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 of All-Inclusive Care for the Elderly

Federal RegisterApr 15, 2025

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 417, 422, 423, and 460

[CMS-4208-F]

RIN 0938-AV40

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 of All-Inclusive Care for the Elderly

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).

ACTION:

Final rule.

SUMMARY:

This final rule revises the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to prescription drug coverage, the Medicare Prescription Payment Plan, dual eligible special needs plans (D-SNPs), Part C and D Star Ratings, and other programmatic areas, including the Medicare Drug Price Negotiation Program. This final rule also codifies existing sub-regulatory guidance in the Part C and Part D programs.

DATES:

Effective date:

These regulations are effective June 3, 2025.

Applicability dates:

The provisions in this rule are applicable to coverage beginning January 1, 2026, except as otherwise noted. The updates to marketing and communication provisions at §§ 422.2267(e)(30) and 423.2267(e)(32) for integrated member ID cards are applicable for all contract year (CY) 2027 marketing and communications beginning October 1, 2026. The requirements related to eligibility and election, targeted outreach, and general outreach regarding participation in the Medicare Prescription Payment Plan for 2026 at §§ 423.2267(e)(45) through (51), 423.2265(b)(16), and 423.137(d), (e), and (m) are applicable beginning October 1, 2025. The health risk assessment (HRA) provision that we are finalizing at § 422.101(f)(1)(v) is applicable beginning October 1, 2026, for HRAs conducted for effective dates of enrollment on or after January 1, 2027. The addition of the updated Part C Breast Cancer Screening measure as described in section III.E. of the final rule is applicable for 2029 Star Ratings beginning January 1, 2027.

FOR FURTHER INFORMATION CONTACT:

Lucia Patrone, (410) 786-8621—General Questions.

Naseem Tarmohamed, (410) 786-0814—Part C and Cost Plan Issues.

Lucia Patrone, (410) 786-8621—Part D Issues.

Kristy Nishimoto, (206) 615-2367—Beneficiary Enrollment and Appeal Issues.

Alissa Stoneking, (410) 786-1120—Parts C and D Payment Issues.

Hunter Coohill, (720) 853-2804—Enforcement Issues.

Lauren Brandow, (410) 786-9765—PACE Issues.

Sara Klotz, (410) 786-1984—D-SNP Issues.

PartCandDStarRatings@cms.hhs.gov

—Parts C and D Star Ratings Issues.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose

The primary purpose of this final rule is to amend the regulations for the Medicare Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (PACE). This final rule includes a number of new policies that will improve these programs for contract year 2026, as well as codify existing Part C and Part D sub-regulatory guidance.

In this final rule, CMS codifies certain Part D requirements from the Inflation Reduction Act of 2022 (IRA). Specifically, this rule codifies the IRA's vaccine and insulin cost-sharing requirements and codifies the program instruction for the Medicare Prescription Payment Plan program. Additionally, CMS is finalizing two IRA-related provisions that are needed to help ensure that selected drugs with maximum fair prices (MFPs) in effect under the Negotiation Program are available to beneficiaries at the point of dispensing and that the MFPs are effectuated for dispensing entities timely.

B. Summary of the Major Provisions

1. Vaccine Cost-Sharing Changes

We are finalizing as proposed this provision to implement section 11401 of the Inflation Reduction Act of 2022 (IRA), which amends section 1860D-2 of the Social Security Act (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

We are finalizing as proposed this provision to 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 finalizing that, with respect to a covered insulin product covered under a prescription drug plan (PDP) or a Medicare Advantage prescription drug (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 title 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 proposed 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 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 proposed to add new § 423.137 establishing requirements for the Medicare Prescription Payment Plan, 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. We also proposed to codify the requirements we established in the Final CY 2025 Part D Redesign Program Instructions for the treatment for Medical Loss Ratio (MLR) purposes of Medicare Prescription Payment Plan unsettled balances for 2026 and subsequent years.

We are finalizing all requirements for 2026 and future years as proposed with a few exceptions:

• Modified the timing and content requirements for the renewal notice at § 423.137(d)(10)(iv).

• Modified the requirements for the telephonic notice of election approval at § 423.137(d)(10)(ii).

• Modified the requirements for voluntary termination effective date at § 423.137(f)(2)(i)(A)(

• Modified timing requirements for the involuntary termination notice at § 423.137(f)(2)(ii)(D)(

• Modified § 423.137(i)(2) to state that Part D plan sponsors should require long-term care pharmacies to provide the “Medicare Prescription Payment Plan Likely to Benefit Notice” to the Part D enrollee (or their authorized representative) at the time of the pharmacy's typical enrollee cost-sharing billing process.

• Modified § 423.137(m)(1) to exempt dual eligible special needs plans (D-SNPs) from certain general outreach and education requirements.

• Modified § 423.137(j)(7) to remove the requirements for Part D sponsors to ensure that pharmacies are prepared to provide information regarding out-of-pocket (OOP) costs for the Medicare Prescription Payment Plan to a participant at the point of sale (POS).

4. 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 through 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 finalizing 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 finalizing provisions 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.

5. Timely Submission Requirements for Prescription Drug Event (PDE) Records

We are finalizing as proposed PDE submission timeframes similar to those timeframes described in the October 2011 guidance on the timely submission of PDE records and refer to those timeframes as the General PDE Submission Timeliness Requirements. CMS is codifying PDE submission timeframes that initial PDE records are due within 30 calendar days following the date the claim is received by the Part D sponsor (or its contracted first tier, downstream, or related entity). Adjustment and deletion PDE records are due within 90 calendar days following discovery of the issue requiring a change to the PDE. Resolution of rejected PDE records are due within 90 calendar days following the receipt of rejected record status from CMS. In addition, we are finalizing as proposed regulatory changes at § 423.325(b) to establish a distinct PDE submission timeliness requirement for selected drugs, in which CMS requires that a Part D sponsor must submit initial PDE records for selected drugs (as described at section 1192(c) of the Act) within 7 calendar days from the date the Part D sponsor (or its contracted first tier, downstream, or related entity) receives the claim.

6. Medicare Transaction Facilitator Requirements for Network Pharmacy Agreements

We are finalizing as proposed our proposal to amend § 423.505 by adding paragraph (q), requiring that Part D sponsors' network participation agreements with contracting pharmacies, including any contracts with any first tier, downstream, and related entities require such pharmacies to be enrolled in the Medicare Drug Price Negotiation Program's (“Negotiation Program”) Medicare Transaction Facilitator Data Module (“MTF DM”) and that such pharmacies certify the accuracy and completeness of their enrollment information in the MTF DM. We believe the inclusion of the requirement for Part D sponsors' network pharmacies to be enrolled in the MTF DM that will be added to Part D sponsors' network contracts with pharmacies will facilitate continued beneficiary access to selected drugs that are covered Part D drugs, promote access to negotiated MFPs under the Negotiation Program for both beneficiaries and dispensing entities, and help ensure accurate Part D claims information and payment.

7. Clarifying MA Organization Determinations To Enhance Enrollee Protections in Inpatient Settings

We are finalizing our proposal to clarify that the definition of “organization determination” includes MA plan decisions made concurrent to the enrollee's receipt of services. We are also finalizing our proposals to codify existing guidance that requires plans give a provider notice of a coverage decision, in addition to the enrollee, whenever the provider submits a request on behalf of an enrollee, as well as our proposal to modify existing regulations to clarify that an enrollee's liability to pay for services cannot be determined until an MA organization has made a claims payment determination. Lastly, we are finalizing our proposal to restrict plans' ability to use information gathered after the inpatient admission has taken place when reviewing the appropriateness of the admission itself.

8. Risk Adjustment Data Updates

We are finalizing a series of provisions related to risk adjustment data updates. First, we are finalizing a technical change to the definition of Hierarchical Condition Categories (HCCs) to remove the reference to a specific version of the ICD, while maintaining a reference to the ICD in general, to keep the HCC definition in § 422.2 current as newer versions of the ICD become available and are adopted by the Secretary, as well as substituting the terms “disease codes” with “diagnosis codes” and “disease groupings” with “diagnosis groupings” to be consistent with ICD terminology. Additionally, we are codifying the longstanding practice of requiring the collection and mandatory submission of risk adjustment data by PACE organizations (at § 460.180(b)) and Cost plans (at § 417.486(a)).

C. Summary of Costs and Benefits

Table 1—Summary of Costs and Benefits

Provision

Description

Financial impact

1. Vaccine Cost-Sharing Changes

We are codifying section 11401 of the IRA 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.

We do not expect these regulatory changes to have an impact on the Medicare Trust Funds.

2. Insulin Cost-Sharing Changes

We are codifying section 11406 of the IRA to require that 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 “covered insulin product applicable cost-sharing amount.”

We estimate that this provision will increase Federal transfers from the Medicare Supplementary Medical Insurance Trust Fund by approximately $1.2 billion from 2026-2035.

3. Medicare Prescription Payment Plan

We proposed to codify, with limited modifications, agency guidance implementing section 11202 of the IRA, which establishes the Medicare Prescription Payment Plan and requires Part D sponsors to provide all Part D enrollees the option to pay their out-of-pocket (OOP) prescription drug costs in monthly amounts over the course of the plan year, instead of paying OOP costs at the point of sale (POS). We are finalizing all requirements for 2026 and future years as proposed with a few exceptions:

We do not expect these regulatory changes to have an impact on the Medicare Trust Funds.

• Modified the timing and content requirements for the renewal notice at § 423.137(d)(10).

• Modified the requirements for the telephonic notice of election approval at § 423.137(d)(10)(ii).

• Modified the requirements for voluntary termination effective date at § 423.137(f)(2)(i)(A)(

• Modified timing requirements for the involuntary termination notice at § 423.137(f)(2)(ii)(D)(

• Modified § 423.137(m)(1) to exempt dual eligible special needs plans (D-SNPs) from certain general outreach and education requirements.

• Modified § 423.137(j)(7) to remove the requirements for Part D sponsors to ensure that pharmacies are prepared to provide information regarding OOP costs for the Medicare Prescription Payment Plan to a participant at the POS.

4. Improving Experiences for Dually Eligible Enrollees

We are finalizing new Federal requirements for D-SNPs that are applicable integrated plans (AIPs) to—(1) have integrated member 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 HRA for Medicare and Medicaid, rather than separate HRAs for each program. We are also finalizing provisions to codify timeframes for special needs plans to conduct HRAs and ICPs and prioritize the involvement of the enrollee or the enrollee's representative, as applicable, in the development of the ICPs.

The integrated HRA provisions may cause a small number of AIPs to incur some upfront costs to make administrative updates. We do not expect the provisions regarding integrated member ID cards and ICPs to have any financial impact.

