Introduction
The Inflation Reduction Act (IRA) of 2022 introduced changes to help lower patient out-of-pocket (OOP) costs for Medicare Part D medications. These changes include introducing a maximum cap, which is inclusive of the deductible, on patient OOP costs ($2,000 in 2025; $2,100 in 2026) for all covered prescriptions for the year and the establishment of the Medicare Prescription Payment Plan.1,2,3,4,5 The Medicare Prescription Payment Plan is a program that offers Medicare Part D enrollees the option to spread their OOP prescription drug costs throughout the remainder of the year as capped monthly payments instead of paying one larger payment (Figure 1).6,7,8
Figure 1: Medicare Part D patient OOP costs in 2025 for a patient reaching the $2,000 OOP maximum in January with and without the Medicare Prescription Payment Plan
*The above scenario represents an illustrative only example in which a patient fulfills their maximum OOP upon first prescription fill in January. With or without the Medicare Prescription Payment Plan, a patient pays the full $2,000 OOP. Patients who opt in to the Medicare Prescription Payment Plan later in the year and/or have previously accumulated spend may have a different OOP experience.
What are the trends in Medicare Prescription Payment Plan participation?
Background
All Medicare prescription drug plans are required to offer the payment plan to enrollees; however, participation is voluntary.9,10,11 Patients may opt in to the program by visiting their health plan’s website or calling their health plan during open enrollment (October 15–December 7) or at any point during the year, prior to picking up their prescription at the pharmacy.12,13 Plans are required to process and confirm participation within 10 days (during open enrollment) or within 24 hours (during the plan year).14,15 Once confirmed as participants, patients receive a bill directly from their Part D drug plan and continue to pay their monthly plan premium (if they have one).16,17
According to the Centers for Medicare and Medicaid Services (CMS), non-low-income and non-Employer Group Waiver Plan (EGWP) patients who have high prescription costs earlier in the year, as well as those who have difficulty paying their medication costs all at once, are likely to benefit the most from this program.18 Although low-income patients are able to opt in, they may not see the benefit due to their maximum copay of $12.15.19 The maximum OOP cap of $2,000 has helped some patients lower their costs for medications; however, non-low-income patients who are prescribed a specialty product still face high OOP costs at first fill. Figure 2 visualizes how the OOP experience for a patient filling a covered $8,000 specialty brand-name product for the first time during their plan year has changed over the past seven years. It highlights the distinct decrease in average OOP cost observed in 2025 with the implementation of the OOP maximum when compared to prior years. With the option of the Medicare Prescription Payment Plan, that same patient would be able to spread their OOP costs over the course of the year, further lowering their costs at first fill in January.
Figure 2: Non-low-income Medicare Part D average patient OOP costs in January for the first specialty drug prescription of the calendar year*
Source: Milliman’s Analysis of January 2019–July 2025 Medicare 100% Part D claims data
*Represents average patient spend for a patient’s first Part D specialty drug, normalized to a spend of $8,000. These patient cost sharing amounts take into consideration any drug spending that patients may have incurred before their specialty drug was prescribed. We limited the prescriptions in this analysis to only January to avoid additional complications from other drug spending, which would lower the patient OOP allocated to that script.
Current trends in Medicare Prescription Payment Plan participation
Our analysis shows that as of July 2025, observed participation in the Medicare Prescription Payment Plan is 0.6% of all Medicare Part D beneficiaries, 0.9% of non-low-income subsidy Medicare Part D beneficiaries, and 6.7% of those non-low-income subsidy Medicare Part D beneficiaries who filled a specialty drug in 2025 (Figure 3).
Figure 3: Medicare Part D patient participation in the Medicare Prescription Payment Plan as of July 2025
Source: Milliman’s Analysis of January 2025–July 2025 Medicare 100% Part D claims data
Patients may face various barriers to opting in, which explains the low participation in the plan to date. Although pharmacies are required to notify patients of the opportunity to participate in the program if their OOP cost is $600 or more, many patients may choose not to because there is no possibility to opt in directly at the point of sale. Navigating the opt-in process with their respective drug plan may also function as a barrier to entry for patients due to the novelty of the program. Apprehension by payers to encourage participation in the program due to the additional financial risk they undertake may further contribute to a lack of awareness among patients. Moreover, for those patients who may have previously experienced high patient OOP before any of the IRA-directed standard benefit design changes, the maximum OOP cap alone may offer enough assistance. Regardless of the reasons for low participation, many patients retain the potential to benefit from the program.
