The Centers for Medicare & Medicaid Services (CMS) finalized CMS-4208-F on April 4, 2025 and the final rule is published in the Federal Register on April 15, 2025. The final rule applies to Medicare Advantage (MA, Part C) program, Medicare Prescription Drug Benefit (PDP, Part D) program, Medicare Cost Plans, and Programs of All-Inclusive Care for the Elderly (PACE). In this blog, we are highlighting the policy changes, how they impact MA plans and PDP and suggesting ways MA and PDP plans can prepare for their implementations.
A. Cost sharing for ACIP-recommended vaccines
Effective January 1, 2023, eligible Medicare beneficiaries do not have cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) covered under Part D. This is now codified.[1] CMS requires that the “effective date of the ACIP recommendation” is the date on which cost-sharing requirements apply. If a Part D sponsor is not able to effectuate $0 cost sharing for an ACIP recommended adult vaccine as of the “effective date of the ACIP recommendation”, the enrollee will need to be reimbursed if cost-sharing is incurred for the ACIP-recommended adult vaccine after the “effective date of the ACIP recommendation”.[2]
What’s New: While the $0 cost-sharing provision originated from the Inflation Reduction Act (IRA) and was implemented in CY 2023, this rule codifies it. CMS is also clarifying the effective date for payment.
Next Steps for Health Plans:
- Monitor ACIP announcements monthly to identify new vaccine recommendations.
- Update formulary adjudication rules to automatically apply $0 cost‑share on “effective date.”
- Implement reimbursement workflows for any member who paid out‑of‑pocket before adjudication system update.
B. Monthly cost sharing for insulin under Medicare Part D
Eligible beneficiaries do not have deductible for covered insulin products, and the applicable copayment for a one-month supply of each covered insulin product must not exceed the $35.00, another IRA provision.[3]
Beginning January 1, 2026, the cost-sharing amount is the lesser of: a). $35; b). an amount equal to 25% of the maximum fair price (MFP) established for the covered insulin product under the Medicare Drug Price Negotiation; or c). an amount equal to 25% of the negotiated price of the covered insulin product, as defined in 42 CFR §423.100[4].
What’s New: The change introduces a “lesser of” calculation for insulin cost-sharing, tying it to the Maximum Fair Price (MFP) from the Medicare Drug Price Negotiation Program.
Next Step for Health Plans:
- Test claim in Q4 2025 to ensure system correctly selects the lowest cost.
C. Medicare Prescription Payment Plan (M3P)
Beginning in 2025, enrollees in Part D plans have the option to pay their out-of-pocket cost-sharing for eligible Part D drugs in monthly payments which are capped during the course of the contract year. CMS is adding new requirements for the program – automatic election renewal in 2026 unless the enrollee opts out, the notice must be sent after the end of the annual coordinated election period (December 7) but prior to the end of the plan year. Part D plan sponsors must include their program terms and conditions for the upcoming plan year as part of the renewal notice or as a separate attachment. The 24-hour effectuation after election approval stands. And unsettled balances from M3P cannot be included in the calculation of Medical Loss Ratio.[5] They are considered administrative costs.
What’s New: The key changes here are the automatic enrollment renewal for M3P and the specific requirements around the content and timing of the renewal notice. While the clarification that unsettled balances are administrative costs is not new but is important.
Action Items for Health Plans:
- Update M3P member notices template to include auto‑renewal language and full T&Cs.[YT3]
- Ensure accounting correctly classify unsettled M3P balances as administrative costs.
- Sponsors who outsource M3P to Third Party Administrators (TPAs) are responsible for the oversight of the implementation of these new rules.
D. Improving experiences for Dually Eligible enrollees
CMS is finalizing new requirements for D-SNPs that are applicable integrated plans to: (1) have integrated member identification (ID) cards that serve as the ID cards for both the Medicare and Medicaid plans in which an enrollee is enrolled; and (2) conduct an integrated health risk assessment (HRA) for Medicare and Medicaid, rather than separate HRAs for each program. These changes go into effect on January 1, 2027. CMS is also finalizing provisions to codify timeframes for special needs plans to conduct HRAs and individualized care plans (ICPs) and prioritize the involvement of the enrollee or the enrollee’s representative, as applicable, in the development of the ICPs.
- Initial HRAs must be completed within 90 days of enrollment
- Annual HRAs must be completed within 365 days of the previous assessment
- ICPs must be completed within 30 days of the initial HRA or 30 days after enrollment, whichever occurs later
What’s New: The major changes focus on integrating processes and member materials for dually eligible enrollees in integrated D SNPs, specifically the integrated ID cards and HRAs. The codification of HRA and ICP timeframes with mandated enrollee involvement is also significant
Action Items for Health Plans:
- Develop and implement systems to issue integrated member ID cards for dually eligible enrollees.
