On October 13, 2023, the Centers for Medicare & Medicaid Services (CMS) published the Readiness List for CY 2024. This has been a very useful tool for Medicare Advantage Organizations (MAO) to check their readiness to fulfill requirements in the new contract year. The Readiness List is comprehensive and touches on all aspects of administering a Medicare Advantage plan (MA), a Prescription Drug Plan (PDP), an 1876 Cost Plan, and a Medicare-Medicaid Plan (MMP).

The focus of this blog article is to alert plan sponsors on the upcoming changes to the Prescription Drug Event (PDE) data and file layout. PDE is a required submission to CMS for Part D payment reconciliation. Effective January 1, 2025, the PDE file will be expanded from the current 512 bytes to 1,000 bytes. Part D sponsors must submit certification (CERT) test files before submitting production PDE files on January 1, 2025. CERT Testing is planned to begin on July 1, 2024. CMS will provide CERT Testing requirements in advance.

With this change, Part D sponsors must use the new 2025 PDE Inbound File Layout beginning January 1, 2025, to submit PDE records for all benefit Years and all Dates of Service (DOS), including benefit Years before 2025 and DOS before January 1, 2025. The existing PDE Inbound File Layout will be accepted until January 1, 2025, when the implementation of the 2025 PDE Inbound File Layout takes effect, and the Prescription Drug Front-End System (PDFS) will reject PDE submission files, regardless of the PDE’s benefit Year, submitted in the existing (“old”) format.

Another change to PDE data is the application of all pharmacy price concessions (see below) to the negotiated price at the point of sale (POS). In 2023, Part D plans must apply pharmacy price concessions to the negotiated price if they can reasonably be determined at the POS. Beginning January 1, 2024, the negotiated price must include all pharmacy price concessions according to the new definitions of “negotiated price” and “price concession” at § 423.100 and § 423.2305 to reflect the lowest possible reimbursement a network pharmacy will receive for a drug.[1]

If a pharmacy receives a post-POS payment from the plan for good performance, that payment amount must be reported as a negative DIR amount. Conversely, if there is any “crawl back” payment from the pharmacy for under-performance, the estimated amount has to be reflected in the “negotiated price.” The regulation intends to lower total beneficiary out-of-pocket costs, provide meaningful price transparency, better reflect pharmacy payment arrangements, and enable CMS to assess payment practices.

Part D plans have to report dollar amounts in the field named “Pharmacy Price Concessions at POS” in the PDE beginning January 1, 2025. The reported amount in this field should be the maximum amount of any contingent payments or adjustments that the Part D plan might receive from a network pharmacy that would decrease the total amount the Part D sponsor pays for the drug, i.e., all pharmacy price concessions.[2] Value in this field may never be negative, but maybe $0 when no price concession is applied at POS.

In addition, as of January 1, 2024, Medicare beneficiaries will have zero copays as they reach the catastrophic phase when True out-of-pocket expenses (TrOOP) reach $8,000.[3][4] To comply with this requirement, the beneficiary’s TrOOP has to be tracked correctly as other eligible TrOOP[5] amounts.

The prescription drug event file is expanded to include fields that were not applicable before 2025[6], such as:

  1. Prescription Payment Plan Indicator – the Inflation Reduction Act of 2022 requires Part D sponsors to provide enrollees the option of paying out-of-pocket prescription drug costs in monthly payments over the plan year instead of all at once at the pharmacy beginning in 2025. Part D enrollees who opt into the Medicare Prescription Payment Plan will pay $0 at the POS for a covered Part D drug instead of the OOP cost-sharing they usually pay when filling a prescription. The Part D sponsor must pay the pharmacy the OOP cost-sharing amount these participants would have paid if they were not in the Medicare Prescription Payment Plan.

    According to the program calculations, they must then bill the program participants monthly for any OOP cost-sharing they incurred while in the program. CMS has provided draft guidance for calculating maximum monthly caps on cost-sharing payments under the Prescription Drug Plans.[7] Any Part D enrollee can opt into the program starting in plan year 2025 by contacting their Part D sponsor and completing the Medicare Prescription Payment Plan election process.
  2. Designated fields that will be removed from the new prescription drug event file layout include Deductible Accumulator, Dispensing Status, and Other Authorized Provider (OAP). The vacated fields will become fillers.
  3. Some new fields have been added. They include:

    (i) The field “Originally Prescribed Quantity” has been added to enable more accurate identification of incrementally filled Schedule II products and to monitor for compliance. Editing will be applied to ensure that the “Quantity Dispensed” does not exceed the “Originally Prescribed Quantity.” Beginning January 1, 2025, Part D sponsors must report the “Originally Prescribed Quantity” for Schedule II drugs reported in submitted PDEs. DOS before January 1, 2025, or for non-Schedule II PDEs, the value in this field must be zero.[8]

    (ii) Another added new field is “LTPAC Dispense Frequency” to identify long-term and post-acute care short-cycle (LTPAC) dispensing PDEs. LTPAC dispensing is currently reported in the existing “Submission Clarification Code” field on the PDE. Beginning January 1, 2025, this information will be reported via the “LTPAC Dispense Frequency” field to align with future versions of the NCPDP Telecommunication Standard.

    (iii) Beginning January 1, 2026, Part D sponsors must report the subsidy amount they advanced at the point of sale for a selected drug in the Initial Coverage Period in the field named “Selected Drug Subsidy,” this amount will not increment the TrOOP Accumulator amount. This field must have a positive dollar value (the value may never be negative), or it may be $0 when there is no selected drug subsidy to report. The value reported for PDEs with a DOS before January 1, 2026, must be zero. [9]

Although the above changes do not take effect until CY 2025 (or 2026 for Selected Drug Subsidy), extensive programming, configuration, testing, and validation must be completed. This requires collaborative efforts by the Pharmacy Benefit Manager (PBM), the plan’s Compliance Department, and the Pharmacy, which oversees PBM performance.

This is the approach Innovare takes in offering Part D plans a scrubber to validate PDE data – the multi-disciplinary team has a data specialist, the Compliance Officer, and a subject matter expert in Part D administration. If your plan would like a consultation to validate PDE data for testing in July 2024 and submission in January 2025, please Contact Us or call at 1.408.850.2235.

Yvonne Tso, PharmD, MBA,
Senior Vice President, Integritas Medicare

[1] CMS Final Rule 4192F
[2] CMS Final Rule 4192-F
[3] Out-of-pocket expenses include what the beneficiary pays and manufacturer discounts in the coverage gap. For beneficiaries who use brand drugs, their out-of-pocket is around $3,250.
[5] TrOOP = true out of pocket
[6] New 2025 Prescription Drug Event (PDE) FINAL File Layouts – FIELD UPDATES, October 31, 2023
[7] Maximum Monthly Cap on Cost-Sharing Payments Under Prescription Drug Plans: Draft Part One Guidance on Select Topics, Implementation of Section 1860D-2 of the Social Security Act for 2025, and Solicitation of Comments, August 21, 2023
[8] New 2025 Prescription Drug Event (PDE) File Layouts (FINAL), April 18, 2023
[9] New 2025 Prescription Drug Event (PDE) FINAL File Layouts – FIELD UPDATES, October 31, 2023