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.\13\ 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
proposed 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.''
---------------------------------------------------------------------------
\13\ 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.
---------------------------------------------------------------------------
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 clarified in the proposed rule 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.''
c. Tier Placement & Utilization Management
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 described in
this section of the final rule still apply.
We proposed to codify at Sec. 423.120(h)(1) and (2) that with
respect to coverage of a covered insulin product, as we proposed 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 proposed 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 proposed to
codify at Sec. 423.120(h)(4) that these cost-sharing requirements
apply for covered insulin products obtained from either in-network or
out-of-network pharmacies and providers.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: A few commenters requested that we monitor out-of-network
claims for covered insulin products, stating that they believe there
are limited circumstances in which a beneficiary would need to obtain a
covered insulin product from an out-of-network pharmacy, especially
considering the existing requirements for pharmacy networks and the
availability of mail order prescriptions. The commenters recommended
that CMS analyze utilization data and determine if out-of-network fills
for covered insulin products are routinely being used without a
particular need. The commenters asserted that routine use of out-of-
network fills may interfere with Part D plans' care coordination and
recommend that limits be placed on access to covered insulin products
at out-of-network pharmacies.
Response: We agree with the commenters that out-of-network access
should not routinely be used to access covered insulin products. We
reiterate our existing requirements at Sec. 423.124, under which a
Part D sponsor must ensure that enrollees have access to covered Part D
drugs at out-of-network pharmacies only if they cannot reasonably be
expected to obtain such drugs at a network pharmacy and do not access
covered Part D drugs at an out-of-network pharmacy on a routine basis.
[[Page 15806]]
Moreover, Sec. 423.124(c) requires Part D sponsors to establish
reasonable rules to appropriately limit out-of-network access to
covered Part D drugs.
Comment: A commenter requested clarification on whether direct
member reimbursement (DMR) requests for covered insulin products can
only be submitted by beneficiaries or whether DMR requests can also be
submitted by providers. The commenter recommended that CMS monitor
claims for covered insulin products, as the codification of CMS's cost-
sharing requirements for insulin products could increase both the plan
and CMS's liability. The commenter also stated that because there is no
limit on the price of covered insulin products that are not selected
drugs under the Medicare Drug Price Negotiation Program, it is possible
that pharmacies may decline to process network claims online and
instead recommend that beneficiaries submit paper claims directly to
their Part D plan in an attempt to charge higher prices at the point-
of-sale and receive higher payments.
Response: We thank the commenter for sharing their questions and
recommendations regarding DMR requests. We note that our reference to
DMR requests in the proposed and final rules is specific to
beneficiary-submitted requests where a beneficiary is requesting
reimbursement for a covered insulin product for which they incurred
out-of-pocket costs. With respect to DMR requests submitted by
beneficiaries for prescriptions obtained from in-network pharmacies,
Sec. 423.120(c)(3) specifies that a Part D sponsor must require its
network pharmacies to submit claims to the Part D sponsor or its
intermediary whenever the card described in Sec. 423.120(c)(1) is
presented or on file at the pharmacy unless the enrollee expressly
requests that a particular claim not be submitted to the Part D sponsor
or its intermediary. Network pharmacies that decline to process network
claims online and instead recommend that beneficiaries submit paper
claims would be in violation of this requirement. We continue to expect
DMR requests for prescriptions obtained from network pharmacies to be
limited and submitted only for reasons such as the claims processing
systems being temporarily unavailable for the pharmacy or the Part D
sponsor or its intermediary when the enrollee obtains their
prescription. Any post-reimbursement reconciliation between the network
pharmacy and plan sponsor would be a contractual matter between the
parties.
Comment: A commenter opposed a cumulative covered insulin product
applicable cost-sharing amount. The commenter stated that cost sharing
is determined on a claim-by-claim basis and interpreted the language in
the proposed rule to require that Part D sponsors track cost sharing
for extended-day supply claims and ensure that the cost sharing does
not exceed one of the cost-sharing thresholds cumulatively.
Response: We clarify that the reference to ``the cumulative
`covered insulin product applicable cost-sharing amount' '' in the
proposed rule was not intended to require assessment across multiple
covered insulin product claims. The covered insulin product's
applicable cost-sharing amount is assessed on a claim-by-claim basis.
For extended-day supplies, the applicable cost-sharing amount is
determined based on the days' supply for the individual claim. For
example, if a covered insulin product is dispensed with a days' supply
greater than 1 month, but less than 2 months, the lesser of $70, 25
percent of the MFP, or 25 percent of the negotiated price would be the
applicable cost-sharing amount. In other words, the Part D sponsor only
needs to look at the days' supply for an individual claim to determine
the applicable cost-sharing amount for a covered insulin product.
Comment: A commenter stated that monthly prescriptions for insulin
can create challenges for patients. The commenter requested that CMS
allow quarterly prescriptions for insulin.
Response: We do not prohibit prescriptions for covered insulin
products from being written and dispensed for greater than 1-month
supplies. In the proposed rule, we provided guidance on how to apply
cost sharing for extended-day supplies of covered insulin products. We
also proposed 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.
After considering the public comments we received, and for the
reasons set forth in the proposed rule and in our responses to
comments, we are finalizing the changes to Sec. Sec. 423.100 and
423.120 as proposed.
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.
As described in the proposed rule, CMS undertook consumer focus
group testing to select a name for the program 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.
As described in more detail in the proposed rule, 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 the 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 (``final part one guidance'') and
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 (``final part two
guidance''), establishing critical operational, technical, and
communication requirements for the Medicare Prescription Payment Plan
for 2025. CMS does not have authority to implement the Medicare
Prescription Payment Plan through program instruction authority beyond
2025. As such, we pursued rulemaking to codify the requirements of the
program for 2026 and subsequent years.
With only a few exceptions, we proposed to codify, without
modification, the requirements established in the final part one
guidance and the final part two
[[Page 15807]]
guidance at Sec. 423.137 for 2026 and subsequent years.
CMS's approach in codifying the requirements established in the
final part one guidance and final part two guidance is to limit changes
to the requirements already set forth and allow stakeholders to gain
experience with the program, minimize additional burden for Part D plan
sponsors, and minimize disruption for Medicare Prescription Payment
Plan participants. Instances where we proposed to make modifications to
the requirements previously finalized for 2025 include--
<bullet> Modifications to the requirements for how Part D plan
sponsors handle adjustments for Part D claims under the Medicare
Prescription Payment Plan; and
<bullet> Modifications to the timing requirements for the grace
period and initial notice of failure to pay.
We also proposed new requirements for the following three
additional topics:
<bullet> Requirements related to participation renewal 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.
In addition, we proposed to modify Sec. 423.2267(e), which lists
CMS-required materials and content for Part D plan sponsors, to include
model and standardized materials for the Medicare Prescription Payment
Plan, and to modify the list of required content for Part D plan
sponsor websites at Sec. 423.2265 to include Medicare Prescription
Payment Plan information. We further proposed 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.
