As Medicare open enrollment nears, ‘M3P’ and the out-of-pocket cap loom large

Medicare beneficiaries will soon need to begin thinking about their coverage for 2025, with the open enrollment period opening on Oct. 15. The next year will be a significant one for seniors, with two major Inflation Reduction Act-related changes coming into effect that could have a substantial impact on patient out-of-pocket spending.

The inclusion of a $2,000 out-of-pocket cap and the introduction of the Medicare Prescription Payment Plan, or M3P, will fundamentally alter the way that individuals pay for their medicines in Medicare Part D.

The highest profile of these changes is the new $2,000 cap in Medicare Part D. The cap means that once patients hit that number through deductible and cost-sharing payments, they’ll no longer be responsible for any Part D drug costs for the rest of the year.

• This is expected to be a great win for patients, especially for those taking multiple medicines and those taking new, innovative medicines that may have required substantial out-of-pocket payments in the past.
• Because of the way that the out-of-pocket cap is calculated – based on a government calculus of a “standard” benefit – some patients, especially those with copays, may hit the cap even before they spend $2,000 out of their own pocket.

Understanding of M3P still lags, however. The M3P program will be administered by health plans and is designed to provide the most benefit to patients with large medication bills at the beginning of the year when deductibles and coinsurance may be overwhelming. This voluntary program will make healthcare expenses more manageable for enrollees by allowing patients to spread payments out over the course of the entire year.

Though CMS has provided a basic overview of the M3P and created a “wizard” tool to help seniors decide whether to enroll in the program, this information is difficult to find from the Medicare.gov landing page. Here are further details:

• Health plans will administer the program, so beneficiaries will need to sign up directly with their Part D plan. Payments will be made directly to the plan by beneficiaries, with no payment required at the pharmacy. Should a patient’s medications change, the monthly payments will change, too.
• Seniors may find it difficult to understand the complex calculations of how much they will be expected to pay every month under the program. Seniors interested in enrolling in the M3P should check with their Part D plan to better understand their monthly payment obligations under the program.
• Patients enrolled in non-Medicare financial assistance programs (such as SPAPs) should check with those programs to see how the M3P and the $2,000 cap may intersect with those benefits.
• Greater educational efforts will be required to ensure that seniors are informed about their Medicare Part D payment options and what program(s) work best for their individual situations.

BIO’s View: The Inflation Reduction Act included several provisions that will harm patients, such as innovation-hindering price controls that may erode coverage for Medicare beneficiaries, but the $2,000 cap and the M3P program will unquestionably improve patient affordability. The key to those programs, however, is informed by consistent engagement with the patient advocacy community. The government and Part D plans must redouble efforts to improve seniors’ understanding of these programs in a way that is clear, consistent, simple to understand, and easily accessible to the patient community.