subpart 2—prescription drug plans; pdp sponsors; financing
§1395w–111. PDP regions; submission of bids; plan approval
(a) Establishment of PDP regions; service areas
(1) Coverage of entire PDP region
The service area for a prescription drug plan shall consist of an entire PDP region established under paragraph (2).
(2) Establishment of PDP regions
(A) In general
The Secretary shall establish, and may revise, PDP regions in a manner that is consistent with the requirements for the establishment and revision of MA regions under subparagraphs (B) and (C) of
(B) Relation to MA regions
To the extent practicable, PDP regions shall be the same as MA regions under
(C) Authority for territories
The Secretary shall establish, and may revise, PDP regions for areas in States that are not within the 50 States or the District of Columbia.
(3) National plan
Nothing in this subsection shall be construed as preventing a prescription drug plan from being offered in more than one PDP region (including all PDP regions).
(b) Submission of bids, premiums, and related information
(1) In general
A PDP sponsor shall submit to the Secretary information described in paragraph (2) with respect to each prescription drug plan it offers. Such information shall be submitted at the same time and in a similar manner to the manner in which information described in paragraph (6) of
(2) Information described
The information described in this paragraph is information on the following:
(A) Coverage provided
The prescription drug coverage provided under the plan, including the deductible and other cost-sharing.
(B) Actuarial value
The actuarial value of the qualified prescription drug coverage in the region for a part D eligible individual with a national average risk profile for the factors described in
(C) Bid
Information on the bid, including an actuarial certification of—
(i) the basis for the actuarial value described in subparagraph (B) assumed in such bid;
(ii) the portion of such bid attributable to basic prescription drug coverage and, if applicable, the portion of such bid attributable to supplemental benefits;
(iii) assumptions regarding the reinsurance subsidy payments provided under
(iv) administrative expenses assumed in the bid.
(D) Service area
The service area for the plan.
(E) Level of risk assumed
(i) In general
Whether the PDP sponsor requires a modification of risk level under clause (ii) and, if so, the extent of such modification. Any such modification shall apply with respect to all prescription drug plans offered by a PDP sponsor in a PDP region. This subparagraph shall not apply to an MA–PD plan.
(ii) Risk levels described
A modification of risk level under this clause may consist of one or more of the following:
(I) Increase in Federal percentage assumed in initial risk corridor
An equal percentage point increase in the percents applied under subparagraphs (B)(i), (B)(ii)(I), (C)(i), and (C)(ii)(I) of
(II) Increase in Federal percentage assumed in second risk corridor
An equal percentage point increase in the percents applied under subparagraphs (B)(ii)(II) and (C)(ii)(II) of
(III) Decrease in size of risk corridors
A decrease in the threshold risk percentages specified in
(F) Additional information
Such other information as the Secretary may require to carry out this part.
(3) Paperwork reduction for offering of prescription drug plans nationally or in multi-region areas
The Secretary shall establish requirements for information submission under this subsection in a manner that promotes the offering of such plans in more than one PDP region (including all regions) through the filing of consolidated information.
(c) Actuarial valuation
(1) Processes
For purposes of this part, the Secretary shall establish processes and methods for determining the actuarial valuation of prescription drug coverage, including—
(A) an actuarial valuation of standard prescription drug coverage under
(B) actuarial valuations relating to alternative prescription drug coverage under
(C) an actuarial valuation of the reinsurance subsidy payments under
(D) the use of generally accepted actuarial principles and methodologies; and
(E) applying the same methodology for determinations of actuarial valuations under subparagraphs (A) and (B).
(2) Accounting for drug utilization
Such processes and methods for determining actuarial valuation shall take into account the effect that providing alternative prescription drug coverage (rather than standard prescription drug coverage) has on drug utilization.
(3) Responsibilities
(A) Plan responsibilities
PDP sponsors and MA organizations are responsible for the preparation and submission of actuarial valuations required under this part for prescription drug plans and MA–PD plans they offer.
(B) Use of outside actuaries
Under the processes and methods established under paragraph (1), PDP sponsors offering prescription drug plans and MA organizations offering MA–PD plans may use actuarial opinions certified by independent, qualified actuaries to establish actuarial values.
(d) Review of information and negotiation
(1) Review of information
The Secretary shall review the information filed under subsection (b) for the purpose of conducting negotiations under paragraph (2).
(2) Negotiation regarding terms and conditions
Subject to subsection (i), in exercising the authority under paragraph (1), the Secretary—
(A) has the authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed plan; and
(B) has authority similar to the authority of the Director of the Office of Personnel Management with respect to health benefits plans under
(3) Rejection of bids
Paragraph (5)(C) of
(e) Approval of proposed plans
(1) In general
After review and negotiation under subsection (d), the Secretary shall approve or disapprove the prescription drug plan.
(2) Requirements for approval
The Secretary may approve a prescription drug plan only if the following requirements are met:
(A) Compliance with requirements
The plan and the PDP sponsor offering the plan comply with the requirements under this part, including the provision of qualified prescription drug coverage.
(B) Actuarial determinations
The Secretary determines that the plan and PDP sponsor meet the requirements under this part relating to actuarial determinations, including such requirements under
(C) Application of FEHBP standard
(i) In general
The Secretary determines that the portion of the bid submitted under subsection (b) that is attributable to basic prescription drug coverage is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of
(ii) Supplemental coverage
The Secretary determines that the portion of the bid submitted under subsection (b) that is attributable to supplemental prescription drug coverage pursuant to
(D) Plan design
(i) In general
The Secretary does not find that the design of the plan and its benefits (including any formulary and tiered formulary structure) are likely to substantially discourage enrollment by certain part D eligible individuals under the plan.
(ii) Use of categories and classes in formularies
The Secretary may not find that the design of categories and classes within a formulary violates clause (i) if such categories and classes are consistent with guidelines (if any) for such categories and classes established by the United States Pharmacopeia.
(f) Application of limited risk plans
(1) Conditions for approval of limited risk plans
The Secretary may only approve a limited risk plan (as defined in paragraph (4)(A)) for a PDP region if the access requirements under
(2) Rules
The following rules shall apply with respect to the approval of a limited risk plan in a PDP region:
(A) Limited exercise of authority
Only the minimum number of such plans may be approved in order to meet the access requirements under
(B) Maximizing assumption of risk
The Secretary shall provide priority in approval for those plans bearing the highest level of risk (as computed by the Secretary), but the Secretary may take into account the level of the bids submitted by such plans.
(C) No full underwriting for limited risk plans
In no case may the Secretary approve a limited risk plan under which the modification of risk level provides for no (or a de minimis) level of financial risk.
(3) Acceptance of all full risk contracts
There shall be no limit on the number of full risk plans that are approved under subsection (e).
(4) Risk-plans defined
For purposes of this subsection:
(A) Limited risk plan
The term "limited risk plan" means a prescription drug plan that provides basic prescription drug coverage and for which the PDP sponsor includes a modification of risk level described in subparagraph (E) of subsection (b)(2) in its bid submitted for the plan under such subsection. Such term does not include a fallback prescription drug plan.
(B) Full risk plan
The term "full risk plan" means a prescription drug plan that is not a limited risk plan or a fallback prescription drug plan.
(g) Guaranteeing access to coverage
(1) Solicitation of bids
(A) In general
Separate from the bidding process under subsection (b), the Secretary shall provide for a process for the solicitation of bids from eligible fallback entities (as defined in paragraph (2)) for the offering in all fallback service areas (as defined in paragraph (3)) in one or more PDP regions of a fallback prescription drug plan (as defined in paragraph (4)) during the contract period specified in paragraph (5).
(B) Acceptance of bids
(i) In general
Except as provided in this subparagraph, the provisions of subsection (e) shall apply with respect to the approval or disapproval of fallback prescription drug plans. The Secretary shall enter into contracts under this subsection with eligible fallback entities for the offering of fallback prescription drug plans so approved in fallback service areas.
(ii) Limitation of 1 plan for all fallback service areas in a PDP region
With respect to all fallback service areas in any PDP region for a contract period, the Secretary shall approve the offering of only 1 fallback prescription drug plan.
(iii) Competitive procedures
Competitive procedures (as defined in
(iv) Timing
The Secretary shall approve a fallback prescription drug plan for a PDP region in a manner so that, if there are any fallback service areas in the region for a year, the fallback prescription drug plan is offered at the same time as prescription drug plans would otherwise be offered.
(V) 2 No national fallback plan
The Secretary shall not enter into a contract with a single fallback entity for the offering of fallback plans throughout the United States.
(2) Eligible fallback entity
For purposes of this section, the term "eligible fallback entity" means, with respect to all fallback service areas in a PDP region for a contract period, an entity that—
(A) meets the requirements to be a PDP sponsor (or would meet such requirements but for the fact that the entity is not a risk-bearing entity); and
(B) does not submit a bid under subsection (b) for any prescription drug plan for any PDP region for the first year of such contract period.
For purposes of subparagraph (B), an entity shall be treated as submitting a bid with respect to a prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.
(3) Fallback service area
For purposes of this subsection, the term "fallback service area" means, for a PDP region with respect to a year, any area within such region for which the Secretary determines before the beginning of the year that the access requirements of the first sentence of
(4) Fallback prescription drug plan
For purposes of this part, the term "fallback prescription drug plan" means a prescription drug plan that—
(A) only offers the standard prescription drug coverage and access to negotiated prices described in
(B) meets such other requirements as the Secretary may specify.
(5) Payments under the contract
(A) In general
A contract entered into under this subsection shall provide for—
(i) payment for the actual costs (taking into account negotiated price concessions described in
(ii) payment of management fees that are tied to performance measures established by the Secretary for the management, administration, and delivery of the benefits under the contract.
(B) Performance measures
The performance measures established by the Secretary pursuant to subparagraph (A)(ii) shall include at least measures for each of the following:
(i) Costs
The entity contains costs to the Medicare Prescription Drug Account and to part D eligible individuals enrolled in a fallback prescription drug plan offered by the entity through mechanisms such as generic substitution and price discounts.
(ii) Quality programs
The entity provides such enrollees with quality programs that avoid adverse drug reactions and overutilization and reduce medical errors.
(iii) Customer service
The entity provides timely and accurate delivery of services and pharmacy and beneficiary support services.