5. Timely Submission Requirements for Prescription Drug Event (PDE) Records

We are codifying at § 423.325 PDE submission timeliness requirements. Specifically, CMS is codifying timeframes at § 423.325(a) to require that—(1) initial PDE records be submitted within 30 calendar days following the date the claim is received by the Part D sponsor (or its contracted first tier, downstream, or related entity); (2) adjustment and deletion PDE records are due within 90 calendar days following discovery of the issue requiring a change to the PDE; and (3) resolution of rejected PDE records are due within 90 calendar days following the receipt of rejected record status from CMS. In addition, we are finalizing regulatory changes at § 423.325(b) to establish a distinct PDE submission timeliness requirement for selected drugs, in which CMS requires that a Part D sponsor must submit initial PDE records for selected drugs (as described at section 1192(c) of the Act) within 7 calendar days from the date the Part D sponsor (or its contracted first tier, downstream, or related entity) receives the claim.

We do not expect these regulatory changes to have an impact on the Medicare Trust Funds.

6. Medicare Transaction Facilitator Requirements for Network Pharmacy Agreements

We are codifying at § 423.505(q) a requirement on Part D sponsors (or first tier, downstream, or related entities, such as PBMs, acting on the sponsors' behalf) to include in their network pharmacy agreements a provision that requires such pharmacies to be enrolled in the MTF DM (or any successor to the MTF DM) and to certify to CMS that the enrollment information provided by such pharmacies in the MTF DM is accurate, complete, and up to date.

We do not expect these regulatory changes to have an impact on the Medicare Trust Funds.

7. Clarifying MA Organization Determinations to Enhance Enrollee Protections in Inpatient Settings

We are finalizing changes to clarify the definition of organization determination, codify requirements related to delivery of notices to providers, clarify that an enrollee's liability to pay for services cannot be determined until an MA organization has made a claims payment determination, and restrict plans' ability to use information gathered after the inpatient admission has taken place when reviewing the appropriateness of the admission itself.

We anticipate that these changes could decrease the number of inpatient downgrades which could, in turn, create a non-quantified cost to MA organizations that could be passed on to the Medicare Hospital Insurance Trust Fund.

8. Risk Adjustment Updates

We are finalizing a technical change to the definition of Hierarchical Condition Categories (HCCs) to remove the reference to a specific version of the ICD, while maintaining a reference to the ICD in general. Additionally, we are codifying the longstanding practice of requiring the collection and mandatory submission of risk adjustment data by PACE organizations (at § 460.180(b)) and Cost plans (at § 417.486(a)).

We do not expect these regulatory changes to have an impact on the Medicare Trust Funds.

D. Publication of the Proposed Rule, Responding to Public Comments, and the Finalization of Proposed Provisions

The proposed rule titled “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 of All-Inclusive Care for the Elderly” appeared in the December 10, 2024

Federal Register

(89 FR 99340) (hereinafter referred to as the “Contract Year 2026 proposed rule”).

In response to the Contract Year 2026 proposed rule, we received approximately 31,227 timely pieces of correspondence containing multiple comments on the proposed rule. We note that some of the public comments were outside of the scope of the proposed rule. These out-of-scope public comments are not addressed in this final rule. Summaries of the public comments within the scope of the proposed rule and our responses to those public comments are set forth in the various sections of this final rule under the appropriate heading. We are finalizing several of the provisions from the proposed rule, some with minor clarifications based on comments received. In this final rule, we are not summarizing or responding to comments received with respect to the provisions of the proposed rule that we are not addressing or finalizing at this time. Rather, as appropriate, and if applicable, we will address those comments at a later time in a subsequent rulemaking document.

With respect to the section of the proposed rule entitled “Formulary Inclusion and Placement of Generics and Biosimilars,” CMS continues to encourage Part D sponsors to prioritize formulary placement for generics and biosimilars through favorable tier placement relative to branded and reference products. As we noted in the proposed rule, CMS currently conducts an extensive formulary review process to ensure Part D sponsors provide an adequate formulary consistent with § 423.120(b)(2). In addition, as also noted in the proposed rule, we have been monitoring beneficiary access to generics and biosimilars, utilization of multi-source brand drugs when generics are available, and situations where the brand drug is situated more favorably in comparison to the generic with regard to tiering and UM, and we will continue to do so. While we are not adding the additional step in our formulary review process described in the proposed rule, the policy reminders and clarifications with respect to Part D plan formularies providing broad access to generics and biosimilars as part of a cost-effective drug utilization program still apply. CMS may consider codifying additional requirements regarding formularies in future rulemaking if necessary.

CMS will continue to review regulations and policies in the Medicare program and make necessary and appropriate changes to ensure consistency with the Executive Order 14192, “Unleashing Prosperity Through Deregulation.. Such regulations and policies currently under review include but are not limited to—

• Health Equity Index Reward for the Parts C and D Star Ratings;

• Annual health equity analysis of utilization management policies and procedures;

• Requirements for MA plans to provide culturally and linguistically appropriate services; and

• Quality improvement and health risk assessments (HRAs) focused on equity and social determinants of health (SDOH).

We also do not intend to finalize the following provisions from the proposed rule: Enhancing Health Equity Analyses: Annual Health Equity Analysis of Utilization Management Policies and Procedures, Part D Coverage of Anti-Obesity Medications (AOMs) and Application to the Medicaid Program, and Ensuring Equitable Access to Medicare Advantage Services— Guardrails for Artificial Intelligence (AI). CMS, however, does want to acknowledge the broad interest in regulation of AI and will continue to consider the extent to which it may be appropriate to engage in future rulemaking in this area.

E. Conclusion

Finally, we are clarifying and emphasizing our intent that if any provision of this rule 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 are finalizing 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).

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 (ACIP) Under Medicare Part D (§§ 423.100 and 423.120)

1. Background

Section 11401 of the Inflation Reduction Act of 2022 (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.

https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf

On April 4, 2023, CMS issued an HPMS memorandum titled “Final Contract Year (CY) 2024 Part D Bidding Instructions” which 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).

https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf

On July 24, 2023, CMS issued a revision to the April 4, 2023 memorandum, which 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, not the date on which the recommendation is published in the MMWR.

https://www.cms.gov/files/document/acip-recommended-vaccines-july-2023.pdf

In this rule, we are finalizing our proposal 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.

We received the following comments on this section of the proposed rule, and our responses follow:

Comment:

Many commenters supported CMS' proposal to codify the statutory $0 cost-sharing requirement for ACIP-recommended adult vaccines that was added to section 1860D-2 of the Act by section 11401 of the Inflation Reduction Act.

Response:

We thank the commenters for their support of our proposal.

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 proposed to refer to these vaccines as “ACIP-recommended adult vaccines” and to codify this definition at § 423.100. We did not propose 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 deferred 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 proposed 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 alignment with the September 26, 2022 HPMS memorandum, we interpreted 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.

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 visiting certain countries. Therefore, consistent with the September 26, 2022 HPMS memorandum, as long as the vaccine is an FDA-licensed vaccine 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.

https://www.cdc.gov/acip-recs/hcp/vaccine-specific/index.html.

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 final 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 proposed 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.

We received the following comments on this section of the proposed rule, and our responses follow:

Comment:

A few commenters requested that we release a HPMS memorandum that includes a list of ACIP-recommended adult vaccines and the dates on which these vaccines should be covered with no cost sharing.

Response:

The most updated information regarding ACIP-recommended adult vaccines and the effective date of ACIP recommendations is available on the Centers for Disease Control and Prevention's (CDC's) website at:

https://www.cdc.gov/acip-recs/hcp/vaccine-specific/.

Given that the CDC's website is the best source for this information, we decline to accept the commenters' recommendation to issue separate guidance.

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 also proposed 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.

Section 423.124(b) currently states that a Part D sponsor that provides its Part D enrollees with coverage other than defined standard coverage may require its Part D enrollees accessing covered Part D drugs at out-of-network pharmacies to assume financial responsibility for any differential between the out-of-network pharmacy's (or provider's) usual and customary price and the Part D sponsor's plan allowance. Section 50.4.3 of Chapter 14 of the Medicare Prescription Drug Benefit Manual (

https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf

) provides detailed guidance on how Part D sponsors must process DMR requests that are submitted by enrollees who paid cash at an out-of-network (or an in-network) pharmacy (or provider)

and where the pharmacy (or provider) did not submit the claim to the Part D plan.

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-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 clarified in the proposed rule 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 proposed 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 final rule, as applicable, to any ACIP-recommended adult vaccine claims with dates of service after the proposed “effective date of the ACIP recommendation.”

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 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 to 74 years of age 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 final rule would still apply.

https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf

In summary, we proposed 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 proposed 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.” Finally, we proposed 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)).

We received the following comments on this section of the proposed rule, and our responses follow:

Comment:

Several commenters provided feedback related to the implementation of utilization management strategies for vaccines. A few of these commenters opposed the use of utilization management strategies to determine whether an enrollee meets the age or clinical requirements recommended by ACIP for a particular vaccine. These commenters stated that utilization management can limit or delay beneficiaries' access to vaccines. A commenter urged CMS to ensure that all commercially available Part D vaccines are included on Part D formularies and that utilization management for vaccines is used appropriately. Another commenter urged CMS to issue guidance to ensure Part D plans are providing coverage and access to ACIP-recommended vaccines and are not imposing restrictive utilization management strategies. Finally, other commenters requested that CMS ensure Part D sponsors are not implementing utilization management strategies that prevent a provider or pharmacy from stocking or administering vaccines.

Response:

We appreciate these commenters sharing their concerns related to utilization management strategies for vaccines. As described in Chapter 6, Section 30.2.7 of the Prescription Drug Benefit Manual, CMS reviews all Part D sponsors' formularies to ensure they contain all commercially available Part D vaccines and to ensure that Part D sponsors are only using utilization management tools to—

• Assess the necessity of vaccines that are less commonly administered in the Medicare population, such as anthrax and yellow fever vaccines;

• Facilitate use of vaccines in line with ACIP recommendations; and

• Evaluate potential reimbursement of those vaccines that could be covered under Part B when directly related to the treatment of an injury or direct exposure to a disease or condition (for example, tetanus).

In order to ensure a vaccine meets the definition of an “ACIP-recommended adult vaccine” and is therefore subject to the cost-sharing requirements outlined in this rule, a Part D sponsor may implement utilization management strategies to determine if the vaccine is being administered in accordance with ACIP recommendations, which is consistent with the Chapter 6 guidance outlined previously.

Given that our existing guidance in Chapter 6 of the Prescription Drug Benefit Manual clearly outlines the situations in which Part D sponsors may implement utilization management for vaccines, we decline to issue additional guidance on this topic.

Comment:

Several commenters expressed concern about Part D sponsors restricting coverage for specific vaccine products and having a “preferred” brand of a particular

vaccine. Commenters stated that these restrictions have been implemented using utilization management strategies (for example, step therapy), $0 reimbursement to pharmacies for less preferred vaccine products, and National Drug Code (NDC) blocks. Commenters emphasized the negative impact these strategies may have on beneficiary access to vaccines. For example, the commenters asserted that a beneficiary may present to a pharmacy to receive a vaccine and, if the vaccine product in stock is not the “preferred” brand on the beneficiary's Part D plan's formulary, the beneficiary would need to return to the pharmacy once the “preferred” brand is in stock or find another pharmacy with the “preferred” brand currently in stock. Commenters also stated how difficult and costly it would be to keep every brand of a vaccine in stock to avoid these situations. A commenter noted that this would be particularly costly in primary care settings where providers are not paid until after a vaccine is administered, and they cannot receive reimbursement for unused vaccines. All commenters requested that CMS not allow these strategies to be implemented.

