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Medicare and Medicaid Programs; Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs  [1]

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Date: 2024-12-10  

In commenting, please refer to file code CMS-4208-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

This proposed rule would revise the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicaid, Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to Star Ratings, marketing and communications, agent/broker compensation, health equity, drug coverage, dual eligible special needs plans (D-SNPs), utilization management, network adequacy, and other programmatic areas, including the Medicare Drug Price Negotiation Program. This proposed rule also includes proposals to codify existing subregulatory guidance in the Part C and Part D programs.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments. CMS will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm an individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.

Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a plain language summary of this proposed rule may be found at https://www.regulations.gov/​.

I. Executive Summary

A. Purpose

The primary purpose of this proposed rule is to amend the regulations for the Medicare Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) program, Medicaid program, Medicare cost plan program, and Programs of All-Inclusive Care for the Elderly (PACE). This proposed rule includes a number of new policies that would improve these programs for contract year 2026 as well as codify existing Part C and Part D subregulatory guidance.

We note that, as with previous rules, the new marketing and communications policies in this rule are proposed to be applicable for all contract year 2026 marketing and communications, beginning October 1, 2025. However, to operationalize the proposed Format Provider Directories for Medicare Plan Finder provision at § 422.111(m), we anticipate that 2025 plan year directory data will need to be made available online for testing purposes in the summer of 2025, and 2026 plan year data would need to be available online on October 1, 2026. Therefore, we propose an applicability date of July 1, 2025, for this provision.

B. Summary of the Key Provisions

1. Vaccine Cost Sharing Changes

This proposal would implement section 11401 of the Inflation Reduction Act of 2022 (IRA), which amends section 1860D-2 of the Act to require that, effective for plan years beginning on or after January 1, 2023, the Medicare Part D deductible shall not apply to, and there is no cost-sharing for, an adult vaccine recommended by the Advisory Committee on Immunization Practices (ACIP) covered under Part D.

2. Insulin Cost Sharing Changes

This proposal would implement section 11406 of the IRA, which amends section 1860D-2 of the Act to require that, effective for plan years beginning on or after January 1, 2023, the Medicare Part D deductible shall not apply to covered insulin products, and the Part D cost-sharing amount for a one-month supply of each covered insulin product must not exceed the statutorily defined “applicable copayment amount” for all enrollees. The applicable copayment amount for 2023, 2024, and 2025 is $35. For 2026 and each subsequent year, in accordance with the statute, we are proposing that, with respect to a covered insulin product covered under a prescription drug plan (PDP) or a Medicare Advantage prescription drug ( printed page 99341) (MA-PD) plan prior to an enrollee reaching the annual out-of-pocket threshold, the “covered insulin product applicable cost-sharing amount” is the lesser of—

$35;

An amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with Part E of subchapter XI; or

An amount equal to 25 percent of the negotiated price, as defined in § 423.100, of the covered insulin product under the PDP or MA-PD plan.

3. Medicare Prescription Payment Plan

We propose regulatory changes to codify agency guidance implementing section 11202 of the IRA, which establishes the Medicare Prescription Payment Plan and requires each PDP sponsor offering a prescription drug plan and each MA organization offering an MA-PD plan to provide to any enrollee of such plan, including an enrollee who is subsidy eligible, the option to elect with respect to a plan year to pay cost-sharing under the plan in monthly amounts that are capped. Specifically, we propose to add new § 423.137, add several new Part D required materials and content at § 423.2267, add Medicare Prescription Payment Plan information to the list of required content for Part D sponsor websites at § 423.2265, and add the Medicare Prescription Payment Plan to the list of Part D requirements waived for the Limited Income Newly Eligible Transition (LI NET) program at § 423.2536.

4. Part D Coverage of Anti-Obesity Medications (§ 423.100) and Application to the Medicaid Program

The statutory definition of a covered Part D drug at section 1860D-2(e)(2) of the Social Security Act (the Act) excludes certain drugs and uses—specifically, those that may be excluded by Medicaid under section 1927(d)(2) of the Act. This includes, at section 1927(d)(2)(A) of the Act, “agents when used for anorexia, weight loss, or weight gain.” Historically, drugs used for weight loss have been excluded from the definition of covered Part D drug, regardless of their use for treatment of individuals with obesity, and have been an optional drug benefit for Medicaid programs. Increases in the prevalence of obesity in the United States and changes in the prevailing medical consensus towards recognizing obesity as a disease since the beginning of the Part D program in 2006 have compelled CMS to re-evaluate Part D coverage of anti-obesity medications (AOMs) for Medicare Part D enrollees with obesity where the drug's prescribed use is not for a medically accepted indication (MAI) that is currently covered under Part D. We are proposing to reinterpret the statutory exclusion of agents when used for weight loss to allow Part D coverage of AOMs when used to treat obesity by reducing excess body weight or maintaining weight reduction long-term for individuals with obesity who do not have another condition for which the prescribed use is an MAI that is covered under the current Part D policy. The proposed reinterpretation would also apply to the Medicaid program. Thus, AOMs could not be excluded from Medicaid coverage under this interpretation when used for weight loss or chronic weight management for the treatment of obesity. Coverage of AOMs and drugs that contain the same active ingredient as AOMs that meet the definition of a covered outpatient drug are already subject to section 1927 requirements when used for an indication, other than weight loss, that is an MAI, and Medicaid must cover those products when they are medically necessary. Under our proposed reinterpretation, AOMs approved for weight loss and chronic weight management that are used for weight loss in individuals who do not have obesity or another condition that is an MAI for the AOM would remain excluded from the definition of covered Part D drug and would remain optional benefit for Medicaid programs.

5. Promoting Informed Choice—Format Provider Directories for Medicare Plan Finder

We are proposing to require MA provider directory data, as required under § 422.111(b)(3)(i) be submitted for use to populate Medicare Plan Finder (MPF). In addition, we are proposing to require MA organizations to attest that this information is accurate and consistent with data submitted to comply with CMS's MA network adequacy requirements at § 422.116(a)(1)(i) when it is submitted to CMS for the purpose of incorporating into MPF. The proposed regulatory changes would further promote informed beneficiary choice and transparency found in online resources, empowering people with Medicare to make informed choices about their coverage. In addition, the proposal will help ensure that provider directory information, including the provider's cultural and linguistic capabilities, which are currently required for MA provider directories, and are especially important to underserved communities, will be more readily available when considering an MA plan.

6. Promoting Informed Choice—Expand Agent and Broker Requirements Regarding Medicare Savings Programs, Extra Help, and Medigap

To ensure beneficiaries are well informed about and have an accurate picture of their MA and Part D enrollment options, we are also proposing to add the following topics to the existing list of requirements that agents and brokers must discuss with their customers: the availability of low-income supports including the Part D Low-Income Subsidy (also known as “Extra Help”) and Medicare Savings Programs; for beneficiaries enrolling into MA when first eligible for Medicare or dropping a Medigap plan to enroll in an MA plan for the first time, general information on Medigap Federal guaranteed issue (GI) rights, the practical implications of switching from Medicare Advantage to Traditional Medicare, and, when applicable, provide information on state laws regarding Medigap GI rights for those states where the agent or broker is licensed and appointed to sell; and requiring that agents pause to address remaining questions the beneficiary may have related to enrollment in a plan prior to moving forward with an enrollment. As Medicare enrollees consider their coverage options, it is essential that agents and brokers provide adequate information to ensure beneficiaries can make fully informed choices, both to support enrollees and promote a functioning, competitive marketplace.

7. Promoting Informed Choice—Enhancing Review of Marketing and Communications

We are proposing to broaden the marketing definition in §§ 422.2260 and 423.2260, in order to expand CMS oversight of Medicare Advantage and Part D communications materials and activities and strengthen beneficiary protections against misleading and confusing advertising tactics. Currently, communications materials and activities only fall within the regulatory definition of marketing if they meet certain content and intent standards. To satisfy the content portion of the current regulatory definition of marketing, communications materials and activities must include or address content regarding: (1) the plan's benefits, benefits structure, premiums or cost sharing; (2) measuring or ranking standards (for example, Star Ratings or plan comparisons); or (3), for MA plans only, rewards and incentives as defined ( printed page 99342) under § 422.134(a). In order to broaden the definition of marketing, CMS is proposing to eliminate this content standard and rely solely on an intent standard to determine whether communications material and activities are considered marketing. Broadening the definition of marketing would expand the scope of materials that must be prospectively submitted to CMS for review, which would allow CMS to better ensure that MA organizations, Part D sponsors, and their downstream entities are not providing misleading, inaccurate, or confusing information to current or potential enrollees, or engaging in activities that could misrepresent the MA organization or Part D sponsor, in accordance with §§ 422.2262 and 423.2262. We are also proposing conforming edits to the definition of “Advertisement (Ad)” in §§ 422.2260 and 423.2260 to align with the proposed updates to the definition of marketing.

8. Promoting Transparency for Pharmacies and Protecting Beneficiaries From Disruptions

We are proposing to require Part D sponsors (or first tier, downstream, or related entities (FDRs), such as pharmacy benefit managers (PBMs), on the sponsors' behalf) to notify network pharmacies which plans the pharmacies will be in-network for in a given plan year by October 1 of the year prior to that plan year and to require sponsors to provide pharmacies a list of these plans to network pharmacies on request after October 1. We are also proposing to require contracts with pharmacies for participation in Part D networks that allow the Part D sponsor or FDR to terminate the contract without cause to also allow pharmacies to terminate the contracts without cause after providing the same notice that the contract requires the sponsor or FDR to provide the pharmacy. We believe these policies will address concerns raised by pharmacies about their ability to provide accurate information to beneficiaries and will help protect beneficiaries from disruptions in care that occur when network pharmacies stop providing services before formally terminating their contracts.