Future shifts in Medicare Prescription Payment Plan participation
In 2026, several factors may promote participation in the Medicare Prescription Payment Plan, especially for non-low-income patients filling prescriptions for specialty medications. These patients will continue to face similar OOP costs for their first fill, as the maximum cap on patient OOP costs will increase from $2,000 to $2,100 and the deductible will increase from $590 to $615.20 Given this increase in the overall annual cost sharing and the initial cost sharing from the deductible, we expect that the benefit a patient may experience will be maintained, if not amplified, throughout 2026. We also expect that more individuals will become aware of the program at a pharmacy point of sale because the $615 deductible amount will be higher than the $600 threshold for payment plan notification that must occur at the point of sale. Additionally, patients who opted in to the Medicare Prescription Payment Plan in 2025 will automatically be designated as participants in the program in 2026 if they do not switch health plans and did not miss payments in the prior year.21 Overall, as patient awareness and understanding of the payment plan benefit increase, we may see an increase in patients opting in, allowing the program to more closely achieve its intended goal of helping patients manage their OOP costs.
Data and methodology
Data underlying this white paper were drawn from the Medicare 100% Research Identifiable Files (RIF), which contain all Medicare Parts A and B paid claims for Medicare fee-for-service (FFS) beneficiaries, as well as all Medicare Part D paid claims.22 We used the Part D files from January 2019–July 2025 for this analysis, accessed in August 2025.
To categorize patients as those who enrolled in the Medicare Prescription Payment Plan, we included any patient who had at least one prescription indicated as being covered under the program.
1 Inflation Reduction Act of 2022, Pub. L. No. 117–169, 136 Stat. 1818 (2022).
2 CMS. (2024, February 29). Medicare Prescription Payment Plan: Final Part One guidance [Memorandum to interested parties]. https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-one-guidance.pdf.
3 CMS. (2024, July 16). Medicare Prescription Payment Plan Final Part Two guidance [Memorandum to interested parties]. https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-two-guidance.pdf.
4 CMS. (2025, April 7). Final CY 2026 Part D Redesign Program Instructions. https://www.cms.gov/newsroom/fact-sheets/final-cy-2026-part-d-redesign-program-instructions.
5 Corrao B, & Robb M. (2023, October 2) Medicare Prescription Payment Plan: What do plan sponsors need to know? Milliman. https://www.milliman.com/en/insight/medicare-prescription-payment-plan-for-plan-sponsors.
6 CMS. (2024, February 29), op. cit.
7 CMS. (2024, July 16), op. cit.
9 Inflation Reduction Act, op. cit.
10 CMS. (2024, February 29), op. cit.
11 CMS. (2024, July 16), op. cit.
12 CMS. (2024, February 29), op. cit.
13 CMS. (2024, July 16), op. cit.
14 CMS. (2024, February 29), op. cit.
15 CMS. (2024, July 16), op. cit.
16 CMS. (2024, February 29), op. cit.
17 CMS. (2024, July 16), op. cit.
18 CMS. (2024, February 29), op. cit.
19 CMS. (2025, April 7). Announcement of calendar year (CY) 2026 Medicare Advantage (MA) capitation rates and Part C and Part D payment policies [Memorandum to interested parties]. https://www.cms.gov/files/document/2026-announcement.pdf.
20 CMS. (2025, April 7), op. cit.
21 CMS. (2025, April 15). Medicare and Medicaid Programs; contract year 2026 policy and technical changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the elderly. HHS. https://www.govinfo.gov/content/pkg/FR-2025-04-15/pdf/2025-06008.pdf.
22 Broulette, J., et.al. (2023, August 8). Innovations in Medicare research: The CMS Research Identifiable Files. Milliman. https://frm.milliman.com/en/video/innovations-in-medicare-research-cms-research-identifiable-files.