(iv) Benefit administration and claims adjudication
The entity provides efficient and effective benefit administration and claims adjudication.
(6) Monthly beneficiary premium
Except as provided in
(7) General contract terms and conditions
(A) In general
Except as may be appropriate to carry out this section, the terms and conditions of contracts with eligible fallback entities offering fallback prescription drug plans under this subsection shall be the same as the terms and conditions of contracts under this part for prescription drug plans.
(B) Period of contract
(i) In general
Subject to clause (ii), a contract approved for a fallback prescription drug plan for fallback service areas for a PDP region under this section shall be for a period of 3 years (except as may be renewed after a subsequent bidding process).
(ii) Limitation
A fallback prescription drug plan may be offered under a contract in an area for a year only if that area is a fallback service area for that year.
(C) Entity not permitted to market or brand fallback prescription drug plans
An eligible fallback entity with a contract under this subsection may not engage in any marketing or branding of a fallback prescription drug plan.
(h) Annual report on use of limited risk plans and fallback plans
The Secretary shall submit to Congress an annual report that describes instances in which limited risk plans and fallback prescription drug plans were offered under subsections (f) and (g). The Secretary shall include in such report such recommendations as may be appropriate to limit the need for the provision of such plans and to maximize the assumption of financial risk under section subsection 3 (f).
(i) Noninterference
In order to promote competition under this part and in carrying out this part, the Secretary—
(1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors;
(2) may not require a particular formulary, except as provided under section 1395w–104(b)(3)(l) 4 of this title; and
(3) may not institute a price structure for the reimbursement of covered part D drugs, except as provided under part E of subchapter XI.
(j) Coordination of benefits
A PDP sponsor offering a prescription drug plan shall permit State Pharmaceutical Assistance Programs and Rx plans under
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–11, as added
Editorial Notes
References in Text
Codification
In subsec. (g)(1)(B)(iii), "
Amendments
2022—Subsec. (g)(6).
Subsec. (i)(1).
Subsec. (i)(2).
Subsec. (i)(3).
2010—Subsec. (d)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Study Regarding Regional Variations in Prescription Drug Spending
"(1)
"(A) price variations (described in section 1860D–15(c)(2) of such Act [
"(B) differences in per capita utilization that is not taken into account in the health status risk adjustment provided under section 1860D–15(c)(1) of such Act [
"(2)
"(A) information regarding the extent of geographic variation described in paragraph (1)(B);
"(B) an analysis of the impact on direct subsidies under section 1860D–15(a)(1) of the Social Security Act [
"(C) recommendations regarding the appropriateness of applying an additional geographic adjustment factor under section 1860D–15(c)(2) [
1 See References in Text note below.
2 So in original. Probably should be "(v)".
4 So in original. Probably should be "(b)(3)(I)".
§1395w–112. Requirements for and contracts with prescription drug plan (PDP) sponsors
(a) General requirements
Each PDP sponsor of a prescription drug plan shall meet the following requirements:
(1) Licensure
Subject to subsection (c), the sponsor is organized and licensed under State law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each State in which it offers a prescription drug plan.
(2) Assumption of financial risk for unsubsidized coverage
(A) In general
Subject to subparagraph (B), to the extent that the entity is at risk the entity assumes financial risk on a prospective basis for benefits that it offers under a prescription drug plan and that is not covered under
(B) Reinsurance permitted
The plan sponsor may obtain insurance or make other arrangements for the cost of coverage provided to any enrollee to the extent that the sponsor is at risk for providing such coverage.
(3) Solvency for unlicensed sponsors
In the case of a PDP sponsor that is not described in paragraph (1) and for which a waiver has been approved under subsection (c), such sponsor shall meet solvency standards established by the Secretary under subsection (d).
(b) Contract requirements
(1) In general
The Secretary shall not permit the enrollment under
(2) Limitation on entities offering fallback prescription drug plans
The Secretary shall not enter into a contract with a PDP sponsor for the offering of a prescription drug plan (other than a fallback prescription drug plan) in a PDP region for a year if the sponsor—
(A) submitted a bid under
(B) offers a fallback prescription drug plan in any PDP region during the year; or
(C) offered a fallback prescription drug plan in that PDP region during the previous year.
For purposes of this paragraph, an entity shall be treated as submitting a bid with respect to a prescription drug plan or offering a fallback prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.
(3) Incorporation of certain medicare advantage contract requirements
Except as otherwise provided, the following provisions of
(A) Minimum enrollment
Paragraphs (1) and (3) of
(i) the Secretary may increase the minimum number of enrollees required under such paragraph (1) as the Secretary determines appropriate; and
(ii) the requirement of such paragraph (1) shall be waived during the first contract year with respect to an organization in a region.
(B) Contract period and effectiveness
(C) Protections against fraud and beneficiary protections
(D) Additional contract terms
(i) may be used for the purposes of carrying out this part, improving public health through research on the utilization, safety, effectiveness, quality, and efficiency of health care services (as the Secretary determines appropriate), or carrying out part E of subchapter XI; and
(ii) shall be made available to Congressional 1 support agencies (in accordance with their obligations to support Congress as set out in their authorizing statutes) for the purposes of conducting Congressional 1 oversight, monitoring, making recommendations, and analysis of the program under this subchapter.
(E) Intermediate sanctions
(F) Procedures for termination
(4) Prompt payment of clean claims
(A) Prompt payment
(i) In general
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that payment shall be issued, mailed, or otherwise transmitted with respect to all clean claims submitted by pharmacies (other than pharmacies that dispense drugs by mail order only or are located in, or contract with, a long-term care facility) under this part within the applicable number of calendar days after the date on which the claim is received.
(ii) Clean claim defined
In this paragraph, the term "clean claim" means a claim that has no defect or impropriety (including any lack of any required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under this part.
(iii) Date of receipt of claim
In this paragraph, a claim is considered to have been received—
(I) with respect to claims submitted electronically, on the date on which the claim is transferred; and
(II) with respect to claims submitted otherwise, on the 5th day after the postmark date of the claim or the date specified in the time stamp of the transmission.
(B) Applicable number of calendar days defined
In this paragraph, the term "applicable number of calendar days" means—
(i) with respect to claims submitted electronically, 14 days; and
(ii) with respect to claims submitted otherwise, 30 days.
(C) Interest payment
(i) In general
Subject to clause (ii), if payment is not issued, mailed, or otherwise transmitted within the applicable number of calendar days (as defined in subparagraph (B)) after a clean claim is received, the PDP sponsor shall pay interest to the pharmacy that submitted the claim at a rate equal to the weighted average of interest on 3-month marketable Treasury securities determined for such period, increased by 0.1 percentage point for the period beginning on the day after the required payment date and ending on the date on which payment is made (as determined under subparagraph (D)(iv)). Interest amounts paid under this subparagraph shall not be counted against the administrative costs of a prescription drug plan or treated as allowable risk corridor costs under
(ii) Authority not to charge interest
The Secretary may provide that a PDP sponsor is not charged interest under clause (i) in the case where there are exigent circumstances, including natural disasters and other unique and unexpected events, that prevent the timely processing of claims.
(D) Procedures involving claims
(i) Claim deemed to be clean
A claim is deemed to be a clean claim if the PDP sponsor involved does not provide notice to the claimant of any deficiency in the claim—
(I) with respect to claims submitted electronically, within 10 days after the date on which the claim is received; and
(II) with respect to claims submitted otherwise, within 15 days after the date on which the claim is received.
(ii) Claim determined to not be a clean claim
(I) In general
If a PDP sponsor determines that a submitted claim is not a clean claim, the PDP sponsor shall, not later than the end of the period described in clause (i), notify the claimant of such determination. Such notification shall specify all defects or improprieties in the claim and shall list all additional information or documents necessary for the proper processing and payment of the claim.
(II) Determination after submission of additional information
A claim is deemed to be a clean claim under this paragraph if the PDP sponsor involved does not provide notice to the claimant of any defect or impropriety in the claim within 10 days of the date on which additional information is received under subclause (I).
(iii) Obligation to pay
A claim submitted to a PDP sponsor that is not paid or contested by the sponsor within the applicable number of days (as defined in subparagraph (B)) after the date on which the claim is received shall be deemed to be a clean claim and shall be paid by the PDP sponsor in accordance with subparagraph (A).
(iv) Date of payment of claim
Payment of a clean claim under such subparagraph is considered to have been made on the date on which—
(I) with respect to claims paid electronically, the payment is transferred; and
(II) with respect to claims paid otherwise, the payment is submitted to the United States Postal Service or common carrier for delivery.
(E) Electronic transfer of funds
A PDP sponsor shall pay all clean claims submitted electronically by electronic transfer of funds if the pharmacy so requests or has so requested previously. In the case where such payment is made electronically, remittance may be made by the PDP sponsor electronically as well.
(F) Protecting the rights of claimants
(i) In general
Nothing in this paragraph shall be construed to prohibit or limit a claim or action not covered by the subject matter of this section that any individual or organization has against a provider or a PDP sponsor.
(ii) Anti-retaliation
Consistent with applicable Federal or State law, a PDP sponsor shall not retaliate against an individual or provider for exercising a right of action under this subparagraph.
(G) Rule of construction
A determination under this paragraph that a claim submitted by a pharmacy is a clean claim shall not be construed as a positive determination regarding eligibility for payment under this subchapter, nor is it an indication of government approval of, or acquiescence regarding, the claim submitted. The determination shall not relieve any party of civil or criminal liability with respect to the claim, nor does it offer a defense to any administrative, civil, or criminal action with respect to the claim.
(5) Submission of claims by pharmacies located in or contracting with long-term care facilities
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that a pharmacy located in, or having a contract with, a long-term care facility shall have not less than 30 days (but not more than 90 days) to submit claims to the sponsor for reimbursement under the plan.
(6) Regular update of prescription drug pricing standard
If the PDP sponsor of a prescription drug plan uses a standard for reimbursement of pharmacies based on the cost of a drug, each contract entered into with such sponsor under this part with respect to the plan shall provide that the sponsor shall update such standard not less frequently than once every 7 days, beginning with an initial update on January 1 of each year, to accurately reflect the market price of acquiring the drug.