Response:

We appreciate the concerns these commenters shared about the potential negative impacts of Part D sponsors restricting coverage for certain brands of a vaccine. We reiterate our rules outlined in Chapter 6, Section 30.2.7, of the Prescription Drug Benefit Manual which state that Part D sponsors' formularies must contain all commercially available Part D vaccines and, as discussed earlier in this preamble, the only allowable uses of utilization management for vaccines are 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. Given that these are the only situations in which utilization management can be used for vaccines, Part D sponsors may not implement utilization management, including step therapy and NDC blocks, to prefer one brand of a vaccine over another.

Comment:

A few commenters expressed concerns about beneficiaries receiving Part D vaccines in primary care settings. The commenters stated that because these settings are not considered in-network, beneficiaries must pay for the vaccine and wait to be reimbursed, which can disincentivize them from receiving recommended vaccines. The commenters emphasized that being considered out-of-network can negatively affect primary care providers' relationships with their patients as they navigate vaccine coverage requirements for each patient and must often refer patients to network pharmacies to receive recommended vaccines. A commenter stated that having to refer patients to network pharmacies for vaccine administration can lead to confusion and increased vaccine hesitancy and may disproportionately affect patients who may have difficulty obtaining transportation to an in-network pharmacy. They also noted that individuals without Part D coverage are not able to receive ACIP-recommended adult vaccines with no cost sharing.

Another commenter requested that we describe our expectations for applying utilization management strategies when vaccines are administered at an out-of-network pharmacy, such as a primary care setting, as Part D sponsors do not have direct relationships with providers in these settings. The commenter stated that there can be operational barriers to imposing utilization management in these settings and requested guidance on how to implement utilization management when vaccines are administered by providers, such as physicians, in out-of-network settings.

Response:

We appreciate the commenters sharing their concerns about Part D enrollees receiving ACIP-recommended vaccines out-of-network. Part D sponsor networks are generally defined as pharmacy networks; therefore, if an enrollee receives a vaccine at a physician's office, this is most often out-of-network. As noted in the preamble to the final rule titled “Medicare Program; Medicare Prescription Drug Benefit” which appeared in the

Federal Register

on January 28, 2005 (70 FR 4194), a Part D enrollee receiving a vaccine in a physician's office constitutes a situation in which out-of-network access would be permitted because a beneficiary could not reasonably be expected to obtain that vaccine at a network pharmacy. We refer the commenters to our current regulations and guidance regarding claims for vaccines administered out-of-network. Specifically, § 423.124(a)(2) establishes that Part D sponsors must ensure that Part D enrollees have adequate access to vaccines and other covered Part D drugs appropriately dispensed and administered by a physician in a physician's office. In Chapter 5, Section 60.2, of the Prescription Drug Benefit Manual, we note that it may be challenging for enrollees to pay upfront and be reimbursed by their Part D plan after receiving a vaccine in their physician's office.

We encourage the commenters to review the possible approaches detailed in Section 60.2.2 of the Prescription Drug Benefit Manual to improve access to Part D vaccines administered and dispensed by a physician without requiring upfront beneficiary payment and subsequent reimbursement by Part D sponsors. The two possible approaches are: (1) a model vaccine notice for physicians (paper claim enhancement) where Part D sponsors provide all enrollees with a vaccine-specific notice that enrollees can bring to their physician with the information necessary for a physician to receive authorization of coverage for a particular vaccine and bill for the vaccine; and (2) web-assisted electronic physician billing where a physician uses a commercially-developed web-based system to electronically request out-of-network reimbursement from Part D sponsors on behalf of enrollees. Both approaches allow providers in primary care settings to administer ACIP-recommended vaccines to Part D enrollees without requiring an upfront payment.

Regarding utilization management for vaccines administered in out-of-network settings, we would expect that any utilization management requirements imposed on vaccines would need to be satisfied regardless of whether the vaccine is being administered at a network or out-of-network setting. However, we believe Part D sponsors are best situated to determine how to operationalize the implementation of utilization management requirements for out-of-network claims. As discussed earlier in this preamble, the only allowable uses of utilization management for vaccines are 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. We also note that, consistent with Chapter 6, Section 10.14.3, of the Prescription Drug Benefit Manual, in the absence of any information showing previous immunization (that is, claims data), the Part D sponsor should make payment available for a vaccine and its administration consistent with ACIP recommendations. Therefore, if a Part D sponsor determines an ACIP-recommended adult vaccine is coverable under their benefit, the enrollee must not be subject to cost sharing regardless of whether they received the vaccine in-network or out-

of-network. Alternatively, if a Part D sponsor determines a vaccine does not meet the definition of an “ACIP-recommended adult vaccine,” the $0 cost-sharing requirement would not apply.

Comment:

A commenter requested clarification on managing coverage determinations in instances where a Part D sponsor requires a prior authorization (PA) for a vaccine. The commenter stated that because many vaccines are administered in pharmacies under standing orders, there is not a physician writing an individual prescription for each enrollee receiving a vaccine. Therefore, there is no physician who can provide information in support of a PA or appeal. The commenter noted that pharmacies are typically not involved in coverage determinations and questioned whether a pharmacist is permitted to request a PA or appeal and provide information in support of a PA or appeal.

Response:

As described in § 423.566(c), the only individuals who can request a standard or expedited coverage determination are the enrollee; the enrollee's representative, on behalf of the enrollee; or the prescribing physician or other prescriber, on behalf of the enrollee. However, as stated in Section 40.12.3 of the Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance, Part D sponsors are permitted, but not required, to treat the presentation of a prescription at the pharmacy as a coverage determination. Therefore, a Part D sponsor can treat a transaction in which a pharmacist explains to an enrollee that a drug is subject to prior authorization as a request for a coverage determination. A pharmacist may then communicate with the Part D sponsor and may be able to override the point-of-sale prior authorization requirement and allow the claim to process. As stated in Chapter 6, Section 30.2.2.1, of the Prescription Drug Benefit Manual, Part D sponsors may decide that it is reasonable to accept information from pharmacists in situations where point-of-sale edits are applied. In these cases, if a network pharmacy is able to provide the necessary information at the point-of-sale, it negates the need for additional administrative review through the coverage determination process and reduces delay in access to Part D drugs, including vaccines. However, we note that a pharmacist's involvement would occur at the initial coverage decision level, consistent with Section 40.9 of the Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance, and not the appeal level.

Comment:

A commenter requested guidance on how to manage situations in which PA requests are submitted for vaccines. The commenter described a situation in which the Part D sponsor determines that a vaccine is not being administered in accordance with ACIP's recommendations and the enrollee is charged the applicable cost sharing. The commenter questioned whether this would be considered a fully favorable, partially unfavorable, or fully unfavorable decision. If this is a partially or fully unfavorable decision, the commenter questioned whether this decision should be classified as a denial due to a lack of medical necessity. The commenter also requested guidance for how plans should process requests in situations where a request is submitted to the plan for a vaccine to be covered at $0 cost sharing, but the plan determines the vaccine is not being administered in accordance with ACIP recommendations. The commenter noted that CMS did not propose allowing enrollees to request cost-sharing exceptions when a vaccine is not being administered in accordance with ACIP recommendations. Specifically, the commenter questioned whether these requests should be dismissed or denied.

Response:

If a request is submitted to a Part D plan asking for a vaccine to be covered at $0 cost sharing, we would expect either: (1) a fully favorable decision if the vaccine is covered at $0; (2) a partially favorable decision if the vaccine is covered but subject to cost sharing; or (3) an adverse decision if the vaccine is not covered. If a request is submitted to a Part D plan asking for a vaccine to be covered, but the request does not specify a preferred cost-sharing amount, we would expect either: (1) a fully favorable decision if the vaccine is covered but subject to cost sharing; or (2) an adverse decision if the vaccine is not covered. In cases where a partially favorable or adverse decision is made, an enrollee must be provided proper notice and appeal rights, consistent with § 423.568(g). We note that it would not be appropriate to dismiss a request in any of these scenarios. A partially favorable or adverse decision would be considered a denial.

Comment:

A commenter encouraged CMS to educate pharmacists about direct member reimbursement (DMR) requests so they can inform their patients that reimbursement is available for vaccines received out-of-network.

Response:

We thank the commenter for their suggestion. Part D plans currently provide information to their enrollees regarding how to request reimbursement when they use an out-of-network pharmacy or provider in Chapter 5 of the Evidence of Coverage (EOC) document which is provided to all Part D enrollees.

Comment:

A commenter questioned whether direct member reimbursement (DMR) requests for ACIP-recommended adult vaccines can only be submitted by beneficiaries or also by providers, including physicians and pharmacies. The commenter noted that they have seen provider-submitted claims that charge more than the negotiated rates for vaccines. If requests cannot be submitted by providers, the commenter recommended that CMS issue separate guidance for provider-submitted claims to ensure there is clarity on how these requests should be managed. They also recommend that CMS limit reimbursement for these claims to contracted rates. If requests can be submitted by providers, the commenter recommended that CMS monitor claims for ACIP-recommended vaccines as the $0 cost-sharing requirement for these vaccines may increase both the plan and CMS' liability. The commenter also stated that because there is no limit on the price of ACIP-recommended vaccines, it is possible that pharmacies and providers may charge higher cost sharing at the point-of-sale and, instead of processing claims online, they would have the beneficiary submit the claim to their Part D plan in order to receive a higher payment. Another commenter questioned how, when DMR requests are submitted, reimbursement to providers for the vaccine product and administration fees should be addressed. The commenter noted that vaccinating providers continue to face challenges with receiving adequate reimbursement for providing vaccines.

Response:

intermediary. Network pharmacies that decline to process network claims online and instead recommend that beneficiaries submit paper claims would be in violation of this requirement. We continue to expect DMR requests for prescriptions obtained from network pharmacies to be limited and submitted only for reasons, such as the claims processing systems being temporarily unavailable for the pharmacy or the Part D sponsor or its intermediary when the enrollee obtains their prescription. Any post-reimbursement reconciliation between the network pharmacy and plan sponsor would be a contractual matter between the parties.

With respect to provider-submitted claims for vaccines, which we do not consider DMR requests, CMS does not prohibit Part D sponsors from establishing arrangements with out-of-network (OON) providers or pharmacies to facilitate OON access in accordance with the requirements specified in § 423.124. As described earlier in this preamble, Chapter 5, Section 60.2, of the Prescription Drug Benefit Manual provides options that Part D sponsors and OON providers may use to facilitate access to vaccines given that vaccines are often provided in physician offices. While we encourage such arrangements for vaccine access, CMS guidance makes it clear that it is not a requirement and that such facilitated approaches to OON access for vaccines would need to be agreed upon between the Part D sponsor and provider. Therefore, it is up to Part D sponsors to establish their own policies on whether to accept OON claims directly from providers or pharmacies, and, if they do, to establish an agreed upon reimbursement amount with the OON provider or pharmacy that could include a prohibition on balance billing the enrollee.

