By Leslie Lotano-Saba RPh, MS

With the release of the second round of guidance for the Centers for Medicare & Medicaid Services’ Medicare Prescription Payment Plan (MPPP), healthcare industry companies and vendors now have a much clearer understanding of how the changes will affect operations and operating margins.

As expected, there were no big surprises in the guidance, which provided more details on outreach, education and communications requirements for Part D sponsors. The guidance served more as an update and reinforced the importance of health plans, pharmacy benefits managers (PBMs) and vendors working collaboratively to ensure accurate calculation of the maximum monthly payment cap and reconciliation, especially given the other Part D benefit design changes that start on Jan. 1, 2025. One thing has also become clear: Health plans will need to allow thorough testing by PBMs – and documentation of results and process changes – at the pharmacy level, so the protocol is approved by all parties well before regulations come into effect in 2025.

How we got here

MPPP, formerly known as “Copay Smoothing,” became part of the federal regulatory landscape as part of the Inflation Reduction Act (IRA), wide-sweeping legislation that was signed into law in August 2022. IRA represents the most significant changes to Medicare Part D since 2006 when the program went into effect with the passage of the landmark Medicare Prescription Drug Improvement and Modernization Act.

Lawmakers created MPPP with one all-encompassing goal in mind: ease the financial burden for Medicare enrollees when they pay for prescription drugs. The regulations also included requirements that govern participant billing, pharmacy payment obligations, claims processing, data submission, procedures to determine participant election/reinstatement/preclusion, and member communication and outreach.

Where do we go from here?

MPPP poses substantial operational and administrative challenges for plan sponsors. To succeed, plan leaders must ensure that all departments – claims processing, billing, coding, accounting and marketing/communications – work in harmony to mitigate compliance risk and guard against cost overruns. That same level of system integration also will need to be in place with key partners (PBMs, pharmacies and any relevant outside vendors) so member data is regularly updated to avoid disruptions as well as delays in billing, payment and medication dispensing.

Based on Parts 1 and 2 of the draft guidance provided by CMS, here are four key areas on which plan decision-makers should focus so their organizations are ready when MPPP goes into effect at the beginning of 2025.

1. Participant billing, payment obligations and claims processing

New requirements: MPPP presents plans with some of the biggest challenges in decades because the program will have a material impact on an organization’s cash flow and administrative workflows. Previously, members paid out-of-pocket (OOP) expenses when incurred. Beginning in 2025, however, all Part D plans, including standalone and Medicare Advantage plans, must offer members the option to pay OOP prescription drug costs in capped monthly installments – spread evenly throughout the year – when the member hits the maximum allowable OOP. Plans also will need policies and procedures to stay in compliance with the new rules.

Recommendations: MPPP presents significant financial and operational challenges for plans, PBMs and third-party vendors. PBMs, for example, will need to maintain member balances to accurately adjudicate member cost share at the pharmacy. To offset these risks, plans should:

• Meet with their PBM to align on the program requirements, roles and responsibilities, additional program costs and an implementation plan. Understand how the PBM will support the process, how they will ensure various pharmacy types understand and are compliant with enrollee communications and enrollment, accurately process claims and ensure minimal access issues or medication delays.
• Enhance member billing systems to generate a separate invoice for MPPP and integrate PBM information to accurately calculate monthly payments. If using a third party for billing, plans should review the vendor’s processes to confirm they are compliant with the new regulations. Whether handling claims internally or through a vendor, the processes must include a seamless exchange of pharmacy claim information to accurately calculate and track each MPPP participant’s payment responsibility. Data exchange between the plan, billing systems and the PBM may need to be set up to ensure reconciliation and coordination of payments, claims and adjustments to participant balances.
• Prioritize premium payments so members do not lose eligibility.
• Implement a process to handle the operational and financial impact of uncollectible payments and bad debts. This must be in place since plans cannot take negative actions (termination, collection) against participants who do not pay their MPPP invoices. Plans must estimate uncompensated and unsettled member balances for inclusion in their bids, reflected as administrative costs.

2. Participation, termination, reinstatement and preclusion

New requirements: MPPP contains a wide range of mandatory processes to process program participation, termination, reinstatement and preclusion of participants.

Recommendations: To maximize employee productivity and streamline workflows, plans should:

• Begin analyzing member data to estimate the number of members who may opt in, and forecast the potential financial impact in terms of operational costs and uncompensated or unsettled member payments.
• Consider creating a separate internal unit or outsourcing these activities (accounting, participation, outreach and member communication) to avoid disrupting the activities of the plan’s member services teams.
• Develop a call center training plan for the program and how to address questions, explain OOP calculations and payments, and handle disputes. Call center technology may need to be enhanced to provide member and provider service teams with each member’s billing and payment history.
• Create a process to notify MPPP participants who have failed to pay their balances and, just as importantly, determine how the organization will collect outstanding payments or terminate their participation in the program. Plans might consider writing off unpaid balances to keep members from leaving the plan.
• Establish protocols that adhere to the prescribed guidelines for communications (toll-free telephone number, online application, paper options that are faxed or mailed) to aid members who want to opt in or opt out of the program.
• Review the benefits of point-of-sale (POS) interactions – especially members’ pharmacy visits to pick up prescriptions – with current or future members. Such an initiative could help minimize disruptions to prescription-dispensing workflows. Plans, PBMs and pharmacies, however, will need to balance the costs and additional workloads of POS programs.

3. Member outreach and communications

Requirements: Plans will be obligated to undertake extensive member outreach. Plans also must identify and connect with individuals who are “likely to benefit” from the new rules, especially current or potential members who historically have incurred high OOP costs early in a plan year. CMS will provide additional input about outreach marketing and communications procedures (and content) in the next phase of guidance.

Recommendation: While CMS is developing model materials, plans should not wait until CMS issues further guidance. Marketing and communications teams should reference existing Part D regulations to develop a library of informational and educational content, as well as a targeted communications strategy to ensure members receive, or have access to, essential documents to make informed decisions about MPPP.

4. Data submission

Requirements: This is the area where plans, PBMs and pharmacies have extensive experience and a proven track record of complying with CMS reporting requirements. Some tweaks will be necessary to provide CMS with information that includes: the cost of MPPP operations, utilization patterns, availability/accessibility/acceptability of services, and pharmacy performance measures.

Recommendation: Begin a comprehensive review of data submission policies and procedures that includes the new data fields/information that CMS requires. For example, the date the participant was likely to benefit from MPPP based on POS notification criteria.

What is next

As with nearly every federal program of this magnitude, regulators will be issuing more detailed guidance in the future. Here are important timelines to remember:

• Summer/Fall: CMS to issue final Part 2 guidance that addresses input received during the comment period.
• October 15: Part D enrollees can opt into MPPP during the start of open enrollment.
• January 1, 2025: MPPP regulations begin.

Make no mistake. Creating, implementing and sustaining operational and technology enhancements to be compliant with MPPP will require the full attention of plan leaders. Implementing these recommendations will help your organization mitigate compliance risk, safeguard capital that can be reinvested, and ensure members receive the care they need to improve health outcomes.

Leslie Lotano-Saba RPh, MS, is a managing director at AArete, a global management and technology consulting firm, where she leads the Pharmacy Solutions practice.