(7) Suspension of payments pending investigation of credible allegations of fraud by pharmacies
(A) In general
(B) Rule of construction
Nothing in this paragraph shall be construed as limiting the authority of a PDP sponsor to conduct postpayment review.
(8) Provision of information related to maximum fair prices
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall require the sponsor to provide information to the Secretary as requested by the Secretary for purposes of carrying out
(c) Waiver of certain requirements to expand choice
(1) Authorizing waiver
(A) In general
In the case of an entity that seeks to offer a prescription drug plan in a State, the Secretary shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in paragraph (2) have been met.
(B) Application of regional plan waiver rule
In addition to the waiver available under subparagraph (A), the provisions of
(2) Grounds for approval
(A) In general
The grounds for approval under this paragraph are—
(i) subject to subparagraph (B), the grounds for approval described in subparagraphs (B), (C), and (D) of
(ii) the application by a State of any grounds other than those required under Federal law.
(B) Special rules
In applying subparagraph (A)(i)—
(i) the ground of approval described in
(ii) for plan years beginning before January 1, 2008, if the State does have such a licensing process in effect, such ground for approval described in such section is deemed to have been met upon submission of an application described in such section.
(3) Application of waiver procedures
With respect to an application for a waiver (or a waiver granted) under paragraph (1)(A) of this subsection, the provisions of subparagraphs (E), (F), and (G) of
(4) References to certain provisions
In applying provisions of
(A) any reference to a waiver application under
(B) any reference to solvency standards shall be treated as a reference to solvency standards established under subsection (d) of this section.
(d) Solvency standards for non-licensed entities
(1) Establishment and publication
The Secretary, in consultation with the National Association of Insurance Commissioners, shall establish and publish, by not later than January 1, 2005, financial solvency and capital adequacy standards for entities described in paragraph (2).
(2) Compliance with standards
A PDP sponsor that is not licensed by a State under subsection (a)(1) and for which a waiver application has been approved under subsection (c) shall meet solvency and capital adequacy standards established under paragraph (1). The Secretary shall establish certification procedures for such sponsors with respect to such solvency standards in the manner described in
(e) Licensure does not substitute for or constitute certification
The fact that a PDP sponsor is licensed in accordance with subsection (a)(1) or has a waiver application approved under subsection (c) does not deem the sponsor to meet other requirements imposed under this part for a sponsor.
(f) Periodic review and revision of standards
(1) In general
Subject to paragraph (2), the Secretary may periodically review the standards established under this section and, based on such review, may revise such standards if the Secretary determines such revision to be appropriate.
(2) Prohibition of midyear implementation of significant new regulatory requirements
The Secretary may not implement, other than at the beginning of a calendar year, regulations under this section that impose new, significant regulatory requirements on a PDP sponsor or a prescription drug plan.
(g) Prohibition of State imposition of premium taxes; relation to State laws
The provisions of
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–12, as added
Editorial Notes
Amendments
2022—Subsec. (b)(3)(D)(i).
Subsec. (b)(8).
2018—Subsec. (b)(7).
2008—Subsec. (b)(3)(D).
Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (b)(6).
Statutory Notes and Related Subsidiaries
Effective Date of 2018 Amendment
Amendment by section 2008(a) of
Effective Date of 2008 Amendment
Amendment by section 171(a) of
Amendment by section 172(a)(1) of
Amendment by section 173(a) of
1 So in original. Probably should not be capitalized.
§1395w–113. Premiums; late enrollment penalty
(a) Monthly beneficiary premium
(1) Computation
(A) In general
The monthly beneficiary premium for a prescription drug plan is the base beneficiary premium computed under paragraph (2) or (8) (as applicable) as adjusted under this paragraph.
(B) Adjustment to reflect difference between bid and national average bid
(i) Above average bid
If for a month the amount of the standardized bid amount (as defined in paragraph (5)) exceeds the amount of the adjusted national average monthly bid amount (as defined in clause (iii)), the base beneficiary premium for the month shall be increased by the amount of such excess.
(ii) Below average bid
If for a month the amount of the adjusted national average monthly bid amount for the month exceeds the standardized bid amount, the base beneficiary premium for the month shall be decreased by the amount of such excess.
(iii) Adjusted national average monthly bid amount defined
For purposes of this subparagraph, the term "adjusted national average monthly bid amount" means the national average monthly bid amount computed under paragraph (4), as adjusted under
(C) Increase for supplemental prescription drug benefits
The base beneficiary premium shall be increased by the portion of the PDP approved bid that is attributable to supplemental prescription drug benefits.
(D) Increase for late enrollment penalty
The base beneficiary premium shall be increased by the amount of any late enrollment penalty under subsection (b).
(E) Decrease for low-income assistance
The monthly beneficiary premium is subject to decrease in the case of a subsidy eligible individual under
(F) Increase based on income
The monthly beneficiary premium shall be increased pursuant to paragraph (7).
(G) Uniform premium
Except as provided in subparagraphs (D), (E), and (F), the monthly beneficiary premium for a prescription drug plan in a PDP region is the same for all part D eligible individuals enrolled in the plan.
(2) Base beneficiary premium
Subject to paragraph (8), the base beneficiary premium under this paragraph for a prescription drug plan for a month is equal to the product 1 —
(A) the beneficiary premium percentage (as specified in paragraph (3)); and
(B) the national average monthly bid amount (computed under paragraph (4)) for the month.
(3) Beneficiary premium percentage
For purposes of this subsection, the beneficiary premium percentage for any year is the percentage equal to a fraction—
(A) the numerator of which is 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); and
(B) the denominator of which is 100 percent minus a percentage equal to—
(i) the total reinsurance payments which the Secretary estimates are payable under
(ii) the sum of—
(I) the amount estimated under clause (i) for the year; and
(II) the total payments which the Secretary estimates will be paid to prescription drug plans and MA–PD plans that are attributable to the standardized bid amount during the year, taking into account amounts paid by the Secretary and enrollees.
(4) Computation of national average monthly bid amount
(A) In general
For each year (beginning with 2006) the Secretary shall compute a national average monthly bid amount equal to the average of the standardized bid amounts (as defined in paragraph (5)) for each prescription drug plan and for each MA–PD plan described in
(B) Weighted average
(i) In general
The monthly national average monthly bid amount computed under subparagraph (A) for a year shall be a weighted average, with the weight for each plan being equal to the average number of part D eligible individuals enrolled in such plan in the reference month (as defined in
(ii) Special rule for 2006
For purposes of applying this paragraph for 2006, the Secretary shall establish procedures for determining the weighted average under clause (i) for 2005.
(5) Standardized bid amount defined
For purposes of this subsection, the term "standardized bid amount" means the following:
(A) Prescription drug plans
(i) Basic coverage
In the case of a prescription drug plan that provides basic prescription drug coverage, the PDP approved bid (as defined in paragraph (6)).
(ii) Supplemental coverage
In the case of a prescription drug plan that provides supplemental prescription drug coverage, the portion of the PDP approved bid that is attributable to basic prescription drug coverage.
(B) MA–PD plans
In the case of an MA–PD plan, the portion of the accepted bid amount that is attributable to basic prescription drug coverage.
(6) PDP approved bid defined
For purposes of this part, the term "PDP approved bid" means, with respect to a prescription drug plan, the bid amount approved for the plan under this part.
(7) Increase in base beneficiary premium based on income
(A) In general
In the case of an individual whose modified adjusted gross income exceeds the threshold amount applicable under paragraph (2) of
(B) Monthly adjustment amount
The monthly adjustment amount specified in this subparagraph for an individual for a month in a year is equal to the product of—
(i) the quotient obtained by dividing—
(I) the applicable percentage determined under paragraph (3)(C) of
(II) 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); and
(ii) the base beneficiary premium (as computed under paragraph (2) or (8) (as applicable)).
(C) Modified adjusted gross income
For purposes of this paragraph, the term "modified adjusted gross income" has the meaning given such term in subparagraph (A) of
(D) Determination by Commissioner of Social Security
The Commissioner of Social Security shall make any determination necessary to carry out the income-related increase in the base beneficiary premium under this paragraph.
(E) Procedures to assure correct income-related increase in base beneficiary premium
(i) Disclosure of base beneficiary premium
Not later than September 15 of each year beginning with 2010, the Secretary shall disclose to the Commissioner of Social Security the amount of the base beneficiary premium (as computed under paragraph (2) or (8) (as applicable)) for the purpose of carrying out the income-related increase in the base beneficiary premium under this paragraph with respect to the following year.
(ii) Additional disclosure
Not later than October 15 of each year beginning with 2010, the Secretary shall disclose to the Commissioner of Social Security the following information for the purpose of carrying out the income-related increase in the base beneficiary premium under this paragraph with respect to the following year:
(I) The modified adjusted gross income threshold applicable under paragraph (2) of
(II) The applicable percentage determined under paragraph (3)(C) of
(III) The monthly adjustment amount specified in subparagraph (B).
(IV) Any other information the Commissioner of Social Security determines necessary to carry out the income-related increase in the base beneficiary premium under this paragraph.
(F) Rule of construction
The formula used to determine the monthly adjustment amount specified under subparagraph (B) shall only be used for the purpose of determining such monthly adjustment amount under such subparagraph.
(8) Premium stabilization
(A) In general
The base beneficiary premium under this paragraph for a prescription drug plan for a month in 2024 through 2029 shall be computed as follows:
(i) 2024
The base beneficiary premium for a month in 2024 shall be equal to the lesser of—
(I) the base beneficiary premium computed under paragraph (2) for a month in 2023 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2024 that would have applied if this paragraph had not been enacted.
(ii) 2025
The base beneficiary premium for a month in 2025 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (i) for a month in 2024 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2025 that would have applied if this paragraph had not been enacted.
(iii) 2026
The base beneficiary premium for a month in 2026 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (ii) for a month in 2025 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2026 that would have applied if this paragraph had not been enacted.
(iv) 2027
The base beneficiary premium for a month in 2027 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (iii) for a month in 2026 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2027 that would have applied if this paragraph had not been enacted.
(v) 2028
The base beneficiary premium for a month in 2028 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (iv) for a month in 2027 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2028 that would have applied if this paragraph had not been enacted.