Finally, section 1103 of Title I, Subpart B of the Health Care and
Education Reconciliation Act (Pub. L. 111-152) amended section 1857(e)
of the Act to add a medical loss ratio (MLR) requirement to Medicare
Part C (MA program). An MLR is expressed as a percentage, generally
representing the percentage of revenue used for patient care rather
than for such other items as administrative expenses or profit. Because
section 1860D-12(b)(3)(D) of the Act adopts by reference the
requirements of section 1857(e) of the Act, these MLR requirements also
apply to the Medicare Part D program. Consistent with the inclusion of
plan losses in the administrative expense portion of the Part D bid and
the treatment of Medicare Prescription Payment Plan unsettled balances
as administrative costs under section 1860D-2(b)(2)(E)(v)(VI) of the
Act, in the proposed rule, we proposed to modify Sec. Sec.
422.2420(b)(4)(i)(D) and 423.2420(b)(4)(i)(D) to codify the exclusion
of such balances from the MLR numerator, a policy which CMS initially
established in the final part two guidance for 2025.
Comment: Many commenters expressed support for the Medicare
Prescription Payment Plan program. Commenters stated that the program
addresses the burden of high OOP costs early in the year and can
improve access to medications and avoid financial hardship,
particularly for those on fixed incomes or managing multiple chronic
conditions. Commenters also expressed support for CMS's proposal to,
with only a few exceptions, codify, without modification, the
requirements established in the final part one guidance and final part
two guidance. A commenter expressed that the guidance was developed
after extensive stakeholder input, and the commenter believes it
reflects an appropriate balance between bureaucratic processes and a
positive consumer experience.
Response: CMS thanks the commenters for their support.
Comment: Some commenters expressed opposition to CMS's proposal to
codify the Medicare Prescription Payment Plan guidance in regulation. A
commenter requested that CMS delay implementation of the program for at
least one year to allow for additional stakeholder input, pilot
testing, and refinement of the program's design. Some commenters
requested that CMS defer codification of the program, except for
statutorily required items, until Part D plan sponsors have had more
time and experience with the Medicare Prescription Payment Plan.
Response: CMS thanks the commenters for their feedback. As noted in
the proposed rule, CMS does not have authority to implement the
Medicare Prescription Payment Plan through program instruction
authority beyond 2025. As section 1860D-2(b)(2)(E)(i) of the Act
requires that Part D plan sponsors offer the Medicare Prescription
Payment Plan for all plan years beginning on or after January 1, 2025,
CMS also does not have the authority to delay the implementation of the
Medicare Prescription Payment Plan. Although CMS is required to pursue
rulemaking to codify the program at this time, CMS has pursued an
approach of, with only a few exceptions, codifying the requirements
established in the final part one guidance and final part two guidance
at Sec. 423.137 for 2026 and subsequent years without modification in
order to allow stakeholders to gain experience with the program,
minimize additional burden for Part D plan sponsors, and minimize
disruption for Medicare Prescription Payment Plan participants.
Codifying only certain requirements would cause considerable confusion
and disruption in the administration of the Medicare Prescription
Payment Plan.
CMS remains committed to engaging with shareholders through
interview series, individual meetings, and other fora, and
incorporating feedback into future rulemaking, as applicable, as Part D
plan sponsors gain more experience with the program.
Comment: Some commenters expressed opposition to CMS making any
modifications to the Medicare Prescription Payment Plan program for
2026 and subsequent years, even certain limited modifications.
Commenters expressed that Part D plan sponsors will need time to
continue assessing and implementing the required changes and that,
given the extensive changes to the Part D program taking effect in
2025, finalizing additional, significant requirements on Part D plan
sponsors for 2026 and 2027 is premature. A commenter recommended that
CMS not impose new requirements for 2026 unless the requirements
provide Part D plan sponsors more flexibility and are optional rather
than mandatory.
Response: CMS thanks the commenters for their feedback. CMS agrees
that limiting changes to the requirements in place for 2025 will allow
stakeholders to gain experience with the program, minimize additional
burden for Part D plan sponsors, and minimize disruption for Medicare
Prescription Payment Plan participants. Accordingly, CMS is not
finalizing any requirements for real-time election or for Part D plans
to provide pharmacies with easily accessible information on a Part D
enrollee's costs incurred under the program. CMS believes that the
limited modifications to the Medicare Prescription Payment Plan
codified in this final rule will improve the efficiency of the program
and minimize disruptions for program participants. CMS has addressed
specific comments related to real-time election and automatic renewal
in section II.C.2.(c). of this final rule and comments related to
providing pharmacies with easily
[[Page 15808]]
accessible information on a Part D enrollee's costs in section
II.C.2.(i). of this final rule. CMS remains committed to engaging with
stakeholders and incorporating feedback into future rulemaking, as
applicable, as stakeholders gain more experience with the program.
Comment: A commenter expressed concern that the complexity of the
Medicare Prescription Payment Plan program could cause beneficiary
confusion. The commenter expressed concern that beneficiaries who fail
to opt in correctly or inadvertently miss payments may experience
disruptions in their access to essential medications, placing their
health at significant risk. The commenter further stated that
beneficiaries who struggle to meet their monthly installment
obligations due to unforeseen financial hardships could face increased
stress and uncertainty, potentially exacerbating existing health
disparities.
Response: CMS appreciates the commenter's feedback. CMS understands
that the Medicare Prescription Payment Plan program is complex and
believes that ongoing robust efforts to educate beneficiaries about the
program by CMS, plan sponsors, and other interested parties will be
important to ensuring that beneficiaries are appropriately informed
about the program. In 2024, CMS developed educational materials and
tools to help beneficiaries assess whether the program is right for
them and raise awareness of other financial assistance programs, such
as the Low-Income Subsidy (LIS) Program, and encouraged Part D plan
sponsors and other interested parties to use the language and examples
in the CMS-developed materials to craft their own educational
materials.
2. Proposed Provisions
a. Basis, Scope, and General Rule
Section 1860D-2(b)(2)(E)(i) of the Act requires that each
prescription drug plan (PDP) sponsor offering a prescription drug plan
and each MA organization offering a Medicare Advantage prescription
drug (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 proposed rule, CMS stated that the provision applies to all
Part D plan sponsors, including both stand-alone PDPs and MA-PD plans,
as well as Employer Group Waiver Plans (EGWPs), cost plans, and
demonstration plans. CMS further stated that for the reasons
articulated in the final part two guidance, we do not expect plans that
exclusively charge $0 cost sharing for covered Part D drugs 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 the proposed rule
and in the proposed new regulation at Sec. 423.137.
In the proposed rule, we proposed to codify at Sec. 423.137(a) the
requirements we established in the final part one guidance and final
part two 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. As explained in
more detail in the proposed rule at 89 FR 99356, 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 final
rule and in the new regulations finalized at Sec. 423.137 to the
extent that those requirements differ from those established in the
final part one guidance and final part two guidance during any portion
of the non-calendar plan year that starts in 2025 and continues into
2026.
