Medicare Prescription Payment Plan: What to Tell Patients

The Medicare Prescription Payment Plan lets people with Part D coverage pay $0 at the pharmacy and get a monthly bill from their drug plan instead. It doesn't lower drug costs. It spreads them across the year. The out-of-pocket cap is $2,100 in 2026 and $2,400 in 2027.

How the plan works

The Medicare Prescription Payment Plan is a Part D payment option, sometimes shortened to M3P. See the glossary entry for a short definition.

Normally a Part D enrollee pays their copay or coinsurance at the counter. Under this plan, they pay $0 at the pharmacy for covered Part D drugs. The Part D plan then bills them each month for that cost sharing. They still pay their plan premium as usual.

Key points for patients:

• Anyone with Part D can use it. That includes stand-alone drug plans and Medicare Advantage plans with drug coverage.
• It's free to join. There's no fee or interest.
• It doesn't save money. The total paid over the year is the same.
• Patients sign up with their plan. Plans take elections by phone, mail or online. A patient can opt in before the year starts or in any month during it. A patient who gets the notice at the pharmacy can also opt in right then.
• Missed payments have a grace period. If a participant doesn't pay, the plan must give at least two months of grace after notifying them before ending participation.
• Extra Help comes first. CMS states that Extra Help, for those who qualify, is "more advantageous" than this plan.

The 2026 and 2027 numbers

The plan works alongside the Part D out-of-pocket cap. Once a person's out-of-pocket drug costs hit the cap, they pay nothing more for covered Part D drugs that year.

The deductible matters because January is when it lands. A patient on an expensive brand drug may owe most of the deductible at the first fill of the year. That's the bill this plan is built to smooth out.

How the monthly cap is calculated

The plan sets a maximum monthly bill. Federal rules spell out the formula.

Here's a simple 2027 example. A patient opts in before January. In January she fills a drug with $600 in cost sharing and nothing else all year.

• January: The cap is $2,400 divided by 12, or $200. She pays $200. The other $400 carries forward.
• February: The cap is $400 divided by 11, or about $36.36.
• March through December: The carried balance keeps spreading over the remaining months, so she pays about $36.36 a month.

She pays $600 in total, the same as she would have at the counter. The difference is that no single month hits her for $600.

The flip side: if she opts in late in the year, there are fewer months to spread across, so each bill is bigger. This is why CMS says people with high costs early in the year are "more likely to benefit."

Who is likely to benefit

The rule gives plans two signals to target:

• $600 or more in out-of-pocket costs for a single Part D drug.
• $2,000 or more in out-of-pocket costs in the first nine months of the prior year.

Patients who usually don't benefit much:

• People with Extra Help, whose costs are already low.
• People with small, steady copays every month.
• People who'd rather pay as they go and don't want another bill.

The pharmacy's job

The pharmacy role is smaller than many teams assume. When a claim puts a patient at $600 or more for one drug, the plan flags it to the pharmacy at the point of sale. The pharmacy then gives the patient the standardized Likely to Benefit Notice from CMS.

CMS's final guidance is explicit. Handing over the notice "does not require pharmacy staff to provide additional education or counseling." You give the notice. You can answer questions if you choose, and point the patient to their plan to enroll.

If the patient opts in on the spot, the plan handles the election. Under CMS guidance, the pharmacy may need to reverse and reprocess the claim that triggered the notice so it falls within the patient's participation dates. The plan sponsor sets those next steps.

A plain-language script

Counseling isn't required, but patients will ask. Here's a short script your team can use at the counter or on the phone. It sticks to facts from Medicare.gov and CMS.

Keep it short. You're not recommending the plan. You're explaining it so the patient can decide.

Using outreach to get ahead of January

The busiest time for this conversation is the first fills of the new year, when deductibles hit. A pharmacy can get ahead of that by reaching high-cost patients in late fall or December, before the bill arrives.

Rivvi is a HIPAA-compliant AI workspace. A pharmacy can upload a list of patients on high-cost brand drugs and ask Rivvi to flag who likely faces a large January bill. On the Team plan, Rivvi can call or text those patients with a short, factual explanation, in English, Spanish, or 30 more languages. Patients with questions get a warm transfer to staff or a task for a callback. Opt-outs are honored on every path.

That's an informational call about the patient's own drug costs. Check how the TCPA rules for healthcare messages apply before you launch. See the full pharmacy picture on Rivvi for pharmacies, or how cost barriers feed into adherence in How to Improve PDC and on the medication adherence page.

Sources

• Medicare.gov, Medicare Prescription Payment Plan
• Medicare.gov, Costs for Medicare drug coverage
• 42 CFR 423.137, Medicare Prescription Payment Plan
• CMS, Final Part One Guidance fact sheet
• CMS, Final Part Two Guidance, July 16, 2024
• CMS, CY2026 MA and Part D final rule fact sheet