Inflation Reduction Act Creates Installment Payment Option for Medicare Part D Enrollees

by Prof. Robert Bloink and Prof. William H. Byrnes

The Inflation Reduction Act of 2022 made a number of changes that are only now starting to become effective. Many changes impact the rights of Medicare beneficiaries going forward. One of the more significant changes that becomes effective in 2025 places a $2,000 limit on the out-of-pocket pocket expenses that a Medicare Part D enrollee will have to pay for prescription drugs. In connection with the $2,000 cap on prescription drug costs, Medicare has created a new program to help enrollees in Part D coverage pay for the expenses for which they remain responsible. The plan is called the Medicare Payment Prescription Plan, or MPPP. The MPPP is much more complex than many enrollees realize—advisors may wish to start learning about the program now so that they can help clients maximize its value going forward.

Inflation Reduction Act Changes

The Inflation Reduction Act made several notable changes to reduce prescription drug costs. Individuals receiving catastrophic coverage are no longer required to cover their otherwise applicable cost-sharing requirements for prescription drugs. Insulin costs are capped at $35 per month. The law also eliminates cost sharing for recommended vaccines when an individual has Part D coverage.

Beginning in 2025, anyone with Medicare Part D coverage will have their prescription drug costs capped at $2,000. While the $2,000 cap will reduce the individual’s costs over the year as a whole, many enrollees are likely to have very high prescription drug costs early in the year. For this reason, the MPPP was also created.

Medicare Payment Prescription Plan: The Basics

The Medicare Payment Prescription Plan gives Medicare Part D enrollees the option of paying for prescription drug costs in monthly installment payments throughout the year, rather than paying in full each time they have prescriptions refilled. Medicare Part D will instead pay the pharmacy, and then send a bill to the individual enrollee on a monthly basis.

Any individual with Part D coverage can enroll in the MPPP, whether their coverage is standalone Part D coverage or part of a Medicare Advantage plan.

Pharmacies are required to notify Part D enrollees about the MPPP option every time enrollees have a single prescription cost that requires at least $600 in out-of-pocket payments (the Part D plan will notify the pharmacy when this obligation arises). The pharmacy, however, won’t have information about the MPPP aside from the basic notification that the individual is “likely to benefit” from the MPPP. The enrollee receives that information from the Part D plan itself.

The plan itself may also send an election form when an individual is eligible to participate in the MPPP and likely to benefit, whether with the individual’s 2025 plan card or separately. Importantly, it’s the individual’s responsibility to elect to participate in the MPPP (there will be no automatic enrollment once the individual is eligible).

The MPPP option is only available with respect to Medicare Part D-covered prescription drugs. Prescriptions provided by a doctor in connection with Part B coverage are not covered, nor is durable medical equipment.

Enrollees can opt in prior to the plan year or at any time during the plan year. Part D sponsors will be required to process requests to participate in the MPPP within 24 hours of the election if the request is made during the plan year. If the request is made prior to the plan year, they have ten days to process the request.

The amount of the individual’s MPPP bill will be calculated by the Part D plan and can vary from month to month if the individual adds a new prescription. If the individual misses a payment, the Part D plan will issue notifications about the missed payment and must offer a grace period to pay. However, they can terminate the enrollee’s participation in the MPPP and require full payment if the enrollee still does not pay the amount due.

The individual enrollee also has the right to opt out of the program once they have elected to participate. For example, if keeping track of another monthly bill becomes more of a hassle than a benefit, the individual can always decide to opt out and pay their remaining balance.

Conclusion

The MPPP, in the end, is not designed to save enrollees additional money. The entire point is to spread the costs of the enrollee’s prescription drugs over a number of months to reduce the financial burden. Medicare will be sending information to enrollees to help them determine whether the MPPP is right for them, so clients should be advised to pay close attention to any Medicare materials that they receive in the mail.

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