Buy Now, Pay Later: CMS Medicare Prescription Payment Plan (M3P)

It’s the first of the year and you haven’t paid down your new deductible and, obviously, are not yet in the donut hole for your Medicare Part D prescription drug plan. Your first prescription has a whopping big cost-sharing requirement that will quickly clear out your bank account. So, what do you do?

Well, if it’s 2025, you opt to pay down the amount you owe over the remainder of the year. This, in short, is the promise of the new Medicare Prescription Payment Plan (M3P), a provision of the Inflation Reduction Act. The new policy is intended to ease the pain of the ever-increasing cost of prescription drugs.

What the M3P Provides

Beginning in 2025 Medicare beneficiaries participating in the plan will have the option to receive their prescriptions without paying their cost-sharing at the pharmacy. Drug plan sponsors, including standalone PDPs and Medicare Advantage MAPD plans, will then bill the beneficiary in monthly installments over the course of the year for their cost-sharing requirement. Pharmacies get paid according to the current prompt-pay requirements. (For a refresher on how nursing homes and pharmacies get paid, see this post.)

Who Is Most Likely to Benefit?

In CMS’ Fact Sheet on the program, the agency notes that the beneficiaries most likely to benefit from enrollment in the M3P are those who face high cost sharing early in the year, because they have not yet satisfied their deductible requirements for their plan. Medicare beneficiaries who qualify for Low-Income Subsidies (LIS) are better off taking advantage of those subsidies than enrolling in this new program.

CMS Guidance Documents

CMS will release proposed and final guidance documents for implementation of this program in 2025 and will provide future-year guidance through notice and comment rulemaking. The first guidance has been finalized and CMS has issued the part two draft guidance. The comment period for the part two guidance expired on March 15, and CMS will follow up with the final version in the future.

Guidance documents seek to address issues such as communicating the new program to Medicare enrollees, the calculation of enrollee payments, pharmacy payment requirements by the plans, and requirements for enrollment, termination, and reinstatement.

Will M3P Help?

In the days before credit cards were popular, most people paid cash when making routine purchases. Most consumers budgeted for large expenses and waited until they had sufficient money before making a purchase. With the increased availability of credit, sellers were able to sell more, and charge more, for products that consumers might otherwise not be able to afford.

The general consensus in healthcare is that prescription drugs cost more than ever (and that PBMs aren’t helping). More people have trouble affording the medicines that will improve their health. If the M3P serves to reduce the burden on consumers to pay for their medications all at once, will public pressure to reduce the cost decrease? Will that make it easier for manufacturers to continue to raise drug costs if consumers are not complaining as loudly?

The Inflation Reduction Act gave CMS the authority to negotiate prices of some Medicare drugs beginning in 2026, and time will tell how successful that effort will be. Perhaps the lowered cost of some drugs, combined with the ability for consumers to pay off their cost sharing amounts, will lead to some moderation of the impact of prices on access to necessary treatments. Time will tell.

Written by:
Paul Baldwin
Baldwin Health Policy Group
Paul Baldwin

Paul’s pharmaceutical industry experience in public and government affairs led to becoming Executive Director of the Long Term Care Pharmacy Alliance, helping lead the industry through the Medicare Modernization Act and creation of the prescription drug benefit. Paul was VP of Public Affairs for Omnicare before founding Baldwin Health Policy Group.

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