42 C.F.R. § 423.137 – Medicare Prescription Payment Plan.

(a) General. For plan years beginning on or after January 1, 2026, or, 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, each PDP sponsor offering a prescription drug plan and each MA organization offering an MA-PD plan must provide to any enrollee of such plan, including an enrollee who is a subsidy eligible individual (as defined at § 423.4), the option to elect with respect to a plan year to pay $0 cost sharing at the point of sale and pay cost sharing under the plan in monthly amounts that are capped in accordance with this section.
(b) Definitions. For the purposes of this section, the following definitions apply:
1. (1) OOP costs for the Medicare Prescription Payment Plan means the out-of-pocket (OOP) cost sharing amount the Part D enrollee is directly responsible for paying.
  1. (i) For the subsequent month calculation of the Part D cost sharing incurred by the Part D enrollee, it includes those Part D cost sharing amounts that the enrollee is responsible for paying after taking into account amounts paid by third-party payers.
  2. (ii) It does not include the covered plan pay amount or other costs defined under section 1860D-2(b)(4)(C) of the Act.
2. (2) Remaining OOP costs owed by the participant means the sum of out-of-pocket costs for the Medicare Prescription Payment Plan that have not yet billed to the program participant. For example, if a Medicare Prescription Payment Plan participant incurs $2,000 in January 2025 and is billed $166.67, the remaining OOP costs for the Medicare Prescription Payment Plan are $2,000−$166.67 = $1,833.33.
(c) Calculation of the maximum monthly cap on cost-sharing payments. For each month in the plan year for which an enrollee in a PDP or an MA-PD plan has made an election to participate in the Medicare Prescription Payment Plan, the PDP sponsor or MA organization must determine a maximum monthly cap (as defined in paragraph (c)(1) of this section) for such enrollee.
1. (1) Enrollee monthly payments. For each month an enrollee is participating in the Medicare Prescription Payment Plan, the PDP sponsor or MA organization shall bill such enrollee an amount (not to exceed the maximum monthly cap) for the out-of-pocket costs of such enrollee in such month.
  1. (i) First month maximum monthly cap calculation. For the first month for which the enrollee has made an election to participate in the Medicare Prescription Payment Plan, the maximum monthly cap is an amount determined by calculating the annual out-of-pocket threshold specified in section 1860D-2(b)(4)(B) of the Act minus the incurred costs of the enrollee as described in section 1860D-2(b)(4)(C) of the Act; divided by the number of months remaining in the plan year.
    1. (A) When the out-of-pocket costs incurred in the first month of program participation are less than the maximum monthly cap defined in this paragraph (c)(1)(i), the PDP sponsor or MA organization must bill the participant the lesser of the participant's actual out-of-pocket costs or the first month's maximum monthly cap.
    2. (B) When an enrollee opts into the Medicare Prescription Payment Plan prior to the start of the plan year, the calculation described in this paragraph (c)(1)(i) applies to their first month of active coverage within the plan year.
  2. (ii) Calculation of maximum monthly cap in subsequent months. For subsequent months in the plan year, the maximum monthly cap is an amount determined by calculating the sum of any remaining out-of-pocket costs owed by the enrollee from a previous month that have not yet been billed to the enrollee and any additional out-of-pocket costs incurred by the enrollee; divided by the number of months remaining in the plan year.
2. (2) Eligible out-of-pocket costs. The calculations described in paragraphs (c)(1)(i) and (ii) of this section apply only to covered Part D drugs, as defined at § 423.100.
3. (3) Months remaining in the plan year. For the calculations described in paragraphs (c)(1)(i) and (ii) of this section, the number of months remaining in the plan year includes the month for which the cap is being calculated.
4. (4) Impact on true out-of-pocket cost accumulation. Participation in the Medicare Prescription Payment Plan must have no impact on true out-of-pocket cost accumulation. Costs defined under section 1860D-2(b)(4)(C) of the Act incurred under the Medicare Prescription Payment Plan must still be treated as incurred based on the date each Part D claim is adjudicated.
5. (5) Prescriptions for an extended day supply. For participants who fill prescriptions for an extended day supply, their OOP costs for the Medicare Prescription Payment Plan for those prescriptions must be attributed to the month the prescription was filled and not be pro-rated over the months covered by the prescription.
6. (6) Mid-year plan switching. When an individual opts into the Medicare Prescription Payment Plan after switching plans midyear, the new Part D sponsor must calculate the individual's monthly cap for the first month of participation under the new plan using the formula for the calculation of the maximum monthly cap in the first month.
(d) Eligibility and election. An individual is eligible for the Medicare Prescription Payment Plan if they are enrolled in a Part D plan and have not been precluded from participation due to failure to pay, as described in paragraphs (f)(2)(ii) and (f)(5) of this section. LIS-eligible Part D enrollees are eligible to participate in the program. The requirements described in this paragraph (d) are applicable beginning October 1, 2025, with respect to eligibility and election in the Medicare Prescription Payment Plan for 2026.
1. (1) Election. A Part D sponsor must allow any Part D enrollee, including those who are LIS-eligible, to opt into the program prior to the beginning of the plan year or at any point during the plan year. A Part D enrollee must also be allowed to opt into the program in advance of a new plan enrollment effective date, including during any of the following:
  1. (i) The annual coordinated election period for the subsequent plan year.
  2. (ii) The Part D initial enrollment period.
  3. (iii) Part D special election periods.
2. (2) Format of election requests. A Part D sponsor must allow any Part D enrollee or a Part D enrollee's authorized legal representative acting on behalf of the enrollee to opt into the program using a paper or electronic election request form or through a telephone call. Part D sponsors must process any election request regardless of format.
