CMS recently released the Final Calendar Year (CY) 2025 Part D Redesign Program Instructions that provides guidance regarding the implementation of section 11201 of the Inflation Reduction Act of 2022 (IRA). This legislation introduced several amendments to the Social Security Act affecting the Medicare Part D drug benefit.
“In the final guidance, CMS clarifies that plans that cover active employees may continue to use the “simplified determination methodology” for determining creditable coverage for 2025. (The draft guidance suggested that methodology would no longer be available.) CMS noted in its guidance that it realized that changing the methodology for creditable coverage determination at this late date for the 2025 plan year could cause substantial disruption for both plan sponsors and participants.
Future guidance will indicate whether the creditable coverage simplified determination methodology can be used for 2026.”
Please note that there will be no changes to the regulatory definition of creditable coverage for 2025, despite the significant updates to the Medicare Part D benefit.
“Creditable Coverage: CMS revised Section 90 to state that we will continue to permit use of the creditable coverage simplified determination methodology, without modification to the existing parameters, for CY 2025 for group health plan sponsors not applying for the retiree drug subsidy (RDS) under section 1860D-22(a) of the Act. These Final Program Instructions also specify that CMS will re-evaluate the continued use of the existing creditable coverage simplified determination methodology, or establish a revised one, for CY 2026 in future guidance.”
This means that if the employer sponsored coverage was creditable in 2024, it would be likely that it will be creditable for 2025. However, ALL employers are required to provide Medicare beneficiaries with a notice of creditable coverage by October 15th.
Overview of Changes to the Part D Benefit:
In CY 2025, the structure of the Part D benefit is updated to reflect provisions of the IRA that become effective on January 1, 2025. The CY 2025 updates include the following:
− A newly defined standard Part D benefit design consisting of three phases: annual deductible, initial coverage, and catastrophic coverage;
− A lower annual out-of-pocket (OOP) threshold of $2,000;
− The sunset of the Coverage Gap Discount Program (CGDP) and establishment of the Manufacturer Discount Program (Discount Program); and
− Changes to the liability of enrollees, Part D sponsors, manufacturers, and CMS in the newly defined standard Part D benefit design.
Creditable Coverage
Consistent with IRA changes, we are revising the regulatory definition of creditable coverage at § 423.56(b) to reflect that discounts paid under the Manufacturer Discount Program are not taken into account when determining actuarial value. Given various concerns raised by commenters and the significant changes to the Part D benefit for CY 2025 as a result of the redesign, CMS will continue to permit use of the creditable coverage simplified determination methodology, without modification to the existing parameters, for CY 2025 for non-EGWP group health plan sponsors not applying for the retiree drug subsidy under section 1860D-22(a) of the Act. The Final Program Instructions also specify that CMS will re-evaluate the continued use of the existing simplified determination methodology or establish a revised one for CY 2026 in future guidance.
Click HERE to read the full update.
If you have any questions about this update, or need additional assistance with assisting your Medicare beneficiaries, please contact our client support services at agents@info.us.