Medicare Prescription Payment Plan (M3P)

As part of President Biden’s initiatives to lower drug costs as outlined in the Inflation Reduction Act, the Medicare Prescription Payment Plan (also known as the M3P) is set for implementation in 2025. The M3P will require Medicare prescription drug plans, including Medicare Advantage Prescription Drug (MAPD) plans, to offer an option for members to make monthly payments to cover the costs of prescriptions.

In mid-February, the Centers for Medicare and Medicaid Services (CMS) released draft guidance for Part Two of the M3P, which focuses on education, outreach, and communications requirements for member participation in the M3P. Just two weeks after the release of the draft Part Two guidance, the final guidance for Part One was released on February 29, which finalizes operational components of the M3P.

CMS solicited comments on the draft guidance along with model notices developed to educate and communicate the availability of the M3P to members and the consequences for failing to make monthly payments. Comments were due back to CMS by March 16, 2024 and finalized guidance is expected later this summer.

The M3P is expected to impact several areas of plan sponsors, so it’s imperative to make sure all key stakeholders are aware of the guidance and plans’ expectations. Some of the impacts include:

Member Opt-In Process: Plans must develop a process which allows the ability to capture a member’s choice to opt into the program at the time of application or at a later point in the year. Plans will also be required to make outreach to members who may benefit from enrolling in the program.
Monthly Billing: Plans are responsible for billing the member for the monthly out-of-pocket amount, which cannot exceed the defined maximum monthly cap. Additionally, plans will be responsible for having a process in place to notify members of non-payment and terminate members from participation in the program for non-payment.
Payment to Pharmacies: Plans will be required to pay the pharmacy the amount owed by the member who is enrolled in the program.
Annual Reporting Requirements: CMS will require plans to report program information annually.
Monitoring: Plans will need to be sure thorough monitoring takes place to validate all requirements have been implemented, and all steps take place timely (such as monthly billings, payment to pharmacies, sending letters to members when payment hasn’t been received, etc.)

All Medicare Advantage organizations need to be prepared to implement M3P by 2025. If you’re not sure where to start, here are some tips:

Connect with your Pharmacy Benefits Manager as soon as possible. Be sure to understand the steps they are taking to implement components of this program. Determine what the PBM will be responsible for, what the plan will be responsible for, and what tasks will be shared between the plan and PBM.
Conduct a needs assessment and identify potential gaps. It's important to capture and involve each area of the organization that may be impacted and how that area will be impacted.
Create a work plan. Establish timelines associated with each task and be sure to track each task through to completion.
Establish work groups. This is a great way to stay on top of assignments and identify risks throughout implementation.
Thoroughly document all decisions. Document these in a consistent manner which will help retrace steps, if necessary, to understand the outcome of the decision.

Implementation of M3P is going to be an organization-wide effort. While the final Part Two guidance hasn’t been released yet, it’s important not to wait to evaluate your needs to be fully compliant by 2025.

By: Angela Keenan, CHC, CHPC

Compliance Officer

Any views expressed within are solely those of the author and do not necessarily reflect the views of the author's employer, company, institution, or other associated parties.