Our guidance for provider-submitted claims for vaccines is provided in Chapter 5 of the Prescription Drug Benefit Manual, as discussed previously.

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 proposed 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 proposed rule, we noted that it is highly unlikely that an ACIP recommendation will be posted without the date on which it was adopted by the CDC Director; however, in the event that a recommendation is posted without an effective date, we noted that CMS would consult with the CDC to obtain the date the recommendation was adopted by the CDC Director and provide guidance.

In the proposed rule, we noted that the “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, we proposed that the “effective date of the ACIP recommendation” would determine 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 would 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 proposed “effective date of the ACIP recommendation” would be the date the CDC Director adopted the changed recommendation once the recommendation is posted on the CDC's website. We noted in the proposed rule 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 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.

In the proposed rule, we also noted that 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 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.

Additionally, we discussed in the proposed rule that when an ACIP recommendation is narrowed and a Part D sponsor does not currently have a PA requirement in place for that vaccine, the plan may 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). 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 our proposed rule, and finalized in this final rule, 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.

We received the following comments on this section of the proposed rule, and our responses follow.

Comment:

A few commenters requested that we change the definition of the “effective date of the ACIP recommendation.” A commenter recommended we use the date the recommendation is published in the CDC's MMWR. Another commenter recommended we use the day after the last day of the ACIP meeting at which the recommendation was approved. Another commenter expressed concern about situations in which the CDC Director does not adopt an ACIP recommendation.

Response:

We thank the commenters for their suggestions, but we decline to change our definition of the “effective date of the ACIP recommendation.” As we explained in the proposed rule, in the April 4, 2023 HPMS memorandum titled “Final Contract Year (CY) 2024 Part D Bidding Instructions,” we stated that the effective date for an ACIP recommendation is the date on which it is adopted by the CDC Director and published in the MMWR. However, on July 24, 2023, based on updated instruction from the CDC, we issued a revision to the memorandum and clarified that the effective date is the date on which the CDC Director adopts the ACIP recommendation, as posted on the CDC's website, not the date on which the recommendation is published in the MMWR. We noted that if the date of publication in the MMWR was used, it is likely there would be a delay in beneficiaries accessing new ACIP-recommended vaccines at $0 cost sharing because of the delay in publication. For example, on October 24, 2024, the CDC Director adopted recommendations to update the dosing interval and schedule for a meningococcal serogroup B vaccine (MenB-4C), but the recommendation was not published in the MMWR until December 12, 2024.

7 8

https://www.cdc.gov/acip/vaccine-recommendations/

https://www.cdc.gov/mmwr/volumes/73/wr/mm7349a3.htm?s_cid=mm7349a3_w

In the July 24, 2023 memorandum, we also stated that if the CDC Director's adoption of an ACIP recommendation is posted as official on the CDC website but an adoption date is not specified, the effective date would be the day after the last day of the ACIP meeting at which the recommendation was approved. However, we did not include this requirement in the proposed rule. We understand from the CDC that there may be situations in which the CDC Director amends or rejects a recommendation after the ACIP meeting concludes. Therefore, if the day after the last day of the ACIP meeting date was used as the “effective date of the ACIP recommendation,” it is possible that a vaccine could be inappropriately considered an ACIP-recommended adult vaccine for a short period of time.

Our proposed definition of “effective date of the ACIP recommendation” aligns with the CDC's current process for publishing ACIP recommendations that have been adopted by the CDC Director. Based on guidance from the CDC, 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 unlikely event this does occur, CMS will consult with the CDC to obtain the date the recommendation was adopted by the CDC Director and provide guidance.

Comment:

A commenter questioned CMS's expectations when an existing ACIP recommendation is narrowed. The commenter requested clarification regarding whether Part D sponsors are required to add a PA requirement with respect to the vaccine and to submit a negative formulary change request to CMS when an ACIP recommendation is narrowed. The commenter stated that if CMS requires plans to submit a negative formulary change request to add a PA requirement in response to a narrowed ACIP recommendation, this would result in delays in implementing the narrowed ACIP recommendation. Finally, the commenter recommended that if a plan does add a PA requirement for a vaccine, CMS should allow the plan to implement the PA requirement immediately without submitting and waiting for approval of a negative formulary change request.

Response:

As stated in the proposed rule, Part D sponsors are not required to implement PA requirements for vaccines to determine if they are being used in accordance with ACIP recommendations. We clarify that Part D sponsors are not required to add a PA requirement when an ACIP recommendation is narrowed. However, if a Part D sponsor chooses to add a PA requirement to determine if the vaccine is being used in accordance with the narrowed ACIP recommendation, the sponsor must comply with the applicable negative formulary change requirements at § 423.120(e) and applicable notice requirements at § 423.120(f).

In the proposed rule, we stated that unless the Part D sponsor is otherwise notified, the negative change request will be considered approved after 30 days, as specified in § 423.120(e)(3)(i). However, we clarify that, depending on the nature of the narrowed ACIP recommendation, the negative formulary change could be considered either a maintenance change or a non-maintenance change as defined at § 423.100. If the change is a maintenance change, the requirements in § 423.120(e)(3)(i) will apply, meaning that the request is deemed approved 30 days after submission unless CMS notifies the Part D sponsor otherwise. If the change is a non-maintenance change, the requirements in § 423.120(e)(3)(ii) will apply, meaning that the change must not be implemented until the Part D sponsor receives a notice of approval from CMS.

Regardless of whether a negative formulary change is considered a maintenance or non-maintenance change, Part D sponsors are not permitted to immediately implement the PA requirement and must wait until the negative formulary change request is approved. Once the PA requirement is approved, the Part D sponsor may implement the PA requirement and may 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.

Comment:

A commenter expressed concern about potential delays in implementing $0 cost sharing when a new ACIP recommendation is posted to the CDC website by the CDC without an effective date. The commenter was concerned about waiting for CMS to work with CDC to obtain the effective date and issue guidance in instances where the CDC did not specify the date on which the recommendation was adopted by the CDC Director. The commenter requested that CMS allow a grace period for Part D sponsors to implement all cost-sharing changes after an ACIP recommendation is posted online, regardless of whether a date is specified or not, as it takes some time to implement cost-sharing changes.

Response:

We appreciate the commenter's suggestion but note that, based on guidance from the CDC, we expect that it is highly unlikely that an ACIP recommendation will be posted without the date on which it was adopted by the CDC Director. We also decline to make a change to our proposed requirements to allow Part D sponsors to have a grace period to implement cost-sharing changes after an

ACIP recommendation is posted. To ensure beneficiaries can immediately benefit from a new ACIP recommendation, the “effective date of the ACIP recommendation” is the date on which cost-sharing requirements apply. If a Part D sponsor is not able to effectuate $0 cost sharing for an ACIP recommended adult vaccine as of the “effective date of the ACIP recommendation” and an enrollee pays cost sharing for the ACIP-recommended adult vaccine after the “effective date of the ACIP recommendation,” the Part D sponsor will need to reimburse the beneficiary for any cost sharing paid for the vaccine.

After considering the public comments we received, and for the reasons set forth in the proposed rule and in our responses to comments, we are finalizing the changes to §§ 423.100 and 423.120 as proposed.

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

1. Background

Section 11406 of the Inflation Reduction Act of 2022 (IRA) amended section 1860D-2 of 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 title 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.”

https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf

https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf

https://www.cms.gov/files/document/final-cy-2025-part-d-redesign-program-instructions.pdf

We proposed to codify the cost-sharing requirements for covered insulin products under Part D for 2026 and each subsequent plan year.

We received the following comments on this section of the proposed rule, and our responses follow:

Comment:

We received many comments that were supportive of our proposal to codify the statutory cost-sharing requirements for covered insulin products that were added to section 1860D-2 of the Act by section 11406 of the IRA.

Response:

We thank the commenters for their support of our proposal.

Comment:

A commenter requested that CMS publish technical prescription drug event (PDE) reporting guidance for covered insulin product claims.

Response:

We thank the commenter for their recommendation. We have released PDE reporting instructions for the implementation of provisions of the IRA for contract years 2023, 2024, and 2025. Our most recent guidance, entitled “Prescription Drug Event Record Reporting Instructions for the Implementation of the Inflation Reduction Act for Contract Year 2025” was published on April 15, 2024 and can be found here:

https://www.cms.gov/files/document/pderecordreportinginstructionsfortheimplementationoftheiraforcontractyear2025508g.pdf

. We anticipate that additional guidance will be released for contract year 2026.

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 proposed 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 clarified that a covered insulin product includes products that are a combination of more than one type of insulin. We also proposed, consistent with the September 26, 2022 HPMS memorandum, that the definition of a covered insulin product include 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 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 products that are FDA-licensed biological 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 specified 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 proposed at § 423.100 that a “covered insulin product” is licensed under section 351 of the PHSA and marketed pursuant to such licensure. We clarified 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 noted that outside of these situations where the insulin had an approved marketing application under section 505 of the FFDCA, 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, there is no need to reference section 505 of the FFDCA since a biological product can no longer be approved under section 505 of the FFDCA and must be licensed in a biologics license application under section 351 of the PHSA. As such, a reference to section 505 is not included in our proposed definition of a “covered insulin product.”

We did not receive any comments on this section of the proposed rule and are finalizing the definition of “covered insulin product” at § 423.100 as proposed.

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 title XI of the Act; or

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

We interpreted the section 1860D-2(b)(9)(D) of the Act reference to “applicable copayment amount” as an amount that could be either a fixed copayment or a coinsurance percentage. Therefore, we proposed 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 in this final rule, we proposed to define the term “covered insulin product applicable cost-sharing amount.”

Specifically, we proposed 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 title XI of the Act; 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.

If, in this example, a plan's negotiated price, as defined in § 423.100, is $95, then an amount equal to 25 percent of the maximum fair price is $29.75 and an amount equal to 25 percent of the negotiated price is $23.75. Therefore, the covered insulin product applicable cost-sharing amount would be $23.75, as it is the lesser of $35, $29.75, and $23.75.

https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf

We received the following comments on this section of the proposed rule, and our responses follow:

Comment:

Several commenters requested clarification regarding the applicable cost-sharing amount for covered insulin products that are selected drugs under the Medicare Drug Price Negotiation Program, as established by sections 11001 and 11002 of the IRA and added to sections 1191 through 1198 of the Act. As described in section 1860D-2 of the Act, and our proposed definition of “covered insulin product applicable cost-sharing amount” at § 423.100, this amount is the lesser of $35, an amount equal to 25 percent of the maximum fair price (MFP), or an amount equal to 25 percent of the negotiated price. Some of these commenters expressed concern regarding the existing guidance for managing situations in which the applicable cost-sharing amount is determined to be equal to 25 percent of the MFP established for the covered insulin product in accordance with Part E of title XI of the Act. A few commenters noted that the MFP only includes the ingredient cost of a covered insulin product and does not include taxes and dispensing fees and requested guidance on how plan sponsors should treat these costs. A commenter, referring to dispensing fees but not sales tax, noted that if reimbursement for covered insulin product claims does not include reimbursement for the ingredient cost of the insulin product and a dispensing fee, below cost or inadequate reimbursement may harm pharmacies and limit beneficiary access to insulin. Other commenters, referring to both sales tax and dispensing fees, requested that these costs be included as part of the applicable copayment amount when it is equal to 25 percent of the MFP, which they note would be consistent with how cost sharing is calculated when 25 percent of the negotiated price is the applicable cost-sharing amount.

