Amy Niles, PAN Foundation

Many of the over 53 million people enrolled in Medicare Part D plans struggle to afford their out-of-pocket (OOP) prescription costs each year, sometimes leading them to delay or go without their needed medications. That’s why the Medicare Prescription Payment Plan (MPPP)—a new voluntary payment option going into effect Jan. 1, 2025—is such an important change that beneficiaries should be aware of.

Unfortunately, there has been limited public outreach and education on the MPPP, which is likely why a recent poll

 from the PAN Foundation’s Center for Patient Research found that nearly nine out of 10 people on Medicare are not aware of it.

Enacted into law through the 2022 Inflation Reduction Act, all Part D plans (both standalone and Medicare Advantage plans) must offer the opportunity for plan enrollees to opt-in to the program, which will spread their OOP drug payments throughout the year. And while it has the potential to make drug costs more affordable for many on Medicare, it is not for everyone.

The individuals most likely to benefit from the MPPP are those who: have faced $2,000+ in OOP costs during the first nine months of the year; have had a one-time prescription fill of at least $600; have difficulty affording one lump upfront payment for their prescription medications; opt-in to the program prior to or at the start of the plan year so there are more months for the costs to be spread out over; and are not eligible for assistance through the federal Extra Help Program and other assistance programs, such as those offered by charitable foundations.

Calculating monthly costs when participating in the MPPP is not straightforward. Monthly costs may vary based on prescription needs and when prescriptions are filled. The program also uses a formula that, each month, evaluates one’s current drug costs, previous months’ balance, and number of months left in the year. What is certain for patients, is by the time they get to Dec. 31, they will not have paid more than $2,000, due to the Part D cap also taking effect Jan. 1.

 allows patients to input their medication needs to calculate monthly costs. It is a good place to start when patients are deciding if the Medicare Prescription Payment Plan is right for them.

How will this new program change patient behavior?

Unlike the Medicare Part D cap, which is automatic, an individual on a Part D plan must opt-in to the MPPP to benefit from the opportunity to spread costs. The best way to opt-in to the program is by calling their Part D plans or requesting participation through their plans’ website. Anyone, regardless of their OOP drug costs, can participate.

When opting-in to the MPPP, patients will no longer pay for their prescriptions at the pharmacy counter. Instead, they will receive monthly bills from their Part D plans that highlight what is owed that month for their medications and when payment is due. Patients enrolled in the program will begin receiving two bills from their plans—one for their premium, and one for their medication costs.

The MPPP is good for patients, especially the few million who face high OOP costs for the medications they need to treat their serious illnesses. But like any major reform, the roll-out and implementation of the Plan may not be smooth and require us to ask the following questions, including but not limited to:

Are patients and healthcare providers aware of the MPPP? What additional outreach is needed?

Who are the patients opting-in to the MPPP, and how can we translate learnings to help boost participation?

In the meantime, let’s all do our part to educate the patients and healthcare providers about this important reform. The PAN Foundation recently launched a Medicare reforms educational campaign to do just that.

 And as 2025 brings big changes to the Medicare Part D program, the stakeholder community will be monitoring successes and opportunities for improvements.

Amy Niles is chief mission officer at PAN Foundation.

1. . Most Patients Enrolled in Medicare Are Unaware of Upcoming Part D Changes. PAN Foundation. 

https://www.panfoundation.org/most-patients-enrolled-in-medicare-are-unaware-of-upcoming-part-d-changes/

2. Medicare.gov PlanFinder Tool. Mediare.gov. 

https://www.medicare.gov/plan-compare/#/?year=2025&lang=en

3. Everything You Need to Know About Medicare Reforms.

https://www.panfoundation.org/everything-you-need-to-know-about-medicare-reforms/

Articles

While the program could be a good option for many, it's not a panacea.

The Advantages of New Medicare Rx Payment Plan

To lower out-of-pocket (OOP) costs of prescription medications for people enrolled in Medicare and to reduce drug spending by the federal government, several key changes to the Medicare Part D benefit were made possible with the passage of the Inflation Reduction Act (IRA) in 2022. Two of the IRA’s most important provisions will go into effect on Jan. 1, 2025—a $2,000 cap on OOP drug spending for all individuals with a Part D plan, and the opportunity to opt-in to the Medicare Prescription Payment Plan and spread costs throughout the year. This program is being offered by Part D plan sponsors.

