Page 8

8 DEPARTMENT OF HEALTH & HUMAN SERVICES Centers for Medicare & Medicaid Services 7500 Security Boulevard Baltimore, Maryland 21244-1850

MEDICARE PLAN PAYMENT GROUP

DATE: July 28, 2025 TO: All Medicare Advantage Organizations and Medicare Prescription Drug Plan Sponsors FROM: Jennifer R. Shapiro, Director, Medicare Plan Payment Group SUBJECT: Voluntary Part D Premium Stabilization Demonstration for Standalone Prescription Drug Plans, Release of the De Minimis Amount, and Operational Guidance

In this memo, CMS is releasing information regarding the voluntary Part D Premium Stabilization Demonstration for Calendar Year (CY) 2026 for standalone prescription drug plans (PDPs) and the CY 2026 de minimis amount. In addition, this memo provides instructions and timelines for opting into the voluntary demonstration, completing rebate reallocation, and volunteering to waive the de minimis amount. Part D sponsors of PDPs will have from Monday, July 28, 2025, until 11:59 PM Pacific Daylight Time (PDT) on Monday, August 4, 2025, to opt into the demonstration for CY 2026. All Part D sponsors will have from Monday, July 28, 2025, until 11:59 PM PDT on Wednesday, August 6, 2025, to complete rebate reallocation. Following the conclusion of the demonstration election and rebate reallocation windows, Part D sponsors will have from Friday, August 8, 2025, until 11:59 PM PDT on Tuesday, August 12, 2025, to inform CMS of their intent to participate in the de minimis program.

Voluntary Part D Premium Stabilization Demonstration Section 402(a)(1)(A) of the Social Security Amendments of 1967, as amended and expressly made applicable to Part D by section 1860D-42(b) of the Social Security Act (“the Act”), authorizes the Secretary to carry out demonstration projects to determine whether “changes in methods of payment or reimbursement” under Medicare “would have the effect of increasing the efficiency and economy of health services” covered under Medicare through the “creation of additional incentives to these ends.” Pursuant to such authority, in 2025, CMS implemented a voluntary demonstration program to test whether additional policy changes would stabilize year- over-year changes in premiums for participating standalone PDPs, leading to more predictable options for beneficiaries during the initial implementation of the Inflation Reduction Act of 2022 (IRA) benefit redesign, creating more gradual enrollment changes, and allowing participating Part D sponsors to accumulate the experience necessary for bidding in future years. The demonstration design allowed for CMS to continue the demonstration for subsequent years, with parameters in each subsequent year to be determined based on market conditions.