Response:

We thank the commenters for their comments. The MFP established for a covered insulin product in accordance with Part E of title XI of the Act only includes the ingredient cost of the insulin product. As such, the amount paid by an enrollee for a 1-month supply of a covered insulin product cannot exceed 25 percent of the MFP, if this amount is lower than $35 or 25 percent of the negotiated price. Therefore, Part D plans are responsible for covering the cost of the dispensing fee and any applicable sales tax. If the applicable covered insulin product applicable cost-sharing amount is determined to be 25 percent of the negotiated price, we note that, consistent with the definition of negotiated price § 423.100, this price includes all price concessions from network pharmacies or other network providers as well as dispensing fees. If the applicable covered insulin product applicable cost-sharing amount is determined to be $35, the amount paid by an enrollee cannot exceed $35.

Comment:

A commenter recommended that CMS consider allowing the establishment of a copayment amount for insulin products that provides flexibility for Part D plan sponsors. Specifically, the commenter recommended that CMS permit plans to set a copayment that is equal to no more than 25 percent of the MFP or the negotiated price, while also allowing for a $35 copay when it is less than 25 percent of the MFP or the negotiated price. The commenter asserted that this approach would provide flexibility for Part D sponsors, ensure enrollees are subject to predictable cost sharing, and encourage pharmaceutical manufacturers to maintain or lower prices of covered insulin products.

Response:

We appreciate the commenter's suggestion. In accordance with the statute, plans are permitted to set a copayment that is less than or equal to $35 so long as that copayment amount is no more than 25 percent of the MFP or 25 percent of the negotiated price. However, it is not clear if the commenter is asking whether the copayment can be greater than $35 as long as it is equal to no more than 25 percent of the MFP or the negotiated price. While a plan may establish a copayment that is equal to or less than $35, we clarify that the copayment cannot exceed $35 even if such copayment would otherwise be equal to no more than 25 percent of the MFP or the negotiated price. While we recognize the importance of allowing Part D sponsors to have some flexibility in how they structure their benefits, the covered insulin product applicable cost-sharing amount that we are codifying in this rule is statutorily defined in section 1860D-2(b)(9)(D) of the Act as the lesser of $35, an amount equal to 25 percent of the MFP, and an amount equal to 25 percent of the negotiated price. As noted in the proposed rule, Part D sponsors have the flexibility to 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.

We clarify that if a Part D sponsor places a covered insulin product on a formulary tier with a copayment or coinsurance that is lower than the statutory maximum cost-sharing amount (that is, the lesser of $35, 25 percent of the negotiate price, or 25 percent of the MFP), the Part D sponsor will need to use the copayment or coinsurance amount specified for the tier when determining the enrollee's cost-sharing amount. For example, if a covered insulin product is placed on a formulary tier with a copayment amount of $20, the enrollee's cost-sharing amount would be the lesser of $20, 25 percent of the negotiated price, or 25 percent of the MFP, if the insulin product is a selected drug. Similarly, if a covered insulin product is placed on a formulary tier with a coinsurance percentage of 20 percent, the enrollee's cost-sharing amount would be the lesser of the 20 percent coinsurance or $35.

We also clarify that if a Part D sponsor places a covered insulin product on a formulary tier with a copayment or coinsurance that is greater than the statutory maximum cost-sharing amount, the Part D sponsor will still need to use the defined covered insulin product applicable cost-sharing amount to ensure that the enrollee's cost sharing does not exceed such amount. For example, if a covered insulin product is placed on a formulary tier with a copayment amount of $50, the enrollee's cost-sharing amount cannot exceed the covered insulin product applicable cost-sharing amount, which is defined as the lesser of $35, 25 percent of the negotiated price, or 25 percent of the MFP. Similarly, if a covered insulin product is placed on a formulary tier with a coinsurance percentage of 30 percent, the enrollee's cost-sharing amount cannot exceed the covered insulin product applicable cost-sharing amount, which is defined as the lesser of $35, 25 percent of the negotiated price, or 25 percent of the MFP.

Comment:

A commenter requested that CMS adjust how it describes the applicable cost-sharing amount for covered insulin products. The commenter stated that the current guidance stating that cost sharing is equal to or lower than $35 or 25 percent of the MFP or the negotiated price is unclear. The commenter recommended rewording this requirement to state that cost sharing cannot exceed the maximum cost sharing of the lower of $35 per month, 25 percent of the MFP, or the negotiated price.

Response:

We thank the commenter for their suggestion. However, we decline to adopt this change as we believe the current language describing the covered insulin product applicable cost-sharing amount is sufficiently clear.

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 proposed to codify these requirements at § 423.120(h)(1) and (2).

a. Duration of Supply

In alignment with the guidance in our September 26, 2022 HPMS memorandum, we proposed 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.” In the proposed rule, and consistent with our current policy in the September 26, 2022 HPMS memorandum, we specified that 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). In the proposed rule, we stated that 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.

With respect to extended-day supplies (that is, greater than a 1-month supply) of covered insulin products, we proposed 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 2-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 2-month supply up to a 3-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.

b. Out-of-Network Claims

In the September 26, 2022 HPMS memorandum, we provided guidance on managing out-of-network claims. Consistent with this guidance, we proposed 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 proposed 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.”

https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf

) provides detailed guidance on how Part D sponsors must process DMR requests that are submitted by enrollees who paid cash at an out-of-network (or an in-network) pharmacy (or provider) and where the pharmacy (or provider) did not submit claim to Part D plan.

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 clarified in the proposed rule 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.”

c. Tier Placement & Utilization Management

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 described in this section of the final rule still apply.

We proposed to codify at § 423.120(h)(1) and (2) that with respect to coverage of a covered insulin product, as we proposed 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 proposed 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 proposed to codify at § 423.120(h)(4) that these cost-sharing requirements apply for covered insulin products obtained from either in-network or out-of-network pharmacies and providers.

We received the following comments on this section of the proposed rule, and our responses follow:

Comment:

A few commenters requested that we monitor out-of-network claims for covered insulin products, stating that they believe there are limited circumstances in which a beneficiary would need to obtain a covered insulin product from an out-of-network pharmacy, especially considering the existing requirements for pharmacy networks and the availability of mail order prescriptions. The commenters recommended that CMS analyze utilization data and determine if out-of-network fills for covered insulin products are routinely being used without a particular need. The commenters asserted that routine use of out-of-network fills may interfere with Part D plans' care coordination and recommend that limits be placed on access to covered insulin products at out-of-network pharmacies.

Response:

We agree with the commenters that out-of-network access should not routinely be used to access covered insulin products. We reiterate our existing requirements at § 423.124, under which a Part D sponsor must ensure that enrollees have access to covered Part D drugs at out-of-network pharmacies only if they cannot reasonably be expected to obtain such drugs at a network pharmacy and do not access covered Part D drugs at an out-of-network pharmacy on a routine basis.

Moreover, § 423.124(c) requires Part D sponsors to establish reasonable rules to appropriately limit out-of-network access to covered Part D drugs.

Comment:

A commenter requested clarification on whether direct member reimbursement (DMR) requests for covered insulin products can only be submitted by beneficiaries or whether DMR requests can also be submitted by providers. The commenter recommended that CMS monitor claims for covered insulin products, as the codification of CMS's cost-sharing requirements for insulin products could increase both the plan and CMS's liability. The commenter also stated that because there is no limit on the price of covered insulin products that are not selected drugs under the Medicare Drug Price Negotiation Program, it is possible that pharmacies may decline to process network claims online and instead recommend that beneficiaries submit paper claims directly to their Part D plan in an attempt to charge higher prices at the point-of-sale and receive higher payments.

Response:

We thank the commenter for sharing their questions and recommendations regarding DMR requests. We note that our reference to DMR requests in the proposed and final rules is specific to beneficiary-submitted requests where a beneficiary is requesting reimbursement for a covered insulin product for which they incurred out-of-pocket costs. With respect to DMR requests submitted by beneficiaries for prescriptions obtained from in-network pharmacies, § 423.120(c)(3) specifies that a Part D sponsor must require its network pharmacies to submit claims to the Part D sponsor or its intermediary whenever the card described in § 423.120(c)(1) is presented or on file at the pharmacy unless the enrollee expressly requests that a particular claim not be submitted to the Part D sponsor or its intermediary. Network pharmacies that decline to process network claims online and instead recommend that beneficiaries submit paper claims would be in violation of this requirement. We continue to expect DMR requests for prescriptions obtained from network pharmacies to be limited and submitted only for reasons such as the claims processing systems being temporarily unavailable for the pharmacy or the Part D sponsor or its intermediary when the enrollee obtains their prescription. Any post-reimbursement reconciliation between the network pharmacy and plan sponsor would be a contractual matter between the parties.

Comment:

A commenter opposed a cumulative covered insulin product applicable cost-sharing amount. The commenter stated that cost sharing is determined on a claim-by-claim basis and interpreted the language in the proposed rule to require that Part D sponsors track cost sharing for extended-day supply claims and ensure that the cost sharing does not exceed one of the cost-sharing thresholds cumulatively.

Response:

We clarify that the reference to “the cumulative `covered insulin product applicable cost-sharing amount' ” in the proposed rule was not intended to require assessment across multiple covered insulin product claims. The covered insulin product's applicable cost-sharing amount is assessed on a claim-by-claim basis. For extended-day supplies, the applicable cost-sharing amount is determined based on the days' supply for the individual claim. For example, if a covered insulin product is dispensed with a days' supply greater than 1 month, but less than 2 months, the lesser of $70, 25 percent of the MFP, or 25 percent of the negotiated price would be the applicable cost-sharing amount. In other words, the Part D sponsor only needs to look at the days' supply for an individual claim to determine the applicable cost-sharing amount for a covered insulin product.

Comment:

A commenter stated that monthly prescriptions for insulin can create challenges for patients. The commenter requested that CMS allow quarterly prescriptions for insulin.

Response:

We do not prohibit prescriptions for covered insulin products from being written and dispensed for greater than 1-month supplies. In the proposed rule, we provided guidance on how to apply cost sharing for extended-day supplies of covered insulin products. We also proposed 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.

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.