  1. (i) Paper election requests. Paper election requests are considered received on the date and time:
    1. (A) The Part D sponsor initially stamps a document received by regular mail (that is, U.S. Postal Service); or
    2. (B) A delivery service that has the ability to track when a shipment is delivered (for example, U.S. Postal Service, UPS, FedEx, or DHL) delivers the document.
  2. (ii) Telephonic election requests. Telephonic election requests are considered received on the date and time that either of the following occurs:
    1. (A) The verbal request is made by telephone with a customer service representative.
    2. (B) A message is left on the Part D sponsor's voicemail system if the Part D sponsor utilizes a voicemail system to accept requests or supporting statements after normal business hours.
  3. (iii) Electronic election requests. An electronic election request is considered received on the date and time a request is received through the Part D sponsor's website. This is true regardless of when a Part D sponsor ultimately retrieves or downloads the request.
3. (3) Completion of election request. For an election request to be considered complete, the Part D sponsor must receive all of the following:
  1. (i) The name of the Part D enrollee.
  2. (ii) The Medicare ID number of the Part D enrollee.
  3. (iii) The Part D enrollee's or their authorized legal representative's agreement to the Part D sponsor's terms and conditions for the program (signature or, in the case of telephonic requests, verbal attestation).
4. (4) Processing an election request—(i) Prior to plan year. Part D sponsors must process election requests received prior to the plan year within the following timeframes:
  1. (A) Within 10 calendar days of receipt, process a complete election request as specified in paragraph (d)(3) of this section.
  2. (B) Within 10 calendar days of receipt of an incomplete election request, contact the Part D enrollee to request the necessary information to process the request as specified in paragraph (d)(3) of this section.
  3. (C) If information necessary to consider the request complete, as required at paragraph (d)(3) of this section, is not received within 21 calendar days of the request for information, the Part D sponsor may deny the request.
  4. (ii) During a plan year. Part D sponsors must process election requests received during a plan year within the following timeframes:
    1. (A) Within 24 hours of receipt, process a complete election request, as specified in paragraph (d)(3) of this section.
    2. (B) Within 24 hours of receipt of an incomplete election request, contact the Part D enrollee to request the necessary information to process the request, as required in paragraph (d)(3) of this section.
    3. (C) If information necessary to consider the request complete, as required at paragraph (d)(3) of this section, is not received within 21 calendar days of the request for information, the Part D sponsor may deny the request.
    4. (D) In the event a Part D sponsor fails to process the request within 24 hours due to no fault of the Part D enrollee, the Part D sponsor must—
      (1) Process a retroactive election effective on the date on which the enrollee should have been admitted into the program; and
      (2) Reimburse the enrollee for any cost-sharing paid on or after that date within 45 calendar days and include those amounts, as appropriate, in the program calculations.
5. (5) Inclusion of all covered Part D drugs once in the program. Once a participant has opted into the program, cost sharing for all covered Part D drugs must be included in the program.
6. (6) Retroactive election.
  1. (i) A Part D sponsor must have in place a process to effectuate a retroactive election into the Medicare Prescription Payment Plan if both of the following conditions are met:
    1. (A) The Part D enrollee believes that any delay in filling the prescription(s) due to the 24-hour timeframe required to process their request to opt in may seriously jeopardize their life, health, or ability to regain maximum function.
    2. (B) The Part D enrollee requests retroactive election within 72 hours of the date and time the claim(s) were adjudicated.
  2. (ii) The Part D sponsor must process the reimbursement for all cost sharing paid by the enrollee for the prescription and any covered Part D prescription filled between the date of adjudication of the claim and the date that the enrollee's election is effectuated within 45 calendar days of the election date.
  3. (iii) If the Part D sponsor determines that an enrollee failed to request retroactive election within the required timeframe, it must promptly notify the individual of its determination and provide instructions on how the individual may file a grievance, as required under paragraph (h)(2) of this section.
7. (7) Retroactive LIS eligibility. A Part D sponsor must develop standardized procedures for determining and processing reimbursements for excess Medicare Prescription Payment Plan payments made by program participants who become LIS eligible and that meet requirements specified at §§ 423.800(c) and (e) and 423.466(a).
8. (8) Mid-year plan switching. When a Part D enrollee switches Part D plans, whether offered by the same or a different Part D sponsor, during the plan year or is reassigned by CMS, the Part D sponsor of the new Part D plan is not permitted to automatically sign up the individual for the Medicare Prescription Payment Plan under the new plan but must allow the individual to opt into the program. Part D plan has the definition established at § 423.4.
  1. (i) The Part D sponsor of the prior Part D plan must offer the participant the option to repay the full outstanding amount in a lump sum. If the individual chooses to continue paying monthly, the Part D sponsor must continue to bill the participant monthly based on the participant's accrued OOP costs for the Medicare Prescription Payment Plan while in the program under that sponsor's Part D plan. The Part D sponsor cannot require full immediate repayment.
  2. (ii) Part D enrollees may only be precluded from opting into the program under a new Part D plan if both of the following conditions are met:
    1. (A) Both the former and new plans are offered by the same Part D sponsor.
    2. (B) The enrollee was involuntarily terminated from the program under the former plan, as described in paragraph (f)(2)(ii) of this section, for failure to pay and still owes an overdue balance.
9. (9) Automatic renewal. A Part D sponsor is required to automatically renew a Part D enrollee's participation in the Medicare Prescription Payment Plan for subsequent plan years. The Part D sponsor must notify the enrollee of the renewal and remind enrollees that they may opt out of the program at any time, in accordance with paragraph (f)(2)(i) of this section.