(vi) 2029
The base beneficiary premium for a month in 2029 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (v) for a month in 2028 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2029 that would have applied if this paragraph had not been enacted.
(B) Clarification regarding 2030 and subsequent years
The base beneficiary premium for a month in 2030 or a subsequent year shall be computed under paragraph (2) without regard to this paragraph.
(9) Percent specified
(A) In general
Subject to subparagraph (B), for purposes of paragraph (3)(A), the percent specified under this paragraph for 2030 and each subsequent year is the percent that the Secretary determines is necessary to ensure that the base beneficiary premium computed under paragraph (2) for a month in 2030 is equal to the lesser of—
(i) the base beneficiary premium computed under paragraph (8)(A)(vi) for a month in 2029 increased by 6 percent; or
(ii) the base beneficiary premium computed under paragraph (2) for a month in 2030 that would have applied if this paragraph had not been enacted.
(B) Floor
The percent specified under subparagraph (A) may not be less than 20 percent.
(b) Late enrollment penalty
(1) In general
Subject to the succeeding provisions of this subsection, in the case of a part D eligible individual described in paragraph (2) with respect to a continuous period of eligibility, there shall be an increase in the monthly beneficiary premium established under subsection (a) in an amount determined under paragraph (3).
(2) Individuals subject to penalty
A part D eligible individual described in this paragraph is, with respect to a continuous period of eligibility, an individual for whom there is a continuous period of 63 days or longer (all of which in such continuous period of eligibility) beginning on the day after the last date of the individual's initial enrollment period under
(3) Amount of penalty
(A) In general
The amount determined under this paragraph for a part D eligible individual for a continuous period of eligibility is the greater of—
(i) an amount that the Secretary determines is actuarially sound for each uncovered month (as defined in subparagraph (B)) in the same continuous period of eligibility; or
(ii) 1 percent of the base beneficiary premium (computed under paragraph (2) or (8) of subsection (a) (as applicable)) for each such uncovered month in such period.
(B) Uncovered month defined
For purposes of this subsection, the term "uncovered month" means, with respect to a part D eligible individual, any month beginning after the end of the initial enrollment period under
(4) Creditable prescription drug coverage defined
For purposes of this part, the term "creditable prescription drug coverage" means any of the following coverage, but only if the coverage meets the requirement of paragraph (5):
(A) Coverage under prescription drug plan or MA–PD plan
Coverage under a prescription drug plan or under an MA–PD plan.
(B) Medicaid
Coverage under a medicaid plan under subchapter XIX or under a waiver under
(C) Group health plan
Coverage under a group health plan, including a health benefits plan under
(D) State pharmaceutical assistance program
Coverage under a State pharmaceutical assistance program described in
(E) Veterans' coverage of prescription drugs
Coverage for veterans, and survivors and dependents of veterans, under
(F) Prescription drug coverage under medigap policies
Coverage under a medicare supplemental policy under
(G) Military coverage (including TRICARE)
Coverage under
(H) Other coverage
Such other coverage as the Secretary determines appropriate.
(5) Actuarial equivalence requirement
Coverage meets the requirement of this paragraph only if the coverage is determined (in a manner specified by the Secretary) to provide coverage of the cost of prescription drugs the actuarial value of which (as defined by the Secretary) to the individual equals or exceeds the actuarial value of standard prescription drug coverage (as determined under
(6) Procedures to document creditable prescription drug coverage
(A) In general
The Secretary shall establish procedures (including the form, manner, and time) for the documentation of creditable prescription drug coverage, including procedures to assist in determining whether coverage meets the requirement of paragraph (5).
(B) Disclosure by entities offering creditable prescription drug coverage
(i) In general
Each entity that offers prescription drug coverage of the type described in subparagraphs (B) through (H) of paragraph (4) shall provide for disclosure, in a form, manner, and time consistent with standards established by the Secretary, to the Secretary and part D eligible individuals of whether the coverage meets the requirement of paragraph (5) or whether such coverage is changed so it no longer meets such requirement.
(ii) Disclosure of non-creditable coverage
In the case of such coverage that does not meet such requirement, the disclosure to part D eligible individuals under this subparagraph shall include information regarding the fact that because such coverage does not meet such requirement there are limitations on the periods in a year in which the individuals may enroll under a prescription drug plan or an MA–PD plan and that any such enrollment is subject to a late enrollment penalty under this subsection.
(C) Waiver of requirement
In the case of a part D eligible individual who was enrolled in prescription drug coverage of the type described in subparagraphs (B) through (H) of paragraph (4) which is not creditable prescription drug coverage because it does not meet the requirement of paragraph (5), the individual may apply to the Secretary to have such coverage treated as creditable prescription drug coverage if the individual establishes that the individual was not adequately informed that such coverage did not meet such requirement.
(7) Continuous period of eligibility
(A) In general
Subject to subparagraph (B), for purposes of this subsection, the term "continuous period of eligibility" means, with respect to a part D eligible individual, the period that begins with the first day on which the individual is eligible to enroll in a prescription drug plan under this part and ends with the individual's death.
(B) Separate period
Any period during all of which a part D eligible individual is entitled to hospital insurance benefits under part A and—
(i) which terminated in or before the month preceding the month in which the individual attained age 65; or
(ii) for which the basis for eligibility for such entitlement changed between
shall be a separate continuous period of eligibility with respect to the individual (and each such period which terminates shall be deemed not to have existed for purposes of subsequently applying this paragraph).
(8) Waiver of penalty for subsidy-eligible individuals
In no case shall a part D eligible individual who is determined to be a subsidy eligible individual (as defined in
(c) Collection of monthly beneficiary premiums
(1) In general
Subject to paragraphs (2), (3), and (4), the provisions of
(2) Crediting of late enrollment penalty
(A) Portion attributable to increased actuarial costs
With respect to late enrollment penalties imposed under subsection (b), the Secretary shall specify the portion of such a penalty that the Secretary estimates is attributable to increased actuarial costs assumed by the PDP sponsor or MA organization (and not taken into account through risk adjustment provided under
(B) Collection through withholding
In the case of a late enrollment penalty that is collected from a part D eligible individual in the manner described in
(C) Collection by plan
In the case of a late enrollment penalty that is collected from a part D eligible individual in a manner other than the manner described in
(3) Fallback plans
In applying this subsection in the case of a fallback prescription drug plan, paragraph (2) shall not apply and the monthly beneficiary premium shall be collected in the manner specified in
(4) Collection of monthly adjustment amount
(A) In general
Notwithstanding any provision of this subsection or
(B) Agreements
In the case where the monthly benefit payments of an individual that are withheld under subparagraph (A) are insufficient to pay the amount described in such subparagraph, the Commissioner of Social Security shall enter into agreements with the Secretary, the Director of the Office of Personnel Management, and the Railroad Retirement Board as necessary in order to allow other agencies to collect the amount described in subparagraph (A) that was not withheld under such subparagraph.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–13, as added
Editorial Notes
Amendments
2022—Subsec. (a)(1)(A).
Subsec. (a)(2).
Subsec. (a)(3)(A).
Subsec. (a)(7)(B)(i).
Subsec. (a)(7)(B)(ii).
Subsec. (a)(7)(E)(i).
Subsec. (a)(8).
Subsec. (a)(9).
Subsec. (b)(3)(A)(ii).
2010—Subsec. (a)(1)(F), (G).
Subsec. (a)(7).
Subsec. (c)(1).
Subsec. (c)(4).
2008—Subsec. (b)(8).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
1 So in original. The word "of" probably should appear after "product".
2 So in original. Probably should be "section 426(b)".
§1395w–114. Premium and cost-sharing subsidies for low-income individuals
(a) Income-related subsidies for certain individuals
(1) Individuals with certain low incomes
In the case of a subsidy eligible individual (as defined in paragraph (3)) who is determined to have income that is below 135 percent (or, with respect to a plan year beginning on or after January 1, 2024, 150 percent) of the poverty line applicable to a family of the size involved and who meets the resources requirement described in paragraph (3)(D) (or, with respect to a plan year beginning on or after January 1, 2024, paragraph (3)(E)) or who is covered under this paragraph under paragraph (3)(B)(i), the individual is entitled under this section to the following:
(A) Full premium subsidy
An income-related premium subsidy equal to 100 percent of the amount described in subsection (b)(1), but not to exceed the premium amount specified in subsection (b)(2)(B).
(B) Elimination of deductible
A reduction in the annual deductible applicable under
(C) Continuation of coverage above the initial coverage limit
For a year preceding 2025, the continuation of coverage from the initial coverage limit (under paragraph (3) of
(D) Reduction in cost-sharing below out-of-pocket threshold
(i) Institutionalized individuals
In the case of an individual who is a full-benefit dual eligible individual and who is an institutionalized individual or couple (as defined in
(ii) Lowest income dual eligible individuals
Subject to paragraph (6), in the case of an individual not described in clause (i) who is a full-benefit dual eligible individual and whose income does not exceed 100 percent of the poverty line applicable to a family of the size involved, the substitution for the beneficiary coinsurance described in
(iii) Other individuals
Subject to paragraph (6), in the case of an individual not described in clause (i) or (ii), the substitution for the beneficiary coinsurance described in
(E) Elimination of cost-sharing above annual out-of-pocket threshold
For a year preceding 2024, the elimination of any cost-sharing imposed under
(2) Other low-income individuals
With respect to a plan year beginning before January 1, 2024, in the case of a subsidy eligible individual who is not described in paragraph (1), the individual is entitled under this section to the following:
(A) Sliding scale premium subsidy
An income-related premium subsidy determined on a linear sliding scale ranging from 100 percent of the amount described in paragraph (1)(A) for individuals with incomes at or below 135 percent of such level to 0 percent of such amount for individuals with incomes at 150 percent of such level.
(B) Reduction of deductible
Subject to paragraphs (8) and (9) of
(C) Continuation of coverage above the initial coverage limit
The continuation of coverage from the initial coverage limit (under paragraph (3) of
(D) Reduction in cost-sharing below out-of-pocket threshold
Subject to paragraph (6), the substitution for the beneficiary coinsurance described in
(E) Reduction of cost-sharing above annual out-of-pocket threshold
Subject to paragraph (6) of this subsection and subsection (c), the substitution for the cost-sharing imposed under
(3) Determination of eligibility
(A) Subsidy eligible individual defined
For purposes of this part, subject to subparagraph (F), the term "subsidy eligible individual" means a part D eligible individual who—
(i) is enrolled in a prescription drug plan or MA–PD plan;
(ii) has income below 150 percent of the poverty line applicable to a family of the size involved; and
(iii) meets the resources requirement described in subparagraph (D) or (E).