As a result of these Part D benefit changes and the increased financial burden on Part D plans, many are concerned about the unintended consequences on patients, such as the potential for increased Part D premiums. The IRA does address this concern by implementing a premium stabilization program, beginning this year through 2029, limiting increases in the Part D base beneficiary premium to 6% growth each year. For 2025, the base premium is $36.78, an increase of $2.08 or 6% over the 2024 base premium. It is important to note, however, that this 6% cap does not apply to individual premiums that plans charge. In fact, a recent analysis by Avalere illustrates that Part D Plan premiums are increasing by double digits.

An increase in Part D plan premiums of double digits has been reported by Medicare beneficiaries themselves. A recent national poll from the PAN Foundation’s Center for Patient Research finds that nearly one in three (28%) Medicare beneficiaries enrolled in Part D plans say the cost of the monthly premium for their prescription drug plan is higher in 2024 than it was in 2023.

Among those who reported an increase, 11% say their premiums increased 16% to 20%, while 10% say their premiums increased by more than 20%. Unfortunately, two in five (40%) of Medicare beneficiaries enrolled in Part D plans say they have financial difficulty affording the monthly premium for their prescription drug plan.

What can be done to stabilize premium growth and make costs more affordable for patients?

The annual open enrollment period (Oct. 15 – Dec. 7) presents an opportunity for Part D enrollees to compare plans for lower-priced coverage that meets their needs. According to the Kaiser Family Foundation,Medicare Advantage drug plans are anticipated to have lower monthly premiums than stand-alone drug plans.

The variability in monthly premium costs was a driving factor behind a new voluntary premium stabilization demonstration program announced in July by the Centers for Medicare & Medicaid Services (CMS) for stand-alone Part D plans. The demonstration program has three components for the plans that choose to participate:

It lowers the base beneficiary premium by $15 (or less if a $15 reduction would result in a plan premium of less than $0).

It limits total Part D premium increases to $35 between 2024 and 2025 (applied after considering the $15 reduction).

It offers enhanced protection by the federal government against the risk of losses for stand-alone plans.

Overall, this demonstration program hopes to stabilize the Part D plan market in the initial transition years of the IRA’s Part D benefit changes and to test whether the premium changes improve the efficiency and overall economics of the Part D benefit changes.

Finally, charitable foundations such as the PAN Foundation offer financial assistance to eligible individuals to help cover their insurance premium costs. As OOP costs for prescription medications start to decrease, but other costs, such as Part D plan premiums, continue to be a burden on Medicare beneficiaries, this kind of assistance will become even more important.

We all look forward to monitoring the implementation of CMS’s demonstration project and hopefully see that over time, premiums for stand-alone plans begin to stabilize, because swapping one high healthcare related cost for another won’t end up helping patients in the long run. 

1. Part D Premiums Increasing Despite Stabilization Program. Avalere. October 17, 2023. 

https://avalere.com/insights/part-d-premiums-increasing-despite-stabilization-program#:~:text=In%20a%20recent%20analysis%2C%20however,for%20the%202024%20plan%20year

2. National Polling: Medicare Patients Seeing Premium Costs Increase in 2024. PAN Foundation. March 29, 2024. 

https://www.panfoundation.org/national-polling-medicare-patients-seeing-premium-costs-increase-in-2024/

3. Cubanski, J.; Neuman, T. What to Know About Medicare Part D Premiums. KFF. August 1, 2024. 

https://www.kff.org/medicare/issue-brief/what-to-know-about-medicare-part-d-premiums/

Why looming benefit changes—and the resulting unintended consequences—are a concern for patients.

The Latest Surrounding Rising Medicare Part D Premiums

In just a few weeks, open enrollment begins for the more than 63 million people enrolled in Medicare programs in the US. During this time, many will evaluate and select a Part D plan that best meets their health needs. It is also a time when those enrolled in Medicare will learn more about two important changes to the Medicare Part D program taking effect Jan. 1, 2025:

 People enrolled in Part D plans (both traditional and Medicare Advantage) will not pay more than $2,000 in 2025 in out-of-pocket (OOP) costs for their prescription medications.