- Establish workflows and systems to ensure HRAs and ICPs are completed within the specified timeframes.
- Implement processes to engage enrollees and their representatives in the development of ICPs.
- Case managers, enrollment teams and Interdisciplinary Care Teams (ICTs) need to collaborate to implement these changes.
E. Submission timelines for Prescription Drug Event (PDE) for selected drugs
CMS is codifying PDE submission timeliness requirements[6].
- Initial PDE records be submitted within 30 calendar days following the date the claim is received by the Part D sponsor or its PBM;
- Adjustment and deletion PDE records due within 90 calendar days following discovery of the issue requiring a change to the PDE;
- Resolution of rejected PDE records within 90 calendar days following the receipt of rejected record status from CMS.
- For drugs selected for negotiation under the Medicare Drug Price Negotiation Program, Part D sponsors must submit initial PDE records within seven (7) calendar days from the date the Part D sponsor receives the claim.
What’s New: The most significant change is the accelerated 7-day submission timeline for initial PDE records for drugs selected under the Medicare Drug Price Negotiation Program.
Action Items for Health Plans:
- Ensure PBMs and internal systems can meet the standard PDE submission timelines.
- Develop processes to identify drugs subject to the Medicare Drug Price Negotiation Program and ensure initial PDE records for those drugs are submitted within 7 days.
- Test systems prior to January 1, 2026, to ensure compliance with the new rule for PDE related to “selected drugs”.
F. Medicare Transaction Facilitator (MTF) Requirements for Network Pharmacy Agreements
CMS is codifying a requirement[7] on Part D sponsors, or their PBMs, to include in their network pharmacy agreements a provision that requires such pharmacies to be enrolled in the Medicare Transaction Facilitator Data Module (MTF DM) and to certify to CMS that the enrollment information provided by such pharmacies in the MTF DM is accurate, complete, and up to date.
The MTF DM will facilitate the exchange of data to help effectuate the Medicare Fair Price (MFP) program timely and consistently..
What’s New: This is a new requirement to ensure pharmacies participate in the MTF DM and maintain accurate enrollment data.
Action Items for Health Plans:
- Amend network agreements with MTF enrollment and certification clauses.
- Notify pharmacies of MTF DM deadlines and draft CMS‑provided agreement.[8].
- Track compliance via attestation reporting from PBM.
G. Clarifying MA Organization Determinations to Enhance Enrollee Protections in Inpatient Settings
CMS is codifying the requirement that plans give a provider notice of a coverage decision in addition to the enrollee, whenever the provider submits a request on behalf of an enrollee. CMS is clarifying that an enrollee’s liability to pay for services cannot be determined until an MA organization has made a claims payment determination. CMS is restricting MA plans’ ability to use information gathered after the enrollee has been admitted for inpatient stay when reviewing the appropriateness of the admission.
What’s New: These changes enhance enrollee protections by ensuring providers receive coverage decisions, clarifying payment liability timelines, and limiting the information MA plans can use for inpatient admission reviews.
Action Items for Health Plans:
- Update processes to ensure both providers and enrollees receive notification of coverage decisions.
- Review and revise claims payment determination processes to align with the clarified liability guidelines.
- Implement controls to restrict the use of post-admission information when reviewing inpatient admissions coverage.
H. Risk Adjustment Update
CMS is removing the reference to a specific version of the ICD[9] when defining Hierarchical Condition Categories (HCCs), while maintaining a reference to the ICD in general and substituting the terms “disease codes” with “diagnosis codes” and “disease groupings” with “diagnosis groupings” to be consistent with ICD terminology.
What’s New: This is primarily a terminology update to align with ICD standards.
Action Items for Health Plans:
- Update internal documentation and systems to reflect the terminology changes from “disease codes” to “diagnosis codes” and “disease groupings” to “diagnosis groupings”.
- Ensure staff are trained on the updated terminology.
The final rule has a lot of new procedures for plan sponsors to process. If you have questions regarding a specific requirement and its implementation, Inovaare has resident compliance specialists and technical consultants who can help. Feel free to contact us at 408.850.2235.
References:
[1] section 1860D-2 of the Social Security Act
[2] §§ 423.100 and 423.120
[3] section 1860D-2 of the Social Security Act
[4] Definition of negotiated price for the stand-alone Medicare prescription drug plan (PDP) or MA plan with prescription drug coverage (MA-PD plan)
[5] Section 1860D-2(b)(2)(E)(v)(VI) of the Social Security Act
[6] § 423.325(a)
[7] § 423.505(q)
[8] https://www.cms.gov/files/document/manufacturer-cms-mtf-program-agreement.pdf
[9] ICD = International Classification of Diseases