(B) Determinations
(i) In general
The determination of whether a part D eligible individual residing in a State is a subsidy eligible individual and whether the individual is described in paragraph (1) shall be determined under the State plan under subchapter XIX for the State under
(ii) Effective period
Determinations under this subparagraph shall be effective beginning with the month in which the individual applies for a determination that the individual is a subsidy eligible individual and shall remain in effect for a period specified by the Secretary, but not to exceed 1 year.
(iii) Redeterminations and appeals through medicaid
Redeterminations and appeals, with respect to eligibility determinations under clause (i) made under a State plan under subchapter XIX, shall be made in accordance with the frequency of, and manner in which, redeterminations and appeals of eligibility are made under such plan for purposes of medical assistance under such subchapter.
(iv) Redeterminations and appeals through Commissioner
With respect to eligibility determinations under clause (i) made by the Commissioner of Social Security—
(I) redeterminations shall be made at such time or times as may be provided by the Commissioner;
(II) the Commissioner shall establish procedures for appeals of such determinations that are similar to the procedures described in the third sentence of
(III) judicial review of the final decision of the Commissioner made after a hearing shall be available to the same extent, and with the same limitations, as provided in subsections (g) and (h) of
(v) Treatment of medicaid beneficiaries
Subject to subparagraph (F), the Secretary—
(I) shall provide that part D eligible individuals who are full-benefit dual eligible individuals (as defined in
(II) may provide that part D eligible individuals not described in subclause (I) who are determined for purposes of the State plan under subchapter XIX to be eligible for medical assistance under clause (i), (iii), or (iv) of
Insofar as the Secretary determines that the eligibility requirements under the State plan for medical assistance referred to in subclause (II) are substantially the same as the requirements for being treated as a subsidy eligible individual described in paragraph (1), the Secretary shall provide for the treatment described in such subclause.
(vi) Special rule for widows and widowers
Notwithstanding the preceding provisions of this subparagraph, in the case of an individual whose spouse dies during the effective period for a determination or redetermination that has been made under this subparagraph, such effective period shall be extended through the date that is 1 year after the date on which the determination or redetermination would (but for the application of this clause) otherwise cease to be effective.
(C) Income determinations
For purposes of applying this section—
(i) in the case of a part D eligible individual who is not treated as a subsidy eligible individual under subparagraph (B)(v), income shall be determined in the manner described in
(ii) the term "poverty line" has the meaning given such term in
Nothing in clause (i) shall be construed to affect the application of
(D) Resource standard applied to full low-income subsidy to be based on three times SSI resource standard
The resources requirement of this subparagraph is that an individual's resources (as determined under
(i) for 2006 three times the maximum amount of resources that an individual may have and obtain benefits under that program; and
(ii) for a subsequent year the resource limitation established under this clause for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any resource limitation established under clause (ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(E) Alternative resource standard
(i) In general
The resources requirement of this subparagraph is that an individual's resources (as determined under
(I) for 2006, $10,000 (or $20,000 in the case of the combined value of the individual's assets or resources and the assets or resources of the individual's spouse); and
(II) for a subsequent year the dollar amounts specified in this subclause (or subclause (I)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any dollar amount established under subclause (II) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(ii) Use of simplified application form and process
The Secretary, jointly with the Commissioner of Social Security, shall—
(I) develop a model, simplified application form and process consistent with clause (iii) for the determination and verification of a part D eligible individual's assets or resources under this subparagraph; and
(II) provide such form to States.
(iii) Documentation and safeguards
Under such process—
(I) the application form shall consist of an attestation under penalty of perjury regarding the level of assets or resources (or combined assets and resources in the case of a married part D eligible individual) and valuations of general classes of assets or resources;
(II) such form shall be accompanied by copies of recent statements (if any) from financial institutions in support of the application; and
(III) matters attested to in the application shall be subject to appropriate methods of verification.
(iv) Methodology flexibility
The Secretary may permit a State in making eligibility determinations for premium and cost-sharing subsidies under this section to use the same asset or resource methodologies that are used with respect to eligibility for medical assistance for medicare cost-sharing described in
(F) Treatment of territorial residents
In the case of a part D eligible individual who is not a resident of the 50 States or the District of Columbia, the individual is not eligible to be a subsidy eligible individual under this section but may be eligible for financial assistance with prescription drug expenses under
(G) Life insurance policy exclusion
In determining the resources of an individual (and the eligible spouse of the individual, if any) under
(4) Indexing dollar amounts
(A) Copayment for lowest income dual eligible individuals
The dollar amounts applied under paragraph (1)(D)(ii)—
(i) for 2007 shall be the dollar amounts specified in such paragraph increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year; or
(ii) for a subsequent year shall be the dollar amounts specified in this clause (or clause (i)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any amount established under clause (i) or (ii), that is based on an increase of $1 or $3, that is not a multiple of 5 cents or 10 cents, respectively, shall be rounded to the nearest multiple of 5 cents or 10 cents, respectively.
(B) Reduced deductible
The dollar amount applied under paragraph (2)(B)—
(i) for 2007 shall be the dollar amount specified in such paragraph increased by the annual percentage increase described in
(ii) for a subsequent year shall be the dollar amount specified in this clause (or clause (i)) for the previous year increased by the annual percentage increase described in
Any amount established under clause (i) or (ii) that is not a multiple of $1 shall be rounded to the nearest multiple of $1.
(5) Waiver of de minimis premiums
The Secretary shall, under procedures established by the Secretary, permit a prescription drug plan or an MA–PD plan to waive the monthly beneficiary premium for a subsidy eligible individual if the amount of such premium is de minimis. If such premium is waived under the plan, the Secretary shall not reassign subsidy eligible individuals enrolled in the plan to other plans based on the fact that the monthly beneficiary premium under the plan was greater than the low-income benchmark premium amount.
(6) No application of cost-sharing or deductible for adult vaccines recommended by the Advisory Committee on Immunization Practices
For plan years beginning on or after January 1, 2023, with respect to an adult vaccine recommended by the Advisory Committee on Immunization Practices (as defined in
(A) the deductible under
(B) there shall be no cost-sharing under this section with respect to such vaccine.
(b) Premium subsidy amount
(1) In general
The premium subsidy amount described in this subsection for a subsidy eligible individual residing in a PDP region and enrolled in a prescription drug plan or MA–PD plan is the low-income benchmark premium amount (as defined in paragraph (2)) for the PDP region in which the individual resides or, if greater, the amount specified in paragraph (3).
(2) Low-income benchmark premium amount defined
(A) In general
For purposes of this subsection, the term "low-income benchmark premium amount" means, with respect to a PDP region in which—
(i) all prescription drug plans are offered by the same PDP sponsor, the weighted average of the amounts described in subparagraph (B)(i) for such plans; or
(ii) there are prescription drug plans offered by more than one PDP sponsor, the weighted average of amounts described in subparagraph (B) for prescription drug plans and MA–PD plans described in
(B) Premium amounts described
The premium amounts described in this subparagraph are, in the case of—
(i) a prescription drug plan that is a basic prescription drug plan, the monthly beneficiary premium for such plan;
(ii) a prescription drug plan that provides alternative prescription drug coverage the actuarial value of which is greater than that of standard prescription drug coverage, the portion of the monthly beneficiary premium that is attributable to basic prescription drug coverage; and
(iii) an MA–PD plan, the portion of the MA monthly prescription drug beneficiary premium that is attributable to basic prescription drug benefits (described in section 1395w–22(a)(6)(B)(ii) 1 of this title) and determined before the application of the monthly rebate computed under
The premium amounts described in this subparagraph do not include any amounts attributable to late enrollment penalties under
(3) Access to 0 premium plan
In no case shall the premium subsidy amount under this subsection for a PDP region be less than the lowest monthly beneficiary premium for a prescription drug plan that offers basic prescription drug coverage in the region.
(c) Administration of subsidy program
(1) In general
The Secretary shall provide a process whereby, in the case of a part D eligible individual who is determined to be a subsidy eligible individual and who is enrolled in a prescription drug plan or is enrolled in an MA–PD plan—
(A) the Secretary provides for a notification of the PDP sponsor or the MA organization offering the plan involved that the individual is eligible for a subsidy and the amount of the subsidy under subsection (a);
(B) the sponsor or organization involved reduces the premiums or cost-sharing otherwise imposed by the amount of the applicable subsidy and submits to the Secretary information on the amount of such reduction;
(C) the Secretary periodically and on a timely basis reimburses the sponsor or organization for the amount of such reductions; and
(D) the Secretary ensures the confidentiality of individually identifiable information.
In applying subparagraph (C), the Secretary shall compute reductions based upon imposition under subsections (a)(1)(D) and (a)(2)(E) of unreduced copayment amounts applied under such subsections.
(2) Use of capitated form of payment
The reimbursement under this section with respect to cost-sharing subsidies may be computed on a capitated basis, taking into account the actuarial value of the subsidies and with appropriate adjustments to reflect differences in the risks actually involved.
(d) Facilitation of reassignments
Beginning not later than January 1, 2011, the Secretary shall, in the case of a subsidy eligible individual who is enrolled in one prescription drug plan and is subsequently reassigned by the Secretary to a new prescription drug plan, provide the individual, within 30 days of such reassignment, with—
(1) information on formulary differences between the individual's former plan and the plan to which the individual is reassigned with respect to the individual's drug regimens; and
(2) a description of the individual's right to request a coverage determination, exception, or reconsideration under
(e) Limited income newly eligible transition program
(1) In general
Beginning not later than January 1, 2024, the Secretary shall carry out a program to provide transitional coverage for covered part D drugs for LI NET eligible individuals in accordance with this subsection.