9. Administration of Supplemental Benefits Coverage Through Debit Cards

This provision would codify existing requirements and new protections for supplemental benefits that are administered using debit cards by MA organizations. Specifically, we are proposing to: (1) describe when, how, and in what manner debit cards can be used by an MA organization and enrollee; (2) introduce additional disclosure requirements to increase transparency, including additional disclosure rules around supplemental benefits and plan debit cards (3) further protect access to plan-covered services for MA enrollees by requiring MA organizations to allow an enrollee to receive covered benefits through an alternative process if there is an issue with a plan debit card, (4) ensure debit cards are electronically linked to plan covered items and services through a real-time identification mechanism, and 5) clarify what types of over the counter (OTC) products are acceptable. Finally, we are proposing to prohibit MA organizations from marketing the dollar value of a supplemental benefit or the method by which a supplemental benefit is administered, such as use of a debit card by the enrollee to provide the plan's payment to the provider for the covered item or service.

10. Improving Access—Enhancing Rules on Internal Coverage Criteria

In the final rule titled “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly,” which appeared in the April 12, 2023, Federal Register (88 FR 22120) (hereinafter referred to as the “April 2023 final rule”), we codified regulations that clarified the obligations and responsibilities for MA organizations in covering basic benefits and established guardrails for MA organizations to develop and use coverage criteria in a way that aligns with Traditional Medicare. These rules were applicable to coverage for MA organizations beginning January 1, 2024. Through CMS account manager engagement with MA organizations, incoming inquiries from industry stakeholders, and our ongoing 2024 program audits, we have learned a great deal about common misunderstandings related to these new rules. In order to further clarify these rules, we are proposing to build upon and enhance the regulations from the April 2023 final rule, specifically those related to the use of internal coverage criteria, by defining the meaning of “internal coverage criteria,” establishing policy guardrails to ensure access to benefits, and adding more specific rules about publicly posting internal coverage criteria content on MA organization websites.

11. Ensuring Equitable Access to Behavioral Health Benefits Through Section 1876 Cost Plan and MA Cost Sharing Limits (§§ 417.454 and 422.100)

Addressing the nation's behavioral health crisis and ensuring equitable access to behavioral health services are key priorities for CMS.[ ] Beneficiaries with severe mental illness experienced substantial disruptions in care during the COVID-19 pandemic and these disruptions were greater among disadvantaged populations (including historically underserved racial and ethnic groups and low-income populations).[ ] As a result, CMS is pursuing policies to address barriers individuals may face in accessing mental health and substance use disorder care. This includes using the authority under sections 1852(a)(1)(B)(iv), 1856(b)(1), 1857(e)(1), 1876(c)(2)(A), and 1876(i)(3)(D) of the Act to add to the list of Part A and Part B benefits (items and services) for which Medicare Advantage (MA) and Section 1876 Cost Plans' (Cost Plans) in-network cost sharing may not exceed the cost-sharing levels in Traditional Medicare.

We propose to require MA and Cost Plans' in-network cost sharing for categories of mental health and substance use disorder services (collectively called “behavioral health services”) be no greater than that in Traditional Medicare beginning January 1, 2026.

We are proposing behavioral health cost-sharing standards for MA and Cost Plans that strike a balance between: (1) improving the affordability of these services for enrollees in a timely manner; and (2) minimizing disruption to enrollees' access to care and coverage options. We also propose several changes to the cost-sharing regulations for MA and Cost Plans at §§ 417.454 and 422.100. Additionally, we solicit comment on: (1) whether CMS should apply these proposed changes to the behavioral health cost-sharing standards beginning in contract year 2026 or 2027; (2) whether there should be a transition period from the existing contract year 2025 behavioral health cost-sharing standards in current regulations for select service categories (such as, the standards at § 422.100(f)(6)(i), (iii), or ( printed page 99343) (iv) for MA plans), to the proposed cost-sharing standard; and (3) how long any transition should be. We also solicit comment regarding this behavioral health cost-sharing proposal's potential impact on how MA plans would satisfy existing requirements that cost sharing be actuarially equivalent to Traditional Medicare cost sharing at § 422.100(j)(1) and (2).

12. Improving Experiences for Dually Eligible Enrollees

Dually eligible individuals face fragmentation in many parts of the health care system, including their experiences as enrollees of Medicare and Medicaid managed care plans. One way in which we seek to address such fragmentation is though policies that integrate care for dually eligible individuals. “Integrated care” refers to delivery system and financing approaches that (1) maximize person-centered coordination of Medicare and Medicaid services; (2) mitigate cost-shifting incentives between the two programs; and (3) create a seamless experience for dually eligible individuals. We are proposing to establish new Federal requirements for D-SNPs that are applicable integrated plans to: (1) have integrated member identification (ID) cards that serve as the ID cards for both the Medicare and Medicaid plans in which an enrollee is enrolled; and (2) conduct an integrated health risk assessment (HRA) for Medicare and Medicaid, rather than separate HRAs for each program. We are also proposing to codify timeframes for special needs plans to conduct HRAs and individualized care plans (ICPs) and prioritize the involvement of the enrollee or the enrollee's representative, as applicable, in the development of the ICPs.

13. Medical Loss Ratio (MLR)

To improve medical loss ratio (MLR) reporting and oversight and to better align MA and Part D MLR requirements with commercial MLR and Medicaid MLR requirements, we are proposing to make certain changes to the regulations that govern MLR requirements for MA and Part D. Specifically, we are proposing to establish clinical and quality improvement standards for provider incentives and bonus arrangements included in the MA MLR numerator in order to help align such bonus payments with care outcomes and avoid excess premium transfer to providers. We also propose to prohibit administrative costs from being included in quality improvement activities in both the MA and Part D MLR numerator. Additionally, we propose to adopt additional requirements for the allocation of expenses in the MLR. We also propose to establish new audit and appeals processes for MLR compliance. In addition, we propose to amend the Medicare MLR regulations authorizing the release of Part C and Part D MLR data. We propose to codify the rules we established in the CY 2025 Part D Redesign Program Instructions for the treatment for MLR purposes of Medicare Prescription Payment Plan unsettled balances for 2026 and subsequent years. We also propose to explicitly provide that the Medicare MLR reporting include detailed information regarding provider payment arrangements. In addition to the proposed changes, we are issuing a request for information on potential policies that CMS could adopt regarding how the MA and Part D MLRs are calculated in order to enable policymakers to address concerns surrounding vertical integration in MA and Part D.

14. Medicare Transaction Facilitator Requirements for Network Pharmacy Agreements

We propose to amend § 423.505 by adding paragraph (q) to require that Part D sponsors' network contracts with pharmacies require such pharmacies to be enrolled in the Medicare Drug Price Negotiation Program's (“Negotiation Program”) Medicare Transaction Facilitator Data Module (“MTF DM”). We believe the requirement among Part D sponsors' network pharmacies to be enrolled in the MTF DM that would be added to Part D sponsors' network contracts with pharmacies, if finalized, would facilitate continued beneficiary access to selected drugs that are covered Part D drugs, promote access to negotiated maximum fair prices under the Negotiation Program for both beneficiaries and dispensing entities, and help ensure accurate Part D claims information and payment.

15. Enhancing Health Equity Analyses: Annual Health Equity Analysis of Utilization Management Policies and Procedures

We propose at § 422.137(d)(6)(iii)(A) through (H) to revise the required metrics for the annual health equity analysis of the use of prior authorization to require the metrics be reported by each item or service, rather than aggregated for all items and services.

In the April 2024 final rule, CMS added health equity related requirements to § 422.137, including a requirement at § 422.137(d)(6) that the Utilization Management committee must conduct an annual health equity analysis of the use of prior authorization. The analysis must examine the impact of prior authorization at the plan level, on enrollees with one or more of the specified social risk factors (SRF). The analysis must use the outlined metrics, aggregated for all items and services, calculated for enrollees with the specified SRFS, and for enrollees without the specified SRFs, from the prior contract year, to conduct the analysis.

During the public comment period, CMS received a significant number of comments on the requirement that the metrics for the health equity analysis be aggregated for all items and services (89 FR 30569). Commenters recommended that CMS require a further level of granularity to ensure that potential disparities could be identified. Specifically, commenters suggested that CMS require disaggregation by item and service to ensure that CMS can identify specific services that may be disproportionately denied. We are proposing to revise the required metrics for the annual health equity analysis of the use of prior authorization to require the metrics be reported by each item or service, rather than aggregated for all items and services.

16. Ensuring Equitable Access to Medicare Advantage Services—Guardrails for Artificial Intelligence (AI)

On October 30, 2023, the Biden-Harris Administration released an Executive Order, “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” directing agencies to ensure that artificial intelligence tools do not impede the advancement of equity and civil rights, and that the use of AI within health care organizations does not deny equal opportunity and justice for the American people.[ ] Given the growing use of AI within the healthcare sector, such as, but not limited to, AI-based patient care decision support tools, vision transformer-based AI methods for lung cancer imaging applications, and AI and machine learning based decision support systems in mental health care settings, we believe it is necessary to ensure that the use of AI does not result in inequitable treatment, bias, or both, within the healthcare system, and instead is used to promote equitable access to care and culturally competent care for all enrollees. As such, we propose to revise ( printed page 99344) § 422.112(a)(8) to ensure services are provided equitably irrespective of delivery method or origin, whether from human or automated systems. We also clarify that in the event that an MA plan uses AI or automated systems, it must comply with section 1852(b) of the Act and § 422.110(a) and other applicable regulations and requirements and provide equitable access to services and not discriminate on the basis of any factor that is related to the enrollee's health status.