10. (10) Election communications—(i) Election request form. A Part D sponsor must make available throughout the plan year and during the Part D plan enrollment periods described at paragraph (d)(4)(i)(A) of this section an election request form in the formats specified in paragraph (d)(2) of this section.
  1. (A) Timing. A Part D sponsor must send a paper election request form within the same timeframe as the membership ID card mailing specified at § 423.2267(e)(32)(i). The election form may be sent in the membership ID card mailing itself or in a separate mailing.
  2. (B) Contents. The election request form must include or provide all of the following:
    (1) Fields for all of the following Part D enrollee information:
    (i) First and last name.
    (ii) Medicare Number.
    (iii) Birth date.
    (iv) Phone number.
    (v) Permanent residence street address, and mailing address, if different from permanent residence street address.
    (vi) Signature field, allowing the enrollee to attest that they understand that form is a request to participate in the Medicare Prescription Payment Plan and the Part D sponsor will contact them if more information is needed to complete the request; their signature indicates they have read and understood the Part D sponsor's terms and conditions; and the Part D sponsor will inform the individual when their participation in the program is active, and, until the individual receives that notification, they are not a participant in the program.
    (2) Instructions for how to submit the form to the Part D sponsor.
    (3) Instructions for how the Part D enrollee can contact the Part D sponsor for questions or assistance.
  3. (C) Additional information. Additional educational information about the Medicare Prescription Payment Plan must accompany the election request form when provided in hard copy or on the web. The additional information requirement may be fulfilled by including with the election request form the CMS-developed fact sheet about the program. If the Part D sponsor develops and uses alternative informational materials in lieu of the CMS-developed fact sheet to satisfy this paragraph (d)(10)(i)(C), they must ensure that these alternative materials accurately convey program information and are compliant with existing Part D requirements specified at subpart V of this part.
  4. (D) Terms and conditions. A Part D sponsor may include their program terms and conditions on the election request form or may include them on a separate attachment.
  5. (ii) Notice of election approval. Upon accepting an election request, the Part D sponsor must send a notice of election approval.
    1. (A) Timing. (1) For requests received prior to the plan year, the notice of election approval must be sent within 10 calendar days of receipt of the election request.
      (2) For requests received during the plan year, the notice of election approval must be sent within 24 hours of receipt of the election request.
      (3) The initial notice must be delivered via telephone, to be followed by a written notice delivered to the participant within 3 calendar days of delivering the initial telephone notice. 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 and other notice of election requirements as outlined at this paragraph (d)(10)(ii), then a second telephonic notification of election acceptance is not required.
    2. (B) Contents. The notice of election approval must include all of the following:
      (1) The effective date of the individual's participation.
      (2) A description of how payments for covered Part D drugs under the program will work.
      (3) An overview of how the monthly bill is calculated.
      (4) Information about procedures for involuntary termination due to failure to pay and how to submit an inquiry or file a grievance.
      (5) A statement that leaving the program will not affect the individual's Part D plan enrollment.
      (6) A description of how individuals may still owe a program balance if they leave the program, and they can choose to pay their balance all at once or be billed monthly.
      (7) An overview of other Medicare programs that can help lower costs and how to learn more about these programs. These programs include all of the following:
      (i) Extra Help.
      (ii) The Medicare Savings Program.
      (iii) The State Pharmaceutical Assistance Program.
      (iv) A manufacturer's Pharmaceutical Assistance Program.
    3. (C) Additional information. Additional educational information about the Medicare Prescription Payment Plan must accompany the notice of election approval. The additional information requirement may be fulfilled by including with the notice the CMS-developed fact sheet about the program. If the Part D sponsor develops and uses alternative informational materials in lieu of the CMS-developed fact sheet to satisfy this paragraph (d)(10)(ii)(C), they must ensure that these alternative materials accurately convey program information and are compliant with existing Part D requirements specified at subpart V of this part.
  6. (iii) Notification of denial. Upon denial of an election request, the Part D sponsor must send a notice of denial.
    1. (A) Timing. (1) For requests received prior to the plan year, the notice of denial must be sent within 10 calendar days of receipt of the election request.
      (2) For requests received during the plan year, the notice of denial must be sent within 24 hours of receipt of the election request.
      (3) For incomplete election requests, within 10 calendar days of the expiration of the timeframe for submission of additional information.
    2. (B) Contents. The notice of denial must explain the reason for denial and a description of the grievance process available to the individual.
  7. (iv) Renewal notice. A Part D sponsor must send a notice alerting program participants that their participation in the program will automatically renew for the subsequent plan year.
    1. (A) Timing. The notice must be sent after the end of the annual coordinated election period, as described at § 422.62(a)(2) of this chapter, but prior to the end of the plan year.
    2. (B) Contents. The notice must include all of the following:
      (1) Notification to the participant that their participation will automatically renew for the upcoming year.
      (2) Reminder that the participant may opt out of the program at any time, including for the upcoming plan year.
      (3) Terms and conditions. A Part D sponsor must include their program terms and conditions for the upcoming year as part of the renewal notice or as a separate attachment.
(e) Part D enrollee targeted outreach. A Part D sponsor must undertake targeted outreach to enrollees who are likely to benefit from making an election into the Medicare Prescription Payment Plan. The requirements described in this paragraph (e) are applicable beginning October 1, 2025, with respect to targeted outreach for the Medicare Prescription Payment Plan for 2026.