(2) LI NET eligible individual defined
For purposes of this subsection, the term "LI NET eligible individual" means a part D eligible individual who—
(A) meets the requirements of clauses (ii) and (iii) of subsection (a)(3)(A); and
(B) has not yet enrolled in a prescription drug plan or an MA–PD plan, or, who has so enrolled, but with respect to whom coverage under such plan has not yet taken effect.
(3) Transitional coverage
For purposes of this subsection, the term "transitional coverage" means with respect to an LI NET eligible individual—
(A) immediate access to covered part D drugs at the point of sale during the period that begins on the first day of the month such individual is determined to meet the requirements of clauses (ii) and (iii) of subsection (a)(3)(A) and ends on the date that coverage under a prescription drug plan or MA–PD plan takes effect with respect to such individual; and
(B) in the case of an LI NET eligible individual who is a full-benefit dual eligible individual (as defined in
(i) the date that such individual was first eligible for a low-income subsidy under this part; or
(ii) the date that is 36 months prior to the date such individual enrolls in a prescription drug plan or MA–PD plan,
and ends on the date that coverage under such plan takes effect.
(4) Program administration
(A) Point of contact
The Secretary shall, as determined appropriate by the Secretary, administer the program under this subsection through a contract with a single program administrator.
(B) Benefit design
The Secretary shall ensure that the transitional coverage provided to LI NET eligible individuals under this subsection—
(i) provides access to all covered part D drugs under an open formulary;
(ii) permits all pharmacies determined by the Secretary to be in good standing to process claims under the program;
(iii) is consistent with such requirements as the Secretary considers necessary to improve patient safety and ensure appropriate dispensing of medication; and
(iv) meets such other requirements as the Secretary may establish.
(5) Relationship to other provisions of this subchapter; waiver authority
(A) In general
The following provisions shall not apply with respect to the program under this subsection:
(i) Paragraphs (1) and (3)(B) of
(ii) Subparagraphs (A) and (B) of
(iii) Paragraphs (1)(C) and (2) of
(B) Waiver authority
The Secretary may waive such other requirements of subchapter XI and this subchapter as may be necessary to carry out the purposes of the program established under this subsection.
(6) Contracting authority
The authority vested in the Secretary by this subsection may be performed without regard to such provisions of law or regulations relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the furtherance of the purpose of this subchapter.
(f) Relation to medicaid program
For special provisions under the medicaid program relating to medicare prescription drug benefits, see
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14, as added
Editorial Notes
Amendments
2022—Subsec. (a).
Subsec. (a)(1).
Subsec. (a)(1)(C).
Subsec. (a)(1)(D)(ii).
Subsec. (a)(1)(D)(iii).
Subsec. (a)(1)(E).
Subsec. (a)(2).
Subsec. (a)(2)(B).
Subsec. (a)(2)(D).
Subsec. (a)(2)(E).
Subsec. (a)(6).
2020—Subsecs. (e), (f).
2010—Subsec. (a)(1)(D)(i).
Subsec. (a)(3)(B)(vi).
Subsec. (a)(5).
Subsec. (b)(2)(B)(iii).
Subsecs. (d), (e).
2008—Subsec. (a)(1)(A).
"(i) 100 percent of the amount described in subsection (b)(1) of this section, but not to exceed the premium amount specified in subsection (b)(2)(B) of this section; plus
"(ii) 80 percent of any late enrollment penalties imposed under
Subsec. (a)(3)(B)(iv)(III).
Subsec. (a)(3)(C)(i).
Subsec. (a)(3)(D), (E)(i).
Subsec. (a)(3)(G).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by section 3303(a) of
Effective Date of 2008 Amendment
Amendment by section 114(a)(2) of
Construction of 2022 Amendment
Nothing in amendment by section 11401(b) of
GAO Study Regarding Impact of Assets Test for Subsidy Eligible Individuals
"(1)
"(2)
1 So in original.
§1395w–114a. Medicare coverage gap discount program
(a) Establishment
Subject to subsection (h), the Secretary shall establish a Medicare coverage gap discount program (in this section referred to as the "program") by not later than January 1, 2011. Under the program, the Secretary shall enter into agreements described in subsection (b) with manufacturers and provide for the performance of the duties described in subsection (c)(1). The Secretary shall establish a model agreement for use under the program by not later than 180 days after March 23, 2010, in consultation with manufacturers, and allow for comment on such model agreement.
(b) Terms of agreement
(1) In general
(A) Agreement
An agreement under this section shall require the manufacturer to provide applicable beneficiaries access to discounted prices for applicable drugs of the manufacturer.
(B) Provision of discounted prices at the point-of-sale
Except as provided in subsection (c)(1)(A)(iii), such discounted prices shall be provided to the applicable beneficiary at the pharmacy or by the mail order service at the point-of-sale of an applicable drug.
(C) Timing of agreement
(i) Special rule for 2011
In order for an agreement with a manufacturer to be in effect under this section with respect to the period beginning on January 1, 2011, and ending on December 31, 2011, the manufacturer shall enter into such agreement not later than not later than 1 30 days after the date of the establishment of a model agreement under subsection (a).
(ii) 2012 and subsequent years
In order for an agreement with a manufacturer to be in effect under this section with respect to plan year 2012 or a subsequent plan year, the manufacturer shall enter into such agreement (or such agreement shall be renewed under paragraph (4)(A)) not later than January 30 of the preceding year.
(2) Provision of appropriate data
Each manufacturer with an agreement in effect under this section shall collect and have available appropriate data, as determined by the Secretary, to ensure that it can demonstrate to the Secretary compliance with the requirements under the program.
(3) Compliance with requirements for administration of program
Each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the Secretary or a third party with a contract under subsection (d)(3), as applicable, for purposes of administering the program, including any determination under clause (i) of subsection (c)(1)(A) or procedures established under such subsection (c)(1)(A).
(4) Length of agreement
(A) In general
An agreement under this section shall be effective for an initial period of not less than 18 months and shall be automatically renewed for a period of not less than 1 year unless terminated under subparagraph (B).
(B) Termination
(i) By the Secretary
The Secretary may provide for termination of an agreement under this section for a knowing and willful violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 30 days after the date of notice to the manufacturer of such termination. The Secretary shall provide, upon request, a manufacturer with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the Secretary determines appropriate.
(ii) By a manufacturer
A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—
(I) if the termination occurs before January 30 of a plan year, as of the day after the end of the plan year; and
(II) if the termination occurs on or after January 30 of a plan year, as of the day after the end of the succeeding plan year.
(iii) Effectiveness of termination
Any termination under this subparagraph shall not affect discounts for applicable drugs of the manufacturer that are due under the agreement before the effective date of its termination.
(iv) Notice to third party
The Secretary shall provide notice of such termination to a third party with a contract under subsection (d)(3) within not less than 30 days before the effective date of such termination.
(c) Duties described and special rule for supplemental benefits
(1) Duties described
The duties described in this subsection are the following:
(A) Administration of program
Administering the program, including—
(i) the determination of the amount of the discounted price of an applicable drug of a manufacturer;
(ii) except as provided in clause (iii), the establishment of procedures under which discounted prices are provided to applicable beneficiaries at pharmacies or by mail order service at the point-of-sale of an applicable drug;
(iii) in the case where, during the period beginning on January 1, 2011, and ending on December 31, 2011, it is not practicable to provide such discounted prices at the point-of-sale (as described in clause (ii)), the establishment of procedures to provide such discounted prices as soon as practicable after the point-of-sale;
(iv) the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—
(I) the negotiated price of the applicable drug; and
(II) the discounted price of the applicable drug;
(v) the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as the Secretary may specify;
(vi) the establishment of procedures to implement the special rule for supplemental benefits under paragraph (2); and
(vii) providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, applicable beneficiaries, and the third party with a contract under subsection (d)(3).
(B) Monitoring compliance
(i) In general
The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.
(ii) Notification
If a third party with a contract under subsection (d)(3) determines that the manufacturer is not in compliance with such agreement, the third party shall notify the Secretary of such noncompliance for appropriate enforcement under subsection (e).
(C) Collection of data from prescription drug plans and MA–PD plans
The Secretary may collect appropriate data from prescription drug plans and MA–PD plans in a timeframe that allows for discounted prices to be provided for applicable drugs under this section.
(2) Special rule for supplemental benefits
For plan year 2011 and each subsequent plan year, in the case where an applicable beneficiary has supplemental benefits with respect to applicable drugs under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in, the applicable beneficiary shall not be provided a discounted price for an applicable drug under this section until after such supplemental benefits have been applied with respect to the applicable drug.
(d) Administration
(1) In general
Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c)(1).
(2) Limitation
(A) In general
Subject to subparagraph (B), in providing for such implementation, the Secretary shall not receive or distribute any funds of a manufacturer under the program.
(B) Exception
The limitation under subparagraph (A) shall not apply to the Secretary with respect to drugs dispensed during the period beginning on January 1, 2011, and ending on December 31, 2011, but only if the Secretary determines that the exception to such limitation under this subparagraph is necessary in order for the Secretary to begin implementation of this section and provide applicable beneficiaries timely access to discounted prices during such period.
(3) Contract with third parties
The Secretary shall enter into a contract with 1 or more third parties to administer the requirements established by the Secretary in order to carry out this section. At a minimum, the contract with a third party under the preceding sentence shall require that the third party—
(A) receive and transmit information between the Secretary, manufacturers, and other individuals or entities the Secretary determines appropriate;
(B) receive, distribute, or facilitate the distribution of funds of manufacturers to appropriate individuals or entities in order to meet the obligations of manufacturers under agreements under this section;
(C) provide adequate and timely information to manufacturers, consistent with the agreement with the manufacturer under this section, as necessary for the manufacturer to fulfill its obligations under this section; and
(D) permit manufacturers to conduct periodic audits, directly or through contracts, of the data and information used by the third party to determine discounts for applicable drugs of the manufacturer under the program.
(4) Performance requirements
The Secretary shall establish performance requirements for a third party with a contract under paragraph (3) and safeguards to protect the independence and integrity of the activities carried out by the third party under the program under this section.
(5) Implementation
The Secretary may implement the program under this section by program instruction or otherwise.
(6) Administration
(e) Enforcement
(1) Audits
Each manufacturer with an agreement in effect under this section shall be subject to periodic audit by the Secretary.