17. Promoting Community-Based Services and Enhancing Transparency of In-Home Service Contractors

CMS has become aware that some entities that provide covered benefits may not be included in an MA organization's provider directory. These concerns relate to safety and a lack of transparency regarding supplemental benefit service providers and their access to an enrollee's home, as well as ensuring individuals know which providers are deeply rooted within the communities they serve. This is particularly of concern when the enrollee may not have information about who may have access to their home, personally identifiable information (PII), or protected health information (PHI). As such, to strengthen beneficiary protections and transparency, we propose to: (1) codify definitions of community-based organizations (CBOs), in-home or at-home supplemental benefit providers and direct furnishing entities; (2) require plans to identify, within the provider directory, which providers and direct furnishing entities meet the proposed definition of a CBO; (3) require plans to identify in-home or at-home supplemental benefit providers and direct furnishing entities, including those that provide a hybrid of services (both in-home or at-home, and in-office services), either through a subset list within the provider directory or through a separate list comprising in-home or at-home supplemental benefit providers and direct furnishing entities; and (4) clarify existing policy by stating that all direct furnishing entities must be included within the provider directory.

C. Conclusion

Finally, we are clarifying and emphasizing our intent that if any provision of this rule, once finalized, is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, it shall be severable from this rule and not affect the remainder thereof or the application of the provision to other persons not similarly situated or to other, dissimilar circumstances. Through this rule, we propose provisions that are intended to and will operate independently of each other, even if each serves the same general purpose or policy goal. Where a provision is necessarily dependent on another, the context generally makes that clear (such as by a cross-reference to apply the same standards or requirements).

D. Summary of Costs and Benefits

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II. Implementation of IRA Provisions for the Medicare Prescription Drug Benefit Program

A. Coverage of Adult Vaccines Recommended by the Advisory Committee on Immunization Practices Under Medicare Part D (§§ 423.100 and 423.120)

1. Background

Section 11401 of the Inflation Reduction Act (IRA) amended section 1860D-2 of the Act by adding new paragraph (8) to subsection (b) and new paragraph (5) to subsection (c) and making other conforming amendments to require that, effective for plan years beginning on or after January 1, 2023, the Medicare Part D deductible shall not apply to, and there is no cost-sharing for, an adult vaccine recommended by the Advisory Committee on Immunization Practices (ACIP) covered under Part D.

Section 11401(e) of the IRA directed the Secretary to implement section 11401 of the IRA for 2023, 2024, and 2025 by program instruction or other forms of program guidance. In accordance with the law, CMS issued memoranda via the Health Plan Management System (HPMS) that outlined requirements for Part D sponsors regarding the implementation of section 11401.

On September 26, 2022, CMS released an HPMS memorandum titled “Contract Year 2023 Program Guidance Related to Inflation Reduction Act Changes to Part D Coverage of Vaccines and Insulin.” [ ] In this memorandum, we provided guidance that for any new ACIP-recommended adult vaccine that becomes available during a plan year, Part D sponsors must apply the $0 cost-sharing requirements in section 1860D-2(b)(8) of the Act to applicable claims with dates of service after ACIP's issued recommendation.

On April 4, 2023, CMS issued an HPMS memorandum titled “Final Contract Year (CY) 2024 Part D Bidding Instructions” in which we explained that, in order for a vaccine to be considered ACIP-recommended for adult use, it must be both adopted by the Director of the Centers for Disease Control and Prevention (CDC) and published in the CDC's Morbidity and Mortality Weekly Report (MMWR).[ ]

On July 24, 2023, CMS issued a revision to the April 4, 2023 memorandum in which we clarified that the effective date of the $0 cost-sharing requirement for an ACIP-recommended adult vaccine must be aligned with the date on which the CDC Director adopts the respective ACIP vaccine recommendation, as posted on the CDC's website at https://www.cdc.gov/​vaccines/​acip/​recommendations.html, not the date on which the recommendation is published in the MMWR.[ ]

In this rule, we propose to codify the requirements related to $0 cost-sharing for adult vaccines recommended by ACIP under Part D for 2026 and each subsequent plan year. ( printed page 99350)

2. Definition of ACIP-Recommended Adult Vaccine

Section 1860D-2(b)(8)(B) of the Act specifies that for purposes of section 1860D-2(b)(8) of the Act, the term “adult vaccine recommended by the Advisory Committee on Immunization Practices” means a covered Part D drug that is a vaccine licensed by the U.S. Food and Drug Administration (FDA) under section 351 of the Public Health Service Act (PHSA) for use by adult populations and administered in accordance with recommendations of the CDC's ACIP as adopted by the CDC Director. We propose to refer to these vaccines as “ACIP-recommended adult vaccines” and to codify this definition at § 423.100. CMS is not proposing to specify a particular age for a vaccine to be considered “adult” for the purposes of determining if a Part D vaccine is subject to $0 cost sharing under section 11401 of the IRA. We defer to how the CDC and ACIP categorize such a recommendation. Part D sponsors must use the information provided by the CDC and ACIP to determine if the vaccine is recommended for, and being administered to, an adult.

Consistent with the September 26, 2022 HPMS memorandum, we propose to define an “ACIP-recommended adult vaccine” as a vaccine licensed by the FDA for use in adults and administered in accordance with ACIP recommendations. In some cases, the vaccine may be included on the ACIP “Adult Immunization Schedule” [ ] and, in other cases, the vaccine may be recommended under a separate ACIP recommendation that is not part of the Adult Immunization Schedule. In alignment with the September 26, 2022 HPMS memorandum, we interpret the term “recommendation” to refer to a recommendation under any one of ACIP's categories of recommendations, including routine, catch-up, risk-based, and shared clinical decision-making immunization recommendations. As described by ACIP, the different categories of recommendations can be distinguished based on the default decision to vaccinate. Routine, catch-up, and risk-based immunization recommendations include a default decision to vaccinate an individual based on their age or other indication, unless contraindicated. For shared clinical decision-making recommendations, the decision of whether or not to vaccinate is determined based on the “best available evidence of who may benefit from vaccination; the individual's characteristics, values, and preferences; the health care provider's clinical discretion; and the characteristics of the vaccine being considered.” [ ]

Some vaccines that are not on the ACIP Adult Immunization Schedule for routine immunization are included on the ACIP Vaccine Recommendations and Guidelines web page.[ ] This web page describes ACIP recommendations for vaccines that are used in limited populations and under limited circumstances. For example, ACIP recommends certain vaccinations for travelers prior to travelling to certain countries. Therefore, consistent with the September 26, 2022 HPMS memorandum, as long as the vaccine is an FDA-licensed vaccine for use by adults that is recommended by ACIP for use by adults, such vaccine would meet our proposed definition of an ACIP-recommended adult vaccine, when provided in accordance with ACIP recommendations.

As described in the September 26, 2022 HPMS memorandum, a Part D vaccine would not meet our proposed definition of an ACIP-recommended adult vaccine and, therefore, would not be subject to the requirements implemented in this proposed rule, if the vaccine is: (1) not licensed by the FDA under section 351 of the PHSA for use by adults; (2) not recommended by ACIP for use by adults; (3) administered to an individual who is not an adult, even if such use in the non-adult is supported by ACIP recommendations (for example, recommendations in the ACIP child and adolescent immunization schedule); or (4) not administered in accordance with ACIP recommendations.

In summary, we propose to add at § 423.100 a definition of “ACIP-recommended adult vaccine” that means a covered Part D drug, as defined at § 423.100, that is a vaccine licensed by the FDA under section 351 of the Public Health Service Act for use by adult populations and administered in accordance with recommendations of ACIP of the CDC as adopted by the CDC Director.

3. No Deductible or Cost-Sharing for ACIP-Recommended Adult Vaccines

Section 1860D-2(b)(8)(A) of the Act specifies that the deductible shall not apply and there shall be no coinsurance or other cost-sharing with respect to ACIP-recommended adult vaccines. Generally, Part D vaccines that have ACIP-recommended uses in the adult population and are administered to an adult must be provided with no enrollee cost-sharing. As described in the September 26, 2022 HPMS memorandum, this means that enrollees must not be subject to cost sharing on the ingredient cost of the vaccine submitted on the prescription drug event (PDE) record, or any associated sales tax, dispensing fee, or vaccine administration fee, regardless of the vaccine's formulary tier placement or the benefit phase that the enrollee is in.

We are also proposing at § 423.120(g)(3) that enrollees who submit direct member reimbursement (DMR) requests for ACIP-recommended adult vaccines accessed at either out-of-network pharmacies or providers (in accordance with § 423.124(a) and (c)), or at in-network pharmacies or providers, that a Part D sponsor determines are coverable under their benefit must not be subject to cost sharing. While Part D sponsors generally may charge the enrollee for the difference between the cash price and plan allowance for DMRs for covered Part D drugs accessed from both out-of-network and in-network pharmacies, neither § 423.124(b) nor Chapter 14 of the Prescription Drug Benefit Manual directly addresses covered Part D drugs that have statutorily limited cost sharing.[ ] Because there can be no cost sharing for ACIP-recommended adult vaccines accessed at either out-of-network pharmacies or providers (in accordance with § 423.124(a) and (c)), or at in-network pharmacies or providers, that a Part D sponsor determines are coverable under their benefit, the Part D sponsor must reimburse the enrollee for the full cash price paid to the pharmacy or provider for an ACIP-recommended adult vaccine.

The total gross covered drug cost (TGCDC) is usually reported differently on PDEs depending on whether the drug was accessed at an out-of-network or in- ( printed page 99351) network pharmacy or provider. Specifically, Part D sponsors report the cash price that the enrollee paid to the pharmacy or provider as the TGCDC for out-of-network DMRs but only report the negotiated price as the TGCDC for in-network DMRs. However, we are clarifying here that with respect to ACIP-recommended adult vaccines, as an exception to the Chapter 14 guidance, the sponsor should report the cash price paid to the pharmacy or provider as the TGCDC on the PDE for both out-of-network and in-network DMRs. Regardless, there is no true out-of-pocket (TrOOP) cost accumulation for these claims because the beneficiary has no cost sharing for ACIP-recommended adult vaccines under the basic Part D benefit.

