Medicare Cost Smoothing Fact Sheet

Submitted: October 15th, 2024

Fact Sheet: New Medicare Part D Program for Spreading Out-of-Pocket Prescription Drug Costs

The new Medicare Part D program presents a transformative opportunity for older persons living with HIV, enabling them to manage their prescription drug costs more effectively. As the rollout approaches, continuous education and outreach will be vital to ensuring beneficiaries can navigate this change successfully.

Overview of the Program 

Beginning January 2025, Medicare Part D prescription drug plans, including stand-alone and Medicare Advantage Part D plans, will implement a new cost-smoothing program formally known as the Medicare Prescription Payment Plan (M3P). This initiative, established under the Inflation Reduction Act of 2022, allows beneficiaries to spread their out-of-pocket (OOP) prescription drug costs evenly throughout the plan year, capped at $2,000 for calendar year 2025.

This program has the potential to significantly improve adherence to medications for older persons living with HIV by mitigating the financial burden associated with their ongoing treatment regimens. This is crucial for maintaining health outcomes in this population, who may rely on multiple prescriptions.

Key Mechanics of the Program:

• Opt-In Process: Starting October 15, 2024, all Medicare Part D plans must provide enrollees with the option to opt into M3P during the Medicare Open Enrollment period. Participation is voluntary; however, beneficiaries must actively opt in using multiple mechanisms, including online applications, paper forms, and phone calls.
• Monthly Billing: Enrollees participating in the program will pay $0 at the pharmacy counter for covered Part D drugs. Instead, plan sponsors will pay the OOP costs upfront and send monthly bills to beneficiaries. This shift is designed to simplify financial management for older adults, many of whom are on fixed incomes.
• Notification to Beneficiaries: Prior to the plan year, sponsors must identify beneficiaries likely to benefit from M3P based on previous OOP costs. For those who experience high drug costs early in the year, the program offers an accessible way to manage these expenses.

Impact on Older Persons with HIV:

• Increased Adherence: The potential for improved medication adherence is significant, especially for older persons with HIV who may face high out-of-pocket costs due to multiple medications. By spreading costs throughout the year, the program may help ensure that individuals do not forgo necessary treatments due to upfront expenses.
• Considerations for Participation: While the program offers many advantages, not all beneficiaries will benefit equally. Those already receiving low-income subsidies or participating in Medicare Savings Programs may find their costs are already low and may not see substantial advantages from M3P. Importantly, beneficiaries can opt out of the program at any time but must repay any outstanding amounts incurred.

Concerns for Older Persons Living with HIV:

• Hidden Costs and Copays: While the program aims to reduce out-of-pocket costs at the pharmacy counter, there may be hidden costs associated with copays that are not fully disclosed at the time of enrollment. Older persons living with HIV may face additional financial burdens due to higher copayments for specialty medications, which could exceed the $2,000 cap. 

These unexpected expenses may lead to challenges in adhering to prescribed treatments, impacting their overall health and well-being.

• Increased Utilization Management: There is a concern that plans may implement stricter utilization management strategies under the guise of cost control, which could hinder access to necessary treatments. Despite the promise of coverage, OPWH may encounter barriers such as prior authorizations, step therapy requirements, and restrictive formularies that could delay or deny access to essential medications.

Such management tactics can result in increased administrative burdens for healthcare providers and may discourage patients from seeking necessary care.

Education and Outreach:

• The Centers for Medicare & Medicaid Services (CMS) will develop educational materials to assist beneficiaries in understanding the new program and its benefits. This outreach will include tools for beneficiaries to assess their eligibility and decide whether to enroll in M3P. However, there are concerns that these educational efforts may not fully address the complexities involved in enrollment and billing processes.

Medicare Plan Finder

The Medicare Plan Finder currently lacks detailed information regarding prior authorization, step therapy, and related issues that beneficiaries may face. Moving forward, there is an opportunity for collaboration among advocacy organizations to enhance the Plan Finder’s capabilities. By working together, organizations can implement concrete steps to ensure that individuals receive the necessary knowledge and support through the Plan Finder, facilitating better access to healthcare resources.

For more information on the Medicare Prescription Payment Plan and its implementation, please visit CMS.gov.

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