(2) Civil money penalty
(A) In general
The Secretary shall impose a civil money penalty on a manufacturer that fails to provide applicable beneficiaries discounts for applicable drugs of the manufacturer in accordance with such agreement for each such failure in an amount the Secretary determines is commensurate with the sum of—
(i) the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and
(ii) 25 percent of such amount.
(B) Application
The provisions of
(f) Clarification regarding availability of other covered part D drugs
Nothing in this section shall prevent an applicable beneficiary from purchasing a covered part D drug that is not an applicable drug (including a generic drug or a drug that is not on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in).
(g) Definitions
In this section:
(1) Applicable beneficiary
The term "applicable beneficiary" means an individual who, on the date of dispensing a covered part D drug—
(A) is enrolled in a prescription drug plan or an MA–PD plan;
(B) is not enrolled in a qualified retiree prescription drug plan;
(C) is not entitled to an income-related subsidy under
(D) who—
(i) has reached or exceeded the initial coverage limit under
(ii) has not incurred costs for covered part D drugs in the year equal to the annual out-of-pocket threshold specified in
(2) Applicable drug
The term "applicable drug" means, with respect to an applicable beneficiary, a covered part D drug—
(A) approved under a new drug application under
(B)(i) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;
(ii) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or
(iii) is provided through an exception or appeal.
(3) Applicable number of calendar days
The term "applicable number of calendar days" means—
(A) with respect to claims for reimbursement submitted electronically, 14 days; and
(B) with respect to claims for reimbursement submitted otherwise, 30 days.
(4) Discounted price
(A) In general
The term "discounted price" means 50 percent (or, with respect to a plan year after plan year 2018, 30 percent) of the negotiated price of the applicable drug of a manufacturer.
(B) Clarification
Nothing in this section shall be construed as affecting the responsibility of an applicable beneficiary for payment of a dispensing fee for an applicable drug.
(C) Special case for certain claims
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall at or above the initial coverage limit under
(5) Manufacturer
The term "manufacturer" means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.
(6) Negotiated price
The term "negotiated price" has the meaning given such term in section 423.100 of title 42, Code of Federal Regulations (as in effect on March 23, 2010), except that such negotiated price shall not include any dispensing fee for the applicable drug.
(7) Qualified retiree prescription drug plan
The term "qualified retiree prescription drug plan" has the meaning given such term in
(h) Sunset of program
(1) In general
The program shall not apply with respect to applicable drugs dispensed on or after January 1, 2025, and, subject to paragraph (2), agreements under this section shall be terminated as of such date.
(2) Continued application for applicable drugs dispensed prior to sunset
The provisions of this section (including all responsibilities and duties) shall continue to apply on and after January 1, 2025, with respect to applicable drugs dispensed prior to such date.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14A, as added
Editorial Notes
Amendments
2022—Subsec. (a).
Subsec. (h).
2018—Subsec. (g)(2)(A).
Subsec. (g)(4)(A).
2010—Subsec. (a).
Subsec. (b)(1)(C)(i).
Subsec. (c)(1)(A)(iii).
Subsec. (c)(2).
Subsec. (d)(2)(B).
Subsec. (g)(1).
Subsec. (g)(1)(C) to (E).
1 So in original. Second "not later than" probably should not appear.
§1395w–114b. Manufacturer rebate for certain drugs with prices increasing faster than inflation
(a) Requirements
(1) Secretarial provision of information
Not later than 9 months after the end of each applicable period (as defined in subsection (g)(7)), subject to paragraph (3), the Secretary shall, for each part D rebatable drug, report to each manufacturer of such part D rebatable drug the following for such period:
(A) The amount (if any) of the excess annual manufacturer price increase described in subsection (b)(1)(A)(ii) for each dosage form and strength with respect to such drug and period.
(B) The rebate amount specified under subsection (b) for each dosage form and strength with respect to such drug and period.
(2) Manufacturer requirements
For each applicable period, the manufacturer of a part D rebatable drug, for each dosage form and strength with respect to such drug, not later than 30 days after the date of receipt from the Secretary of the information described in paragraph (1) for such period, shall provide to the Secretary a rebate that is equal to the amount specified in subsection (b) for such dosage form and strength with respect to such drug for such period.
(3) Transition rule for reporting
The Secretary may, for each rebatable covered part D drug, delay the timeframe for reporting the information and rebate amount described in subparagraphs (A) and (B) of such paragraph for the applicable periods beginning October 1, 2022, and October 1, 2023, until not later than December 31, 2025.
(b) Rebate amount
(1) In general
(A) Calculation
For purposes of this section, the amount specified in this subsection for a dosage form and strength with respect to a part D rebatable drug and applicable period is, subject to subparagraph (C), paragraph (5)(B), and paragraph (6), the estimated amount equal to the product of—
(i) subject to subparagraph (B) of this paragraph, the total number of units of such dosage form and strength for each rebatable covered part D drug dispensed under this part during the applicable period; and
(ii) the amount (if any) by which—
(I) the annual manufacturer price (as determined in paragraph (2)) paid for such dosage form and strength with respect to such part D rebatable drug for the period; exceeds
(II) the inflation-adjusted payment amount determined under paragraph (3) for such dosage form and strength with respect to such part D rebatable drug for the period.
(B) Excluded units
For purposes of subparagraph (A)(i), beginning with plan year 2026, the Secretary shall exclude from the total number of units for a dosage form and strength with respect to a part D rebatable drug, with respect to an applicable period, units of each dosage form and strength of such part D rebatable drug for which the manufacturer provides a discount under the program under
(C) Reduction or waiver for shortages and severe supply chain disruptions
The Secretary shall reduce or waive the amount under subparagraph (A) with respect to a part D rebatable drug and an applicable period—
(i) in the case of a part D rebatable drug that is described as currently in shortage on the shortage list in effect under
(ii) in the case of a generic part D rebatable drug (described in subsection (g)(1)(C)(ii)) or a biosimilar (defined as a biological product licensed under
(iii) in the case of a generic Part 1 D rebatable drug (as so described), if the Secretary determines that without such reduction or waiver, the drug is likely to be described as in shortage on such shortage list during a subsequent applicable period.
(2) Determination of annual manufacturer price
The annual manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—
(A) the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of such period; and
(B) the ratio of—
(i) the total number of units of such dosage form and strength reported under
(ii) the total number of units of such dosage form and strength reported under
(3) Determination of inflation-adjusted payment amount
The inflation-adjusted payment amount determined under this paragraph for a dosage form and strength with respect to a part D rebatable drug for an applicable period, subject to paragraph (5), is—
(A) the benchmark period manufacturer price determined under paragraph (4) for such dosage form and strength with respect to such drug and period; increased by
(B) the percentage by which the applicable period CPI–U (as defined in subsection (g)(5)) for the period exceeds the benchmark period CPI–U (as defined in subsection (g)(4)).
(4) Determination of benchmark period manufacturer price
The benchmark period manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—
(A) the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of the payment amount benchmark period (as defined in subsection (g)(3)); and
(B) the ratio of—
(i) the total number of units reported under
(ii) the total number of units reported under
(5) Special treatment of certain drugs and exemption
(A) Subsequently approved drugs
In the case of a part D rebatable drug first approved or licensed by the Food and Drug Administration after October 1, 2021, subparagraphs (A) and (B) of paragraph (4) shall be applied as if the term "payment amount benchmark period" were defined under subsection (g)(3) as the first calendar year beginning after the day on which the drug was first marketed and subparagraph (B) of paragraph (3) shall be applied as if the term "benchmark period CPI–U" were defined under subsection (g)(4) as if the reference to "January 2021" under such subsection were a reference to "January of the first year beginning after the date on which the drug was first marketed".
(B) Treatment of new formulations
(i) In general
In the case of a part D rebatable drug that is a line extension of a part D rebatable drug that is an oral solid dosage form, the Secretary shall establish a formula for determining the rebate amount under paragraph (1) and the inflation adjusted payment amount under paragraph (3) with respect to such part D rebatable drug and an applicable period, consistent with the formula applied under subsection (c)(2)(C) of
(ii) Line extension defined
In this subparagraph, the term "line extension" means, with respect to a part D rebatable drug, a new formulation of the drug, such as an extended release formulation, but does not include an abuse-deterrent formulation of the drug (as determined by the Secretary), regardless of whether such abuse-deterrent formulation is an extended release formulation.
(C) Selected drugs
In the case of a part D rebatable drug that is a selected drug (as defined in
(6) Reconciliation in case of revised information
The Secretary shall provide for a method and process under which, in the case where a PDP sponsor of a prescription drug plan or an MA organization offering an MA–PD plan submits revisions to the number of units of a rebatable covered part D drug dispensed, the Secretary determines, pursuant to such revisions, adjustments, if any, to the calculation of the amount specified in this subsection for a dosage form and strength with respect to such part D rebatable drug and an applicable period and reconciles any overpayments or underpayments in amounts paid as rebates under this subsection. Any identified underpayment shall be rectified by the manufacturer not later than 30 days after the date of receipt from the Secretary of information on such underpayment.
(c) Rebate deposits
Amounts paid as rebates under subsection (b) shall be deposited into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund established under
(d) Information
For purposes of carrying out this section, the Secretary shall use information submitted by—
(1) manufacturers under
(2) States under
(3) PDP sponsors of prescription drug plans and MA organization offering MA–PD plans under this part.
(e) Civil money penalty
If a manufacturer of a part D rebatable drug has failed to comply with the requirement under subsection (a)(2) with respect to such drug for an applicable period, the manufacturer shall be subject to a civil money penalty in an amount equal to 125 percent of the amount specified in subsection (b) for such drug for such period. The provisions of
(f) Limitation on administrative or judicial review
There shall be no administrative or judicial review of any of the following:
(1) The determination of units under this section.
(2) The determination of whether a drug is a part D rebatable drug under this section.
(3) The calculation of the rebate amount under this section.
(g) Definitions
In this section:
(1) Part D rebatable drug
(A) In general
Except as provided in subparagraph (B), the term "part D rebatable drug" means, with respect to an applicable period, a drug or biological described in subparagraph (C) that is a covered part D drug (as such term is defined under
(B) Exclusion
(i) In general
Such term shall, with respect to an applicable period, not include a drug or biological if the average annual total cost under this part for such period per individual who uses such a drug or biological, as determined by the Secretary, is less than, subject to clause (ii), $100, as determined by the Secretary using the most recent data available or, if data is not available, as estimated by the Secretary.
