Starting in 2025, the Inflation Reduction Act (IRA) introduces the Medicare Prescription Payment Plan (MPPP or M3P) that allows Medicare drug plan members to spread the cost of their Medicare Part D drugs across the entire year - while remaining under the maximum annual out-of-pocket Part D formulary drug spending limit (RxMOOP) of $2,000 in 2025. Please note, RxMOOP may increase each year - RxMOOP will be $2,100 in 2026.

UPDATE for pharmacies and healthcare professionals: Now online the BIN and PCN values for each 2025 Medicare Part D and Medicare Advantage plans. Also online are the BIN/PCNs for the Medicare Prescription Payment plan (M3P or MPPP).  See: Chart of 2025 BIN and PCN numbers for each Medicare Part D prescription drug plan Part 1 of 7 (E3014 through H1862) includes M3P (MPPP) BIN/PCN numbers

Once the plan member has spent $2,000 on formulary Part D drugs, the person pays no additional costs for formulary Part D drugs through the remainder of the year.

Medicare Part D coverage 2025 and beyond



Your cost-sharing for formulary Part D drug purchases spread across the entire year - up to your $2,000 out-of-pocket limit.

Here are some additional highlights of the Medicare Prescription Payment Plan:

• The MPPP is best suited for people who have very high drug costs at the beginning of the year. (see Example #1 below)
  
• The MPPP is free and does not charge interest on drug purchases.
• Although the MPPP will not save you money on your prescription drugs, the MPPP may make help with monthly budgeting by spreading drug costs over a greater time.
• The MPPP applies to both stand-alone Medicare Part D prescription drug plan (PDPs) or Medicare Advantage plans that include drug coverage (MAPDs).
  
• The MPPP will not help people who already have consistent drug costs each month.
  
• The MPPP is voluntary and you can join or opt into the MPPP during the annual Open Enrollment Period before the start of the next plan year or during the plan year.
• Your Medicare drug plan may notify you that your drug spending makes you an ideal candidate for the MPPP.
• Your pharmacy may inform you that you are "likely to benefit" from the MPPP as they process your prescription purchases - the threshold or trigger is a $600 single drug purchase transaction (this value can change year-to-year).
• Once in the MPPP, you will not pay anything at your pharmacy, instead your Medicare drug plan will send you a monthly bill for your cost-sharing.  However, you will continue to pay your monthly Medicare plan premium (if any) as usual.
  
• Your payments to your Medicare drug plan can change each month based on your monthly drug purchases and you may not be able to easily predict the amount of your next monthly bill.  (see Example #2 below)
• A person who does not pay their MPPP bills will be provided a two-month grace period to repay any unpaid cost-sharing bills and then the Medicare plan can terminate the person from the MPPP.  A person can work with the Medicare drug plan, pay unpaid bills, and be reinstated into the MPPP later in the year.
  
• The MPPP is not recommended for people eligible for the Medicare Part D Extra Help program (the Low-Income Subsidy provides a better benefit).
• A person can opt out or leave the MPPP program and their Medicare drug plan will continue to bill them for the outstanding prescription costs and the plan member will again pay for prescription drugs directly at the pharmacy.

Examples of the Medicare Prescription Payment Plan

1. Calculating the maximum monthly cap for the first month of the MPPP
   The first month of the MPPP is calculated by "taking the annual [out-of-pocket] OOP threshold [$2,000] minus any Part D costs the Part D enrollee incurred during the year before opting in, divided by the number of months remaining in the plan year" (including the month the person opts into the MPPP).
   The Medicare drug plan would then bill the plan member "the lesser of the participant’s actual OOP costs or the first month’s maximum monthly cap".  That is, "when the amount [of the Part D drug purchase] incurred in the first month in the program is less than the maximum monthly cap, the participant cannot be billed more than their actual OOP costs in that month."  For example, in the first month of the MPPP, if the person has a maximum monthly cap of $166.67 and buys only a $4 generic drug, they will only be billed for the $4 copay.
   
   
2. Calculating the maximum monthly cap for the subsequent months
   First, "the maximum monthly cap is determined by calculating the sum of any remaining [out-of-pocket]  OOP costs owed by the participant from a previous month that have not yet been billed and any additional OOP costs incurred by the participant in the subsequent month, divided by the number of months remaining in the plan year."
   "The maximum monthly cap calculation in subsequent months applies to newly incurred [out-of-pocket] OOP costs and previous costs not yet billed. If there are unpaid balances from prior monthly bills, the total billed amount may be higher than the maximum monthly cap." [emphasis added]
   As is shown in Example #2, below, the "resulting maximum monthly cap will change if additional OOP costs are incurred".
   "For these calculations, the 'OOP costs incurred by the participant' do not include the covered plan paid amount or amounts paid by third parties, such as qualified State Pharmaceutical Assistance Programs (SPAPs) or charities."
   

Example #1: The simplest example of a high cost formulary drug as your first purchase of the year.