1. (1) Identification criteria. An enrollee deemed to be “likely to benefit” from the Medicare Prescription Payment Plan is identified by the Part D sponsor based on the following criteria.
  1. (i) For 2026 and subsequent years, the targeted outreach criteria are as follows:
    1. (A) A Part D enrollee is likely to benefit from participating in the program if the enrollee incurs $600 or more in out-of-pocket costs for a single covered Part D drug.
    2. (B) A Part D enrollee is likely to benefit from participating in the program if the enrollee incurred $2,000 in out-of-pocket costs for covered Part D drugs in the first nine months of the year prior to the upcoming plan year.
  2. (ii) A Part D sponsor may develop supplemental strategies for identification of additional Part D enrollees likely to benefit. If supplemental strategies are implemented, then the Part D sponsor must apply any additional identification criteria to every enrollee of each plan equally.
2. (2) Point of sale notification.
  1. (i) A Part D sponsor must have a mechanism to notify a pharmacy when a Part D enrollee incurs out-of-pocket costs with respect to covered Part D drugs that make it likely the enrollee may benefit from participating in the program using the identification criteria set forth in paragraphs (e)(1)(i)(A) and (e)(1)(ii) of this section.
  2. (ii) A Part D sponsor must ensure that a pharmacy, after receiving such a notification from the Part D sponsor, informs the Part D enrollee that it is likely that the Part D enrollee may benefit from the Medicare Prescription Payment Plan.
3. (3) Part D sponsor notification. A Part D sponsor must directly outreach to enrollees identified as likely to benefit from the program during either of the following timeframes:
  1. (i) Prior to the plan year. Prior to the plan year, a Part D sponsor must notify current enrollees that they are likely to benefit from the program during the fourth quarter of the year, and no later than the end of the annual coordinated election period, as described at § 422.62(a)(2) of this chapter, using the identification criteria set forth in paragraphs (e)(1)(i)(B) and (e)(1)(ii) of this section.
  2. (ii) On an ongoing basis during the plan year. Part D sponsors must put in place reasonable guidelines for ongoing identification and notification of enrollees that are likely to benefit from the program on an ongoing basis during the plan year.
4. (4) Targeted outreach notification requirements. When an enrollee is identified as likely to benefit from the program, using the identification criteria set forth in paragraphs (e)(1)(i) and (ii) of this section or based on Part D sponsor-developed guidelines set forth at paragraph (e)(3)(ii) of this section, the Part D sponsor must provide to the enrollee the standardized “Medicare Prescription Payment Plan Likely to Benefit Notice” consistent with the requirements at § 423.2267(b).
  1. (i) When the enrollee is identified as likely to benefit directly by the Part D sponsor, either prior to or during the plan year, the notification may be done via mail or electronically (based on the Part D enrollee's preferred and authorized communication methods).
    1. (A) The outreach must include a program election request form and additional information about the Medicare Prescription Payment Plan. The additional information requirement may be fulfilled by including with the notice the CMS-developed fact sheet about the program. If the Part D sponsor develops and uses alternative informational materials in lieu of the CMS-developed fact sheet to satisfy this paragraph (e)(4)(i)(A), they must ensure that these alternative materials accurately convey program information and are compliant with existing Part D requirements specified at subpart V of this part.
    2. (B) During the plan year, the initial notice may be provided via telephone, so long as the written “Medicare Prescription Payment Plan Likely to Benefit Notice,” election request form, and additional information are sent within 3 calendar days of the telephone notification.
  2. (ii) When the enrollee is identified as likely to benefit during the plan year at the pharmacy point of sale, the notice must be provided as described in paragraph (i)(2) of this section.
5. (5) Targeted outreach exclusions. A Part D sponsor does not have to notify enrollees that they are likely to benefit from the program under any of the following circumstances:
  1. (i) For the current year during the final month of the plan year (December).
  2. (ii) When the enrollee is currently participating in the program, including—
    1. (A) For the current year; and
    2. (B) For the upcoming year.
  3. (iii) When the enrollee is precluded from opting into the program.
  4. (iv) When the PDP is non-renewing its contract or individual plan benefit package. This exclusion only applies to the requirements at paragraph (e)(3)(i) of this section related to prior to plan year targeted outreach.
(f) Termination of election, reinstatement, and preclusion—(1) General rule. Except as provided in paragraph (f)(2) of this section, a Part D sponsor may not do any of the following:
1. (i) Terminate an individual from the Medicare Prescription Payment Plan.
2. (ii) Orally or in writing, or by any action or inaction, request or encourage an individual to disenroll.
3. (2) Basis for termination—(i) Voluntary terminations. A Part D sponsor must have a process to allow participants who have opted into the Medicare Prescription Payment Plan to opt out during the plan year.
  1. (A) When a participant opts out of the Medicare Prescription Payment Plan, a Part D sponsor must—
    (1) Process the termination with an effective date within 3 calendar days of receipt of the request for termination.
    (2) Provide the individual with a notice of termination after the individual notifies the Part D sponsor that they intend to opt out under the Part D sponsor's established process.
    (i) Timing. The Part D sponsor must send the notice of termination within 10 calendar days of receipt of the request for termination.
    (ii) Contents. The notice of voluntary termination must include all of the following. The date on which the individual's participation in the program ends. An explanation of why the individual is receiving the notice. A statement clarifying that the notice only applies to participation in the Medicare Prescription Payment Plan. A statement clarifying that the individual will continue to be billed monthly or can choose to pay the amount owed all at once, and that the individual will not pay interest or fees on the amount owed. A statement clarifying that the individual can join the Medicare Prescription Payment Plan again and instructions for how to do so. An overview of other Medicare programs that can help lower costs and how to learn more about these programs, including Extra Help, the Medicare Savings Program, the State Pharmaceutical Assistance Program, and a manufacturer's Pharmaceutical Assistance Program.
