The Medicare Payment Plan lets you cut up your Part D drug payments and spread them through the entire year.
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2025 has been a busy year as some of the Inflation Reduction Act initiatives have taken effect. The biggest one is probably the cap on Part D out-of-pocket costs. This year, the most a drug plan enrollee will pay for covered drugs from an in-network pharmacy is $2,000.
The other big change, the Medicare Prescription Payment Plan (MPPP) is connected to this cap. Those who reach the threshold can face a big bill at the pharmacy. For instance, one specialty drug could in the first month of the year hit the limit. The MPPP allows an enrollee to spread the payments out over the course of the calendar year, instead of all at once.
MPPP Basics
For those who are new to this, here’s a quick review of 10 important points.
- The program is voluntary for anyone who has Part D, such as a stand-alone plan or coverage included in a Medicare Advantage plan.
- Each plan identifies those who are eligible, within Medicare’s protocol, and handles the enrollment.
- Not everyone will benefit by spreading out the payments. This can include those with low drug costs or who do not want to change the way they pay for drugs.
- The MPPP will not save anyone any money.
- Once signed up for the MPPP, plans calculate a monthly amount and send monthly statements.
- Enrollees pay the drug plan on a monthly basis, not the pharmacy at the time medications are delivered.
- The amount of the monthly bill may change, such as when there’s a new prescription or the plan’s deductible is met.
- The drug plan can terminate an enrollee’s participation in the MPPP for failure to pay bills, but not enrollment in the drug plan.
- Individuals can opt out of the program. They would be responsible for paying the balance due.
- During the year, when the costs of a new drug push someone, who is not enrolled in the MPP, toward the threshold, the pharmacy issues the “Medicare Prescription Payment Plan Likely to Benefit Notice.” However, there is no requirement that the pharmacy must educate the enrollee about the MPPP; that is the responsibility of the Part D plan.
Changes Coming
After the inaugural year of the MPPP, it’s time to look at what is scheduled to happen next year.
Increase in the Part D out-of-pocket limit.
The threshold will increase in 2026 from $2,000 to $2,100.
Automatic renewal of 2025 participants.
A participant in the MPPP this year will be reenrolled automatically for 2026. The drug plan must send the renewal notice after the end of the annual coordinated election period (Open Enrollment) but prior to the beginning of the plan year (January 1).
Two points about automatic renewal:
- The participant can opt out of the automatic renewal.
- A participant who switches drug plans would not be eligible for automatic renewal.
I could not find any mention about how automatic renewal will handle those who have had a change in their medications and no longer would reach the $2,100 cap. The monthly billing in those situations often starts out low but then increases significantly heading toward the end of the year.
Notice of a drug’s out-of-pocket cost at the point of sale.
When an enrollee gets a new medication that hits the point-of-sale notification threshold, the pharmacy must issue the Medicare Prescription Payment Plan Likely to Benefit Notice. (In 2025, the trigger is $600.) CMS had considered requiring the Part D plan sponsors to ensure that pharmacies were prepared to inform the enrollee about the actual out-of-pocket cost of the drug; however, that was not finalized. Instead, CMS “continues to encourage pharmacies to leverage standard industry transaction set data to provide OOP costs to participants verbally upon request.” Because education about the MPPP is the plan’s responsibility, customers may leave the pharmacy without the prescription until they figure out the impact on their monthly payments.
MPPP overpayments.
If a Part D plan bills an MPPP enrollee over the maximum monthly cap (determined by a formula), it should work with the individual to decide whether to refund the difference or apply the overpayment to the remaining out-of-pocket costs.
It is difficult to find current MPPP enrollment numbers. Avalere Health reported that, of the 1.2 million beneficiaries who met the threshold, only 190,000 (16%) who picked up a medication in February 2025 were enrolled. There are probably several reasons why so many did not sign up for the MPPP.
- They prefer to and can pay the $2,000 in one or two payments and don’t want monthly bills.
- Some do not want to change the way they pay for medications.
- They may not know about or understand the program.
- And perhaps, they do not trust the drug plan to handle the billing appropriately.
The MPPP together with the $2100 cap can help drug plan enrollees manage the cost of their medications. But at the same time, those who choose to ignore this new Medicare program won’t be financially punished. The prescription drug coverage will still be there and they will pay the same out-of-pocket costs.