If you are prescribed an expensive medication that has a retail cost of $24,000 (such as, REVLIMID 10 MG CAPSULE (28.000 EA ) (NDC: 59572041028)) with 25% co-insurance, your cost should be $6,000 (25% of $24,000), but your out-of-pocket costs are limited to $2,000 for the year.  So, your options are to (1) pay the $2,000 for the $24,000 drug or you can (2) spread the S2,000 cost across the entire year, paying $167 per month from January through December.

In this example, we will assume:

• You have enrolled or opted into your Medicare drug plan's "Medicare prescription payment plan" (MPPP) during the annual Open Enrollment Period (OEP) with the MPPP starting on January 1st.
  
  
• You have not purchased any other formulary drugs yet this year and decide to purchase your most expensive medication first (first fill).
  

With Option (1), you pay the $2,000 at your plan's network pharmacy and have no additional costs for formulary Part D drugs through the remainder of the year.

With Option (2), you would pay $0 at the pharmacy and instead, your Medicare drug plan would bill you $167 ($166.67) each month for the remainder of the year (and your plan would pay your copay to the pharmacy).  You would also pay $0 for any additional formulary Medicare Part D drugs through the remainder of the year.


Example #2: A more complex example of typical low cost formulary drugs purchased throughout the year.

• The person does not enroll or opt into the MPPP during the Open Enrollment Period, rather the person waits until April to opt into the Medicare prescription payment plan.
  
  
• The person is enrolled in a Medicare drug plan with a standard deductible ($545) - and assuming the low-cost $4 generic purchases are excluded from the plan's deductible or have a retail drug cost equal to the $4 copay.
  
  
• During January, February, and March the person purchases only one low-cost $4 Part D medication.
  
  
• In April, the plan member joins or opts into the MPPP and purchases a 90-day supply of a medication with costs totaling $617 (assuming a $613 retail price and the $4 generic).  The $545 plan deductible is first met by the 90-day purchase and the remainder of the retail cost falls into the Initial Coverage Phase and calculated as a straddle claim.  The 90-day supply then will have a $120 copay in the Initial Coverage Phase.
  
  
• If the Medicare plan member has not already joined the MPPP, the formulary drug purchase over $600 would trigger the pharmacy to suggest the person consider joining the MPPP.  (See section below for a "Likely to Benefit Notice")
  
  
• The person will have the following costs based on their 90-day supply and routine low-cost prescription purchases.
  
  

  	Actual drug cost incurred by  plan Member (without MPP)	Monthly cost-sharing payment with MPPP
  January	$4	(not yet in MPPP)
  February	$4	(not yet in MPPP)
  March	$4	(not yet in MPPP)
  April	$617	$220.89
  May	$4	$50.01
  June	$4	$50.59
  July	$124	$71.25
  August	$4	$72.05
  September	$4	$73.05
  October	$124	$114.39
  November	$4	$116.39
  December	$4	$120.38

  
  (To learn more, please see the CMS document "Technical Memorandum on the Calculation of the Maximum Monthly
  Cap on Cost-Sharing Payments Under Prescription Drug Plans")
  

A graphical comparison of how the MPPP can affect your Medicare Part D cost-sharing is shown below where the blue bars would be the actual costs without the MPPP and the orange is showing how the MPPP can somewhat "smooth" your Medicare Part drug costs.


With Option (1), you pay your actual prescription costs at the pharmacy just as in past year.

With Option (2), you would pay $0 at the pharmacy and instead, your Medicare drug plan would bill you no more than the maximum out-of-pocket costs divided by the remaining months of the year.

For April (the first month of the MPPP), you will spend no more than $2,000 per year minus the $12 you have already spent divided by nine (9) months remaining in the year ($2,000 - $12)/9 = $220.89.  And since your actual $617 drug cost is more than your maximum monthly payment cap, your plan would bill you $220.89.

Subsequent monthly payments will be calculated by determining the amount owed by the person and dividing by the number of remaining months.  For May, the person has costs of $617 and paid $220.89 for an unpaid balance of $396.11 plus the $4 copay divided by eight (8) months remaining for a new maximum payment cap of $50.01.


Where can we learn more?

The Centers for Medicare and Medicaid Services (CMS) has released guidance on the MPPP and includes a model MPPP letter sent to standalone Medicare Part D prescription drug plans (PDP) and Medicare Advantage plans with prescription drug coverage (MAPD) members during the annual Open Enrollment Period (OEP) (see example notice below).

Your Medicare drug plan's network pharmacies will also notify you when you are purchasing formulary Medicare Part D drugs that you may wish to consider using the MPPP to spread the cost of your expensive medications across the entire year.

Here is a copy of the CMS model "Likely to Benefit Notice" that will provide notice of the Medicare prescription payment plan:



Consider Managing Your Monthly Drug Costs with the Medicare Prescription Payment Plan

You might benefit from participating in the Medicare Prescription Payment Plan because you have high drug costs.