Medicare prescription payment plan (now commonly referred to as M3P). 

Plans will offer enrollees the opportunity to opt-in to an interest-free payment plan allowing them to pay OOP drug costs monthly.

Recently, several colleagues and patient advocates have reached out to me asking questions about these reforms and their impact on patient assistance foundations, such the PAN Foundation. Ahead are some of those questions, along with my responses and perspective.

How will the Part D cap impact Medicare beneficiaries’ need to receive patient assistance from charitable foundations?

Medicare beneficiaries will continue to need patient assistance from charitable foundations, even with the Part D cap of $2,000 in place come 2025. Because those with federal insurance, such as Medicare, cannot benefit from pharma company assistance, the assistance provided by charitable foundations will continue to serve as an important, if not critical, safety net for many people on Medicare. Without this safety net, thousands of individuals living with serious illness would have no place to turn for assistance, and many would likely abandon treatment.

Recent in-depth research by Avalere and our own national polling from the PAN Foundation’s Center for Patient Research found that despite the new reforms leading to more patients being able to start and stay on their prescription drugs, many people will continue to face affordability challenges. This is especially true among those within certain therapeutic areas—such as autoimmune conditions, multiple sclerosis, and HIV—and the most marginalized and underserved communities (e.g., lower-income, Black, and Native American patients). In fact, Avalere projects that more than 2.6 million adults enrolled in Medicare Part D will have OOP spending high enough to reach the new $2,000 annual cap when it comes into effect in 2025.

And when looking at beneficiaries within only eight key therapeutic areas, Avalere projects anywhere from about 182,000 to 410,000 people will likely spend more than 10% of their estimated annual income on OOP costs for prescription medications each year.

 This leaves them effectively underinsured and at increased risk of delaying or forgoing treatment.

Doesn’t the $2,000 Medicare Part D cap make OOP prescription drugs affordable for everyone?

For some, perhaps. But for most people seeking assistance from charitable foundations, many of whom are living on fixed incomes between 150% and 300% of the federal poverty level and living with serious illnesses, the answer is no.

Our national polling found about 75% of adults said it would be difficult to afford $2,000 in OOP prescription costs each year.

 Affordability concerns were especially high among Black and Hispanic adults, adults with incomes under $50,000, and adults with chronic or rare diseases.

In addition, for the more than 50 million adults enrolled in Medicare Part D, their OOP Rx costs are just one part of their overall cost of care. This doesn’t account for their other healthcare costs (e.g., insurance premiums, doctors’ office copays, lab tests, etc.) or living expenses, such as housing/rent, food, utilities, clothing, or transportation. In fact, about 60% of respondents whose current prescription drug costs don’t exceed $2,000 said they would cut back on food-related expenses if they were faced with that total, while others reported they would cut back on utilities or other medical expenses.

Is the  M3P a good payment option for all beneficiaries enrolled in Medicare Part D plans?

When M3P goes into effect in 2025, ultimately, it will be up to the Medicare beneficiary to decide if this payment option is best for them. Someone enrolled in Medicare Part D should consider opting into the program if they:

Have difficulty paying for their OOP drug costs all at once.

Have experienced more than $2,000 in OOP drug costs in the prior year.

Have experienced a single prescription cost of at least $600.

Want to budget and spread their OOP drug costs throughout the year.

Are not eligible for financial assistance from programs such as the Extra Help Program, State Pharmaceutical Assistance Programs, Medicare Savings Programs, AIDS Drug Assistance Program, or charitable assistance foundations, like the PAN Foundation.

As the Medicare program undergoes significant transformation for the first time in many years, what do donors to charitable foundations need to know?

The generosity of donors makes it possible for charitable foundations to provide financial assistance directly to patients. This financial assistance is often the difference between being able to receive treatment, or not—especially for those living with life-threatening, chronic, or rare diseases.

It’s clear that while these reforms are an important step in the right direction, many will continue to struggle. And since individuals enrolled in Medicare Part D, and other federally funded insurance programs, are unable to use manufacturer assistance, they must rely on organizations such as the PAN Foundation to serve as a safety net when they can’t afford their medications.

Sustained funding to foundations in 2025 and beyond will provide continuity of care for people who have relied on foundation support for years. And it will continue to minimize disparities in access to care while helping us serve even more people who need our help.