As described in the proposed rule, CMS undertook consumer focus group testing to select a name for the program 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.

As described in more detail in the proposed rule, 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 the Medicare Prescription Payment Plan: Final Part One Guidance on Select Topics, Implementation of Section 1860D-2 of the Social Security Act for 2025, and Response to Relevant Comments (“final part one guidance”) and Medicare Prescription Payment Plan: Final Part Two Guidance on Select Topics, Implementation of Section 1860D-2 of the Social Security Act for 2025, and Response to Relevant Comments (“final part two guidance”), establishing critical operational, technical, and communication requirements for the Medicare Prescription Payment Plan for 2025. CMS does not have authority to implement the Medicare Prescription Payment Plan through program instruction authority beyond 2025. As such, we pursued rulemaking to codify the requirements of the program for 2026 and subsequent years.

With only a few exceptions, we proposed to codify, without modification, the requirements established in the final part one guidance and the final part two

guidance at § 423.137 for 2026 and subsequent years.

CMS's approach in codifying the requirements established in the final part one guidance and final part two guidance is to limit changes to the requirements already set forth and allow stakeholders to gain experience with the program, minimize additional burden for Part D plan sponsors, and minimize disruption for Medicare Prescription Payment Plan participants. Instances where we proposed to make modifications to the requirements previously finalized for 2025 include—

• Modifications to the requirements for how Part D plan sponsors handle adjustments for Part D claims under the Medicare Prescription Payment Plan; and

• Modifications to the timing requirements for the grace period and initial notice of failure to pay.

We also proposed new requirements for the following three additional topics:

• Requirements related to participation renewal 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.

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

Finally, section 1103 of Title I, Subpart B of the Health Care and Education Reconciliation Act (Pub. L. 111-152) amended section 1857(e) of the Act to add a medical loss ratio (MLR) requirement to Medicare Part C (MA program). An MLR is expressed as a percentage, generally representing the percentage of revenue used for patient care rather than for such other items as administrative expenses or profit. Because section 1860D-12(b)(3)(D) of the Act adopts by reference the requirements of section 1857(e) of the Act, these MLR requirements also apply to the Medicare Part D program. Consistent with the inclusion of plan losses in the administrative expense portion of the Part D bid and the treatment of Medicare Prescription Payment Plan unsettled balances as administrative costs under section 1860D-2(b)(2)(E)(v)(VI) of the Act, in the proposed rule, we proposed to modify §§ 422.2420(b)(4)(i)(D) and 423.2420(b)(4)(i)(D) to codify the exclusion of such balances from the MLR numerator, a policy which CMS initially established in the final part two guidance for 2025.

Comment:

Many commenters expressed support for the Medicare Prescription Payment Plan program. Commenters stated that the program addresses the burden of high OOP costs early in the year and can improve access to medications and avoid financial hardship, particularly for those on fixed incomes or managing multiple chronic conditions. Commenters also expressed support for CMS's proposal to, with only a few exceptions, codify, without modification, the requirements established in the final part one guidance and final part two guidance. A commenter expressed that the guidance was developed after extensive stakeholder input, and the commenter believes it reflects an appropriate balance between bureaucratic processes and a positive consumer experience.

Response:

CMS thanks the commenters for their support.

Comment:

Some commenters expressed opposition to CMS's proposal to codify the Medicare Prescription Payment Plan guidance in regulation. A commenter requested that CMS delay implementation of the program for at least one year to allow for additional stakeholder input, pilot testing, and refinement of the program's design. Some commenters requested that CMS defer codification of the program, except for statutorily required items, until Part D plan sponsors have had more time and experience with the Medicare Prescription Payment Plan.

Response:

CMS thanks the commenters for their feedback. As noted in the proposed rule, CMS does not have authority to implement the Medicare Prescription Payment Plan through program instruction authority beyond 2025. As section 1860D-2(b)(2)(E)(i) of the Act requires that Part D plan sponsors offer the Medicare Prescription Payment Plan for all plan years beginning on or after January 1, 2025, CMS also does not have the authority to delay the implementation of the Medicare Prescription Payment Plan. Although CMS is required to pursue rulemaking to codify the program at this time, CMS has pursued an approach of, with only a few exceptions, codifying the requirements established in the final part one guidance and final part two guidance at § 423.137 for 2026 and subsequent years without modification in order to allow stakeholders to gain experience with the program, minimize additional burden for Part D plan sponsors, and minimize disruption for Medicare Prescription Payment Plan participants. Codifying only certain requirements would cause considerable confusion and disruption in the administration of the Medicare Prescription Payment Plan.

CMS remains committed to engaging with shareholders through interview series, individual meetings, and other fora, and incorporating feedback into future rulemaking, as applicable, as Part D plan sponsors gain more experience with the program.

Comment:

Some commenters expressed opposition to CMS making any modifications to the Medicare Prescription Payment Plan program for 2026 and subsequent years, even certain limited modifications. Commenters expressed that Part D plan sponsors will need time to continue assessing and implementing the required changes and that, given the extensive changes to the Part D program taking effect in 2025, finalizing additional, significant requirements on Part D plan sponsors for 2026 and 2027 is premature. A commenter recommended that CMS not impose new requirements for 2026 unless the requirements provide Part D plan sponsors more flexibility and are optional rather than mandatory.

Response:

CMS thanks the commenters for their feedback. CMS agrees that limiting changes to the requirements in place for 2025 will allow stakeholders to gain experience with the program, minimize additional burden for Part D plan sponsors, and minimize disruption for Medicare Prescription Payment Plan participants. Accordingly, CMS is not finalizing any requirements for real-time election or for Part D plans to provide pharmacies with easily accessible information on a Part D enrollee's costs incurred under the program. CMS believes that the limited modifications to the Medicare Prescription Payment Plan codified in this final rule will improve the efficiency of the program and minimize disruptions for program participants. CMS has addressed specific comments related to real-time election and automatic renewal in section II.C.2.(c). of this final rule and comments related to providing pharmacies with easily

accessible information on a Part D enrollee's costs in section II.C.2.(i). of this final rule. CMS remains committed to engaging with stakeholders and incorporating feedback into future rulemaking, as applicable, as stakeholders gain more experience with the program.

Comment:

A commenter expressed concern that the complexity of the Medicare Prescription Payment Plan program could cause beneficiary confusion. The commenter expressed concern that beneficiaries who fail to opt in correctly or inadvertently miss payments may experience disruptions in their access to essential medications, placing their health at significant risk. The commenter further stated that beneficiaries who struggle to meet their monthly installment obligations due to unforeseen financial hardships could face increased stress and uncertainty, potentially exacerbating existing health disparities.

Response:

CMS appreciates the commenter's feedback. CMS understands that the Medicare Prescription Payment Plan program is complex and believes that ongoing robust efforts to educate beneficiaries about the program by CMS, plan sponsors, and other interested parties will be important to ensuring that beneficiaries are appropriately informed about the program. In 2024, CMS developed educational materials and tools to help beneficiaries assess whether the program is right for them and raise awareness of other financial assistance programs, such as the Low-Income Subsidy (LIS) Program, and encouraged Part D plan sponsors and other interested parties to use the language and examples in the CMS-developed materials to craft their own educational materials.

2. Proposed Provisions

a. Basis, Scope, and General Rule

Section 1860D-2(b)(2)(E)(i) of the Act requires that each prescription drug plan (PDP) sponsor offering a prescription drug plan and each MA organization offering a Medicare Advantage prescription drug (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 proposed rule, CMS stated that the provision applies to all Part D plan sponsors, including both stand-alone PDPs and MA-PD plans, as well as Employer Group Waiver Plans (EGWPs), cost plans, and demonstration plans. CMS further stated that for the reasons articulated in the final part two guidance, we do not expect plans that exclusively charge $0 cost sharing for covered Part D drugs 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 the proposed rule and in the proposed new regulation at § 423.137.

In the proposed rule, we proposed to codify at § 423.137(a) the requirements we established in the final part one guidance and final part two 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. As explained in more detail in the proposed rule at 89 FR 99356, 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 final rule and in the new regulations finalized at § 423.137 to the extent that those requirements differ from those established in the final part one guidance and final part two guidance during any portion of the non-calendar plan year that starts in 2025 and continues into 2026.

We also proposed to codify our existing definitions first established in the final part one guidance at § 423.137(b) for plan year 2026 and subsequent years with certain clarifications. Specifically, at § 423.137(b)(1), we proposed 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 guidance and final part two guidance, we referred to these costs simply as “OOP costs.” We also proposed 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 guidance and final part two guidance.

As described in the proposed rule at 89 FR 99356 and section II.C.2.(b) of this final 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 True Out-of-Pocket costs (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.

TrOOP is spending on covered Part D drugs by the beneficiary or on their behalf by certain third parties. TrOOP costs determine when a beneficiary becomes an applicable beneficiary for the Manufacturer Discount Program, reaches the annual OOP threshold, and subsequently enters the catastrophic coverage phase.

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 proposed 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, as described in more detail in section II.C.2.(b). of this final rule, 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, 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 proposed to codify 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. (Because the LI NET sponsor is a Part D sponsor and the LI NET contract is a PDP contract, many existing provisions in Part 423 apply to LI NET. Certain requirements were waived by the statute (such as dissemination of information and formulary requirements) and some requirements were waived through rulemaking (such as medication therapy management and quality improvement

activities).) Specifically, we proposed to revise § 423.2536 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. We would do this by redesignating paragraphs (c) through (k) as paragraphs (d) through (l) and adding the new proposed waiver at paragraph (c). In addition, we proposed to add the materials proposed at §§ 423.2265(b)(16) and 423.2267(e)(45) through (51) (that is, information about the Medicare Prescription Payment Plan on sponsor websites and forms and notices related to the program) to the list of communication requirements waived for the LI NET program. We proposed to do this by revising newly redesignated § 423.2536(i)(1) and (4).

Comment:

A commenter expressed support for CMS's policy of not expecting plans that exclusively charge $0 cost sharing for covered Part D drugs 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 the proposed rule. The commenter requested that CMS also apply that policy to dual eligible special needs plans (D-SNPs) that offer nominal cost-sharing. The commenter anticipates that termination of the MA Value-Based Insurance Design (VBID) model will reduce the number of D-SNPs that can offer $0 copays for Part D drugs and expressed concern that an LIS enrollee in a plan with Part D cost sharing could experience higher cost-sharing in later months under the Medicare Prescription Payment Plan if their cost sharing in the early months of a year is shifted to the later months.