What’s the Medicare Prescription Payment Plan?

The Medicare Prescription Payment Plan is a new payment option that works with your current drug coverage to help you manage your out-of-pocket Medicare Part D drug costs by spreading them across the calendar year (January– December). Starting in 2025, anyone with a Medicare drug plan or Medicare health plan with drug coverage (like a Medicare Advantage Plan with drug coverage) can use this payment option for drugs covered by Part D. All plans offer this payment option and participation is voluntary.

If you select this payment option, each month you’ll continue to pay your plan premium (if you have one), and you’ll get a bill from your health or drug plan to pay for your prescription drugs (instead of paying the pharmacy). There’s no cost to participate in the Medicare Prescription Payment Plan, and you won’t pay any interest or fees on the amount you owe, even if your payment is late.

Will this payment option help me?

It depends on your situation. If you have high out-of-pocket drug costs earlier in the calendar year, this payment option spreads out what you’ll pay each month across the calendar year (Jan – Dec), so you don’t have to pay out-of-pocket costs to the pharmacy. This payment option might help you manage your monthly expenses, but it doesn’t save you money or lower your drug costs. Visit Medicare.gov/basics/costs/help/drug-costs to learn about programs that can help lower your drug costs.

How will my costs work?

The prescription drug law caps your out-of-pocket costs at $2,000 in 2025. This means you’ll never pay more than $2,000 in out-of-pocket drug costs in 2025. This is true for everyone with Medicare drug coverage, even if you don’t join the Medicare Prescription Payment Plan.

When you fill a prescription for a drug covered by Part D, you won’t pay your pharmacy (including mail order and specialty pharmacies). Instead, you’ll get a bill each month from your health or drug plan. Your monthly bill is based on what you would have paid for any prescriptions you get, plus your previous month’s balance, divided by the number of months left in the year.

Even though you won’t pay for your drugs at the pharmacy, you’re still responsible for the costs. If you want to know what your drug will cost before you take it home, call your plan or ask the pharmacist.

Note: Your payments might change every month, so you might not know what your exact bill will be ahead of time. Future payments might increase when you fill a new prescription (or refill an existing prescription) because as new out-of-pocket drug costs get added to your monthly payment, there are fewer months left in the year to spread out your remaining payments.  

How do I know if this payment option might not be the best choice for me?

This payment option might not be the best choice for you if:

•    Your yearly drug costs are low.
•    Your drug costs are the same each month.
•    You’re considering signing up for the payment option late in the calendar year (after September).
•    You don’t want to change how you pay for your drugs.
•    You get or are eligible for Extra Help from Medicare.
•    You get or are eligible for a Medicare Savings Program.
•     You get help paying for your drugs from other organizations, like a State Pharmaceutical Assistance Program (SPAP), a coupon program, or other health coverage.

Who can help me decide if I should participate?

•    Your [Medicare] health or drug plan: Visit your plan’s website, or call your plan to get more information. If you need to pick up a prescription urgently, call your plan to discuss your options.
•    Medicare: Visit Medicare.gov/prescription-payment-plan to learn more about this payment option and if it might be a good fit for you.
•    State Health Insurance Assistance Program (SHIP): Visit shiphelp.org to get the phone number for your local SHIP and get free, personalized health insurance counseling.

How do I sign up?

Visit your [Medicare Advantage] or [stand-alone Medicare Part D] drug plan’s website, or call your plan to start participating in this payment option at any time during the plan year. [The telephone number for your Medicare plan is found on your Member ID card and most of your plan's printed information.]

Need this information in another format or language?

To get this material in other formats like large print, braille, or another language, contact your Medicare drug plan at the phone number on the back of your membership card. If you need help contacting your plan, call 1-800-MEDICARE (1-800-633-4227). TTY users can call 1-877-486-2048.


Form CMS-10882    OMB Approval No. 0938-1475 (Expires: 07/31/2025)

[bold in original with additional highlights and formatting]

Sources include:

"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"
https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-one-guidance.pdf

"Fact Sheet: Medicare Prescription Payment Plan Final Part One Guidance"
https://www.cms.gov/files/document/fact-sheet-medicare-prescription-payment-plan-final-part-one-guidance.pdf

"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"
https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-two-guidance.pdf

"Fact Sheet: Medicare Prescription Payment Plan Final Part Two Guidance"
https://www.cms.gov/files/document/fact-sheet-medicare-prescription-payment-plan-final-part-two-guidance.pdf

"The Medicare Advantage and Prescription Drug Programs: Part C and Part D Medicare Prescription Payment Plan Model Documents"
https://www.cms.gov/medicare/regulations-guidance/legislation/paperwork-reduction-act-1995/pra-listing/cms-10882

"Technical Memorandum on the Calculation of the Maximum Monthly Cap on Cost-Sharing Payments Under Prescription Drug Plans"
https://www.cms.gov/files/document/monthly-cap-cost-sharing-technical-memo-july-2023.pdf