Under our proposed policy at § 423.120(g), and as described in the September 26, 2022 HPMS memorandum, new Part D vaccines that become available during the plan year and meet the definition of an ACIP-recommended adult vaccine are subject to the cost-sharing requirements of section 1860D-2(b)(8)(A) of the Act. Consistent with the definition of a covered Part D drug at § 423.100, the statutory cost-sharing requirements apply regardless of whether a Part D sponsor adds the vaccine to the formulary midyear, or the enrollee obtains the vaccine via a formulary exception. In addition, we propose at § 423.120(g)(2) that if ACIP issues a new or revised recommendation for a vaccine, related to its use in adults during the plan year, Part D sponsors must apply the cost-sharing requirements of this proposed rule, as applicable, to any ACIP-recommended adult vaccine claims with dates of service after the proposed “Effective date of the ACIP recommendation” discussed later in this proposed rule.

Consistent with the April 4, 2023, HPMS memorandum, Part D sponsors may place ACIP-recommended adult vaccines on any tier, including a vaccine tier, and apply utilization management strategies (for example, prior authorization), insofar as such tier placement or utilization management strategy is consistent with the requirements of CMS's formulary review and approval process under § 423.120(b).

As described in section 30.2.7 of Chapter 6 of the Medicare Prescription Drug Benefit Manual, Part D sponsors may only use utilization management strategies to assess the necessity of vaccines that are less commonly administered in the Medicare population, facilitate the use of vaccines in line with ACIP recommendations, and evaluate potential reimbursement of vaccines that could be covered under Part B.[ ] For example, utilization management strategies may be used to ensure an enrollee meets the age or clinical requirements recommended by ACIP for a particular vaccine, such as the respiratory syncytial virus (RSV) vaccine which is currently recommended by ACIP for adults aged 75 years of age and older and adults aged 60-74 who are at increased risk for severe RSV disease. However, regardless of an ACIP-recommended adult vaccine's tier placement or applicable utilization management strategies, the statutory zero cost-sharing limits required under this proposed rule would still apply.

In summary, we propose to codify at § 423.120(g)(1) the requirement that Part D sponsors must not apply the deductible or charge cost sharing on ACIP-recommended adult vaccines. We also propose to codify at § 423.120(g)(2) that once a new or revised recommendation is posted on the CDC website, Part D sponsors must provide coverage consistent with § 423.120(g)(1) for dates of service on or after the “Effective date of the ACIP recommendation” as discussed later in this proposed rule. Finally, we propose to codify at § 423.120(g)(3) that these cost-sharing requirements apply for ACIP-recommended adult vaccines obtained from either in-network or out-of-network pharmacies or providers (in accordance with § 423.124(a) and (c)).

4. Effective Date of ACIP Recommendations

In the July 24, 2023, HPMS memorandum, we stated that Part D sponsors must provide $0 cost sharing for an ACIP-recommended adult vaccine as of the date the CDC Director adopts the ACIP's recommendation, and it is posted on the CDC's website. Accordingly, we propose to add at § 423.100 a definition of “Effective date of the ACIP recommendation” that means the date specified on the CDC website noting the date the CDC Director adopted the ACIP recommendation.

In the July 24, 2023 HPMS memorandum, we also stated that in the event that the CDC Director's adoption of an ACIP recommendation for an adult vaccine is posted on the CDC's website but an adoption date is not specified, the effective date of the ACIP recommendation is the day after the last day of the ACIP meeting at which the recommendation was approved. However, we are not including this requirement in our proposed definition of “Effective date of the ACIP recommendation” at § 423.100 as it is highly unlikely that an ACIP recommendation will be posted without the date on which it was adopted by the CDC Director. In the event that a recommendation is posted without an effective date, CMS will consult with the CDC to obtain the date the recommendation was adopted by the CDC Director and provide guidance.

The ACIP holds three regular meetings annually, generally in February, June, and October, in addition to emergency sessions, for the purpose of reviewing scientific data and voting on vaccine recommendations. We note that the proposed “Effective date of the ACIP recommendation” and the date on which it is published on the CDC's website may not always be the same date (if, for example, the website posting occurs after the date specified as the date the CDC Director adopted the recommendation). Nevertheless, the proposed “Effective date of the ACIP recommendation” determines when the cost-sharing requirements apply. Consequently, if an enrollee paid cost sharing for an ACIP-recommended adult vaccine after the “Effective date of the ACIP recommendation” (for example, the enrollee received the vaccine after the “Effective date of the ACIP recommendation,” but prior to the recommendation being posted on the CDC website), once the recommendation has been posted to the CDC website, the Part D sponsor will need to reimburse the enrollee for any cost sharing they paid for the vaccine.

In instances where ACIP expands a previous recommendation, narrows a previous recommendation, or removes a previous recommendation, the “Effective date of the ACIP recommendation” is the date the CDC Director adopted the changed recommendation once the recommendation is posted on the CDC's website. We note that a change to an ACIP recommendation alone does not affect a vaccine's status as a Part D drug. Specifically, a Part D drug is defined at § 423.100, in relevant part, as including a vaccine, if used for a medically accepted indication, as defined in section 1860D-2(e)(4) of the Act. Since an ACIP recommendation does not affect what is considered a medically accepted indication, as defined under section 1860D-2(e)(4) of the Act, for a particular vaccine, an ACIP recommendation alone does not affect a vaccine's status as a Part D drug. However, if the FDA labeling changes to ( printed page 99352) align with a narrowed ACIP recommendation, this may change what is considered a medically accepted indication and may change what indications are coverable under Part D for a particular vaccine. In other words, if an ACIP recommendation is narrowed or removed, the vaccine may still be coverable under Part D, but an enrollee may be subject to cost-sharing for the vaccine if it is not administered in accordance with the revised ACIP recommendation.

When an ACIP recommendation for a particular vaccine is narrowed (for example, additional restrictions are added or the vaccine is recommended for a more limited patient population), Part D sponsors may implement prior authorization (PA) to determine whether the vaccine is being administered in accordance with ACIP recommendations and whether the enrollee should be subject to cost-sharing. For example, if an ACIP recommendation is amended to raise the age for which a vaccine is recommended to be administered, Part D sponsors may implement PA to ensure a beneficiary meets this new age requirement. However, Part D sponsors are not required to implement PA for vaccines to determine if a vaccine is being used for an ACIP-recommended use and is therefore subject to $0 cost-sharing.

When an ACIP recommendation is narrowed and a Part D sponsor does not currently have a PA in place for that vaccine, the plan must submit a negative formulary change request to add a PA requirement for that vaccine that aligns with the newly narrowed recommendation, consistent with § 423.120(e)(1). As specified in § 423.120(e)(3)(i), negative change requests for maintenance changes are considered to be approved after 30 days unless the Part D sponsor is notified otherwise. Once the request is approved, Part D sponsors may implement the PA requirement and, if the plan determines that the vaccine is not being used for an ACIP—recommended use, may charge the enrollee the applicable cost-sharing. Part D sponsors are permitted, but not required, to make retroactive determinations for claims that were processed with $0 cost-sharing after the “Effective date of the ACIP recommendation” and before the date on which the PA requirement went into effect.

If ACIP withdraws a recommendation for a previously recommended vaccine such that the vaccine no longer meets the definition of an ACIP-recommended adult vaccine, Part D sponsors are not required to submit a negative change request and may immediately apply cost sharing for the vaccine for dates of service after the “Effective date of the ACIP recommendation.”

Because the cost-sharing limits for vaccines outlined in this proposal have been in place since 2023 through program instruction authority and we have annually reviewed cost sharing in plan benefit package submissions, we believe the impacts of our proposed codification of these requirements should have minimal impact on Part D sponsors and beneficiaries.

B. Appropriate Cost-Sharing for Covered Insulin Products Under Medicare Part D (§§ 423.100 and 423.120)

1. Background

Section 11406 of the Inflation Reduction Act (IRA) amended section 1860D-2 of the the Act by adding new paragraph (9) to subsection (b) and new paragraph (6) to subsection (c) and making other conforming amendments to require that, effective for plan years beginning on or after January 1, 2023, the Medicare Part D deductible shall not apply to covered insulin products, and the Part D cost-sharing amount for a 1-month supply of each covered insulin product must not exceed the statutorily defined “applicable copayment amount” for all enrollees. For 2023, 2024, and 2025, the applicable copayment amount is $35. For 2026 and each subsequent year, the applicable copayment amount is the lesser of: (1) $35, (2) an amount equal to 25 percent of the maximum fair price (MFP) established for the covered insulin product in accordance with part E of subchapter XI of the Act, or (3) an amount equal to 25 percent of the negotiated price of the covered insulin product under the PDP or MA-PD plan.

Section 11406(d) of the IRA directed the Secretary to implement section 11406 of the IRA for 2023, 2024, and 2025 by program instruction or other forms of program guidance. In accordance with the law, CMS issued several memoranda related to cost-sharing for covered insulin products via the Health Plan Management System (HPMS) that outlined expectations for Part D sponsors regarding the implementation of section 11406. On September 26, 2022, CMS released an HPMS memorandum titled “Contract Year 2023 Program Guidance Related to Inflation Reduction Act Changes to Part D Coverage of Vaccines and Insulin,” in which we provided program instructions for the implementation of the requirements in section 11406.[ ] On April 4, 2023, we released additional guidance in the “Final Contract Year (CY) 2024 Part D Bidding Instructions” in which we provided instructions for Part D sponsors as they prepared to submit bids for CY 2024.[ ] Lastly, on April 1, 2024, we released “Final CY 2025 Part D Redesign Program Instructions.” [ ]

In this rule, we propose to codify the requirements related to appropriate cost-sharing for covered insulin products under Part D for 2026 and each subsequent plan year.