Response:

CMS thanks the commenter for their support and feedback. CMS does not expect Part D plans that exclusively charge $0 cost sharing for covered Part D drugs to all plan enrollees to offer the Medicare Prescription Payment Plan because there is no practical application for the Medicare Prescription Payment Plan in Part D plans that do not charge cost sharing. While CMS recognizes that Part D enrollees with low cost sharing may be less likely to benefit from the Medicare Prescription Payment Plan, under section 1860D-2(b)(2)(E)(i) of the Act, Part D plan sponsors must provide the option to participate in the Medicare Prescription Payment Plan to all Part D enrollees, including subsidy eligible individuals as defined in paragraph (3)(A) of section 1860D-14(a) of the Act. Because the statute explicitly requires that the Medicare Prescription Payment Plan be offered to subsidy-eligible individuals and because such beneficiaries could determine that they would benefit from the Medicare Prescription Payment Plan under certain circumstances, D-SNPs that offer nominal cost sharing are required to offer the Medicare Prescription Payment Plan to their enrollees.

Comment:

A commenter expressed support for CMS's proposal to add the Medicare Prescription Payment Plan to the list of Part D requirements waived for the LI NET program. Another commenter expressed support for the definitions proposed for the Medicare Prescription Payment Plan program and stated that they add additional clarity about the subset of costs eligible for the program.

Response:

CMS thanks the commenters for their support.

Comment:

A commenter requested that CMS waive Medicare Prescription Payment Plan requirements for EGWPs, as the commenter believes the program will add significant administrative costs without providing meaningful benefits to EGWP enrollees.

Response:

CMS appreciates the commenter's feedback but declines to waive the requirement to offer the Medicare Prescription Payment Plan for EGWPs. Section 1860D-22(b) of the Act and 42 CFR 423.458(c) permit CMS to waive or modify any requirement that hinders the design of, offering of, or enrollment in an EGWP. Under section 1860D-2(b)(2)(E)(i) of the Act, all Part D plan sponsors must provide the option to participate in the Medicare Prescription Payment Plan to all Part D enrollees. Regardless of whether EGWP enrollees are less likely to benefit from the Medicare Prescription Payment Plan than enrollees in other types of plans, waiving the requirements of the Medicare Prescription Payment Plan would mean that some EGWP beneficiaries who would be likely to benefit would not be able to take advantage of the program. CMS believes that waiving requirements for EGWPs is not aligned with the statutory requirement that all Part D enrollees must be provided with the option to participate in the program.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing all proposed provisions at §§ 423.137(a) and (b) and 423.2536 without modification.

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.

Final CY 2025 Part D Redesign Program Instructions:

https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements.

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.

The proposed rule discussed the specifics of the first and subsequent month calculation for the maximum monthly cap on cost-sharing payments.

Comment:

A commenter expressed support for finalizing the program calculations.

Response:

CMS thanks the commenter for their support.

Comment:

A commenter expressed concern that the program calculations are not intuitive and may be confusing for program participants.

Response:

CMS appreciates the commenter's feedback. However, section 1860D-2(b)(2)(E)(iv) of the Act specifies how the maximum monthly caps on OOP cost sharing payments are to be calculated, and CMS does not have the authority to change the statutory formula for the maximum monthly cap.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing all proposed provisions at § 423.137(c) without modification.

c. Eligibility and Election

Under section 1860D-2(b)(2)(E)(i) of the Act, Part D plan sponsors must provide the option to opt into the Medicare Prescription Payment Plan to all Part D enrollees, including enrollees who are eligible for LIS. Consistent with the statute, in the proposed rule, we proposed to codify the 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 addition, under section 1860D-2(b)(2)(E)(v)(III)(aa) of the Act, Part D plan sponsors may not restrict the application of the Medicare Prescription Payment Plan benefit to specific covered Part D drugs. We proposed 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 also 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 proposed rule, we proposed the following requirements for 2026 and subsequent years:

• Part D plan sponsors must allow Part D enrollees to opt into the Medicare Prescription Payment Plan prior to the plan year (including the annual coordinated 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 plan 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 coordinated election period and in advance of the January 1 new plan enrollment effective date).

We also proposed requirements for election into the program. We proposed that the Part D enrollee, or their authorized legal representative, must complete an election request, provide the required information to the Part D plan sponsor, and be approved by the Part D plan sponsor to opt into the Medicare Prescription Payment Plan. As discussed in more detail in the proposed rule, we also proposed to require Part D plan sponsors to have specific election mechanisms available to Part D enrollees who wish to opt into the Medicare Prescription Payment Plan.

We further proposed that Part D plan sponsors must consider Medicare Prescription Payment Plan election requests regardless of the election mechanism or format provided it includes certain information necessary to be complete, as described in the proposed rule.

In the proposed rule, for 2026 and subsequent years, we proposed to codify the 24-hour effectuation requirement at § 423.137(d)(4), but requested comment on a potential requirement for Part D plan sponsors to effectuate election requests received via phone or web in real-time for 2026 or future years, including 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 expressed interest in opportunities for pharmacists to support enrollees in using any future Part D plan sponsor-adjudicated real-time election mechanisms at the POS.

We also outlined proposed requirements for receipt of election requests and incomplete election requests. We further proposed requirements for Part D plan sponsors to process retroactive election requests in cases where an enrollee cannot have immediate election into the program and believes that any delay in filling a prescription due to the 24-hour timeframe required to process a program election request may seriously jeopardize their life, health, or ability to regain maximum function and so must pay OOP to the pharmacy.

Section 1860D-2(b)(2)(E)(v)(II) of the Act requires Part D plan sponsors to offer the Medicare Prescription Payment Plan to all Part D enrollees in any month during the year. At § 423.137(d)(8), for 2026 and subsequent years, we proposed to codify requirements for mid-year plan switches, consistent with the requirements included in the final part one guidance for 2025. The proposed rule outlined new requirements related to participation in the program from year to year, a topic CMS did not address in the final part one guidance or final part two guidance because the IRA limited CMS's program instruction authority to a single year of the program (that is, contract year (CY) 2025). We proposed requiring Part D plan sponsors to send a notice alerting the Part D enrollee that their participation in the program will continue into the next year unless they indicate that they would like to opt out for the upcoming year. This notice would be required to be sent out to program participants by the end of the annual coordinated election period (no later than December 7) and must include the Part D plan sponsor's program terms and conditions for the upcoming year.

We also addressed other program election communications and notice requirements for Part D plan sponsors, including timing, content, and supplemental information requirements for the election request form, notice of election approval, and notice of denial.

CMS issued model materials that Part D enrollees can use to fulfill the election request and election approval requirements through the Medicare Advantage and Prescription Drug Programs: Part C and Part D Medicare Prescription Payment Plan Model

Documents (CMS-10882; OMB 0938-1475) ICR package. As established in § 423.2267(c), model materials and content are required materials and content created by CMS as an example of how to convey beneficiary information. If Part D plan sponsors choose to not use a CMS-developed model version of a particular required material or content, they must still accurately convey the vital information in the required material or content to the beneficiary.

Comment:

A few commenters expressed support for finalizing the effectuation timeframes for election requests, including the 24-hour effectuation requirement for election requests made during the plan year. A commenter requested that plans be able to make exceptions to the 24-hour requirement, such as for effectuating election requests received via paper form and requested that CMS exercise enforcement discretion for effectuation timeframes. Other commenters requested the effectuation timeframe for election requests made during the plan year be extended to 72 hours.

Response:

CMS thanks the commenters for their feedback. To ensure a seamless election process for Part D enrollees and ensure they have timely access to the program and their Part D prescriptions, CMS is finalizing the requirement for Part D plan sponsors to process election requests received during the plan year within 24 hours. Through this requirement, CMS reiterates the importance of ensuring that Part D enrollees, once they request to participate, are able to access the benefits of the program as timely as possible. This is particularly important for those who may wait to pick up a prescription until their program participation is effectuated. Additionally, CMS emphasizes that Part D plan sponsors can encourage those who are likely to benefit from the program to opt in prior to the plan year or during the plan year prior to going to a pharmacy through strong education and outreach efforts.

In response to comments regarding operational challenges effectuating election requests received via the paper form, CMS acknowledges these concerns but reiterates the importance of ensuring that Part D enrollees gain timely access to the program and their prescriptions, regardless of the means of election request.

Comment:

Many commenters expressed support for real-time election, stating that it would reduce burden on enrollees, prevent drug dispensing delays, and reduce prescription abandonment. Many of these commenters acknowledged that plan-facilitated real-time election may need to be implemented as a temporary measure but expressed a strong preference for a pharmacy-facilitated real-time election process once it is technologically feasible.

However, many commenters opposed requirements for real-time election, especially in the early years of the program. These commenters pointed to technological and operational challenges with real-time election (both plan-facilitated and pharmacy-facilitated) and requested additional years of program experience before considering a real-time election requirement. In addition, some commenters expressed concerns that real-time election processing could impose additional pharmacy burden (due to potential workflow disruption or provision of program education to enrollees).

Response:

CMS thanks the commenters for their feedback CMS agrees that prompt access to the program is important and supports actions by Part D plan sponsors to prevent drug dispensing delays and reduce prescription abandonment. However, CMS also acknowledges that there are technological barriers to industry-wide implementation of real-time election for 2026. As noted in the proposed rule, our research indicates that there is no mechanism at the POS for program election information to be documented in a manner that complies with election requirements; technological updates would 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.

While real-time election (facilitated by Part D plan sponsors outside of the POS) need not involve changes to the current NCPDP Telecommunication Standard, CMS recognizes that additional information technology systems modifications may be necessary for sponsor-facilitated election updates to interface in real-time with the pharmacy benefit manager (PBM) and pharmacy systems. Finally, CMS is cognizant of potential additional burden pharmacies may face under a real-time election option. As such, CMS is not requiring Part D plan sponsors to effectuate election requests received via phone or web in real-time for 2026. CMS continues to encourage Part D plan sponsors to process election requests within timeframes shorter than 24 hours or in real-time if they are able.

Additionally, CMS reiterates the importance of targeted outreach prior to the plan year to identify enrollees likely to benefit from the program in advance of any POS notifications, which will streamline the program election process. This requirement, alongside the 24-hour effectuation timeframe during the plan year and the required process to retroactively apply the program to those meeting criteria for an urgent situation, will reduce the likelihood of dispensing delays and prescription abandonment. CMS will continue to evaluate program operations and election processes and consider future modifications to effectuation requirements.

Comment:

Many commenters expressed support for the proposed automatic election renewal process, stating that automatic renewal would reduce the burden on Medicare Prescription Payment Plan participants. Some commenters opposed the automatic renewal requirements, instead suggesting that automatic renewal be optional for plans to implement in the early years of the program. Some of these commenters also suggested that plans be able to exempt some participants from automatic renewal, such as those with unpaid cost sharing amounts or those who appear not likely to benefit in the upcoming year. A commenter suggested that CMS issue criteria to help plans identify a targeted subset of participants for renewal. Another commenter requested that participants in long-term care settings be exempt from automatic renewal.

Response:

CMS thanks the commenters for their feedback. We agree that automatic renewal eases burden for both participants and plan sponsors. While there may be some participants who did not meet program thresholds for “likely to benefit” in the current year or who appear not likely to benefit in the upcoming year, we believe that consistent standards for participation renewal for all participants promotes the cleanest implementation of the program, especially in the early years of the Medicare Prescription Payment Plan.