We also proposed to codify our existing definitions first
established in the final part one guidance at Sec. 423.137(b) for plan
year 2026 and subsequent years with certain clarifications.
Specifically, at Sec. 423.137(b)(1), we proposed 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 guidance and final part two guidance, we referred to these
costs simply as ``OOP costs.'' We also proposed 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 guidance and final part two guidance.
As described in the proposed rule at 89 FR 99356 and section
II.C.2.(b) of this final 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 True Out-of-Pocket costs
(TrOOP) prior to election into the program.\14\ 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.
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\14\ TrOOP is spending on covered Part D drugs by the
beneficiary or on their behalf by certain third parties. TrOOP costs
determine when a beneficiary becomes an applicable beneficiary for
the Manufacturer Discount Program, reaches the annual OOP threshold,
and subsequently enters the catastrophic coverage phase.
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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 proposed 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, as described in more detail in section
II.C.2.(b). of this final rule, 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, 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 proposed to codify 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. (Because the LI NET sponsor is
a Part D sponsor and the LI NET contract is a PDP contract, many
existing provisions in Part 423 apply to LI NET. Certain requirements
were waived by the statute (such as dissemination of information and
formulary requirements) and some requirements were waived through
rulemaking (such as medication therapy management and quality
improvement
[[Page 15809]]
activities).) Specifically, we proposed to revise Sec. 423.2536 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. We would do this by
redesignating paragraphs (c) through (k) as paragraphs (d) through (l)
and adding the new proposed waiver at paragraph (c). In addition, we
proposed to add the materials proposed at Sec. Sec. 423.2265(b)(16)
and 423.2267(e)(45) through (51) (that is, information about the
Medicare Prescription Payment Plan on sponsor websites and forms and
notices related to the program) to the list of communication
requirements waived for the LI NET program. We proposed to do this by
revising newly redesignated Sec. 423.2536(i)(1) and (4).
Comment: A commenter expressed support for CMS's policy of not
expecting plans that exclusively charge $0 cost sharing for covered
Part D drugs 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 the proposed rule. The commenter requested that CMS also apply
that policy to dual eligible special needs plans (D-SNPs) that offer
nominal cost-sharing. The commenter anticipates that termination of the
MA Value-Based Insurance Design (VBID) model will reduce the number of
D-SNPs that can offer $0 copays for Part D drugs and expressed concern
that an LIS enrollee in a plan with Part D cost sharing could
experience higher cost-sharing in later months under the Medicare
Prescription Payment Plan if their cost sharing in the early months of
a year is shifted to the later months.
Response: CMS thanks the commenter for their support and feedback.
CMS does not expect Part D plans that exclusively charge $0 cost
sharing for covered Part D drugs to all plan enrollees to offer the
Medicare Prescription Payment Plan because there is no practical
application for the Medicare Prescription Payment Plan in Part D plans
that do not charge cost sharing. While CMS recognizes that Part D
enrollees with low cost sharing may be less likely to benefit from the
Medicare Prescription Payment Plan, under section 1860D-2(b)(2)(E)(i)
of the Act, Part D plan sponsors must provide the option to participate
in the Medicare Prescription Payment Plan to all Part D enrollees,
including subsidy eligible individuals as defined in paragraph (3)(A)
of section 1860D-14(a) of the Act. Because the statute explicitly
requires that the Medicare Prescription Payment Plan be offered to
subsidy-eligible individuals and because such beneficiaries could
determine that they would benefit from the Medicare Prescription
Payment Plan under certain circumstances, D-SNPs that offer nominal
cost sharing are required to offer the Medicare Prescription Payment
Plan to their enrollees.
Comment: A commenter expressed support for CMS's proposal to add
the Medicare Prescription Payment Plan to the list of Part D
requirements waived for the LI NET program. Another commenter expressed
support for the definitions proposed for the Medicare Prescription
Payment Plan program and stated that they add additional clarity about
the subset of costs eligible for the program.
Response: CMS thanks the commenters for their support.
Comment: A commenter requested that CMS waive Medicare Prescription
Payment Plan requirements for EGWPs, as the commenter believes the
program will add significant administrative costs without providing
meaningful benefits to EGWP enrollees.
Response: CMS appreciates the commenter's feedback but declines to
waive the requirement to offer the Medicare Prescription Payment Plan
for EGWPs. Section 1860D-22(b) of the Act and 42 CFR 423.458(c) permit
CMS to waive or modify any requirement that hinders the design of,
offering of, or enrollment in an EGWP. Under section 1860D-
2(b)(2)(E)(i) of the Act, all Part D plan sponsors must provide the
option to participate in the Medicare Prescription Payment Plan to all
Part D enrollees. Regardless of whether EGWP enrollees are less likely
to benefit from the Medicare Prescription Payment Plan than enrollees
in other types of plans, waiving the requirements of the Medicare
Prescription Payment Plan would mean that some EGWP beneficiaries who
would be likely to benefit would not be able to take advantage of the
program. CMS believes that waiving requirements for EGWPs is not
aligned with the statutory requirement that all Part D enrollees must
be provided with the option to participate in the program.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing all proposed provisions at Sec. Sec. 423.137(a) and (b) and
423.2536 without modification.
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.\15\ 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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\15\ 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
[[Page 15810]]
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.
The proposed rule discussed the specifics of the first and
subsequent month calculation for the maximum monthly cap on cost-
sharing payments.
Comment: A commenter expressed support for finalizing the program
calculations.
Response: CMS thanks the commenter for their support.
Comment: A commenter expressed concern that the program
calculations are not intuitive and may be confusing for program
participants.
Response: CMS appreciates the commenter's feedback. However,
section 1860D-2(b)(2)(E)(iv) of the Act specifies how the maximum
monthly caps on OOP cost sharing payments are to be calculated, and CMS
does not have the authority to change the statutory formula for the
maximum monthly cap.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing all proposed provisions at Sec. 423.137(c) without
modification.
c. Eligibility and Election
Under section 1860D-2(b)(2)(E)(i) of the Act, Part D plan sponsors
must provide the option to opt into the Medicare Prescription Payment
Plan to all Part D enrollees, including enrollees who are eligible for
LIS. Consistent with the statute, in the proposed rule, we proposed to
codify the 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 addition, under section 1860D-2(b)(2)(E)(v)(III)(aa) of the Act,
Part D plan sponsors may not restrict the application of the Medicare
Prescription Payment Plan benefit to specific covered Part D drugs. We
proposed 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 also 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 proposed rule, we proposed the following requirements for 2026 and
subsequent years:
<bullet> Part D plan sponsors must allow Part D enrollees to opt
into the Medicare Prescription Payment Plan prior to the plan year
(including the annual coordinated 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 plan 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 coordinated election
period and in advance of the January 1 new plan enrollment effective
date).