2. Definition of Covered Insulin Product

Section 1860D-2(b)(9)(C) of the Act defines a covered insulin product as “an insulin product that is a covered Part D drug covered under a PDP or MA-PD plan and that is approved under section 505 of the Federal Food, Drug, and Cosmetic Act (FFDCA) or licensed under section 351 of the Public Health Service Act (PHSA) and marketed pursuant to such approval or licensure, including any covered insulin product that has been deemed to be licensed under section 351 of the PHSA pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 and marketed pursuant to such section.”

We are proposing to codify the statutory definition of “covered insulin product” at § 423.100 and, in alignment with the guidance in CMS's September 26, 2022 HPMS memorandum, we clarify that a covered insulin product includes drug products that are a combination of more than one type of insulin. We are also proposing, consistent with the September 26, 2022 HPMS memorandum, that the definition of a covered insulin product include drug products that are a combination of both insulin and a non-insulin drug or biological product. Our proposed definition of covered insulin product would not, however, include medical supplies associated with the injection of an insulin product, unless such medical supplies are a device constituent part of a combination product (as defined in 21 CFR 3.2(e)) containing insulin and such combination product is licensed under section 351 of the PHSA.

While our proposed definition of “covered insulin product” includes drug products that are a combination of more than one type of insulin or both insulin and non-insulin drug or biological products, the definition would be limited to those drug products ( printed page 99353) that are FDA-licensed products. Consequently, because a compounded drug product, as described in § 423.120(d), is not FDA-licensed, it would not meet the definition of “covered insulin product”. As such, a compounded drug product would not be subject to the requirements for a “covered insulin product” under our proposed definition at § 423.100.

Section 1860D-2(b)(9)(C) of the Act specifies that a “covered insulin product” is an insulin product that is a covered Part D drug covered under a PDP or MA-PD plan. Section 423.100 defines a covered Part D drug to be a Part D drug that is included on a Part D sponsor's formulary, treated as being included in a Part D plan's formulary as a result of a coverage determination or appeal, and obtained at a network pharmacy or an out-of-network pharmacy in accordance with § 423.124(a) and (c). Accordingly, we specify in our proposed definition at § 423.100 that a “covered insulin product” is a covered Part D drug as defined in § 423.100.

Additionally, we propose at § 423.100 that a “covered insulin product” is licensed under section 351 of the Public Health Service Act and marketed pursuant to such licensure. We clarify that this proposed definition, in accordance with the statute, includes any covered insulin product that had an approved marketing application that was deemed to be a license for the insulin product (that is, an approved biologics license application) under section 351 of the PHSA pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 and marketed pursuant to such license. We also note that outside of these situations where the insulin had an approved marketing application under section 505 of the Federal Food, Drug, and Cosmetic Act, that was deemed to be a license for the insulin product (that is, an approved biologics license application) under section 351 of the Public Health Service Act pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009, there is no need to reference section 505 of the Federal Food, Drug, and Cosmetic Act since a biological product can no longer be approved under section 505 and must be licensed in a biologics license application under section 351 of the Public Health Service Act. As such, a reference to section 505 is not included in our proposed definition of a “covered insulin product”.

3. Definition of Applicable Cost-Sharing Amount for Covered Insulin Products

Section 1860D-2(b)(9)(D) of the Act defines “applicable copayment amount” with respect to a covered insulin product under a PDP or an MA-PD plan dispensed during plan year 2026, and each subsequent plan year, as the lesser of—

$35;

An amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with Part E of subchapter XI, or;

An amount equal to 25 percent of the negotiated price of the covered insulin product under the PDP or MA-PD plan.

We interpret the section 1860D-2(b)(9)(D) reference to “applicable copayment amount” as an amount that could be either a fixed copayment or a coinsurance percentage. Therefore, we propose to define this “applicable copayment amount” as an “applicable cost-sharing amount” at § 423.100. In addition, to ensure that the reference to “applicable cost-sharing amount” is specific to the cost-sharing for covered insulin products described under proposed § 423.120(h), and discussed later in this proposed rule, we propose to define the term “covered insulin product applicable cost-sharing amount.”

Specifically, we propose to add at § 423.100 a definition of “covered insulin product applicable cost-sharing amount” that means, with respect to a covered insulin product covered under a PDP or an MA-PD plan prior to an enrollee reaching the annual out-of-pocket threshold during plan year 2026 and each subsequent plan year, the lesser of—

$35;

An amount equal to 25 percent of the maximum fair price established for the covered insulin product in accordance with Part E of subchapter XI, or;

An amount equal to 25 percent of the negotiated price, as defined in § 423.100, of the covered insulin product under the PDP or MA-PD plan.

For example, the August 15, 2024 publication “Medicare Drug Price Negotiation Program: Negotiated Prices for Initial Price Applicability Year 2026” establishes the maximum fair price for the covered insulin product Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill as $119 for a 30-day supply in CY 2026.[ ] An amount equal to 25 percent of the maximum fair price for this product is $29.75, which is lower than the cost-sharing amount of $35. Therefore, the covered insulin product applicable cost-sharing amount for Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog FlexPen; NovoLog PenFill would be the lesser of: (1) $29.75; or (2) an amount equal to 25 percent of the negotiated price, as defined in § 423.100, of the covered insulin product under the PDP or MA-PD plan.

4. Cost Sharing for Covered Insulin Products

Section 1860D-2(b)(9)(A) of the Act specifies that for plan year 2023 and subsequent plan years, the deductible, as described in section 1860D-2(b)(1) of the Act, shall not apply with respect to any covered insulin product. Section 1860D-2(b)(9)(B)(ii) of the Act further specifies that for 2025 and subsequent plan years, the coverage provides benefits for any covered insulin product, prior to an individual reaching the out-of-pocket threshold, with cost-sharing for a month's supply that does not exceed the applicable copayment amount. We are proposing to codify these requirements at § 423.120(h)(1) and (2).

In alignment with the guidance in our September 26, 2022 HPMS memorandum, we propose to interpret the section 1860D-2(b)(9) cost-sharing requirements to apply separately to each prescription fill that is dispensed. For a prescription fill dispensed in an amount up to a 1-month supply, $35 (or a lower amount specified by the sponsor) is considered a copayment for purposes of determining the “covered insulin product applicable cost-sharing amount.” Under our proposal, and consistent with our current policy in the September 26, 2022 HPMS memorandum, Part D sponsors would not be required to prorate the $35 copayment if less than a 1-month supply is dispensed. We believe this proposed policy is supported by section 1860D-2(b)(9)(D) of the Act, which does not explicitly require prorating the applicable copayment amount for less than a 1-month supply. It also aligns with current regulations because insulin is not a solid oral dosage form subject to daily cost-sharing requirements at § 423.153(b)(4). Under our proposal, if the “covered insulin product applicable cost-sharing amount” is a coinsurance, the coinsurance percentage would be ( printed page 99354) applied to the negotiated price regardless of the days' supply dispensed.

With respect to extended-day supplies (that is, greater than a 1-month supply) of covered insulin products, we are proposing that cost sharing must not exceed the cumulative “covered insulin product applicable cost-sharing amount” that would apply if the same days' supply was dispensed in the fewest number of 1-month supply increments necessary. For example, if a covered insulin product is dispensed for greater than a 1-month supply, but less than a two-month supply, the lesser of $70 or 25 percent of MFP or negotiated price, whichever applies, would remain the maximum cost-sharing amount. Similarly, the lesser of $105 or 25 percent of the MFP or negotiated price, whichever applies, would apply for a covered insulin product that is dispensed for greater than a two-month supply up to a three-month supply. If the “covered insulin product applicable cost-sharing amount” is a coinsurance, the coinsurance percentage would be applied to the negotiated price regardless of the days' supply dispensed.

While Part D sponsors must not charge cost-sharing that exceeds the “covered insulin product applicable cost-sharing amount,” Part D sponsors may charge cost-sharing that is equal to or less than the “covered insulin product applicable cost-sharing amount.” This means that Part D sponsors have the flexibility to specify cost-sharing that is equal to or lower than the lesser of: a $35 copayment, or 25 percent coinsurance based on the MFP (if established for such product under the Medicare Drug Price Negotiation Program for that year), or 25 percent coinsurance based on the negotiated price. Part D sponsors could meet this cost-sharing requirement by establishing a copayment amount that is equal to or lower than $35 for a 1-month supply, establishing a coinsurance percentage that is equal to or lower than 25 percent of the product's MFP or negotiated price, or establishing both a copayment amount equal to or lower than $35 and a coinsurance percentage equal to or lower than 25 percent of the product's MFP or negotiated price.

In the September 26, 2022 HPMS memorandum, we provided guidance on managing out-of-network claims. We are now proposing that enrollees who submit direct member reimbursement (DMR) requests for covered insulin products accessed at either out-of-network pharmacies or providers (in accordance with § 423.124(a) and (c)), or at in-network pharmacies or providers, must not pay more than the “covered insulin product applicable cost-sharing amount.” While Part D sponsors generally may charge the enrollee for the difference between the cash price and plan allowance for DMRs for covered Part D drugs accessed from both out-of-network and in-network pharmacies, neither § 423.124(b) nor Chapter 14 of the Prescription Drug Benefit Manual directly addresses covered Part D drugs that have statutorily limited cost sharing.[ ] Therefore, for covered insulin products accessed at either out-of-network pharmacies or providers (in accordance with § 423.124(a) and (c)), or at in-network pharmacies or providers, we propose at § 423.120(h)(4) that the Part D sponsor must reimburse the enrollee for the full cash price paid to the pharmacy or provider for a covered insulin product minus the “covered insulin product applicable cost-sharing amount.”

