What Ambulatory Care Pharmacists Should Know About 2025 Medicare Part D Updates

Written by Ardis M. Copenhaver, PharmD, MS, BCPS

Some of Medicare Part D changes from the passage of Inflation Reduction Act of 2022 have come into effect in January 2025. The goal of this legislation is to provide further support on prescription drug benefits for the adults aged 65 and older and those individuals with qualifying disabilities. The two big 2025 changes include the elimination of the “Donut Hole” with the reduction of out-of-pocket (OOP) costs and the launch of the Medicare Prescription Payment Plan (MPPP).(1-3)

Starting in 2025, all standard benefit Medicare Part D plans will include a $2,000 maximum on OOP cost for prescriptions drugs covered by the plan.(1,2) If the plan has a yearly deductible, the patient pays 100% of the retail drug costs, up to $590 maximum.(1,2) After meeting the yearly deductible, the patient is responsible for 25% of the total cost of all their covered prescription drugs up to $2,000 annually under the standard Part D benefit.(1,2) If a patient is enrolled in an enhanced alternative plan their initial coverage benefits are not subject to the same calculation. Enhanced alternative plan is a Part D plan that covers drugs that are excluded from the standard defined benefit and/or reduces or eliminates the defined standard deductible or cost sharing in the initial coverage phase.(1) The standard benefit across all Part D plans is $2,000 OOP maximum.(1, 2) Once the patient meets the OOP maximum, the individual will not pay anything more for covered prescription drugs for the remainder of the calendar year and will automatically fall into “catastrophic coverage”.(1) The OOP amount does not include monthly Medicare Part D premiums, what the plan pays towards the pharmacy dispensing fee, or non-covered medications.(1) The changes from 2024 to 2025 are highlighted in Figure 1 where the patient’s OOP threshold has been reduced and able to enter the catastrophic coverage gap faster at a lower OOP amount.(1,2)

Figure 1. Comparison of Medicare Part D standard benefit in 2024 and 2025 with the elimination of the “Donut Hole”(1,2)

So, what does this mean for patients enrolled in Medicare Part D programs? At the beginning of the calendar year of January 2025, patient will have to pay upfront cost of their covered prescriptions drugs.(1) For patients mostly taking few or generic prescriptions drugs, costs may be like the previous year or minimal based on the individual plan and/or prescription drug tier. However, patients on expensive and/or brand name drugs without available low-cost generics will need to spend more on their prescription drugs upfront based on their individual plan deductible.(1, 3) The total cost of all covered prescription drugs per month will vary based on the number and type of medications patients are receiving throughout the year. The positive side to these changes is the reduced OOP maximum that will benefit patients on high-cost medications. The downside is patients are responsible for upfront costs as 25% of the cost does not represent most prescription drug plans.(1)

To manage the possible upfront cost of prescription drug expenses, a new 2025 program called the Medicare Prescription Payment Plan (MPPP) will be available to assist in managing prescription drug expenses.(3-5) This program gives patients the option of making monthly installment payments for covered prescription drugs over the course of the year.(4,5) This will allow for the OOP cost to be spread across the year.(3-5) Medicare Part D or Medicare Advantage Plans are required to provide a Part D enrollee with information about MPPP.(4,5) Participation is voluntary (no automatic enrollment) through individual insurance plans at no cost to the patient.(4,6,7) Some payors and pharmacy systems may identify a patient as a candidate for the MPPP based on previous prescription drug expenses.(4-7) Enrollment in MPPP may occur during open enrollment or anytime throughout the year without penalty.(4,5) If enrolled in this payment option, each month patient will continue to pay their premium and will get a bill from the insurance plan to pay for prescription drugs monthly instead of paying the pharmacy directly.(3-7)

With the elimination of the “Donut Hole” and the MPPP available, pharmacists are in the position to educate patients and prescribing providers about these changes and what it means for their Medicare Part D prescription drug plan and potential expenses. As pharmacists, we can continue to support our patients enrolled in Medicare to improve medication access and adherence through education and financial resources.

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1. How much does Medicare drug coverage cost? Medicare. Accessed March 22, 2025. https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage.

2. Final CY 2025 Part D Redesign Program Instructions Fact Sheet. Accessed March 22, 2025. https://www.cms.gov/files/document/fact-sheet-final-cy-2025-part-d-redesign-program-instructions.pdf.

3. Medicare Prescription Payment Plan. Centers for Medicare & Medicaid Services. Accessed March 22, 2025. https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements/medicare-prescription-payment-plan.

4. Medicare Prescription Payment Plan: Final part one guidance on select topics, implementation of section 1860D-2 of the social security act for 2025, and response to relevant comments. Memorandum from Meena Seshamani, MD, PhD. Center for Medicare & Medicaid Services. February 29, 2024. Accessed March 22, 2025. https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-one-guidance.pdf.

5. Medicare Prescription Payment Plan Final Part One Guidance. February 2024. Accessed March 22, 2025. https://www.cms.gov/files/document/fact-sheet-medicare-prescription-payment-plan-final-part-one-guidance.pdf.    

6. Medicare Prescription Payment Plan: Final Part Two Guidance on Select Topics, Implementation of Section 1860D-2 of the Social Security Act for 2025, and Response to Relevant Comments. Memorandum from Meena Seshamani, MD, PhD. Center for Medicare & Medicaid Services. July 16, 2024. Accessed March 22, 2025. https://www.cms.gov/files/document/medicare-prescription-payment-plan-final-part-two-guidance.pdf.

7. Fact Sheet: Medicare Prescription Payment Plan Final Part Two Guidance. July 2024. Accessed March 22, 2025. https://www.cms.gov/files/document/fact-sheet-medicare-prescription-payment-plan-final-part-two-guidance.pdf.

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Ardis M. Copenhaver, PharmD, MS, BCPS

Clinical Pharmacy Specialist

St. Clair Health, Pittsburgh, Pennsylvania