Part D Plans Get Ready for Potentially ‘Messy’ Rollout of M3P Program

For the first time ever, Medicare Part D beneficiaries in 2025 will have the opportunity to spread their prescription drug expenses over the course of the plan year. While Part D sponsors must offer the option to enrollees effective Jan. 1, 2025, plans face multiple considerations and tasks prior to then. One of their most immediate concerns, industry experts say, is factoring in potential administrative costs and/or financial losses associated with the new Medicare Prescription Payment Plan (M3P, as many are calling it) into bids due next month.

Created under the Inflation Reduction Act, the M3P requires stand-alone Prescription Drug Plans and Medicare Advantage Prescription Drug plans to give enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly payments versus paying the full amount at the pharmacy. Program participants will pay $0 at the pharmacy but receive a monthly bill from their Part D carrier, which must reimburse the pharmacies in full.

The first major decision Part D sponsors must make is whether to internally handle all the components (e.g., enrollment, invoicing, outreach) associated with the M3P, hire an outside company, or pursue a hybrid approach. And whatever approach they choose should be communicated to their pharmacy benefit manager (PBM) as soon as possible, if it hasn’t been already, suggests Crescent Moore, Pharm.D., director of Part D/pharmacy with BluePeak Advisors, a Gallagher company.

“Some of the PBMs have chosen to partner with an M3P vendor who’s offering a solution. And then some PBMs are choosing to build out their own solution that they’re offering to their health plan clients,” Moore tells AIS Health, a division of MMIT. Then there are vendors that are offering a full suite of M3P solutions, she adds.

“In order to make that decision, [plans] have to know all the pieces that are involved today that they have, how much they rely on their PBM” and how their PBM is positioned to support them, “so that they know if there are gaps they have to fill,” weighs in Leslie Lotano-Saba, R.Ph., managing director with AArete. For example, “there has to be communication between the health plan and the PBM in the sharing of the data. So [considering] all of that…is probably one of the first critical pieces of this.”

Moreover, the extra costs associated with meeting the new requirements “need to be factored into your bid, so that information has to get over to your actuaries” as soon as possible, adds Moore.

Setting Up M3P Has ‘Many Moving Parts’

To help Part D sponsors set up the new program, CMS has released guidance documents, model materials and technical memoranda. The M3P Part 1 guidance, which was finalized in February after a comment period, included calculations for the monthly payment amounts, instructions for Part D sponsors on how to handle monthly billing, proposed thresholds for identifying Part D enrollees who are likely to benefit from the program, and suggestions about how to notify those members through the pharmacies about the program. The draft Part 2 guidance, which was released on Feb. 15 and had a 30-day comment period, included information on pharmacy processes and operational considerations but centered largely on outreach and education to beneficiaries.

“There’s just so many moving parts to this, and it’s a very short timeline,” says Moore. “Everyone thinks about this going into effect 1/1/25. But you really need to be ready” before the Annual Election Period (AEP) starts in October. “Because when you start sending out your materials for the new plan year, you’ve got to include M3P information in there and folks will be calling in to potentially enroll in the program for 2025 during that October to December period.”

Other moving parts include identifying beneficiaries who are likely to benefit, enrolling beneficiaries, setting up a mechanism with the pharmacy so that claims exceeding the $600 threshold trigger a point-of-sale (POS) notification about eligibility, accurately calculating the monthly payment, sending invoices, and “providing all of that due diligence (e.g., grace periods) before you terminate someone from the M3P for lack of payments,” points out Moore.

Meanwhile, plans are concerned about the possibility that they won’t get paid. CMS in the second draft guidance included a “Notice of Failure to Pay” section, in which it advised sponsors to send notices to beneficiaries who have not paid their monthly billed amount. But if patients don’t pay those bills, they must be met as plan losses. “There’s going to be a percentage of members that don’t pay or don’t pay all of it,” predicts Lotano-Saba. As a result, plans should be incorporating that kind of expectation into their plan costs for next year when they file bids. CMS clarified in the draft guidance that “only uncompensated unsettled balances” can be included as losses estimated in plan bids, and the agency said it will modify the Part D bid pricing tool to reflect projected losses associated with the M3P.

Plans Await Final Part 2 Guidance

But the Part 2 guidance won’t be finalized until this summer (“probably end of June,” says Moore) and bids for the 2025 plan year are due June 3. That “is going to make plans even more nervous, depending on what actually comes out in that final guidance,” says Lotano-Saba. Then there are other operational considerations, such as whether to hire additional staff to handle potential questions, billing inquiries and/or complaints related to the M3P.

“I don’t know how many people call and talk about their premiums every month — probably not much, I would imagine — but they do call and talk about claims issues. Now, potentially, they’re going to talk about how much they’re being billed, so the person on the other end of the line has to understand how that accounting was calculated. And are they going to have access to that system to be able to explain it to the member, all while the member might be trying to enroll at the point of sale?” asks Lotano-Saba. “There are going to be some members that didn’t think about this in the fall when they joined the plan…or didn’t even think about it until they go to get that first prescription filled and then realize, ‘Oh, there’s a chance I could spread this money out over 12 months, or 11 months? I think I want to take that.’ So I think it’s messy. Very messy.”

“Some plans have decided that they’re almost going to create within their customer service unit…an M3P-specialized set of folks,” says Moore. So if a member calls in with more than basic questions about the program, member services can do a “warm transfer” to the appropriate unit to talk the member through everything.

Potential member confusion could be a real pain point for plans if it results in poor member experiences that impact the Star Ratings.

“I worry about what’s going to happen from a grievance perspective around sales agents and brokers,” where there’s potential for them to not fully understand the program and “the member gets the impression that they’re not going to have to pay anything for their drugs,” points out Moore. “So then, of course, when they get that bill, we run into this issue of potentially having grievances or complaints to Medicare…and that’s a whole other bucket of issues to have to resolve.”

CMS in the draft Part 2 guidance said it will monitor and collect data about beneficiary complaints and grievances reported via the Medicare Complaints Tracking Module (CTM) to assess compliance with all M3P requirements, beneficiary protections, and program integrity. With respect to beneficiary complaints and grievances reported via the CTM, the agency will consider whether an additional CTM category or subcategory is needed for the M3P in future years, according to the document.

© 2024 MMIT
Lauren Flynn Kelly

Lauren Flynn Kelly Managing Editor, Radar on Medicare Advantage

Lauren has been covering health business issues since the early 2000s and specializes in in-depth reporting on Medicare Advantage, managed Medicaid and Medicare Part D. She also possesses a deep understanding of the complex world of pharmacy benefit management, having written AIS Health’s Radar on Drug Benefits from 2004 to 2005 and again from 2011 to 2016. In addition to her role as managing editor of Radar on Medicare Advantage, she oversees AIS Health’s publications and manages the health editorial staff. She graduated from Vassar College with a B.A. in English.

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