The total gross covered drug cost (TGCDC) usually is reported differently on prescription drug events (PDEs) depending on whether the drug was accessed at an out-of-network or in-network pharmacy or provider. Specifically, Part D sponsors report the cash price that the enrollee paid to the pharmacy or provider as the TGCDC for out-of-network DMRs but only report the negotiated price as the TGCDC for in-network DMRs. However, we are clarifying here that with respect to covered insulin products, as an exception to the Chapter 14 guidance, the sponsor should report the cash price paid to the pharmacy or provider as the TGCDC on the PDE for both out-of-network and in-network DMRs. Additionally, true out-of-pocket (TrOOP) cost accumulation for covered insulin products would be limited to the beneficiary's cost-sharing amount, which cannot exceed the “covered insulin product applicable cost-sharing amount.”

As described in the April 4, 2023 HPMS memorandum, Part D sponsors may place covered insulin products on any tier, and apply utilization management strategies (for example, prior authorization and step therapy), insofar as such tier placement or utilization management strategy is consistent with the requirements of CMS's formulary review and approval process under § 423.120(b). However, regardless of a covered insulin product's tier placement or applicable utilization management strategy, the statutory cost-sharing limits under this proposed rule still apply.

We propose to codify at § 423.120(h)(1) and (2) that with respect to coverage of a covered insulin product, as we propose to define such term at § 423.100, prior to an enrollee reaching the annual out-of-pocket threshold, a Part D sponsor must not apply a deductible and must ensure any enrollee cost-sharing for each prescription fill up to a 1-month supply does not exceed the “covered insulin product applicable cost-sharing amount” as defined at § 423.100. We also propose to codify at § 423.120(h)(3) that Part D sponsors must ensure that any enrollee cost sharing for each prescription fill greater than a 1-month supply does not exceed the cumulative “covered insulin product applicable cost-sharing amount,” that would apply if the same days' supply was dispensed in the fewest number of 1-month supply increments necessary. Finally, we propose to codify at § 423.120(h)(4) that these cost-sharing requirements apply for covered insulin products obtained from either in-network and out-of-network pharmacies and providers.

C. Medicare Prescription Payment Plan (§§ 423.137, 423.2265, 423.2267, and 423.2536)

1. Background

The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169) made several additions and amendments to the Social Security Act (the Act) that affect the structure of the defined standard Part D drug benefit. Section 11202 of the IRA (Maximum Monthly Cap on Cost-Sharing Payments under Prescription Drug Plans and MA-PD Plans) added a new section 1860D-2(b)(2)(E) to the Act requiring all Medicare prescription drug plans to offer their Part D enrollees the option to pay out-of-pocket (OOP) Part D drug costs through monthly payments over the course of the plan year instead of at the pharmacy point of sale (POS) beginning January 1, 2025.

CMS undertook consumer focus group testing to select a name for the program ( printed page 99355) established at section 1860D-2(b)(2)(E) of the Act that would resonate with Medicare Part D enrollees. After multiple rounds of consumer testing fieldwork and evaluation of the results, CMS announced the official name of the program as the “Medicare Prescription Payment Plan.” We refer to the program herein using this name.

Section 11202(c) of the IRA directs the Secretary to implement the Medicare Prescription Payment Plan for 2025 by program instruction or other forms of program guidance. In accordance with the law, CMS released guidance establishing critical operational, technical, and communication requirements for the Medicare Prescription Payment Plan for 2025. To provide Part D sponsors with sufficient time to implement the program, CMS released the guidance in two parts: the first addressed critical operational and technical requirements and the second addressed communications-related requirements.[ ] In order to solicit the feedback of interested parties, CMS initially published both parts as draft guidance and voluntarily solicited comment. After consideration of the comments, we then released final versions of each part.

CMS released the draft part one guidance in August 2023, which covered topics such as how incurred OOP pharmacy costs should be re-calculated into monthly billed amounts (“program calculations”); participant billing requirements; pharmacy payment obligations and claims processing; requirements related to Part D enrollee outreach; requirements related to Part D enrollee election; procedures for termination of election; reinstatement and preclusion; participant disputes; and data submission requirements. CMS also provided examples of the program calculations to help Part D sponsors program their claims and billing systems correctly for 2025. After consideration of comments received on the draft part one guidance, CMS released the final part one guidance (hereinafter referred to as “final part one guidance”) in February 2024.

CMS released the draft part two guidance in February 2024, which covered topics such as outreach, education, and communications requirements for Part D sponsors; CMS Part D enrollee education and outreach; pharmacy processes; and Part D sponsor operational requirements. After consideration of comments received on the draft part two guidance, CMS released the final part two guidance (hereinafter referred to as “final part two guidance”) in July 2024.

In addition to the final part one and final part two guidance, CMS released a technical memorandum in July 2023 providing examples to demonstrate the calculations of the maximum monthly cap on cost sharing payments under the program in different scenarios, a second technical memorandum in April 2024 providing additional examples of calculations that reflect IRA-related changes to the incurred costs that count toward true out-of-pocket costs (TrOOP), and a set of frequently asked questions in October 2024 providing clarifications on the final part one and final part two guidance.

CMS also developed model and standardized materials to be used by Part D sponsors in meeting the statutory requirement for Part D sponsors to communicate with enrollees about the program. The materials developed by CMS include a model election request form, a model notice of election approval, a standardized likely to benefit notice, a model notice of voluntary termination, a model notice of failure to pay, and a model notice of involuntary termination. Where possible, CMS based development of the Medicare Prescription Payment Plan model materials on Part D plan enrollment and disenrollment notices to promote consistency across the Part D program. CMS issued the model materials through the Office of Management and Budget's Information Collection Request (ICR) process and released final model materials in July 2024 after consideration of public comments received on the ICR package.

CMS does not have authority to implement the Medicare Prescription Payment Plan through program instruction authority beyond 2025. As such, we are pursuing rulemaking to codify the requirements of the program for 2026 and subsequent years.

With only a few exceptions, we are proposing to codify, without modification, the requirements established in the final part one and final part two guidance at § 423.137 for 2026 and subsequent years. Because we are codifying existing guidance, these provisions are not expected to impact the baseline.

Instances where we are making modifications to the requirements previously finalized for 2025 include—

Proposing to modify the requirements for how Part D sponsors handle adjustments for Part D claims under the Medicare Prescription Payment Plan; and

Proposing to modify the timing requirements for the grace period and initial notice of failure to pay.

We are also proposing new requirements for three additional topics:

Requirements related to year-over-year participation for existing participants in the Medicare Prescription Payment Plan and addition of a renewal notice to the required notices related to election into the program;

Requirements for the effective date of voluntary terminations from the program;

Requirements for Part D plans to provide pharmacies with easily accessible information on a Part D enrollee's costs incurred under the program.

We are also proposing to modify § 423.2267(e), which lists CMS-required materials and content for Part D sponsors, to include model and standardized materials for the Medicare Prescription Payment Plan, and to modify the list of required content for Part D sponsor websites at § 423.2265 to include Medicare Prescription Payment Plan information. Finally, we are proposing to modify § 423.2536 to waive requirements related to the Medicare Prescription Payment Plan for the Limited Income Newly Eligible Transition (LI NET) program.

2. Provisions of the Proposed Regulation

(a) Basis, Scope, and General Rule

Section 1860D-2(b)(2)(E)(i) of the Act requires that 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 in paragraph (3) of section 1860D-14(a) of the Act), the option to elect, with respect to a plan year, to pay cost sharing under the plan in monthly amounts that are capped in accordance with section 1860D-2(b)(2)(E) of the Act.

In the final part one guidance, CMS stated that, for calendar year 2025, the provision applies to all Part D sponsors, including both stand-alone PDPs and MA-PDs, as well as Employer Group Waiver Plans (EGWPs), cost plans, and demonstration plans.

In the final part two guidance, CMS stated that while the Medicare Prescription Payment Plan is applicable to all Part D plans, it has no practical ( printed page 99356) application for PACE participants or enrollees in plans that exclusively charge $0 cost sharing for Part D covered drugs. As such, CMS does not expect Part D plans that exclusively charge $0 cost sharing for covered Part D drugs to all plan enrollees to offer enrollees the option to pay their OOP costs through monthly payments over the course of the plan year or otherwise comply with the final part one guidance or the final part two guidance for calendar year 2025. CMS further stated that, if a Part D plan has any enrollees that could pay any cost sharing, even a nominal amount, under the Part D plan at any point during the year, then this clarification would not be applicable to such a plan.

For the reasons articulated in the final part two guidance, we intend to continue to not expect such plans to offer enrollees the option to pay their OOP costs through monthly payments over the course of the plan year or otherwise comply with the Medicare Prescription Payment Plan requirements set forth in this proposed rule and in the proposed new regulation at § 423.137.

In this proposed rule, we propose to codify at § 423.137(a) the rules we established in the 2025 guidance to apply to plan year 2026 and subsequent years and, 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. CMS recognizes that implementing the proposed modifications to the requirements established in the final part one and final part two guidance and the new requirements in this proposed rule could be operationally challenging for plans operating on a non-calendar year basis to implement midway through a plan year. As such, we intend to not expect plans operating on a non-calendar year basis to comply with the Medicare Prescription Payment Plan requirements set forth in this proposed rule and in the proposed new regulation at § 423.137 to the extent that those requirements differ from those established in the final part one and final part two guidance during any portion of the non-calendar plan year that starts in 2025 and continues into 2026.[ ] However, such plans would be expected to comply with all requirements set forth in this proposed rule and in the proposed new regulation at § 423.137 for non-calendar plan years beginning in 2026 and subsequent non-calendar plan years.