We also proposed requirements for election into the program. We
proposed that the Part D enrollee, or their authorized legal
representative, must complete an election request, provide the required
information to the Part D plan sponsor, and be approved by the Part D
plan sponsor to opt into the Medicare Prescription Payment Plan. As
discussed in more detail in the proposed rule, we also proposed to
require Part D plan sponsors to have specific election mechanisms
available to Part D enrollees who wish to opt into the Medicare
Prescription Payment Plan.
We further proposed that Part D plan sponsors must consider
Medicare Prescription Payment Plan election requests regardless of the
election mechanism or format provided it includes certain information
necessary to be complete, as described in the proposed rule.
In the proposed rule, for 2026 and subsequent years, we proposed to
codify the 24-hour effectuation requirement at Sec. 423.137(d)(4), but
requested comment on a potential requirement for Part D plan sponsors
to effectuate election requests received via phone or web in real-time
for 2026 or future years, including 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 expressed interest in opportunities
for pharmacists to support enrollees in using any future Part D plan
sponsor-adjudicated real-time election mechanisms at the POS.
We also outlined proposed requirements for receipt of election
requests and incomplete election requests. We further proposed
requirements for Part D plan 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 OOP to the pharmacy.
Section 1860D-2(b)(2)(E)(v)(II) of the Act requires Part D plan
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 proposed to codify requirements for mid-
year plan switches, consistent with the requirements included in the
final part one guidance for 2025. The proposed rule outlined new
requirements related to participation in the program from year to year,
a topic CMS did not address in the final part one guidance or final
part two guidance because the IRA limited CMS's program instruction
authority to a single year of the program (that is, contract year (CY)
2025). We proposed requiring Part D plan 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
coordinated election period (no later than December 7) and must include
the Part D plan sponsor's program terms and conditions for the upcoming
year.
We also addressed other program election communications and notice
requirements for Part D plan sponsors, including timing, content, and
supplemental information requirements for the election request form,
notice of election approval, and notice of denial.
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
[[Page 15811]]
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 plan 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.
Comment: A few commenters expressed support for finalizing the
effectuation timeframes for election requests, including the 24-hour
effectuation requirement for election requests made during the plan
year. A commenter requested that plans be able to make exceptions to
the 24-hour requirement, such as for effectuating election requests
received via paper form and requested that CMS exercise enforcement
discretion for effectuation timeframes. Other commenters requested the
effectuation timeframe for election requests made during the plan year
be extended to 72 hours.
Response: CMS thanks the commenters for their feedback. To ensure a
seamless election process for Part D enrollees and ensure they have
timely access to the program and their Part D prescriptions, CMS is
finalizing the requirement for Part D plan sponsors to process election
requests received during the plan year within 24 hours. Through this
requirement, CMS reiterates the importance of ensuring that Part D
enrollees, once they request to participate, are able to access the
benefits of the program as timely as possible. This is particularly
important for those who may wait to pick up a prescription until their
program participation is effectuated. Additionally, CMS emphasizes that
Part D plan sponsors can encourage those who are likely to benefit from
the program to opt in prior to the plan year or during the plan year
prior to going to a pharmacy through strong education and outreach
efforts.
In response to comments regarding operational challenges
effectuating election requests received via the paper form, CMS
acknowledges these concerns but reiterates the importance of ensuring
that Part D enrollees gain timely access to the program and their
prescriptions, regardless of the means of election request.
Comment: Many commenters expressed support for real-time election,
stating that it would reduce burden on enrollees, prevent drug
dispensing delays, and reduce prescription abandonment. Many of these
commenters acknowledged that plan-facilitated real-time election may
need to be implemented as a temporary measure but expressed a strong
preference for a pharmacy-facilitated real-time election process once
it is technologically feasible.
However, many commenters opposed requirements for real-time
election, especially in the early years of the program. These
commenters pointed to technological and operational challenges with
real-time election (both plan-facilitated and pharmacy-facilitated) and
requested additional years of program experience before considering a
real-time election requirement. In addition, some commenters expressed
concerns that real-time election processing could impose additional
pharmacy burden (due to potential workflow disruption or provision of
program education to enrollees).
Response: CMS thanks the commenters for their feedback CMS agrees
that prompt access to the program is important and supports actions by
Part D plan sponsors to prevent drug dispensing delays and reduce
prescription abandonment. However, CMS also acknowledges that there are
technological barriers to industry-wide implementation of real-time
election for 2026. As noted in the proposed rule, our research
indicates that there is no mechanism at the POS for program election
information to be documented in a manner that complies with election
requirements; technological updates would 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.
While real-time election (facilitated by Part D plan sponsors
outside of the POS) need not involve changes to the current NCPDP
Telecommunication Standard, CMS recognizes that additional information
technology systems modifications may be necessary for sponsor-
facilitated election updates to interface in real-time with the
pharmacy benefit manager (PBM) and pharmacy systems. Finally, CMS is
cognizant of potential additional burden pharmacies may face under a
real-time election option. As such, CMS is not requiring Part D plan
sponsors to effectuate election requests received via phone or web in
real-time for 2026. CMS continues to encourage Part D plan sponsors to
process election requests within timeframes shorter than 24 hours or in
real-time if they are able.
Additionally, CMS reiterates the importance of targeted outreach
prior to the plan year to identify enrollees likely to benefit from the
program in advance of any POS notifications, which will streamline the
program election process. This requirement, alongside the 24-hour
effectuation timeframe during the plan year and the required process to
retroactively apply the program to those meeting criteria for an urgent
situation, will reduce the likelihood of dispensing delays and
prescription abandonment. CMS will continue to evaluate program
operations and election processes and consider future modifications to
effectuation requirements.
Comment: Many commenters expressed support for the proposed
automatic election renewal process, stating that automatic renewal
would reduce the burden on Medicare Prescription Payment Plan
participants. Some commenters opposed the automatic renewal
requirements, instead suggesting that automatic renewal be optional for
plans to implement in the early years of the program. Some of these
commenters also suggested that plans be able to exempt some
participants from automatic renewal, such as those with unpaid cost
sharing amounts or those who appear not likely to benefit in the
upcoming year. A commenter suggested that CMS issue criteria to help
plans identify a targeted subset of participants for renewal. Another
commenter requested that participants in long-term care settings be
exempt from automatic renewal.
Response: CMS thanks the commenters for their feedback. We agree
that automatic renewal eases burden for both participants and plan
sponsors. While there may be some participants who did not meet program
thresholds for ``likely to benefit'' in the current year or who appear
not likely to benefit in the upcoming year, we believe that consistent
standards for participation renewal for all participants promotes the
cleanest implementation of the program, especially in the early years
of the Medicare Prescription Payment Plan.
