LAW: Medicare Part D MTM Obligations
42 CFR 423.153: What Part D Plans Are Legally
Required to Do for MTM, and What Happens When They Don’t
Required to Do for MTM, and What Happens When They Don’t
Medicare Part D medication therapy management (MTM) is a mandatory programme requirement under 42 CFR 423.153(d) that applies to every Part D sponsor. This obligation is not optional, has no minimum plan size threshold, and applies to every contract year. A CMS-approved MTM programme description is a required element of the annual bid, an incomplete or non-compliant description puts the bid itself at risk. From January 1, 2025, sponsors must also count all Part D maintenance drugs when assessing MTM targeting eligibility, using a recognised drug database. Plans that have not updated their targeting methodology are applying non-compliant criteria right now. This article covers what the law requires, what changed in 2025, what non-compliance costs, and what compliance leaders must verify before each programme year.
$1,623
2025 Annual Drug Cost Threshold for MTM Targeting
Part D sponsors must target members likely to incur annual drug costs of $1,623 or more in 2025. This threshold is set by CMS annually. A sponsor whose targeting criteria use a higher threshold than $1,623 is excluding members who have a legal right to MTM services. Source: AARP Policy Book: Part D MTM (2025)
Jan 1, 2025
Effective Date: All Maintenance Drugs Must Be Counted for Targeting
The April 2024 Final Rule (89 FR 30448) requires sponsors to include all Part D maintenance drugs in the drug count for MTM targeting from January 1, 2025, using a widely accepted drug database (Medi-Span, First Databank, or equivalent). Plans still using a 2024 methodology are applying non-compliant targeting criteria. Source: 42 CFR 423.153(d)(2)(iv)
Bid required
CMS-Approved MTM Programme Description Is a Required Bid Component
Every Part D sponsor, including EGWPs, must submit an annual MTM programme description via HPMS for CMS review and approval. A plan that bids without a CMS-approved description has submitted an incomplete bid. A deficient description must be corrected before the bid is complete. Source: CMS: CY2027 MTM Submission Memo (May 2026)
Law Summary: The Legal Framework Under 42 CFR 423.153
42 CFR 423.153 establishes three mandatory programme obligations for every Part D sponsor. Section 423.153(b) requires a drug utilisation management programme. Section 423.153(c) requires quality assurance measures and systems to prevent medication errors, detect over and under utilisation, and improve drug use. Section 423.153(d) requires a Medication Therapy Management programme. The general rule at 423.153(a) states each Part D sponsor must have established all three for covered Part D drugs. There is no minimum plan size threshold and no waiver pathway. The only exempt plans are MA Private Fee-For-Service organisations under 423.153(e) and PACE organisations.
MTM compliance has two distinct layers. The structural layer requires an approved programme design: the right eligibility criteria, developed with pharmacists and physicians, coordinated with the Chronic Care Improvement Programme, and submitted annually to CMS via HPMS. The operational layer requires the programme to actually run: identifying eligible members quarterly, enroling them, offering the Comprehensive Medication Review in the CMS standardised format, tracking outcomes, and producing evidence of programme activity. A plan with an approved programme description that does not operationally deliver MTM services fails the operational layer. CMS programme auditors evaluate both.