In our final part one guidance, we also established definitions of key terms related to the Medicare Prescription Payment Plan for plan year 2025. We now propose to codify our existing definitions at § 423.137(b) for plan year 2026 and subsequent years with certain clarifications. Specifically, at § 423.137(b)(1), we propose to define “OOP costs for the Medicare Prescription Payment Plan” as the cost sharing amount the Part D enrollee is directly responsible for paying. In the final part one and final part two guidance, we referred to these costs simply as “OOP costs.' ” We propose to codify the more specific definition of “OOP costs for the Medicare Prescription Payment Plan” to avoid confusion with other uses of the term OOP costs, which may be inconsistent with the use of that term in the final part one and final part two guidance.

As described in section (b) of this proposed rule, the formula for calculating the maximum monthly cap differs for the first month of participation in the program versus the remaining months of the year. The cap for the first month for which the Part D enrollee has opted into the Medicare Prescription Payment Plan incorporates an enrollee's TrOOP prior to election into the program. However, the subsequent month calculation is determined by calculating the sum of any remaining OOP costs owed by the participant from a previous month that have not yet been billed and any additional OOP costs for the Medicare Prescription Payment Plan in the subsequent month. As such, for the subsequent month calculation of the Part D cost sharing incurred by the Part D enrollee, the term “OOP costs for the Medicare Prescription Payment Plan” includes those Part D cost sharing amounts that the enrollee is responsible for paying after accounting for amounts paid by third-party payers. Specifically, the OOP costs for the Medicare Prescription Payment Plan do not include the covered plan pay amount or other TrOOP-eligible amount(s), such as any amount paid by potential third-party payers, such as State Pharmaceutical Assistance Programs or charities. Additionally, within the definition of OOP costs for the Medicare Prescription Payment Plan, we propose to define “remaining OOP costs owed by the participant” to be the sum of OOP costs for the Medicare Prescription Payment Plan that have not yet been billed to the program participant. For example, if a Medicare Prescription Payment Plan participant incurs $2,000 in January and is billed $166.67, the remaining OOP costs owed by the participant are $2,000 − $166.67 = $1,833.33.

Finally, in the final part two guidance, CMS stated that it does not expect the LI NET program to offer enrollees the option to pay their OOP costs through monthly payment over the course of the plan year or to comply with the final part one guidance or final part two guidance for calendar year 2025. CMS clarified that, consistent with the agency's longstanding interpretation and implementation of the LI NET program, participants in the LI NET program are considered to be enrolled in a PDP. However, because the LI NET program is limited to offering Part D-eligible individuals with temporary coverage during a limited, transitional period, CMS stated it does not expect the LI NET program to comply with the requirements of the final part one guidance or the final part two guidance for calendar year 2025 in connection with the offering of such transitional coverage. Pursuant to our authority under section 1860D-14(e)(5)(B) of the Act to waive such requirements of title XI and title XVIII of the Act as may be necessary to carry out the purposes of the LI NET program, we propose to codify in this rule a waiver for the LI NET program with respect to the requirements of the Medicare Prescription Payment Plan for plan year 2026 and subsequent years. The LI NET program is limited to temporary coverage during a limited, transitional period and applying the Medicare Prescription Payment Plan to the LI NET program would be inconsistent with the purposes of such transitional coverage and would raise various operational challenges for the program. Accordingly, we are proposing to revise § 423.2536 to redesignate paragraphs (c) through (k) as paragraphs (d) through (l) and add new paragraph (c) to include the proposed Medicare Prescription Payment Plan requirements at § 423.137 discussed in this section to the list of Part D requirements waived for the LI NET program. In addition, we ( printed page 99357) are proposing to revise newly redesignated paragraphs § 423.2536(i)(1) and (i)(4) to add the materials proposed at §§ 423.2265(b)(16) and 423.2267(e)(45) through (51) (discussed previously) to the list of communication requirements waived for the LI NET program.

(b) Calculation of the Maximum Monthly Cap on Cost-Sharing Payments

Section 1860D-2(b)(2)(E)(iv) of the Act specifies how the monthly caps on OOP cost sharing payments are to be calculated. The formula for calculating the cap differs for the first month of participation in the program, versus the remaining months of the year. The maximum monthly cap calculations include specifics of a participant's Part D drug costs (previously incurred costs and new OOP costs), as well as the number of months remaining in the plan year; as such, the amount can vary from person-to-person and month-to-month. Assuming a program participant remains in the Medicare Prescription Payment Plan through the end of the plan year, the total amounts billed monthly through the December payment (which would be billed and paid in the following year) will equal the total OOP costs for the Medicare Prescription Payment Plan during the year.

Under section 1860D-2(b)(2)(E)(iv)(I) of the Act, for the first month for which the Part D enrollee has opted into the Medicare Prescription Payment Plan, the term “maximum monthly cap” means an amount calculated by taking the annual OOP threshold minus any Part D costs the Part D enrollee incurred during the year before opting into the program, divided by the number of months remaining in the plan year. The number of months remaining in the plan year includes the current reference month (for example, for a calendar year plan, the months remaining in the calculation for the January maximum cap would be 12).

Additionally, incurred costs for the Medicare Prescription Payment Plan (as used in the statutory definition of the first month's maximum cap calculation) means the incurred costs, with the meaning set forth at section 1860D-2(b)(4)(C) of the Act and described in section 30 of the Final CY 2025 Part D Redesign Program Instructions (Final 2025 Program Instructions), that were incurred prior to effectuation of an election into the Medicare Prescription Payment Plan, including all TrOOP-eligible costs.[ ] If election into the program occurs mid-month, this would include Part D costs incurred within the calendar month of election but prior to election.

Under section 1860D-2(b)(2)(E)(iv)(II) of the Act, for each subsequent month for which the Part D enrollee has opted into the program, the maximum monthly cap is determined by calculating the sum of any remaining OOP costs owed by the participant from a previous month that have not yet been billed and any additional OOP costs for the Medicare Prescription Payment Plan in the subsequent month, divided by the number of months remaining in the plan year. The number of months remaining includes the month for which the cap is being calculated. This calculation repeats for each month in which the participant remains in the Medicare Prescription Payment Plan. The resulting maximum monthly cap will change if additional OOP costs for the Medicare Prescription Payment Plan are incurred.

Under section 1860D-2(b)(4)(B)(i)(VII) of the Act, the annual OOP cost threshold for 2025 is $2,000. Under section 1860D-2(b)(4)(B)(i)(VII) of the Act, for 2026 and subsequent years, the annual OOP cost threshold is equal to the amount specified for the previous year, increased by the annual percentage increase described in section 1860D-2(b)(6). “Incurred costs” means any costs incurred or treated as incurred under section 1860D-2(b)(4)(C) of the Act.

In the final part one guidance, we established standards for calculating the maximum monthly cap for the Medicare Prescription Payment Plan. The participant will not have any monthly bills to pay under this program until opting into the program and incurring OOP costs for covered Part D drugs. Once a participant incurs an OOP Part D drug cost, all their OOP costs for all covered Part D drugs will be billed on a monthly basis as long as the participant remains in the program. Program calculations apply to all OOP costs for the Medicare Prescription Payment Plan, including those in the deductible phase. Part D sponsors must include all covered Part D drugs in the program. However, non-covered drugs are excluded. Part D sponsors are responsible for correctly calculating the monthly caps based on the statutory formulas, determining the amount to be billed (not to exceed the cap), and sending monthly bills to program participants.

In the final part one guidance, we also established that opting into the program will not impact how a program participant moves through the Part D benefit or what counts towards their TrOOP costs. Under section 1860D-2(b)(4)(F) of the Act, a participant's TrOOP-eligible costs under the Medicare Prescription Payment Plan will still be treated as incurred based on the date each Part D claim is adjudicated. Opting into the program only provides participants with the ability to spread OOP costs over the year—the total incurred costs and the timing of TrOOP accumulation do not change.

In the final part one guidance, we also established standards for how to incorporate extended day supplies of medications in the calculations. For participants who fill prescriptions for an extended day supply, their OOP costs for those prescriptions will be attributed to the month the prescription was filled and will not be pro-rated over the months covered by the prescription. For example, if a participant in the program has $300 in OOP costs for the Medicare Prescription Payment Plan for a 90-day supply dispensed in January, the full $300 will be counted as incurred in January.

In addition, we stated that when an individual opts into the Medicare Prescription Payment Plan during the plan year, the individual's incurred costs used to calculate the first month maximum cap are equal to the individual's accumulated TrOOP before opting into the program. If election into the program occurs mid-month, this would include Part D costs incurred within the calendar month of election but prior to election (refer to example B4 in Appendix B of the final part one guidance for an illustration of a mid-month election). The number of months remaining in the plan year includes the month when an individual opts into the program. When an individual opts into the Medicare Prescription Payment Plan prior to the start of the plan year (such as during open enrollment), the first month maximum monthly cap calculation applies to their first month of active coverage within the plan year.

The final part one guidance also stated that in scenarios where the OOP costs for the Medicare Prescription Payment Plan in the first month of participation in the program are less than the maximum monthly cap, a Part D sponsor cannot bill the participant more than their actual incurred OOP costs. Specifically, a Part D sponsor must bill the participant the lesser of the participant's OOP costs for the Medicare Prescription Payment Plan or the first month's maximum monthly cap. Section 1860D-2(b)(2)(E)(iv)(I) of the Act clearly states that the first month maximum cap calculation applies to the ( printed page 99358) first month an enrollee has elected to participate in the Medicare Prescription Payment Plan; in scenarios in which a participant incurs $0 in OOP costs for the Medicare Prescription Payment Plan in the first month, the Part D sponsor must not bill the participant for the first month and would use the subsequent month maximum monthly cap calculation for all succeeding months in the year in which the participant remains in the program.