1. Despite Historic Medicare Reforms, Charitable Assistance Programs Still Critical for Many. PAN Foundation

https://www.panfoundation.org/despite-historic-medicare-reforms-charitable-assistance-programs-still-critical-for-many/

2. New Analysis: Medicare Reforms Will Lead to Continued Affordability Challenges, Despite Increased Medication Uptake and Adherence. PAN Foundation

https://www.panfoundation.org/new-analysis-medicare-reforms-will-lead-to-continued-affordability-challenges/

3. National Poll: Many Adults will Struggle to Afford Medications Even with Medicare Reforms. PAN Foundation

https://www.panfoundation.org/national-poll-many-adults-will-struggle-to-afford-medications-even-with-medicare-reforms/

Will the looming changes address the concerns of the patient assistance community?

Looking Ahead to Medicare Reforms Coming in 2025

Millions of people enrolled in Medicare have benefited from the telehealth flexibilities that were granted during the COVID-19 pandemic, and, subsequently, extended in 2022. However, without Congressional action, these flexibilities will end on Dec. 31, 2024—impacting access and leading to further health inequities.

Telehealth flexibilities have played a critical role in expanding access to care and maintaining continuity of care, especially those living in rural communities and underserved areas. For individuals requiring access to advanced specialists, mental health providers, and those with mobility issues or lack of transportation, telehealth flexibilities have served as a much-needed lifeline to care.

According to a national poll conducted by the PAN Foundation’s Center for Patient Research,

 nearly one-third of adults who use telehealth services say they do so to refill their prescriptions (30%), to address less serious health issues (28%), and for mental health support (28%). Clinicians have used telehealth to expand access to care for patients and to support strong patient relationships, and they value the flexibility created by the option for remote care when clinically appropriate. Important safety-net providers such as community health centers and rural health clinics have depended on these flexibilities, as have clinicians such as physical, speech, and occupational therapists to extend access to patients.

Over the past couple of years, several bills to permanently extend telehealth flexibilities for people enrolled in Medicare have been introduced with bipartisan support. This includes the Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act of 2023 (H.R. 4189), introduced by Rep. Mike Thompson (D-CA). While there are similarities between various telehealth bills, it is important that a final telehealth bill that is passed and permanently extends flexibilities includes the following:

Expands patient access to telehealth services by removing geographic and originating site limitations to enable patients to communicate remotely with their providers, regardless of location.

Removes distant site provider list restrictions to allow all Medicare providers who deliver telehealth-appropriate. services to provide those through telehealth. Providers would include physical and occupational therapists, speech-language pathologists, and social workers.

Ensures that federally qualified health centers, critical access hospitals, and rural health clinics can furnish telehealth in Medicare and be reimbursed fairly for those services.

Removes in-person requirements under Medicare for mental health services furnished through telehealth and telecommunications technology.

Allows the Centers for Medicare & Medicaid Services to cover audio-only telehealth services where necessary to bridge gaps in access to care. Audio-only telehealth visits should continue to be an option for patients who lack access to the resources needed to participate in video-based telehealth.

Allows employers to offer telehealth benefits for seasonal and part-time workers. Increasing access to some telehealth benefits for part-time employees, seasonal workers, interns, new employees in a waiting period can be a meaningful way to support workers—as long as this access supplements health insurance purchased by that individual or a family member.

Drives better and more coordinated care for those with chronic disease by ensuring adequate reimbursement for remote patient monitoring technology.

Since the pandemic, patient and provider groups have advocated for legislation that recognizes the value of telehealth services for Medicare beneficiaries. Congress must not wait until the end of the year to pass legislation that already has bipartisan support. We at PAN urge Congress to act now

 to pass telehealth legislation that will positively impact millions of people in the US and their healthcare journeys.

1. Nearly Half of Adults Who Use Telehealth Face Barriers to Accessing Services. PAN Foundation. April 17, 2024. 

https://www.panfoundation.org/nearly-half-of-adults-who-use-telehealth-face-barriers-to-accessing-services/

2. Urge Congress to Expand Telehealth Flexibilities Before it’s too Late! PAN Foundation. 

https://www.votervoice.net/PANFoundation/Campaigns/114714/Respond

If Congress doesn't act soon, it could result in more health inequities.