What changed on January 1, 2025: the maintenance drug counting requirement
The April 2024 Final Rule (89 FR 30448) amended 42 CFR 423.153(d)(2)(iv): from January 1, 2025, when counting the number of Part D drugs a member takes for targeting purposes, sponsors must include all Part D maintenance drugs, using a widely accepted commercially or publicly available drug database such as Medi-Span or First Databank. Sponsors may also count all Part D drugs (not just maintenance drugs). This expands the drug count pool, moving more members above the drug count threshold and increasing the eligible population. Plans that did not update their targeting methodology for 2025 are under-identifying eligible members and applying non-compliant criteria. Additionally, since January 1, 2022, at-risk beneficiaries with an active Drug Management Programme coverage limitation must be targeted for MTM regardless of whether they meet the drug cost threshold. Source: 42 CFR 423.153(d)(2)(iv); 89 FR 30448
Medicare Part D Medication Therapy Management: Compliance Table
| Programme Obligation | Regulation | Who Must Comply | Core Requirement |
|---|---|---|---|
| MTM Programme | 42 CFR 423.153(d) | All Part D sponsors including EGWPs, not MA-PFFS, not PACE | Establish, operate, and submit an annual CMS-approved MTM programme targeting members with multiple chronic conditions, multiple Part D drugs, and drug costs above the annual threshold |
| Comprehensive Medication Review | 42 CFR 423.153(d)(1) | All Part D sponsors with MTM programme | Offer at least one annual CMR per enrolled member in CMS standardised format; provide written personal medication list and medication action plan; offer Targeted Medication Reviews at other times |
| Drug Utilisation Management | 42 CFR 423.153(b) | All Part D sponsors | Maintain a reasonable and appropriate DUM programme including prior authorisation, step therapy, quantity limits, and incentives to reduce costs when medically appropriate |
| Quality Assurance | 42 CFR 423.153(c) | All Part D sponsors | Establish QA measures and systems that prevent medication errors and adverse drug interactions, improve drug use, and include a mechanism for drug review to detect over or under utilisation |
| Drug Management Programme | 42 CFR 423.153(f) | All Part D sponsors (mandatory since January 1, 2022) | Establish a DMP for at-risk beneficiaries to address overutilisation of frequently abused drugs; at-risk beneficiaries with active DMP limitations must be targeted for MTM enrolment |
| Annual HPMS Submission | 42 CFR 423.153(d); bid requirements | All Part D sponsors including EGWPs | Submit MTM programme description via HPMS annually for CMS review and approval; required element of the annual bid; CMS evaluates against minimum requirements in 42 CFR 423.153(d) |
What the Law Requires: Medicare Part D Medication Therapy Management in Detail
The Three-Part Eligibility Test Under 42 CFR 423.153(d)(2)
Sponsors must target members who meet all three criteria simultaneously. First, multiple chronic conditions: the plan sets its minimum between 2 and 15 designated chronic conditions from a CMS-required list that includes at minimum heart failure, diabetes, dyslipidemia, respiratory disease (asthma, COPD, chronic lung disorders), bone disease-arthritis (osteoarthritis, osteoporosis, rheumatoid arthritis), hypertension, and mental health conditions (depression, schizophrenia, bipolar disorder, chronic or disabling mental health conditions). Second, multiple Part D covered drugs: the plan sets its minimum between 2 and 8; from January 1, 2025, all Part D maintenance drugs must be counted using a widely accepted drug database. Third, likely to incur annual drug costs above the CMS-set threshold: $1,623 for 2025. Sponsors set their own thresholds within these ranges but cannot exceed the CMS maximum. Source: 42 CFR 423.153(d)(2)
CMR Format, Offer, and Documentation Requirements Under 42 CFR 423.153(d)(1)
The CMR must be an interactive person-to-person or telehealth consultation between a pharmacist or other qualified provider and the beneficiary and/or their caregiver. It must be offered in the CMS standardised format, which specifies structure, content, and the format of the written summary. After the CMR, the plan must provide the member with a written summary in the CMS standardised format including a personal medication list (all medications the member is taking) and a medication action plan (recommended actions). The plan must also offer Targeted Medication Reviews at other times during the year. The CMR may be conducted in ambulatory or institutional settings. Source: CMS: MTM Programme Requirements
CCIP Coordination and Drug Claims Data Requirements
Under 42 CFR 423.153(d)(3), the MTM programme must be coordinated with any care management plan established for a targeted individual under the Chronic Care Improvement Programme under section 1807 of the Social Security Act. Under 42 CFR 423.153(d)(4), the sponsor must provide drug claims data to CCIPs for beneficiaries enrolled in those programmes in the manner specified by CMS. These requirements mean MTM and CCIP cannot operate as independent silos for shared members, they must share member data bidirectionally. CMS programme auditors examine whether the data sharing workflow exists and is operational, not just whether both programmes are listed in the plan’s documentation. Source: 42 CFR 423.153(d)(3) and (d)(4)
Drug Utilisation Management (42 CFR 423.153(b))
The DUM programme must include incentives to reduce costs when medically appropriate and appropriate utilisation of applicable therapies. In practice this covers prior authorisation, step therapy, quantity limits, and utilisation review. CMS auditors assess whether DUM policies are consistent with evidence-based clinical standards and the Internal Coverage Criteria rules effective January 1, 2024, which prohibit PA criteria more restrictive than applicable NCDs and LCDs for basic benefits.