Finally, the final part one guidance established that “OOP costs” (defined as “OOP costs for the Medicare Prescription Payment Plan” for the purposes of this rule) refers only to the patient pay portion for covered Part D drugs that a program participant would have paid at the POS if they had not opted into the Medicare Prescription Payment Plan, not to all incurred costs as defined under section 1860D-2(b)(4)(C) of the Act. For these calculations, the OOP costs for the Medicare Prescription Payment Plan do not include the covered plan paid amount or amounts paid by third parties, such as qualified State Pharmaceutical Assistance Programs (SPAPs) or charities. OOP costs for the Medicare Prescription Payment Plan also do not include any amounts paid by enrollees for monthly premiums.

In this proposed rule, we propose to codify the standards we established in the final part one guidance for plan year 2026 and subsequent years at § 423.137(c).

(c) Eligibility and Election

Under section 1860D-2(b)(2)(E)(i) of the Act, Part D sponsors must provide the option to opt into the Medicare Prescription Payment Plan to all Part D enrollees, including enrollees who are eligible for the Low-Income Subsidy (LIS). For 2026 and subsequent years, we propose to codify the statutory requirement that Part D sponsors must offer the program to all Part D enrollees, including those who are LIS eligible, at § 423.137(d).

In the final part one guidance, we explained that while the statute requires that an LIS enrollee must have the option to become a Medicare Prescription Payment Plan participant, individuals with low, stable drug costs (such as LIS enrollees) are not likely to benefit from the program. Further, LIS enrollment, for those who qualify, is more advantageous than participation in the Medicare Prescription Payment Plan. We are aware that there may be limited circumstances in which an LIS enrollee would benefit from participation in the Medicare Prescription Payment Plan, but, in general, participation in the Medicare Prescription Payment Plan is unlikely to benefit LIS enrollees. It is important that Part D sponsors inform any individual interested in the Medicare Prescription Payment Plan of potential eligibility for the LIS program. In this rule, for 2026 and subsequent years, we propose to require Part D sponsors to include information on the availability of the LIS program and other financial assistance programs in the election-related materials described at proposed § 423.137(d)(10) with the goal of alerting Part D enrollees to the availability of these programs that can lower costs.

In addition, under section 1860D-2(b)(2)(E)(v)(III)(aa) of the Act, Part D sponsors may not restrict the application of the Medicare Prescription Payment Plan benefit to specific covered Part D drugs. To minimize potential confusion and operational challenges, in the final part one guidance, we stated that for 2025, once an individual has opted into the program, OOP cost sharing for all covered Part D drugs must be included in program bills until the participant reaches the OOP threshold, opts out of the Medicare Prescription Payment Plan, or is terminated from the Medicare Prescription Payment Plan due to failure to pay. The program must apply to all of a program participant's prescriptions for covered Part D drugs. We propose to codify this requirement for 2026 and subsequent years at § 423.137(d)(5).

Section 1860D-2(b)(2)(E)(v)(II) of the Act states that a Part D enrollee may opt into the Medicare Prescription Payment Plan prior to the beginning of the plan year or in any month during the plan year. In the final part one guidance, we established requirements for a process for enrollees to opt into the Medicare Prescription Payment Plan in 2025, consistent with the statutory requirement cited previously. The final part one guidance set forth the following requirements for 2025:

Part D sponsors must allow Part D enrollees to opt into the Medicare Prescription Payment Plan prior to the plan year (including the Annual Election Period for the subsequent plan year, the Part D initial enrollment period, and Part D special election periods) or at any point during the plan year.

Part D sponsors must allow Part D enrollees to opt into the Medicare Prescription Payment Plan after the conclusion of an enrollment period and before the new plan enrollment effective date (for example, an enrollee could opt into the program for the upcoming plan year after the conclusion of the Annual Election Period and in advance of the January 1 new plan enrollment effective date).

In this proposed rule, for 2026 and subsequent years, we propose to codify these requirements at § 423.137(d)(4)(1).

In the final part one guidance, we also established requirements for election into the program in 2025, which were designed to reduce administrative burden by aligning with existing requirements and procedures for Part D plan enrollment and to provide a uniform experience for Part D enrollees by reducing potential variation in program administration across Part D plans. We required the Part D enrollee, or their authorized legal representative, to complete an election request, provide the required information to the Part D sponsor, and be approved by the Part D sponsor to opt into the Medicare Prescription Payment Plan. Part D sponsors must have the following mechanisms available to Part D enrollees who wish to opt into the Medicare Prescription Payment Plan:

A paper election request form that can be mailed.

A toll-free telephone number that must provide the individual with evidence the election request was received (for example, a confirmation number).

A website application that must provide the individual with evidence the election request was received (for example, a confirmation number).

Part D sponsors must consider Medicare Prescription Payment Plan election requests regardless of the election mechanism or format (for example, a handwritten letter). For an election request to be considered complete, the Part D sponsor must receive the name of the Part D enrollee, their Medicare ID number, and the signature (or verbal attestation, in the case of telephonic requests)

of the Part D enrollee or their authorized legal representative validating that the requestor understands and accepts the Part D sponsor's terms and conditions for the program. In this proposed rule, for 2026 and subsequent years, we propose to codify these requirements at §§ 423.137(d)(2) and 423.137(d)(3).

We are committed to ensuring that Part D enrollees, once they request to participate, are able to access the benefits of the program as timely as possible and recognize the importance of timely access to prevent enrollees from not filling prescriptions due to affordability challenges. To that end, we requested comment in the draft part one guidance on real-time or POS election approaches that would require Part D sponsors to effectuate election into the ( printed page 99359) Medicare Prescription Payment Plan without any delay or with only a nominal delay between the election request and effectuation. As we clarified in the final part one guidance, real-time election refers to a process that would enable a Part D enrollee to request election and be effectuated into the program in one instance from any setting (and so is not limited to only the pharmacy POS setting). POS election, rather, is limited to the pharmacy POS setting and would require updates to pharmacies' claims processing systems.

In response to the request for comment in the draft part one guidance, many commenters expressed support for real-time election, noting that it would prevent dispensing delays and prescription abandonment. However, due to a number of policy and operational barriers and the restricted lead-up time to the statutory implementation date of January 1, 2025, we did not require real-time or POS election for 2025. In the final part one guidance for 2025, we required a 24-hour effectuation timeframe for election requests made during the plan year, to reduce the likelihood of dispensing delays and prescription abandonment while reducing operational burden for plans and pharmacies. Specifically, we stated that when a Part D sponsor receives a program election request for the next, upcoming plan year (or in advance of a new plan enrollment effective date during a plan year) through either an election request form or through other means, the Part D sponsor must process the request within 10 calendar days of receipt, or the number of calendar days before the plan enrollment starts, whichever is shorter. When a current Part D enrollee requests to opt into the Medicare Prescription Payment Plan during the plan year, Part D sponsors must process the election request within 24 hours.

Since publication of the final part one guidance, we have conducted extensive outreach with a variety of stakeholders and conducted in-depth research to assess the feasibility of real-time or POS election options for 2026 or future years. Our research indicates that there is no mechanism for program election information to be passed through the current National Council for Prescription Drug Programs (NCPDP) Telecommunication Standard and easily integrated into Part D sponsor and/or pharmacy benefit manager (PBM) systems; updates to current standards would also be needed to support POS election. These updates would require significant lead time and coordination with industry standards committees that have existing processes and timelines outside of CMS's purview. However, real-time election (facilitated by Part D sponsors outside of the POS) is operationally feasible and need not involve changes to the current Telecommunication Standard; in fact, some Part D sponsors have indicated to CMS that they plan to offer real-time election to their enrollees in 2025. We also note that real-time election facilitated by Part D sponsors could still take place at the POS; for example, an individual who receives the “Medicare Prescription Payment Plan Likely to Benefit Notice” while picking up a high-cost prescription could step away from the pharmacy counter to call their Part D plan or submit an online election request, and then return to the counter, request that the pharmacist re-process the claim, and pay $0 at POS for the prescription.

In this rule, for 2026 and subsequent years, we propose to codify the 24-hour effectuation requirement at § 423.137(d)(4), but request comment on a potential requirement for Part D sponsors to effectuate election requests received via phone or web in real-time for 2026 or future years. In particular, we are interested in the operational feasibility of implementing a real-time election requirement for 2026, what technology and processes would be required to enable a real-time election requirement for 2026, implications for Part D enrollees, and potential burden on interested parties. We are also interested in opportunities for pharmacists to support enrollees in using any future Part D sponsor-adjudicated real-time election mechanisms at the POS.

In the final part two guidance, we stated that for 2025, paper election requests are considered received on the date and time—

The Part D sponsor initially stamps a document received by regular mail (that is, U.S. Postal Service); or

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.

A telephonic election request is considered received on the date and time:

The verbal request is made by telephone with a customer service representative; or

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.

An electronic election request is considered received on the date and time a request is received through the Part D sponsor's website and/or portal. This is true regardless of when a Part D sponsor ultimately retrieves or downloads the request. In this rule, for 2026 and subsequent years, we propose to codify these processing time requirements at § 423.137(d)(2).

In the final part one guidance, we stated that in 2025, if a Part D sponsor receives an election request that does not have all necessary elements required to consider it complete, the sponsor must not immediately deny the request. For requests received prior to the plan year, the Part D sponsor must contact the individual to request the additional documentation necessary to process the request within 10 calendar days of receipt of the incomplete election request. For requests received during the plan year, the Part D sponsor must contact the individual to request the additional documentation necessary to process the request within 24 hours of receipt of the incomplete election request. Additional documentation to make the program election request complete must be received by the Part D sponsor within 21 calendar days of the 

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[1] Url: https://www.federalregister.gov/documents/2024/12/10/2024-27939/medicare-and-medicaid-programs-contract-year-2026-policy-and-technical-changes-to-the-medicare

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