Fact sheet

Part D Payment Modernization Model Calendar Year (CY) 2022 Fact Sheet

In January 2020, the Centers for Medicare & Medicaid Services (CMS) Center for Medicare & Medicaid Innovation (CMS Innovation Center) launched the Part D Payment Modernization Model (the “PDM Model” or the “Model”) to voluntarily test the impact of a modernized Part D program design that includes flexibilities to reduce beneficiary out-of-pocket costs and overall Part D prescription drug spending. The Model aims to reduce Medicare expenditures while enhancing or preserving quality of care for beneficiaries.

CMS is announcing the CY 2022 Model request for applications (RFA). The Model is open to eligible standalone Prescription Drug Plans (PDPs) and Medicare Advantage-Prescription Drug Plans (MA-PDs) for the 2022 Plan Year (the third year of the Model).

This voluntary Model tests a modernized Part D payment structure that creates new incentives for plans, patients, and providers to choose drugs with lower list prices in order to address rising costs in the Part D program. The Model features two-sided risk on CMS’s federal reinsurance subsidy (80 percent of catastrophic phase liability), offering shared savings to Part D sponsors whose federal reinsurance spending under the Model was below a Spending Target Benchmark and sharing losses if their federal reinsurance under the Model was above the Spending Target Benchmark. However in light of the changes to the discount safe harbor under the Federal anti-kickback statute (effective January 1, 2022), CMS is making a temporary change to the Model’s current performance-based payment structure to incentivize Part D sponsor participation.  Specifically, for the 2022 Plan Year only, CMS is removing the ten percent downside risk for Part D sponsors participating in the Model.

The Model also offers Part D sponsors the opportunity to implement several Part D programmatic flexibilities aimed at reducing out-of-pocket costs and improving the quality of care for beneficiaries.

  • (New for CY 2022) Provides flexibility for participating Part D sponsors to treat five of the six protected classes (anticonvulsants, immunosuppressants, antidepressants, antipsychotics, and antineoplastics) as they would other Part D drug classes, while continuing to require robust access to the Part D drugs beneficiaries need;
  • (New for CY 2022) Allows participating Part D sponsors to include on their formulary at least one drug per class, instead of the current requirement of two drugs per class, while maintaining robust beneficiary access to the Part D drugs beneficiaries need;  
  • Allows participating Part D sponsors to create Part D Rewards and Incentives programs to encourage greater enrollee education and engagement between the enrollee and the enrollee’s chosen Part D plan;
  • Allows participating Part D sponsors to reduce or eliminate cost-sharing on generics and biosimilars for LIS beneficiaries to encourage the use of the most appropriate products;
  • Permits participating Part D sponsors to develop more comprehensive and innovative Medication Therapy Management+ (MTM+) programs beyond existing MTM programs;
  • Enables participating Part D sponsors to allow enrollees to pay for their prescription cost-sharing over time within the course of the plan year (e.g., installment payments);
  • Allows Part D sponsors to include care management/coordination programs to improve the management of drug therapies, including helping to monitor for adverse effects and increasing medication adherence; and
  • Enables increased medication adherence, increased initial determination approvals, and decreased re-determinations by allowing Part D sponsors to increase the standard coverage determination timeframe from 72 to 96 hours.

The new CY 2022 flexibilities, which are similar to recent MedPAC recommendations, are intended to give Part D sponsors greater ability to negotiate with manufacturers, ensuring formulary inclusion and favorable access. Only the protected class requirements and two-drugs-per-class requirements mentioned above are being waived for Part D sponsors that apply and are approved to implement either of these flexibilities. All existing enrollee protections, including the coverage determination and appeal process and other Part D formulary requirements, would remain in place and provide safeguards to ensure beneficiaries retain access to Part D prescription drugs.

CMS intends to test this voluntary model on a limited number of Part D Plan Benefit Packages and may limit the geographic scope of the Model depending on interest level. Additionally, for basic Part D plans that may be above the benchmark, CMS will consider offering Model participants the option of waiving a higher de minimis amount, as necessary.

Part D sponsors that implement these new formulary flexibilities must continue to comply with the existing, comprehensive Part D formulary checks and enrollee protections including the Part D expedited exception, coverage determination and appeal processes, as well as other Part D formulary requirements. These protections provide safeguards to ensure beneficiaries retain access to the Part D prescription drugs they need. In addition, each Part D sponsor that applies to implement the formulary flexibilities will be required to provide an enhanced transition process for enrollees affected by proposed formulary changes for drugs in the protected classes. This transition process must include both proactive outreach to current enrollees and an extended transition supply that provides for multiple temporary fills for new enrollees and current enrollees who have not been able to switch to a formulary medication or complete the coverage determination process.

Overall, through the PDM Model, CMS aims to test better alignment of CMS and plan risk-sharing in Part D to increase Part D market competition, decrease beneficiary out-of-pocket costs, preserve or enhance quality of care for beneficiaries, maintain and ensure affordable access to prescription drugs, and decrease Part D programmatic spending.

Additional information on the PDM Model can be found on the Model website at The first step of the application process is for interested Part D Sponsors to submit a non-binding Notice of Intent (NOI) to apply to join the Model by 11:59 PM PT on March 1st, 2021. While the Notice of Intent is non-binding, organizations must submit a Notice of Intent to be eligible to apply for participation in the PDM Model. The RFA to join the Model for CY 2022 is available on the Model website and applications from eligible sponsors will be accepted through April 16th, 2021. More details regarding the application process and the Model’s eligibility requirements can be found in the Model’s CY 2022 RFA.

For any questions about this Model, please email