Comment: Multiple commenters suggested that CMS revise the
automatic renewal requirements to extend to participants switching
plans within the same parent organization or Part D plan sponsor. A
commenter requested that CMS clarify how automatic renewal would work
with CMS-approved crosswalks.
Response: CMS thanks the commenters for their questions. The
automatic renewal requirements are generally intended to align with
existing
[[Page 15812]]
Part D program enrollment requirements. As such, if a Part D enrollee
would be required to complete a new enrollment request for the upcoming
plan year (such as when an enrollee chooses to switch between plan
benefit packages (PBPs) within the same contract), that enrollee would
also need to re-elect into the Medicare Prescription Payment Plan.
Generally, in situations in which the Part D enrollee is not required
to complete a new Part D enrollment request for the upcoming year (such
as when someone remains in the same PBP or when their PBP is part of a
consolidated renewal plan), then the enrollee's participation in the
Medicare Prescription Payment Plan would also automatically carry over
for the upcoming year.
Comment: A commenter requested that CMS clarify when the
requirement for automatic renewal would start (that is, at the end of
2025 for CY 2026 or at the end of 2026 for CY 2027).
Response: Automatic renewal requirements will take effect for the
CY 2026 plan year. As such, Part D plan sponsors will be required to
automatically renew Medicare Prescription Payment Plan participation
for enrollees who are participating in the program in 2025.
Comment: A couple of commenters requested that CMS update technical
guidance for the submission of beneficiary-level data elements into the
MARx Medicare Advantage Prescription Drug (MARx) system upon
finalization of the rule to reflect the automatic renewal policy.
Response: CMS thanks the commenters for their recommendations. Any
potential modifications to the technical guidance for CY 2026 will be
published in Fall 2025.
Comment: Many commenters supported the requirement for a separate
renewal notice, including the requirements to include the Part D plan
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. Commenters requested the
opportunity to review and provide feedback for the renewal notice
through an Information Collection Request (ICR) process. Some
commenters suggested alternative mechanisms to notify participants
about automatic renewal, such as adding language to existing annual
plan documents (such as the Annual Notice of Change (ANOC) and Evidence
of Coverage (EOC), the program notice of election approval, or the
program monthly bill). A commenter also suggested that if a separate
notice is required, it should be distributed after the annual
coordinated election period to avoid confusion during times of
increased plan switching.
Response: CMS thanks the commenters for their feedback. CMS
believes that a separate notice is important to clearly communicate to
Medicare Prescription Payment Plan participants that their program
participation will continue in the upcoming plan year. The model notice
will be incorporated into the Medicare Advantage and Prescription Drug
Programs: Part C and Part D Medicare Prescription Payment Plan Model
Documents ICR package (CMS-10882; OMB 0938-1475) and will be made
available to the public for review and comment under the standard non-
rule Paperwork Reduction Act (PRA) process which includes the
publication of 60- and 30-day Federal Register notices and the posting
of the collection of information documents on our PRA website. CMS will
also consider adding educational language related to automatic renewal
of participation to other Part D materials, such as the ANOC.
Finally, CMS appreciates the suggestion to delay the timing of the
required renewal notice until after the annual coordinated election
period to account for participants who may switch plans for the
upcoming year and thus not be eligible for automatic renewal. CMS
agrees that this will reduce beneficiary confusion and promote a more
efficient automatic renewal process. At Sec. 423.137(d)(10)(iv)(A),
CMS has modified the timing requirement for the renewal notice in this
final rule, such that the renewal notice must be sent after the end of
the annual coordinated election period but prior to the beginning of
the plan year.
Comment: A commenter requested that CMS clarify whether, given the
automatic renewal process, plans would be required to send the program
fact sheet, paper election request, and ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' to Part D enrollees currently
participating in the program.
Response: CMS appreciates the opportunity to clarify. Part D plan
sponsors are required to send only the renewal notice to Part D
enrollees who are currently participating in the Medicare Prescription
Payment Plan and will be automatically renewed for the upcoming year.
Part D plan sponsors are not required to perform ``likely to benefit''
analyses for current program participants, nor to send the ``Medicare
Prescription Payment Plan Likely to Benefit Notice.'' We also note that
although a Part D sponsor may choose to send the Medicare Prescription
Payment Plan mailing described at Sec. 423.137(m)(1) to all of its
Part D enrollees or only to a Part D enrollee who is receiving a new
membership ID card, we encourage Part D sponsors to not send the paper
enrollment form to current Medicare Prescription Payment Plan
participants to reduce potential beneficiary confusion.
Comment: A commenter requested that CMS remove requirements for
telephonic delivery of the notice of election approval during the plan
year. The commenter stated that the process adds to plan burden and is
often confusing for beneficiaries, who have already received a
confirmation number when they completed the telephone or electronic
election process.
Response: CMS thanks the commenter for their feedback. CMS agrees
that when a Part D plan sponsor is able to fully complete the election
request process in the course of a telephonic or electronic interaction
and at that same time provides the enrollee with the effective date of
their program effectuation (which must be within 24 hours of receipt)
and satisfies other notice of election approval requirements as
outlined at Sec. 423.137(d)(10)(ii), then a second telephonic
notification of election acceptance is redundant. CMS is modifying the
criteria at Sec. 423.137(d)(10)(ii)(A)(3) to reflect that exception.
In these cases, the Part D plan sponsor must still deliver the written
notice within 3 calendar days.
Comment: A few commenters expressed support for the requirements
for Part D plan sponsors to include information on the availability of
the LIS program and other financial assistance programs in the
election-related materials; a few commenters also requested that
information about financial assistance programs be added to either the
election request form or the educational materials required with the
election request form. A few commenters suggested modifications to the
requirements for the election request form, including adding language
stating that enrollees with low, stable drug costs are not likely to
benefit from the program and adding a field to differentiate election
requests for the current year versus the upcoming plan year. A
commenter requested that the period for opting into the Medicare
Prescription Payment Plan for the upcoming plan year be delayed until
December 10 (after the end of the annual coordinated election period)
to allow for plan switching to be completed before processing
elections.
[[Page 15813]]
Response: CMS thanks the commenters for their feedback and notes
that the CMS-developed Medicare Prescription Payment Plan fact sheet
contains information on programs, like the LIS program (also known as
Extra Help), that can lower costs for enrollees.\16\
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\16\ The Medicare Prescription Payment Plan fact sheet can be
accessed at <a href="http://medicare.gov/publications">medicare.gov/publications</a>.
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As stated in this final rule, Part D plan 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 plan sponsors are encouraged to use the CMS-
developed educational fact sheet to satisfy requirements to provide
supplemental information on the program. The fact sheet includes
language to help enrollees decide if they are likely to benefit from
participating in the program. With regard to the requested field to
differentiate the intended year of the election request, CMS will
consider any changes to the existing model materials through the
standard non-rule PRA process. Under section 1860D-2(b)(2)(E)(v)(II) of
the Act, 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. CMS believes that requiring Part D plan sponsors
to allow Part D enrollees to opt into the Medicare Prescription Payment
Plan prior to the plan year, including during the annual coordinated
election period for the subsequent year, simplifies the election
process for Part D enrollees.