    (3) Offer the participant the option to repay the full outstanding amount in a lump sum. A Part D sponsor is prohibited from requiring full immediate repayment from a participant who has been terminated from the Medicare Prescription Payment Plan.
    (4) If the participant opts not to repay the full outstanding amount in a lump sum, continue to bill amounts owed under the program in monthly amounts not to exceed the maximum monthly cap according to the statutory formula for the duration of the plan year after an individual has been terminated.
    (5) Maintain appropriate records of the termination once the termination is processed.
  2. (B) [Reserved]
  3. (ii) Involuntary termination. If a participant fails to pay their monthly billed amount under the program, a Part D sponsor is required to terminate that individual's Medicare Prescription Payment Plan participation.
    1. (A) A participant will be considered to have failed to pay their monthly billed amount only after the conclusion of the required grace period as specified at paragraph (f)(4) of this section.
    2. (B) When a Part D sponsor involuntarily terminates a participant, the sponsor must do all of the following:
      (1) Provide the individual with a notice of termination consistent with the requirements of paragraphs (f)(2)(ii)(C) and (D) of this section.
      (2) Offer the participant the option to repay the full outstanding amount in a lump sum. A Part D sponsor is prohibited from requiring full immediate repayment from a participant who has been terminated from the Medicare Prescription Payment Plan.
      (3) If the participant opts not to repay the full outstanding amount in a lump sum, continue to bill amounts owed under the program in monthly amounts not to exceed the maximum monthly cap according to the statutory formula for the duration of the plan year after an individual has been terminated.
    3. (C) If a Part D sponsor involuntarily terminates a participant under this paragraph (f)(2)(ii), the Part D sponsor must send the individual an initial notice explaining that the individual has failed to pay the billed amount.
      (1) Timing. The notice of failure to pay must be sent within 15 calendar days of the payment due date.
      (2) Contents. The notice of failure to pay must include all of the following:
      (i) Pertinent dates, including the date the missed monthly payment was due, the amount the individual must pay to remain in the program, and the date by when payment must be received, which is the date of the end of the grace period.
      (ii) A statement clarifying that the notice only applies to participation in the Medicare Prescription Payment Plan.
      (iii) Instructions for how to submit payment.
      (iv) Information about procedures for involuntary termination due to failure to pay, including the date on which the participant would be removed if payment is not received, and how to submit an inquiry or file a grievance.
      (v) A statement describing how individuals should pay their Part D plan premium first if they cannot afford both their premium and their program balance.
      (vi) An overview of other Medicare programs that can help lower costs and how to learn more about these programs, including Extra Help, the Medicare Savings Program, the State Pharmaceutical Assistance Program, and a manufacturer's Pharmaceutical Assistance Program.
    4. (D) If the individual has failed to pay the amount due by the end of the grace period described at paragraph (f)(4) of this section, the Part D sponsor must send the individual a termination notice explaining that the individual has been terminated from the Medicare Prescription Payment Plan.
      (1) Timing. The involuntary termination notice must be sent within 3 calendar days following the last day of the end of the grace period.
      (2) Contents. The involuntary termination notice must include all of the following:
      (i) Pertinent dates, including the date the individual was originally notified of the missed monthly payment and the due date for that payment, as well as the date on which the individual's participation in the program ends, which should be the same date as the notice.
      (ii) A statement clarifying that the notice only applies to participation in the Medicare Prescription Payment Plan, and that the individual's Part D drug coverage will not be impacted.
      (iii) Instructions for how to submit payment and the amount owed.
      (iv) Instructions for how to submit an inquiry or file a grievance.
      (v) A statement clarifying that the individual can join the Medicare Prescription Payment Plan again if they pay the amount owed.
      (vi) An overview of other Medicare programs that can help lower costs and how to learn more about these programs, including Extra Help, the Medicare Savings Program, the State Pharmaceutical Assistance Program, and a manufacturer's Pharmaceutical Assistance Program.
    5. (E) If either notice is returned to the Part D sponsor as undeliverable, the Part D sponsor must immediately implement its existing procedure for researching a potential change of address.
4. (3) Required grace period and reinstatement. When a program participant fails to pay a program bill, the Part D sponsor must provide individuals with a grace period of at least two months upon notifying the individual of the initial missed payment.
  1. (i) The grace period must begin on the first day of the month following the date on which the initial notice described in this paragraph (f)(3) is sent.
  2. (ii) A participant must be allowed to pay the overdue balance in full during the grace period to remain in the program.
  3. (iii) If a participant fails to pay their monthly billed amount under the program with fewer than two full calendar months remaining in the calendar year, the grace period must carry over into the next calendar year.
    1. (A) If the program participant is within their grace period from the prior year, the Part D sponsor must allow the participant to opt into the program for the next year.
    2. (B) If that participant fails to pay the amount due from the prior year during the required grace period, the Part D sponsor may terminate the individual's participation in the program in the new year following the procedures outlined in paragraph (f)(2)(ii) of this section.
  4. (iv) If an individual who has been terminated from the Medicare Prescription Payment Plan demonstrates good cause for failure to pay the program billed amount within the grace period and pays all overdue amounts billed, a Part D sponsor must reinstate that individual into the Medicare Prescription Payment Plan.