Comment:

Multiple commenters suggested that CMS revise the automatic renewal requirements to extend to participants switching plans within the same parent organization or Part D plan sponsor. A commenter requested that CMS clarify how automatic renewal would work with CMS-approved crosswalks.

Response:

CMS thanks the commenters for their questions. The automatic renewal requirements are generally intended to align with existing

Part D program enrollment requirements. As such, if a Part D enrollee would be required to complete a new enrollment request for the upcoming plan year (such as when an enrollee chooses to switch between plan benefit packages (PBPs) within the same contract), that enrollee would also need to re-elect into the Medicare Prescription Payment Plan. Generally, in situations in which the Part D enrollee is not required to complete a new Part D enrollment request for the upcoming year (such as when someone remains in the same PBP or when their PBP is part of a consolidated renewal plan), then the enrollee's participation in the Medicare Prescription Payment Plan would also automatically carry over for the upcoming year.

Comment:

A commenter requested that CMS clarify when the requirement for automatic renewal would start (that is, at the end of 2025 for CY 2026 or at the end of 2026 for CY 2027).

Response:

Automatic renewal requirements will take effect for the CY 2026 plan year. As such, Part D plan sponsors will be required to automatically renew Medicare Prescription Payment Plan participation for enrollees who are participating in the program in 2025.

Comment:

A couple of commenters requested that CMS update technical guidance for the submission of beneficiary-level data elements into the MARx Medicare Advantage Prescription Drug (MARx) system upon finalization of the rule to reflect the automatic renewal policy.

Response:

CMS thanks the commenters for their recommendations. Any potential modifications to the technical guidance for CY 2026 will be published in Fall 2025.

Comment:

Many commenters supported the requirement for a separate renewal notice, including the requirements to include the Part D plan sponsor's program terms and conditions for the upcoming year and a reminder that the participant may opt out of the program at any time, including for the upcoming plan year. Commenters requested the opportunity to review and provide feedback for the renewal notice through an Information Collection Request (ICR) process. Some commenters suggested alternative mechanisms to notify participants about automatic renewal, such as adding language to existing annual plan documents (such as the Annual Notice of Change (ANOC) and Evidence of Coverage (EOC), the program notice of election approval, or the program monthly bill). A commenter also suggested that if a separate notice is required, it should be distributed after the annual coordinated election period to avoid confusion during times of increased plan switching.

Response:

CMS thanks the commenters for their feedback. CMS believes that a separate notice is important to clearly communicate to Medicare Prescription Payment Plan participants that their program participation will continue in the upcoming plan year. The model notice will be incorporated into the Medicare Advantage and Prescription Drug Programs: Part C and Part D Medicare Prescription Payment Plan Model Documents ICR package (CMS-10882; OMB 0938-1475) and will be made available to the public for review and comment under the standard non-rule Paperwork Reduction Act (PRA) process which includes the publication of 60- and 30-day

Federal Register

notices and the posting of the collection of information documents on our PRA website. CMS will also consider adding educational language related to automatic renewal of participation to other Part D materials, such as the ANOC.

Finally, CMS appreciates the suggestion to delay the timing of the required renewal notice until after the annual coordinated election period to account for participants who may switch plans for the upcoming year and thus not be eligible for automatic renewal. CMS agrees that this will reduce beneficiary confusion and promote a more efficient automatic renewal process. At § 423.137(d)(10)(iv)(A), CMS has modified the timing requirement for the renewal notice in this final rule, such that the renewal notice must be sent after the end of the annual coordinated election period but prior to the beginning of the plan year.

Comment:

A commenter requested that CMS clarify whether, given the automatic renewal process, plans would be required to send the program fact sheet, paper election request, and “Medicare Prescription Payment Plan Likely to Benefit Notice” to Part D enrollees currently participating in the program.

Response:

CMS appreciates the opportunity to clarify. Part D plan sponsors are required to send only the renewal notice to Part D enrollees who are currently participating in the Medicare Prescription Payment Plan and will be automatically renewed for the upcoming year. Part D plan sponsors are not required to perform “likely to benefit” analyses for current program participants, nor to send the “Medicare Prescription Payment Plan Likely to Benefit Notice.” We also note that although a Part D sponsor may choose to send the Medicare Prescription Payment Plan mailing described at § 423.137(m)(1) to all of its Part D enrollees or only to a Part D enrollee who is receiving a new membership ID card, we encourage Part D sponsors to not send the paper enrollment form to current Medicare Prescription Payment Plan participants to reduce potential beneficiary confusion.

Comment:

A commenter requested that CMS remove requirements for telephonic delivery of the notice of election approval during the plan year. The commenter stated that the process adds to plan burden and is often confusing for beneficiaries, who have already received a confirmation number when they completed the telephone or electronic election process.

Response:

CMS thanks the commenter for their feedback. CMS agrees that when a Part D plan sponsor is able to fully complete the election request process in the course of a telephonic or electronic interaction and at that same time provides the enrollee with the effective date of their program effectuation (which must be within 24 hours of receipt) and satisfies other notice of election approval requirements as outlined at § 423.137(d)(10)(ii), then a second telephonic notification of election acceptance is redundant. CMS is modifying the criteria at § 423.137(d)(10)(ii)(A)(

) to reflect that exception. In these cases, the Part D plan sponsor must still deliver the written notice within 3 calendar days.

Comment:

A few commenters expressed support for the requirements for Part D plan sponsors to include information on the availability of the LIS program and other financial assistance programs in the election-related materials; a few commenters also requested that information about financial assistance programs be added to either the election request form or the educational materials required with the election request form. A few commenters suggested modifications to the requirements for the election request form, including adding language stating that enrollees with low, stable drug costs are not likely to benefit from the program and adding a field to differentiate election requests for the current year versus the upcoming plan year. A commenter requested that the period for opting into the Medicare Prescription Payment Plan for the upcoming plan year be delayed until December 10 (after the end of the annual coordinated election period) to allow for plan switching to be completed before processing elections.

Response:

CMS thanks the commenters for their feedback and notes that the CMS-developed Medicare Prescription Payment Plan fact sheet contains information on programs, like the LIS program (also known as Extra Help), that can lower costs for enrollees.

The Medicare Prescription Payment Plan fact sheet can be accessed at

medicare.gov/publications.

As stated in this final rule, Part D plan sponsors are required to furnish additional educational information on the Medicare Prescription Payment Plan with the election request form and the notice of acceptance; Part D plan sponsors are encouraged to use the CMS-developed educational fact sheet to satisfy requirements to provide supplemental information on the program. The fact sheet includes language to help enrollees decide if they are likely to benefit from participating in the program. With regard to the requested field to differentiate the intended year of the election request, CMS will consider any changes to the existing model materials through the standard non-rule PRA process. Under section 1860D-2(b)(2)(E)(v)(II) of the Act, 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. CMS believes that requiring Part D plan sponsors to allow Part D enrollees to opt into the Medicare Prescription Payment Plan prior to the plan year, including during the annual coordinated election period for the subsequent year, simplifies the election process for Part D enrollees.

Comment:

A commenter expressed support for continuing to require telephone and electronic election options. Some commenters suggested that program election be integrated into Medicare Plan Finder.

Response:

CMS thanks the commenters for their support and suggestions. CMS notes that enhancements were made to Medicare Plan Finder starting with CY 2025 to display a cost preview based on a consumer's specific drug list, a set of consumer-selected MA or Part D plans, and consumer-selected pharmacies, including both retail locations and mail order options. However, CMS reiterates that participation in the Medicare Prescription Payment Plan is an arrangement between the Part D plan sponsor and the Part D enrollee, and, as such, Part D plan sponsors are ultimately responsible for managing the election process.

Comment:

A few commenters expressed support for CMS's requirement that in case of retroactive election, the Part D plan sponsor is responsible for reimbursing the participant, not the pharmacy. A commenter requested that the timeframe for processing retroactive election requests be extended from 24 hours to 72 hours.

Response:

CMS thanks the commenters for their support and feedback. CMS is finalizing requirements for retroactive election requests as proposed. With respect to retroactive election requests, CMS reiterates the importance of ensuring that Part D enrollees, once they request to participate, are able to access the benefits of the program as timely as possible. CMS believes that this applies equally to a retroactive election request as to a non-retroactive request. Accordingly, we are finalizing this requirement as proposed.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, at § 423.137(d)(9), for 2026 and subsequent years, we are finalizing the proposed requirements related to participation renewal, with a modification to the timing of the required notice and required contents. The notice must be sent after the end of the annual coordinated election period but prior to the end of the plan year; Part D plan sponsors must include their program terms and conditions for the upcoming plan year as part of the renewal notice or as a separate attachment. We are also finalizing as proposed those requirements for 2026 and subsequent years at § 423.137(d)(10)(ii), with one modification. In response to comments received, we are modifying the criteria for when an initial telephone notice of election approval is not required. If a Part D plan sponsor is processing an election request over the phone or electronically and at that same time provides the enrollee with the effective date of their program effectuation (which must be within 24 hours of receipt) and other notice of election requirements as outlined at § 423.137(d)(10)(ii), then a second telephonic notification of election acceptance is not required. In these cases, the Part D plan sponsor must still deliver the written notice within 3 calendar days. We are finalizing all other provisions as § 423.137(d) as proposed.

d. Part D Enrollee Targeted Outreach

Consistent with our authority under section 11202 of the IRA and under section 1860D-12(b)(3)(D) of the Act, in the proposed rule, we proposed to codify the targeted outreach framework and thresholds established in the final part one guidance and final part two guidance at § 423.137(e). The statute establishes that some Part D enrollees will incur OOP costs that make them likely to benefit from election into the Medicare Prescription Payment Plan. While this program is open to all Part D enrollees, Part D enrollees incurring high OOP costs earlier in the plan year are generally more likely to benefit. Section 1860D-2(b)(2)(E)(v)(III)(dd) of the Act requires that Part D plan sponsors have a mechanism in place to notify a pharmacy when a Part D enrollee incurs OOP costs with respect to covered Part D drugs that make it likely the enrollee may benefit from participating in the program. CMS recognizes, however, that notification of Part D enrollees likely to benefit from the Medicare Prescription Payment Plan prior to reaching the pharmacy POS will be a critical component to program success. Therefore, in the 2025 guidance, CMS proposed requirements for Part D plan sponsors to undertake targeted outreach, both prior to and during the plan year, directly to Part D enrollees likely to benefit from the program.

While the statute requires a likely to benefit notification, it does not outline the specific criteria or define the profile of someone who is likely to benefit under the program. As discussed in further detail in the proposed rule, CMS developed a standardized, quantitative framework for assessing “likely to benefit,” which was used to inform targeted outreach requirements both prior to and during the plan year.

For 2026 and subsequent years, we proposed to codify at paragraph (e)(1)(i)(A) of § 423.137 that a Part D enrollee is likely to benefit from participating in the program if the enrollee incurs $600 or more in OOP costs for a single prescription. Additionally, at paragraph (e)(2), we proposed to codify that Part D plan spons

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