Comment: A commenter expressed support for continuing to require
telephone and electronic election options. Some commenters suggested
that program election be integrated into Medicare Plan Finder.
Response: CMS thanks the commenters for their support and
suggestions. CMS notes that enhancements were made to Medicare Plan
Finder starting with CY 2025 to display a cost preview based on a
consumer's specific drug list, a set of consumer-selected MA or Part D
plans, and consumer-selected pharmacies, including both retail
locations and mail order options. However, CMS reiterates that
participation in the Medicare Prescription Payment Plan is an
arrangement between the Part D plan sponsor and the Part D enrollee,
and, as such, Part D plan sponsors are ultimately responsible for
managing the election process.
Comment: A few commenters expressed support for CMS's requirement
that in case of retroactive election, the Part D plan sponsor is
responsible for reimbursing the participant, not the pharmacy. A
commenter requested that the timeframe for processing retroactive
election requests be extended from 24 hours to 72 hours.
Response: CMS thanks the commenters for their support and feedback.
CMS is finalizing requirements for retroactive election requests as
proposed. With respect to retroactive election requests, CMS reiterates
the importance of ensuring that Part D enrollees, once they request to
participate, are able to access the benefits of the program as timely
as possible. CMS believes that this applies equally to a retroactive
election request as to a non-retroactive request. Accordingly, we are
finalizing this requirement as proposed.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, at Sec.
423.137(d)(9), for 2026 and subsequent years, we are finalizing the
proposed requirements related to participation renewal, with a
modification to the timing of the required notice and required
contents. The notice must be sent after the end of the annual
coordinated election period but prior to the end of the plan year; Part
D plan sponsors must include their program terms and conditions for the
upcoming plan year as part of the renewal notice or as a separate
attachment. We are also finalizing as proposed those requirements for
2026 and subsequent years at Sec. 423.137(d)(10)(ii), with one
modification. In response to comments received, we are modifying the
criteria for when an initial telephone notice of election approval is
not required. If a Part D plan sponsor is processing an election
request over the phone or electronically and at that same time provides
the enrollee with the effective date of their program effectuation
(which must be within 24 hours of receipt) and other notice of election
requirements as outlined at Sec. 423.137(d)(10)(ii), then a second
telephonic notification of election acceptance is not required. In
these cases, the Part D plan sponsor must still deliver the written
notice within 3 calendar days. We are finalizing all other provisions
as Sec. 423.137(d) as proposed.
d. Part D Enrollee Targeted Outreach
Consistent with our authority under section 11202 of the IRA and
under section 1860D-12(b)(3)(D) of the Act, in the proposed rule, we
proposed to codify the targeted outreach framework and thresholds
established in the final part one guidance and final part two guidance
at Sec. 423.137(e). 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. 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 plan
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. Therefore, in the 2025 guidance, CMS proposed requirements for
Part D plan 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. As discussed in further
detail in the proposed rule, 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.
For 2026 and subsequent years, we proposed to codify at paragraph
(e)(1)(i)(A) of Sec. 423.137 that a Part D enrollee is likely to
benefit from participating in the program if the enrollee incurs $600
or more in OOP costs for a single prescription. Additionally, at
paragraph (e)(2), we proposed to codify that Part D plan sponsors must
notify a pharmacy when a Part D enrollee incurs OOP costs for a single
prescription that equals or exceeds the $600 POS threshold.
As discussed in the proposed rule, for 2025, CMS required Part D
plan sponsors to review their Part D claims history from the first
three quarters of the year and conduct outreach to Part D enrollees who
incurred at least $2,000 in OOP costs for covered drugs through
September of 2024. Part D plan sponsors may develop supplemental
strategies for identification of Part D enrollees likely to benefit
prior to the plan year. In the proposed rule, for 2026 and subsequent
years, we proposed to codify, at
[[Page 15814]]
paragraph (e)(1)(i)(B), this likely to benefit criteria and, at
paragraph (e)(3)(i), the related requirements for Part D plan sponsor
direct outreach to identified likely to benefit prior to the plan year.
In addition to these criteria, in the final part two guidance, CMS
established a requirement for 2025 for Part D plan sponsors to put in
place reasonable guidelines for ongoing identification of Part D
enrollees likely to benefit during the plan year. We proposed to codify
this requirement for ongoing identification and notification of
enrollees for 2026 and subsequent years at paragraph (e)(3)(ii).
Based on the required analysis to fulfill requirements at paragraph
(e)(3) and any additional analysis Part D plan sponsors conduct to
identify enrollees who may be likely to benefit from this program, we
proposed to codify at paragraph (e)(4) that the Part D plan sponsor
must send the standardized ``Medicare Prescription Payment Plan Likely
to Benefit Notice'' to identified enrollees. We proposed to add this
notice as a required standardized communication material for Part D
plan sponsors at Sec. 423.2267(e)(47). Prior to the plan year, the
notification must occur no later than the end of the annual coordinated
election period (open enrollment), which is December 7 of each year. We
proposed that 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, which may be fulfilled by
including the CMS-developed fact sheet.
In the proposed rule, we proposed to codify at paragraph
(e)(4)(i)(A) of Sec. 423.137 that if Part D plan 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.
As discussed in the proposed rule, Part D plan 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 and should counsel enrollees about their participation in
the program accordingly. There are scenarios in which a Part D enrollee
is less likely to benefit, and therefore, should not be notified that
they are likely to benefit from the program. In the proposed rule, we
proposed to codify at paragraph (e)(5) the targeted outreach
exclusions.
As noted in the proposed rule, we plan to revisit these targeted
outreach 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. In
the proposed rule, we outlined an approach where CMS 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. Although CMS is not
codifying an approach to modifying targeted outreach criteria for
future years of the program, we solicited public comments on the
approach and will use feedback from interested parties to support
future policy development.
Comment: Several commenters expressed support for CMS's intent to
evaluate its targeted outreach framework and the likely to benefit
thresholds for future years based on program experience. Specifically,
a few commenters recommended that CMS use 2025 as an evaluation year to
assess the Medicare Prescription Payment Plan's current operations,
including the criteria for providing the ``Medicare Prescription
Payment Plan Likely to Benefit Notice.'' Several commenters expressed
support for CMS's proposal to maintain the current framework for
targeted outreach to enrollees that are likely to benefit, including
those who reached the $2,000 threshold by September of the previous
plan year. A commenter stated that the proposal should help to minimize
pharmacies' administrative burdens.
Response: CMS appreciates the commenters' support and feedback. As
outlined in the proposed rule, CMS plans to revisit these requirements
in future rulemaking, after gaining program experience and evaluating
program data and operations.