    1. (A) A Part D sponsor is expected to reinstate an individual into the program within a reasonable timeframe after the individual has repaid their past due Medicare Prescription Payment Plan balance in full.
    2. (B) To demonstrate good cause, the individual must establish by a credible statement that failure to pay the monthly amount billed within the grace period was due to circumstances for which the individual had no control, or which the individual could not reasonably have been expected to foresee.
  5. (v) If an individual who has been terminated from the Medicare Prescription Payment Plan pays all overdue amounts billed in full, a Part D sponsor may also reinstate that individual, at the sponsor's discretion and within a reasonable timeframe, even if the individual does not demonstrate good cause.
5. (4) Preclusion of election in a subsequent plan year. If an individual fails to pay the amount billed for a month as required under the Medicare Prescription Payment Plan, a Part D sponsor may preclude that individual from opting into the Medicare Prescription Payment Plan in a subsequent year.
  1. (i) A Part D sponsor may only preclude an individual from opting into the Medicare Prescription Payment Plan in a subsequent year if the individual owes an overdue balance to that Part D sponsor.
  2. (ii) If an individual enrolls in a Part D plan offered by a different Part D sponsor than the Part D sponsor to which the individual owes an overdue balance, that individual cannot be precluded from opting into the Medicare Prescription Payment Plan in a subsequent year by that different Part D sponsor.
  3. (iii) If a Part D enrollee remains in a plan offered by the same Part D sponsor and continues to owe an overdue balance, preclusion may extend beyond the immediately subsequent plan year.
    1. (A) If an individual pays off the outstanding balance under the Medicare Prescription Payment Plan during a subsequent year, the Part D sponsor must promptly permit them to opt into the Medicare Prescription Payment Plan after the balance is paid.
    2. (B) [Reserved]
  4. (iv) A Part D sponsor that offers more than one Part D plan may have different preclusion policies for its different plans. However, the Part D sponsor must apply its preclusion policy consistently among all enrollees of the same Part D plan.
6. (5) Prohibition on Part D enrollment penalties. A Part D plan sponsor is prohibited from doing any of the following:
  1. (i) Disenrolling a Part D enrollee from a Part D plan for failure to pay any amount billed under the Medicare Prescription Payment Plan.
  2. (ii) Declining future enrollment into a Part D plan based on an individual's failure to pay a monthly amount billed under the Medicare Prescription Payment Plan.
7. (6) Disenrollment.
  1. (i) If a participant in the Medicare Prescription Payment Plan is disenrolled voluntarily or involuntarily from their Part D plan under the provisions in § 423.44(b), the participant is also terminated from the Medicare Prescription Payment Plan in that plan.
  2. (ii) If the participant enrolls in a different plan, they may opt into the Medicare Prescription Payment Plan under their new plan.
8. (7) Billing for amounts owed. Nothing in this section prohibits a Part D sponsor from billing an individual for an outstanding Medicare Prescription Payment Plan amount owed.
(g) Participant billing rights—(1) General rule. For each billing period after an individual has opted into the program and incurred out-of-pocket costs, a Part D sponsor must calculate a monthly amount that takes into account the out-of-pocket costs in that month that were incurred on or after the date on which the individual opted into the program.
1. (i) A Part D sponsor must not bill a participant who is in the program but has not yet incurred any out-of-pocket costs during the plan year.
2. (ii) While past due balances from prior monthly bills may also be included in a billing statement, which could result in the total amount on the billing statement exceeding the maximum monthly cap, the amount billed for the month for which the maximum monthly cap is being calculated cannot be higher than the cap for that month.
3. (iii) A Part D sponsor must not charge late fees, interest payments, or other fees, such as for different payment mechanisms.
  1. (A) A Part D sponsor must ensure that—
    (1) Any third party it contracts with complies with such requirements.
    (2) Participants do not incur any charges or fees as a result of overbilling or overpayment errors made by the Part D sponsor.
  2. (B) [Reserved]
4. (iv) A Part D sponsor must send a bill for the Medicare Prescription Payment Plan that is separate from the bill for collection of premiums, if applicable.
5. (2) Billing period. Each billing period will be a calendar month.
  1. (i) The billing period begins on either of the following:
    1. (A) The effective date of a Part D enrollee's participation in the Medicare Prescription Payment Plan (for the first month a participant elects into the program during the plan year).
    2. (B) The first day of the month (for each subsequent month or for the first month of a participant who elects into the program prior to the start of the plan year).
  2. (ii) The billing period ends on the last date of that month.
6. (3) Billing statement. Billing statements must include all of the following information:
  1. (i) A statement that the bill is for the Medicare Prescription Payment Plan.
  2. (ii) A brief description of the program.
  3. (iii) A reference to where additional information about the program can be found.
  4. (iv) The effective date of program participation.
  5. (v) The last payment received, showing the date, amount of the last payment, and the means of payment made by the participant.
  6. (vi) Any balance carried over from the prior month, including any missed payments.
  7. (vii) Itemized out-of-pocket costs by prescription for the month being billed.
  8. (viii) The amount due from the participant for the month being billed (that is, the amount based on the application of the monthly cap calculation).
  9. (ix) The remaining total out-of-pocket cost sharing balance.
  10. (x) Information on the next steps if the participant fails to pay by the stated due date.
  11. (xi) Information on how to voluntarily opt out of the program and balances due if participation is terminated.
  12. (xii) Information on the dispute processes available if the individual disputes their bill.
  13. (xiii) LIS program information, including the following:
    1. (A) General information about how to enroll in the LIS program (as an additional or alternative avenue for addressing prescription drug costs).