Quality Assurance (42 CFR 423.153(c))
The QA programme must prevent medication errors and adverse drug interactions, improve drug use, and include a mechanism for drug review detecting over or under utilisation with prescriber alerts where appropriate. These QA measures connect directly to Star Ratings medication adherence measures, a plan whose QA system identifies and addresses non-adherence is directly supporting its adherence-related Star Ratings performance. Source: 42 CFR 423.153(c)
Penalties: Consequences of MTM Non-Compliance
| Violation | Regulation | Consequence | Star Ratings Impact |
|---|---|---|---|
| MTM description not submitted or not CMS-approved | 42 CFR 423.153(d); bid requirement | Bid incomplete; potential rejection; CMS contract deficiency requiring corrective action | Zero score on CMR completion Star Ratings measure |
| Failure to enrol all eligible members or non-compliant targeting criteria | 42 CFR 423.153(d)(2) | CMS programme audit finding; corrective action; potential civil money penalty | Lower CMR completion denominator; suppressed MTM measure score |
| CMR not in CMS standardised format or written summary not provided | 42 CFR 423.153(d)(1) | CMS audit deficiency; member rights violation; corrective action | Non-standardised CMRs not counted; CMR measure score suppressed |
| At-risk beneficiaries with active DMP limitations not targeted for MTM | 42 CFR 423.153(f); section 1860D-4(c)(2)(A)(ii)(II) | CMS audit finding; corrective action; potential statutory violation | Indirect suppression of safety-related adherence measures |
| Maintenance drugs not counted using approved database from January 2025 | 42 CFR 423.153(d)(2)(iv) | Non-compliant targeting criteria; under-identification of eligible members; audit finding when CMS detects the methodological deficiency | Reduced enrolled population; lower CMR completion denominator |
Common Failures: What Triggers MTM Compliance Findings
Running the targeting screen only once at plan year start
CMS expects sponsors to enrol eligible members on an ongoing basis throughout the year, not only in January. A member who does not meet the $1,623 drug cost threshold in January may meet it by March as utilisation data accumulates. Quarterly targeting is the minimum expected frequency. A single January screen that is not repeated leaves mid-year eligible members un-enrolled and un-offered MTM services they are entitled to receive. CMS evaluates programme descriptions for evidence of ongoing identification, not an annual sweep.
Conducting CMRs in a non-standardised format
The CMS CMR standardised format specifies the structure of the review, the format of the written summary, the required elements of the personal medication list, and the required elements of the medication action plan. A thorough pharmacist review conducted without following the CMS standardised format is not a compliant CMR. It does not count for Star Ratings purposes. The format requirement is a member rights standard, every MTM-enrolled member is entitled to a CMR in the format CMS has specified. Using an internally developed format, however comprehensive, generates a deficiency in both the audit and the Star Ratings calculation.
Not updating the drug count methodology for the January 2025 change
Plans that ran their 2025 targeting screen using the 2024 methodology, which may have excluded maintenance drugs from the drug count or used an internally defined drug list rather than a recognised database, are applying non-compliant criteria for the entire 2025 plan year. The regulation specifies that sponsors must use a widely accepted, commercially or publicly available drug database to identify maintenance drugs. An internally defined list that is not based on a recognised database does not meet this requirement. Source: 42 CFR 423.153(d)(2)(iv)
Operating MTM and CCIP as separate programmes with no data coordination
42 CFR 423.153(d)(3) and (d)(4) require the MTM programme to be coordinated with CCIP care management plans for shared members, and require drug claims data to be provided to CCIPs for CCIP-enrolled beneficiaries. Plans that operate both programmes independently, with no shared member data and no coordination of care management plans, are non-compliant with both subsections. CMS auditors look for evidence of genuine operational coordination: that the MTM provider has access to the CCIP care plan, that interventions are informed by it, and that drug claims data is flowing to the CCIP in the format CMS specifies.
Plan Responsibilities: What Must Be Operational Every Programme Year
Submit the MTM programme description via HPMS by the bid deadline
The annual MTM programme description must be submitted through the HPMS MTM Programme Submission module for CMS review and approval. CMS issues an annual submission memo with current requirements, the CY2025 memo was issued May 6, 2024; the CY2027 memo was issued May 4, 2026. Sponsors must follow the current year’s guidance. Prior year formats are not accepted. A description that receives a CMS deficiency must be corrected and resubmitted before the bid is complete. Source: CMS: CY2027 MTM Submission Memo
Run quarterly targeting screens using compliant drug count methodology
Run the MTM eligibility screen at minimum quarterly. From January 1, 2025, the drug count must include all Part D maintenance drugs using a widely accepted drug database (Medi-Span, First Databank, or equivalent). Set the drug count threshold at or below the CMS maximum (2 to 8 drugs). Set the cost threshold at or below $1,623 for 2025. Enrol newly eligible members from each quarterly screen. Document the methodology and the database used, CMS auditors will ask for both.
