Costs Counted Toward True Out-of-Pocket Costs (TrOOP) is the portion of spending on covered Part D drugs made by the beneficiary or on their behalf by certain third parties.

• Beginning in Calendar Year (CY) 2025, Part D sponsors are required to provide all Part D enrollees the option to pay their out-of-pocket (OOP) prescription drug costs in monthly amounts over the course of the plan year, instead of paying OOP costs at the point of sale (POS).
• As a result, Part D enrollees who opt into the Medicare Prescription Payment Plan will pay $0 at the POS for a covered Part D drug, instead of the OOP cost sharing they would normally pay when filling a prescription.
• The Part D sponsor must pay the pharmacy the OOP cost sharing amount that these participants would have paid if they were not in the Medicare Prescription Payment Plan and then bill the program participants monthly for any OOP cost sharing they incurred while in the program.

• TrOOP is the spending that determines when a beneficiary enters the initial coverage phase, becomes an applicable beneficiary for the Discount Program, reaches the annual OOP threshold, and subsequently enters the catastrophic coverage phase.
• In addition to the third party arrangements that already count toward TrOOP, the IRA specifically amends the definition of incurred costs that count toward TrOOP for CY 2025 to include payments for previously excluded supplemental benefits provided by Part D sponsors and Employer Group Waiver Plans (EGWPs) and exclude payments under the new Discount Program.
• The new Manufacturer Discount Program replaces the Coverage Gap
• Additions to TROOP for 2025
  • Supplemental Part D coverage provided by
    • Enhanced alternative (EA) Part D plans and
    • Other health insurance (OHI) will be counted as incurred costs and included in the calculation of TrOOP
  • In addition, the following third-party arrangements will continue to contribute to TrOOP:
    • Low Income Subsidy (LIS)
    • Costsharing support
    • Qualified State Pharmacy Assistance Programs (SPAPs)
    • Indian Health Service and certain other Native American organizations
    • AIDS Drug Assistance Programs (ADAPs)

• In 2025, the Medicare Part D Coverage Gap Discount Program (CGDP) is sunset and the Manufacturer Discount Program (Discount Program) is initiated— a necessary move due to elimination of the coverage gap phase.
• Medicare’s share of total costs in the catastrophic phase (reinsurance) will decrease from 80% to 20% for brand-name drugs and from 80% to 40% for generic drugs beginning in 2025
  • This reduction will help address concerns about the substantial increase in Medicare’s reinsurance payments to Part D plans over time, which accounted for close to half (48%) of total Part D spending in 2022, up from 14% in 2006.
• Medicare Part D plans’ share of costs will increase from 15% to 60% for both brands and generics above the cap
• Drug manufacturers will be required to provide a 20% price discount on brand-name drugs