    2. (B) A statement that LIS enrollment, for those who qualify, is likely to be more advantageous than participation in the Medicare Prescription Payment Plan.
  14. (xiv) Plan contact information for participant questions about the billing statement.
7. (4) Treatment of unsettled balances. Any unsettled balances with respect to amounts owed under the program will be treated as plan losses.
  1. (i) The Secretary is not liable for any such balances outside of those assumed as losses estimated in a Part D sponsor's plan bid.
  2. (ii) If a Part D sponsor is compensated by or on behalf of the participant for an unsettled balance or sells an unsettled balance as a debt, that Part D sponsor cannot treat the amount as a loss and cannot include it in its bid.
8. (5) Prioritization of premium payments. If a Part D enrollee has opted into the program and makes payments directly to the Part D sponsor, and it is unclear whether a payment should go towards the participant's outstanding Part D plan premium or Medicare Prescription Payment Plan balance, then the payment must be applied to the Part D premium.
9. (6) Financial reconciliation. A Part D sponsor must have a financial reconciliation process in place to correct inaccuracies in billing or payments or both.
  1. (i) Participant payment.
    1. (A) A participant may pay more than the maximum monthly cap, up to the annual out-of-pocket threshold.
    2. (B) The participant cannot pay more than their total OOP costs for the Medicare Prescription Payment Plan.
    3. (C) If a participant does pay more than their total OOP costs for the Medicare Prescription Payment Plan, then the Part D sponsor must reimburse the participant the amount that is paid above the balance owed.
  2. (ii) Reimbursements for excess participant payments. A Part D sponsor must develop standardized procedures for determining and processing reimbursements for excess Medicare Prescription Payment Plan payments made by program participants.
  3. (iii) Claims adjustments resulting in increased amounts owed. When Part D claims adjustments result in increased amounts owed by the participant, and these amounts have not yet been billed to the participant, they must be included in the revised remaining OOP costs owed by the participant (as defined at paragraph (b)(1) of this section) and, thus, in the subsequent month maximum cap for the next billing period.
(h) Participant disputes—(1) Coverage determination and appeals procedures. A Part D sponsor must apply the Part D coverage determination and appeals procedures specified at § 423.566(a) to any disputes made by program participants concerning the cost sharing amount of a covered Part D drug.
(2) Grievance procedures. A Part D sponsor must apply the Part D grievance procedure specified at § 423.562 to any dispute made by a program participant related to any aspect of the Medicare Prescription Payment Plan.
1. (i) Pharmacy point of sale notification process.
2. (1) When a Part D sponsor is notifying a pharmacy that a Part D enrollee has incurred out-of-pocket costs with respect to covered Part D drugs that make it likely the enrollee may benefit from participating in the program, as required at paragraph (e)(2) of this section, the Part D sponsor must use standard code values for notifying the pharmacy that an enrollee has been identified as likely to benefit, as outlined by the National Council for Prescription Drug Programs.
3. (2) A Part D sponsor must ensure that the “Medicare Prescription Payment Plan Likely to Benefit Notice” is provided to enrollees identified as likely to benefit (or the person acting on their behalf) through the pharmacy point of sale notification process.
  1. (i) In pharmacy settings in which there is direct contact with enrollees (for example, community pharmacies where enrollees present in person to pick up prescriptions), the Part D sponsor must ensure that a hard copy of the “Medicare Prescription Payment Plan Likely to Benefit Notice” is provided to enrollees identified as likely to benefit (or the person acting on their behalf) at the time the prescription is picked up.
  2. (ii) For non-retail pharmacy settings without in-person encounters (such as mail order pharmacies), a Part D sponsor must require the pharmacy to notify the Part D enrollee via a telephone call or their preferred contact method.
  3. (iii) For long-term care pharmacy settings, the Part D plan sponsor should not require that the pharmacy notify the Part D enrollee prior to dispensing the medication. Instead, the Part D plan sponsor should require the long-term care pharmacy to provide the notice to the Part D enrollee (or their authorized representative) at the time of its typical enrollee cost-sharing billing process.
  4. (iv) If the pharmacy is in contact with a Part D enrollee identified as likely to benefit and the enrollee declines to complete the prescription filling process, the Part D sponsor must ensure that the pharmacy provides the “Medicare Prescription Payment Plan Likely to Benefit Notice” to the Part D enrollee.
4. (3) A Part D sponsor must ensure that any contract between the Part D sponsor and a pharmacy (or between a first tier, downstream, or related entity and a pharmacy on the Part D sponsor's behalf) for participation in one or more of the Part D sponsor's networks includes a provision requiring pharmacies to provide this notification to Part D enrollees.
5. (j) Pharmacy claims processing—(1) Electronic claims processing methodology. Part D sponsors must use, and must ensure pharmacies use, a bank identification number (BIN) or processor control number (PCN) electronic claims processing methodology for applicable Medicare Prescription Payment Plan transactions.
  1. (i) Part D sponsors must utilize, and ensure pharmacies utilize, an additional BIN/PCN that is unique to the Medicare Prescription Payment Plan to facilitate electronic processing of supplemental coordination of benefits (COB) transactions for program participants.
  2. (ii) A Part D sponsor must provide the unique Medicare Prescription Payment Plan BIN/PCN and any other pertinent billing information to the pharmacy on paid claim responses when the enrollee is also a Medicare Prescription Payment Plan participant.
  3. (iii) A Part D sponsor must assign a program-specific PCN that starts with “MPPP” and report the new BIN/PCN to CMS.
