🧮 Medicare Prescription Payment Plan Math and Remindars

Posted September 11, 2024

Jennifer Snow created some perfect representations of prescription costs on the M3P/MPPP and how they play out for the beneficiary.

This is why I have been bending the ear of anyone who will listen about this program.

1️⃣ Only Part D Enrollees who have high drug costs towards the first half of the year or those who cannot afford a high drug cost fill in one month should opt-in to the M3P/MPPP.

2️⃣ More education and transparency is needed, for the masses, on this program. The less is better approach will likely backfire in catastrophic proportion.

3️⃣ Retail agents (those staffing Wal-Mart, Walgreens, Kroger, etc) should be well educated on the M3P. You will be needed. This is your time to shine and show extreme value in this space, bridging a chasm in the industry, and keeping beneficiaries from falling into it.

4️⃣ Beneficiaries with average costs throughout the year will experience a “Balloon mortgage” type of payment structure.

5️⃣ For beneficiaries in point 4, the payments hit peak cost in NOVEMBER / DECEMBER. I cannot think of a worse time of year for that to happen to a beneficiary on a fixed income. This WILL cause a higher number of default in these months.

Two program reminders:

💊 This program is ALL or NOTHING. Once a beneficiary opts-in to the M3P/MPPP ALL of their prescriptions are included in the program. They no longer have the option to pay at the Pharmacy/POS.

💊 EVERY Part D Enrollee will receive a notice with an opt-in form. This includes those with LIS/MSP. The only exception is if all Rx costs on their plan are $0.

If you’ve read this far, thank you! You are awesome and have alleviated some of my anxiety. 😂

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In 2025, the Medicare prescription drug plan (Part D) adds an out-of-pocket cap (OOP) of $2,000 and the ability to spread out the OOP costs over the course of the year. This program is called the Medicare Prescription Payment Plan (M3P).

Earlier this year, but after I put out my first take on this, Medicare released final guidance on the math of the M3P. So, while what I put out there was directionally correct, the formula I used was different than the final. Can’t have that. 😊

Below is visual of the math for different examples of monthly OOP ($200, $500, $600, $1000 and $6230+)

Takeaways
According to Medicare, about 3 million beneficiaries have single day OOP expenses of $600+ so this program, while cool, is not necessarily important for everyone.

The MPPP works out really well for an expensive product that hits the OOP cap in one month which is a product that costs over $6,230 per month.
Amount owed by beneficiary: $2,000 ($590 deductible + $1410 initial coverage limit)

The beneficiary can choose to use the MPPP program and spread the cost out over the course of the year ($2000/12) and pay $166.67 per month.
It is a nice-to-have for those who are in the $600/month camp because it spreads costs a little bit but not in a super easy to understand way. It feels like a surprise what you’d pay each month. And for those under $600/month, that feels especially true.

Of course, no one knows for certain what their OOP will be for the year. Life happens. Beneficiaries can enroll in the M3P at any point in the year so that should help beneficiaries that are hit with unexpected prescription drug costs. That is if they know about the M3P program. The communication of the program does not seem to be a Medicare priority. That’s a problem.

And all of this should be caveated with that, at least in 2024, many beneficiaries have supplemental coverage in Medicare Part D where they might pay a copay instead of coinsurance and if that copay is less than 25% (the standard benefit design) then they actually get the OOP credit of the full 25%.

(Say drug is $500 and standard benefit design would say that a beneficiary should owe $125 but their copay is $60. They will pay $60 but their OOP spending will reflect the full $125. Confusing? Yes.)

If you want me to create some posts walking through my math, let me know. I *think* it is right.