Offer and deliver CMRs in CMS standardised format for all enrolled members
Every MTM-enrolled member must be offered at least one CMR per year. The CMR must follow the CMS standardised format. The written summary (personal medication list and medication action plan) must be provided to the member after the CMR in the CMS standardised format. Track offer dates, completion dates, and reasons for non-completion for every enrolled member. CMR completion rate is a Star Ratings measure, every compliant completed CMR improves the plan’s score directly.
Coordinate MTM with CCIP and provide drug claims data
For every member enrolled in both MTM and a CCIP, the MTM programme must have access to the CCIP care management plan and the MTM intervention must be informed by it. Provide drug claims data to the CCIP for CCIP-enrolled members in the format CMS specifies. Document the data sharing workflow. Retain evidence of what data was shared and when. CMS auditors look for operational coordination, not parallel programmes that co-list the same members without interacting.
Legal Disclaimer
This article provides educational information about regulations and legal requirements. It does not constitute legal advice. Requirements vary by plan type, contract year, and specific operational circumstances. Consult a qualified healthcare compliance attorney or licensed pharmacy consultant for guidance specific to your organisation’s Medicare Part D contract obligations under 42 CFR Part 423.
Key Takeaways
The MTM programme description is a required bid component, not an administrative filing
A Part D bid without a CMS-approved MTM programme description is an incomplete bid. The structural compliance obligation (approved description) and the operational compliance obligation (running the programme for enrolled members) are both required and evaluated independently. A plan that has a perfect programme description but does not run the programme for its enrolled members fails the operational layer. A plan that runs a thorough programme but submits a description that CMS marks deficient fails the structural layer. Both layers must pass.
From January 2025, all maintenance drugs must be counted, plans using 2024 methodology are non-compliant
42 CFR 423.153(d)(2)(iv), effective January 1, 2025, requires all Part D maintenance drugs in the targeting drug count using a recognised drug database. Plans that did not update their methodology for the 2025 plan year have been applying non-compliant targeting criteria since January. The practical consequence is under-identification: members who now qualify under the expanded drug count are not being targeted and are not being offered MTM services they have a legal right to receive. The longer this continues uncorrected, the larger the population of un-served eligible members the plan accumulates.
CMR completion is simultaneously a legal obligation and a triple-weighted Star Ratings measure, non-compliance costs the plan in both compliance and revenue
The CMR offer and completion requirement under 42 CFR 423.153(d)(1) is a legal obligation. The CMR Completion Rate for Chronic Conditions is a Part D Star Ratings measure. The CMR must be in the CMS standardised format to count for Star Ratings. A plan that conducts CMRs in a non-standardised format generates a compliance deficiency and receives no Star Ratings credit for those reviews simultaneously. For plans near the 4-star threshold that determines Quality Bonus Payment eligibility, suppressed CMR completion scores directly affect the $30 million or more in annual QBP revenue that separates a plan at 4.0 stars from a plan at 3.5 stars. CMR outreach, tracking, and format compliance are not quality improvement activities. They are regulatory requirements with direct financial consequences.
Frequently Asked Questions
Which Part D sponsors must have an MTM programme?
All Part D sponsors, including Employer Group Waiver Plans, must establish and operate an MTM programme under 42 CFR 423.153(a) and (d). The only exempt plan types are MA Private Fee-For-Service organisations under 42 CFR 423.153(e) and PACE organisations. There is no minimum plan size threshold. A Part D sponsor with 50 enrolled members has the same MTM obligation as one with 500,000 enrolled members. Source: CMS: CY2027 MTM Submission Memo (May 2026)
What are the three MTM eligibility criteria?
Under 42 CFR 423.153(d)(2), a member must meet all three: (1) multiple chronic conditions, the plan sets its minimum between 2 and 15 from a CMS-designated list; (2) multiple Part D drugs, the plan sets its minimum between 2 and 8; from January 1, 2025 all maintenance drugs must be counted using a recognised drug database; (3) likely to incur annual drug costs above the CMS threshold, $1,623 for 2025, indexed annually. At-risk beneficiaries with active DMP coverage limitations must be targeted regardless of whether they meet the cost threshold. Source: 42 CFR 423.153(d)(2)
What changed about the MTM drug count on January 1, 2025?