Comment: A few commenters recommended that CMS reevaluate the
identification criteria for likely to benefit to exclude LIS members,
dually eligible individuals, or fully integrated dual eligible special
needs plan (FIDE SNP) and highly integrated dual eligible special needs
plan (HIDE SNP) members who already have limited cost-sharing
responsibilities. A commenter recommended CMS narrow the scope of the
program and relieve administrative burden on Part D plan sponsors by
setting a higher threshold. The commenter stated that as currently
implemented, any member with any amount of cost-sharing may elect into
the program. Another commenter recommended CMS adopt a lower threshold
for determining which patients will likely benefit from participation
in the program. The commenter stated that the pharmacy POS notification
threshold is too high and should take into account the total cost of
all prescriptions a patient collects at the pharmacy that day and their
OOP costs to date.
Response: CMS thanks the commenters for their feedback. Under
section 1860D-2(b)(2)(E)(i) of the Act, Part D plan sponsors must
provide the option to opt into the Medicare Prescription Payment Plan
to all Part D enrollees, including enrollees who are eligible for LIS.
As discussed in the proposed rule, individuals with low, stable drug
costs (such as LIS enrollees) are not likely to benefit from the
program. Therefore, Part D plan sponsors are encouraged to provide
support tailored to beneficiaries' unique situations and clearly
communicate to enrollees when it appears that they are less likely to
benefit from the program (for example, enrollees with low-to-moderate
recurring OOP drug costs). Additionally, as discussed in the proposed
rule, CMS has established requirements for Part D plan sponsors to
provide information on the LIS program as part of their Medicare
Prescription Payment Plan materials, including in the billing
statement, notice of election approval, and on their websites. For the
pharmacy POS notification, CMS chose a single prescription drug cost
POS threshold of $600 because this approach strikes the best balance
between identifying Part D enrollees with a very high likelihood (~98
percent) of benefiting from the Medicare Prescription Payment Plan,
while reducing the risk of identifying Part D enrollees for whom the
program may not be as helpful.\17\
---------------------------------------------------------------------------
\17\ In the final part one guidance, CMS summarized key findings
from an analysis of POS thresholds ranging from $400 to $1,000. The
proportion of identified enrollees who would benefit from the
program ranged from 90 percent to greater than 99 percent.
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[[Page 15815]]
Comment: A few commenters recommended that CMS assess the efficacy
of the targeted outreach criteria by investigating and publishing data
on OOP costs of those enrollees who are likely to benefit and who elect
into the program and of those enrollees who were notified that they
were likely to benefit but did not elect into the program.
Response: CMS appreciates the commenters' suggestions. As stated in
the proposed rule, CMS requires Part D plan sponsors to report
information related to the Medicare Prescription Payment Plan on
prescription drug event (PDE) records and through reporting
requirements at the beneficiary level through the MARx system and
contract-PBP levels through the Health Plan Management System (HPMS).
CMS will use these data to assess any potential revisions to the POS
notification threshold in future years and will consider opportunities
for publicly sharing the data.
Comment: A commenter recommended that CMS conduct broader outreach
to beneficiaries beyond the targeted outreach notification
requirements. The commenter stated that broad outreach is important for
many patients who may not fall into the likely to benefit parameters
but could still see significant positive impacts from the program.
Response: CMS thanks the commenter for their feedback. CMS agrees
that educating beneficiaries about the program is important for its
success. In advance of the implementation of the program on January 1,
2025, CMS developed new educational resources and updated existing Part
D materials, such as the ANOC, EOC, and Explanation of Benefits (EOB),
to inform Part D enrollees about the program. CMS's education and
outreach efforts discussed in the proposed rule and this final rule are
not comprehensive of the various activities CMS is undertaking to
educate Part D enrollees and other stakeholders about the program.
Supporting broad awareness of the Medicare Prescription Payment Plan
is, however, a shared responsibility between CMS and Part D sponsors.
To ensure all prospective and current Part D enrollees are aware of the
program, CMS has also established general Part D plan sponsor outreach
and education requirements, which are discussed in further detail in
the proposed rule and this final rule. After considering the comments
we received and for the reasons outlined in the proposed rule and our
responses to comments, we are finalizing our proposed provisions at
Sec. 423.137(e) without modification.
e. Termination of Election, Reinstatement, and Preclusion
Section 1860D-2(b)(2)(E)(v)(IV)(aa) of the Act requires a Part D
plan sponsor to terminate an enrollee's Medicare Prescription Payment
Plan participation if that enrollee 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 enrollee from opting into the
Medicare Prescription Payment Plan in a subsequent year if the enrollee
fails to pay the amount billed for a month as required under the
program.
We proposed standards for termination of election, reinstatement,
and preclusion consistent with the statutory requirements. CMS
established procedures for voluntary termination of election, under
which Part D plan sponsors are required to have a process to allow a
participant who has opted into the Medicare Prescription Payment Plan
to opt out during the plan year. For 2025, we required Part D plan
sponsors to 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
proposed to maintain the requirement for Part D plan 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 solicited
public comment on this proposal.
When a participant opts out of the Medicare Prescription Payment
Plan, a Part D plan sponsor must provide the individual with a notice
of voluntary termination after the individual notifies the Part D plan
sponsor that they intend to opt out under the Part D plan sponsor's
established process. At Sec. 423.137(f)(2)(i)(A)(2)(ii) of the
proposed rule, we outlined required contents for the notice of
voluntary termination. As discussed in the proposed rule, a Part D plan
sponsor must offer the enrollee terminating their program participation
the option to repay the full outstanding amount in a lump sum but is
prohibited from requiring full immediate repayment from a participant.
For 2026 and subsequent years, we proposed to codify the voluntary
termination process and notice requirements at Sec. 423.137(f)(2)(i)
and to add the voluntary termination notice as a required material and
content for Part D plan sponsors at Sec. 423.2267(e)(50).
We also proposed standards for involuntary termination, 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 and requirements for reinstatement. If an individual fails to
pay the billed amount within 15 calendar days of the payment due date,
the Part D plan sponsor must send the individual an initial notice of
failure to pay. The required contents of the notice of failure to pay
are detailed in the proposed rule and at Sec.
423.137(f)(2)(ii)(C)(2)(i). If the individual fails to pay the amount
due by the end of the grace period, the Part D plan sponsor must send
the individual an involuntary termination notice explaining that the
individual has been terminated from the Medicare Prescription Payment
Plan. We proposed that 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 contents detailed in the proposed rule and
at Sec. 423.137(f)(2)(ii)(D)(2). For 2026 and subsequent years, we
proposed 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 plan sponsors at Sec. 423.2267(e)(48) and (49). For the grace
period, we proposed 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, for 2025, we
required 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. For
2026 and subsequent years, we proposed 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. As discussed in the proposed
rule, we believe this would simplify the timing requirements for the
notice of nonpayment and the required grace period. We solicited
comment on the proposed change.
