NovaRest CY2025 Part D Redesign Program Instructions

Executive Summary Only, download document above for full article

The Centers for Medicare and Medicaid Services (CMS) released the Final CY 2025 Part D Redesign Program Instructions1 and Fact Sheet,2 which includes detailed changes to the structure of the Medicare Part D Defined Standard as a result of the implementation of the Inflation Reduction Act (IRA). The guidance also includes some information on provisions that already took effect in CY2023 or CY2024, but primarily focuses on CY2025 provisions.

For CY 2025, the Defined Standard benefit will now have three benefit phases due to the removal of the Coverage Gap Phase. True out-of-pocket (TrOOP)-eligible costs (see download above) are used to determine a member’s progression through the coverage phases (Deductible Phase, Initial Coverage Phase, and the Catastrophic Phase)(see download above). Previously TrOOP costs were used to determine whether deductible or catastrophic limits were met, while total drug costs were used to determine whether the initial coverage limit (ICL) was met. As the Coverage Gap Phase has been removed, the ICL has also been removed.

Enhanced Alternative (EA) (see download above) and Basic Alternative (BA) plans will continue to have the#download ability to offer a lower deductible. However, EA plans can offer a lower deductible as supplemental coverage, where the plan’s cost share would count towards the TrOOP and a member would progress towards the DS deductible (and Discount Program eligibility) at roughly the same rate as the DS. However, BA plans cannot offer supplemental coverage, therefore the plan’s cost share of Part D covered drugs does not count towards the TrOOP, and members will incur more total drug costs than either the EA or DS plans to satisfy the DS deductible and become eligible for the Discount Program (where manufacturers discount drug costs).

The Coverage Gap Discount Program (CGDP) (see download above) is ending. It has been replaced by a new Discount Program that provides for manufacturer discounts in the initial coverage phase (ICP) as well as the catastrophic phase. Eligibility for the Discount Program is contingent on sufficient TrOOP costs to meet the DS deductible, even if an EA or BA plan offers a lower deductible.