Under 42 CFR 423.153(d)(2)(iv), effective January 1, 2025 (April 2024 Final Rule, 89 FR 30448), sponsors must include all Part D maintenance drugs when assessing the drug count threshold for targeting, using a widely accepted commercially or publicly available drug database such as Medi-Span or First Databank. Sponsors may also include all Part D drugs (not just maintenance drugs). This expands the eligible drug count pool. Plans using a 2024 methodology that excluded maintenance drugs are applying non-compliant targeting criteria. Source: 42 CFR 423.153(d)(2)(iv); 89 FR 30448
What must a Comprehensive Medication Review include?
Under 42 CFR 423.153(d)(1), the CMR must be an interactive person-to-person or telehealth consultation in the CMS standardised format, with a pharmacist or other qualified provider. After the CMR, the plan must provide a written summary including a personal medication list (all medications the beneficiary is taking) and a medication action plan (recommended actions the beneficiary can take), both in the CMS standardised format. Targeted Medication Reviews must also be offered at other times during the year. The CMR may be conducted in ambulatory or institutional settings. Source: CMS: MTM Programme Requirements
How does the Drug Management Programme connect to the MTM requirement?
The Drug Management Programme under 42 CFR 423.153(f), mandatory since January 1, 2022, addresses overutilisation of frequently abused drugs by at-risk beneficiaries. Since January 1, 2022, any at-risk beneficiary with an active DMP coverage limitation must also be targeted for MTM enrolment under section 1860D-4(c)(2)(A)(ii)(II) of the Social Security Act. This is a statutory obligation, not an optional coordination step. Sponsors operating a DMP must have an automated process to flag DMP members with active limitations for MTM targeting. Source: CMS AB2D: MTM White Paper
How does MTM CMR completion affect Star Ratings?
MTM Comprehensive Medication Review Completion Rate for Chronic Conditions is a Part D Star Ratings measure. CMS calculates it as the percentage of MTM-enrolled members who completed a CMR during the measurement year. Only CMRs conducted in the CMS standardised format count. The measure is scored and affects the plan’s overall Star Rating, which determines QBP eligibility at 4+ stars. A plan that enrols many members in MTM but delivers CMRs in a non-standardised format will have a poor measure score, enrolment without compliant CMR delivery does not count.
How must the MTM programme coordinate with the Chronic Care Improvement Programme?
Under 42 CFR 423.153(d)(3) and (d)(4), the MTM programme must coordinate with CCIP care management plans for members enrolled in both programmes, and the sponsor must provide drug claims data to CCIPs for CCIP-enrolled beneficiaries in the format CMS specifies. In practice this means bidirectional data sharing: the CCIP uses Part D drug claims data to inform care management, and the MTM programme uses the CCIP care management plan to inform medication reviews for shared members. Parallel programmes that list the same members without operational data sharing do not satisfy these requirements. Source: 42 CFR 423.153(d)(3) and (d)(4)
Sources
Government and Regulatory Sources
- 42 CFR 423.153, Drug Utilisation Management, Quality Assurance, Medication Therapy Management, and Drug Management Programmes: primary regulation for all three mandatory programmes; source for the general rule at 423.153(a), MTM requirements at 423.153(d), DUM at 423.153(b), QA at 423.153(c), DMP at 423.153(f), CCIP coordination at 423.153(d)(3) and (d)(4), and the January 2025 maintenance drug counting requirement at 423.153(d)(2)(iv).
- CMS: Medication Therapy Management Programme Requirements: CMS’s primary MTM resource page, source for CMR standardised format requirements, programme structure requirements, and CCIP coordination obligations.
- CMS: CY2027 MTM Programme Submission Memo (May 4, 2026): source for the annual HPMS submission requirement, confirmation that a CMS-approved description is a required bid element, that EGWPs are covered, and the current submission timeline.
- CMS AB2D: MTM White Paper: source for the January 1, 2022 DMP-MTM targeting link under section 1860D-4(c)(2)(A)(ii)(II), and the April 2024 Final Rule (89 FR 30448) implementing the January 2025 maintenance drug counting requirement.
Policy Sources
- AARP Policy Book: Medicare Part D Prescription Drugs in Medicare (2025): source for the 2025 MTM annual drug cost threshold of $1,623 and the Part D programme structure requirement that sponsors offer MTM to members whose projected drug costs exceed the statutory amount.
- Applied Policy: CMS Finalizes CY2025 Policy Changes for Medicare Advantage and Part D Plans: source for the April 2024 Final Rule’s MTM targeting changes, including the expansion of the drug counting methodology and the rationale CMS cited for the change.
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