We proposed 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
[[Page 15816]]
participant is within their grace period from the prior year, the Part
D plan 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 plan
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
plan 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. As discussed in the proposed rule, CMS proposed to adopt 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. A Part D plan 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. For 2026 and subsequent
years, we proposed to codify these grace period and reinstatement
requirements at Sec. 423.137(f)(3).
In the proposed rule, we clarified that, consistent with the
statute, a Part D plan 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
plan sponsor than the Part D plan 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 plan sponsor. We also stated that preclusion may
extend beyond the immediate subsequent plan year if a Part D enrollee
remains in a plan offered by the same Part D plan sponsor and continues
to owe an overdue balance. For 2026 and subsequent years, we proposed
to codify requirements related to preclusion of election in a
subsequent plan year at Sec. 423.137(f)(4).
We proposed to prohibit Part D enrollment penalties for failure to
pay a Medicare Prescription Payment Plan amount billed. Additionally,
we outlined 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. We also proposed 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. For 2026 and
subsequent years, we proposed to codify these requirements at Sec.
423.137(f)(5) and (6).
Comment: Several commenters expressed support for CMS's proposal to
clearly identify the grace period start date and simplify the grace
period timing requirements by changing the start of the grace period to
the first day of the month following the issuance of the initial
failure to pay notice. A commenter stated that the change will provide
a better member experience and simplify plan sponsor operations and
management of the program. However, a few commenters expressed
opposition to the proposal, noting that it will extend the grace period
by up to a month from the initial claim in some cases. The commenters
expressed concern that this will allow for potential program abuse by
extending the time to accumulate unpaid claims before Part D plan
sponsors can end beneficiaries' participation in the program. Another
commenter stated that the grace period should begin on the due date of
missed payment because this is a date that is known by all parties.
A commenter expressed opposition to the proposed grace period
length and recommended CMS shorten the minimum grace period to reduce
potential risk for non-payments.
Response: CMS thanks commenters for their feedback. CMS will
continue to engage stakeholders on issues related to implementation and
program integrity. While CMS appreciates the recommendation to have the
grace period begin on the due date of the missed payment, we do not
agree with the suggestion. Requiring the grace period to begin on the
first day of the month following the date on which the initial notice
is sent simplifies the program requirements, reducing the burden on
Part D plan sponsors.
Comment: A few commenters recommended that CMS add information
about retroactive LIS eligibility to the notice of voluntary
termination, notice of failure to pay, involuntary termination notice,
and billing statement in order to provide timely information about
accessing LIS assistance. A commenter recommended that the involuntary
and voluntary termination notices for the program include reminders to
beneficiaries to continue to pay monthly Part D premiums to maintain
drug coverage.
Response: CMS thanks commenters for their feedback. As discussed in
the proposed rule, CMS has established requirements for Part D plan
sponsors to provide information on the LIS program as part of their
Medicare Prescription Payment Plan materials. Part D plan sponsors are
required to include general information about the LIS program,
including how LIS enrollment for eligible individuals is likely to be
more advantageous than participation in the Medicare Prescription
Payment Plan, on their websites. In addition, the notice of election
approval must include an overview of other Medicare programs that can
help lower costs, including the LIS Program (also known as 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. Additionally, CMS notes that
the involuntary termination and voluntary termination notices are both
required to include a statement clarifying that the notice only applies
to participation in the Medicare Prescription Payment Plan.
Comment: Several commenters expressed concern about the proposed
requirement that voluntary terminations take effect within 24 hours.
They recommended that CMS extend the timeframe for the effective date
of termination to 3 business days or 72 hours from the time the plan
sponsor receives the voluntary termination request to accommodate the
need for greater flexibility in processing times in some cases,
including weekends and holidays. A commenter stated that changing the
requirement to 3 business days would provide plan sponsors with
adequate time to process the request within the allotted time, provide
uniformity across the industry for the program, and simplify data
submission processes. A few commenters expressed support for the 24-
hour timeframe for the effective date of termination. A commenter
stated that CMS has not specified the termination events that fall
within the 24-hour requirement. The commenter recommended that CMS
provide guidance on the effective program termination date for all plan
disenrollment events.
[[Page 15817]]
Response: CMS thanks commenters for their feedback. While the 24-
hour requirement aligns with the required timeframe for processing
election requests during the plan year, CMS agrees that extending the
timeframe reduces burden on Part D plan sponsors while still ensuring a
timely response to opt out requests during the plan year. Consequently,
we are modifying our proposal of 24 hours and finalizing the
requirement as 3 calendar days. We are not adopting the recommendation
of 3 business days as suggested by a few commenters in order to
simplify program requirements by making all timeframe requirements in
calendar days. All scenarios in which the Part D enrollee requests to
voluntarily terminate their participation in the program must be
processed within the 3-calendar day window. CMS is not providing
guidance on the effective date for Part D plan sponsors to process
involuntary terminations at this time but continues to welcome
stakeholder feedback on the issue.
Comment: A commenter stated that patients and pharmacies are
concerned that a plan would attempt to collect the unpaid balance at
the pharmacy counter after the required 2-month grace period. The
commenter recommended that CMS make it easy for beneficiaries and
pharmacists to file a complaint with CMS if they suspect incorrect
cost-sharing calculations and wrongful termination from the program.
Another commenter expressed support for proposals to protect enrollees
from improper termination.
Response: CMS appreciates the commenters' feedback and recognizes
concerns about protecting beneficiaries from wrongful termination. As
described in the proposed rule, 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.
Additionally, CMS tracks plan grievances and beneficiary complaints
entered in the Medicare Complaints Tracking Module (CTM) to assess
compliance with all Medicare Prescription Payment Plan requirements and
ensure program integrity.
Comment: A commenter recommended that the calculation in the first
paragraph of the model notice of failure to pay be aligned with the
changes in the final rule and provide the updated model as soon as
possible.
Response: CMS thanks the commenter for their suggestion. CMS issued
model materials that Part D enrollees can use to fulfill the failure to
pay, involuntary termination, and voluntary 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. We will make any
necessary changes to align the existing model materials with this final
rule through the standard non-rule PRA process, which includes the
publication of 60- and 30-day Federal Register notices.
Comment: A commenter stated that in section 80.3 of the final part
one guidance, CMS states that ``preclusion is only permitted in plans
that are offered by the same parent organization.'' The commenter
recommended that CMS aligns the language in the proposed rule with the
final part one guidance by replacing ``Part D sponsor'' with ``parent
organization'' to provide additional clarity and to ensure preclusion
is applied consistently by Part D plan sponsors. Another commenter
stated that the proposal for Sec. 423.137(f)(4) may be partially
unenforceable. The commenter observed that section 1860D-
2(b)(2)(E)(v)(IV) of the Act states that ``if an enrollee fails to pay
the amount billed for a month as required under this subparagraph [. .
.] the PDP sponsor or MA organization may preclude the enrollee from
making an elec
[…truncated; see source link]Indexed from Federal Register on April 15, 2025.
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