  4. (iv) The transaction processed through the Medicare Prescription Payment Plan BIN/PCN will be submitted after processing any applicable other payer transactions in order to capture the final patient responsibility amount after all other payers have paid.
  5. (2) Supplemental coverage that increases final patient pay amount. When a Part D enrollee has supplemental coverage that modifies their final out-of-pocket responsibility for covered Part D drugs:
    1. (i) When the final patient pay amount returned to the pharmacy by a supplemental payer for a covered Part D drug is higher than the original Part D patient pay amount, the Part D sponsor may only include in the Medicare Prescription Payment Plan the participant's original Part D cost sharing, as determined by their plan-specific benefit structure.
    2. (ii) [Reserved]
  6. (3) Prescription drug event reporting. A Part D sponsor must ensure that the claims processing methodology described in paragraph (j)(1) of this section has no impact on prescription drug event (PDE) cost/payment field reporting, meaning PDE records must reflect participant and plan liability amounts as if the Medicare Prescription Payment Plan did not apply.
  7. (4) Real-time benefit tools. A Part D sponsor must ensure that participation in the Medicare Prescription Payment Plan or the associated claims processing methodology described in paragraph (j)(1) of this section or both has no impact on the cost-sharing information displayed in real-time benefit tools.
  8. (5) Inclusion of retroactive claims. A Part D sponsor is not required to retroactively include under this program claims submitted to the Part D sponsor by a Medicare Prescription Payment Plan participant (whether the request is made via paper form, telephonically, or electronically) except as provided in paragraph (d)(6) of this section.
  9. (6) Re-adjudication of prescription drug claims for new program participants.
    1. (i) When a Part D enrollee receives the “Medicare Prescription Payment Plan Likely to Benefit Notice” from the pharmacy, they may choose to take time to consider opting into the program and leave the pharmacy without the prescription that triggered the notification.
    2. (ii) When the Part D enrollee returns to the pharmacy after their election into the Medicare Prescription Payment Plan has been effectuated, the plan sponsor must require the pharmacy to reverse and reprocess the high-cost claim that triggered the likely to benefit notification.
      1. (A) Should a Part D enrollee have other unpaid claims at the same pharmacy for covered Part D drugs from prior dates of service, in addition to the prescription that may have triggered the likely to benefit notification, they may also request that those claims be readjudicated.
      2. (B) [Reserved]
    3. (iii) When the Part D claim date of service is the same as the date of program effectuation), the Part D sponsor is not required to ensure the pharmacy reverse and resubmit the Part D claim, provided that they otherwise obtain the necessary Medicare Prescription Payment Plan BIN/PCN for the program-specific transaction.
6. (k) Pharmacy payment obligations. A Part D sponsor must ensure that enrollee participation in the Medicare Prescription Payment Plan does not affect the amount paid to pharmacies or the timing of such payments, consistent with § 423.520. A Part D sponsor must not do either of the following:
  1. (1) Impose any fees or costs related to program implementation on pharmacies.
  2. (2) Hold pharmacies responsible for any unsettled balances of a participant or for collecting unpaid balances from the participant on the Part D sponsor's behalf.
7. (l) [Reserved]
8. (m) General Part D sponsor outreach and education requirements. The requirements described in this paragraph (m) are applicable beginning October 1, 2025, with respect to general outreach for the Medicare Prescription Payment Plan for 2026.
  1. (1) Mailing. A Part D sponsor, except a dual eligible special needs plan (D-SNP), must provide a Medicare Prescription Payment Plan election request form, described at paragraph (d)(10)(i) of this section, and additional educational information on the program in a hard copy mailing.
    1. (i) The mailing must be sent by the later of—
      1. (A) Within 10 calendar days from receipt of CMS confirmation of enrollment in the Part D plan; or
      2. (B) The last day of the month prior to the plan effective date.
    2. (ii) The election request form and supplemental information may be sent—
      1. (A) With the membership ID card mailing described at § 423.2267(e)(32); or
      2. (B) In its own envelope.
    3. (iii) The mailing may be sent only to a Part D enrollee who is receiving a new membership ID card or to all Part D enrollees.
    4. (iv) The additional information requirement may be fulfilled by including in the mailing the CMS-developed fact sheet about the program. If the Part D sponsor develops and uses alternative informational materials in lieu of the CMS-developed fact sheet to satisfy this paragraph (m)(1)(iv), they must ensure that these alternative materials accurately convey program information and are compliant with existing Part D requirements specified at subpart V of this part.
  2. (2) Websites. In addition to meeting requirements described at §§ 423.128(d)(2) and 423.2265(b), a Part D sponsor is required to include all of the following on its website:
    1. (i) An election request mechanism, as described at paragraph (d)(2) of this section.
    2. (ii) An overview of the Medicare Prescription Payment Plan.
    3. (iii) Examples of the program calculation and explanations.
    4. (iv) A description of Part D enrollees who may be likely to benefit from the program.
    5. (v) The financial implications of participation.
    6. (vi) The implications of not paying monthly bills.
    7. (vii) Instructions for how to opt into and out of the program, including timing requirements around election effectuation.
    8. (viii) A description of the standards for retroactive election in cases where an enrollee believes that a delay in filling a prescription may seriously jeopardize their life, health, or ability to regain maximum function.
    9. (ix) A description of the dispute and grievance procedure, as required under § 423.137(h).
    10. (x) Contact information Part D enrollees can use to obtain further information
    11. (xi) General information about the LIS program, including an overview of how LIS enrollment, for those who qualify, is likely to be more advantageous than program participation.

[90 FR 15912, Apr. 15, 2025]