(ii) Increase
The dollar amount applied under clause (i)—
(I) for the applicable period beginning October 1, 2023, shall be the dollar amount specified under such clause for the applicable period beginning October 1, 2022, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of 2023; and
(II) for a subsequent applicable period, shall be the dollar amount specified in this clause for the previous applicable period, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of the previous period.
Any dollar amount specified under this clause that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(C) Drug or biological described
A drug or biological described in this subparagraph is a drug or biological that, as of the first day of the applicable period involved, is—
(i) a drug approved under a new drug application under
(ii) a drug approved under an abbreviated new drug application under
(I) the reference listed drug approved under
(II) there is no other drug approved under
(III) the manufacturer is not a "first applicant" during the "180-day exclusivity period", as those terms are defined in
(IV) the manufacturer is not a "first approved applicant" for a competitive generic therapy, as that term is defined in
(iii) a biological licensed under
(2) Unit
The term "unit" means, with respect to a part D rebatable drug, the lowest dispensable amount (such as a capsule or tablet, milligram of molecules, or grams) of the part D rebatable drug, as reported under
(3) Payment amount benchmark period
The term "payment amount benchmark period" means the period beginning January 1, 2021, and ending in the month immediately prior to October 1, 2021.
(4) Benchmark period CPI–U
The term "benchmark period CPI–U" means the consumer price index for all urban consumers (United States city average) for January 2021.
(5) Applicable period CPI–U
The term "applicable period CPI–U" means, with respect to an applicable period, the consumer price index for all urban consumers (United States city average) for the first month of such applicable period.
(6) Average manufacturer price
The term "average manufacturer price" has the meaning, with respect to a part D rebatable drug of a manufacturer, given such term in
(7) Applicable period
The term "applicable period" means a 12-month period beginning with October 1 of a year (beginning with October 1, 2022).
(h) Implementation for 2022, 2023, and 2024
The Secretary shall implement this section for 2022, 2023, and 2024 by program instruction or other forms of program guidance.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14B, as added
1 So in original. Probably should not be capitalized.
§1395w–114c. Manufacturer discount program
(a) Establishment
The Secretary shall establish a manufacturer discount program (in this section referred to as the "program"). Under the program, the Secretary shall enter into agreements described in subsection (b) with manufacturers and provide for the performance of the duties described in subsection (c).
(b) Terms of agreement
(1) In general
(A) Agreement
An agreement under this section shall require the manufacturer to provide, in accordance with this section, discounted prices for applicable drugs of the manufacturer that are dispensed to applicable beneficiaries on or after January 1, 2025.
(B) Clarification
Nothing in this section shall be construed as affecting—
(i) the application of a coinsurance of 25 percent of the negotiated price, as applied under paragraph (2)(A) of
(ii) the application of the copayment amount described in paragraph (4)(A) of such section, with respect to costs described in such paragraph.
(C) Timing of agreement
(i) Special rule for 2025
In order for an agreement with a manufacturer to be in effect under this section with respect to the period beginning on January 1, 2025, and ending on December 31, 2025, the manufacturer shall enter into such agreement not later than March 1, 2024.
(ii) 2026 and subsequent years
In order for an agreement with a manufacturer to be in effect under this section with respect to plan year 2026 or a subsequent plan year, the manufacturer shall enter into such agreement not later than a calendar quarter or semi-annual deadline established by the Secretary.
(2) Provision of appropriate data
Each manufacturer with an agreement in effect under this section shall collect and have available appropriate data, as determined by the Secretary, to ensure that it can demonstrate to the Secretary compliance with the requirements under the program.
(3) Compliance with requirements for administration of program
Each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the Secretary, as applicable, for purposes of administering the program, including any determination under subparagraph (A) of subsection (c)(1) or procedures established under such subsection (c)(1).
(4) Length of agreement
(A) In general
An agreement under this section shall be effective for an initial period of not less than 12 months and shall be automatically renewed for a period of not less than 1 year unless terminated under subparagraph (B).
(B) Termination
(i) By the Secretary
The Secretary shall provide for termination of an agreement under this section for a knowing and willful violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 30 days after the date of notice to the manufacturer of such termination. The Secretary shall provide, upon request, a manufacturer with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the Secretary determines appropriate.
(ii) By a manufacturer
A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—
(I) if the termination occurs before January 31 of a plan year, as of the day after the end of the plan year; and
(II) if the termination occurs on or after January 31 of a plan year, as of the day after the end of the succeeding plan year.
(iii) Effectiveness of termination
Any termination under this subparagraph shall not affect discounts for applicable drugs of the manufacturer that are due under the agreement before the effective date of its termination.
(5) Effective date of agreement
An agreement under this section shall take effect at the start of a calendar quarter or another date specified by the Secretary.
(c) Duties described
The duties described in this subsection are the following:
(1) Administration of program
Administering the program, including—
(A) the determination of the amount of the discounted price of an applicable drug of a manufacturer;
(B) the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—
(i) the negotiated price of the applicable drug; and
(ii) the discounted price of the applicable drug;
(C) the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as specified by the Secretary; and
(D) providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, prescription drug plans and MA–PD plans, and the Secretary.
(2) Monitoring compliance
The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.
(3) Collection of data from prescription drug plans and MA–PD plans
The Secretary may collect appropriate data from prescription drug plans and MA–PD plans in a timeframe that allows for discounted prices to be provided for applicable drugs under this section.
(d) Administration
(1) In general
Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c).
(2) Limitation
In providing for the implementation of this section, the Secretary shall not receive or distribute any funds of a manufacturer under the program.
(e) Civil money penalty
(1) In general
A manufacturer that fails to provide discounted prices for applicable drugs of the manufacturer dispensed to applicable beneficiaries in accordance with an agreement in effect under this section shall be subject to a civil money penalty for each such failure in an amount the Secretary determines is equal to the sum of—
(A) the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and
(B) 25 percent of such amount.
(2) Application
The provisions of
(f) Clarification regarding availability of other covered part D drugs
Nothing in this section shall prevent an applicable beneficiary from purchasing a covered part D drug that is not an applicable drug (including a generic drug or a drug that is not on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in).
(g) Definitions
In this section:
(1) Applicable beneficiary
The term "applicable beneficiary" means an individual who, on the date of dispensing a covered part D drug—
(A) is enrolled in a prescription drug plan or an MA–PD plan;
(B) is not enrolled in a qualified retiree prescription drug plan; and
(C) has incurred costs, as determined in accordance with
(2) Applicable drug
The term "applicable drug", with respect to an applicable beneficiary—
(A) means a covered part D drug—
(i) approved under a new drug application under
(ii)(I) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;
(II) if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or
(III) is provided through an exception or appeal; and
(B) does not include a selected drug (as referred to under
(3) Applicable number of calendar days
The term "applicable number of calendar days" means—
(A) with respect to claims for reimbursement submitted electronically, 14 days; and
(B) with respect to claims for reimbursement submitted otherwise, 30 days.
(4) Discounted price
(A) In general
The term "discounted price" means, subject to subparagraphs (B) and (C), with respect to an applicable drug of a manufacturer dispensed during a year to an applicable beneficiary—
(i) who has not incurred costs, as determined in accordance with
(ii) who has incurred such costs, as so determined, in the year that are equal to or exceed such threshold for the year, 80 percent of the negotiated price of such drug.
(B) Phase-in for certain drugs dispensed to LIS beneficiaries
(i) In general
In the case of an applicable drug of a specified manufacturer (as defined in clause (ii)) that is marketed as of August 16, 2022, and dispensed for an applicable beneficiary who is a subsidy eligible individual (as defined in
(ii) Specified manufacturer
(I) In general
In this subparagraph, subject to subclause (II), the term "specified manufacturer" means a manufacturer of an applicable drug for which, in 2021—
(aa) the manufacturer had a coverage gap discount agreement under
(bb) the total expenditures for all of the specified drugs of the manufacturer covered by such agreement or agreements for such year and covered under this part during such year represented less than 1.0 percent of the total expenditures under this part for all covered Part 1 D drugs during such year; and
(cc) the total expenditures for all of the specified drugs of the manufacturer that are single source drugs and biological products for which payment may be made under part B during such year represented less than 1.0 percent of the total expenditures under part B for all drugs or biological products for which payment may be made under such part during such year.
(II) Specified drugs
(aa) In general
For purposes of this clause, the term "specified drug" means, with respect to a specified manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.
(bb) Aggregation rule
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.
(III) Limitation
The term "specified manufacturer" shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025.
(iii) Specified LIS percent
In this subparagraph, the "specified LIS percent" means, with respect to a year—
(I) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has not incurred costs, as determined in accordance with
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent; and
(ee) for 2029 and each subsequent year, 90 percent; and
(II) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has incurred costs, as determined in accordance with
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent;
(ee) for 2029, 90 percent;
(ff) for 2030, 85 percent; and
(gg) for 2031 and each subsequent year, 80 percent.
(C) Phase-in for specified small manufacturers
(i) In general
In the case of an applicable drug of a specified small manufacturer (as defined in clause (ii)) that is marketed as of August 16, 2022, and dispensed for an applicable beneficiary, the term "discounted price" means the specified small manufacturer percent (as defined in clause (iii)) of the negotiated price of the applicable drug of the manufacturer.
(ii) Specified small manufacturer
(I) In general
In this subparagraph, subject to subclause (III), the term "specified small manufacturer" means a manufacturer of an applicable drug for which, in 2021—
(aa) the manufacturer is a specified manufacturer (as defined in subparagraph (B)(ii)); and
(bb) the total expenditures under part D for any one of the specified small manufacturer drugs of the manufacturer that are covered by the agreement or agreements under
(II) Specified small manufacturer drugs
(aa) In general
For purposes of this clause, the term "specified small manufacturer drugs" means, with respect to a specified small manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.
(bb) Aggregation rule
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.
(III) Limitation
The term "specified small manufacturer" shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified small manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025.
(iii) Specified small manufacturer percent
In this subparagraph, the term "specified small manufacturer percent" means, with respect to a year—
(I) for an applicable drug dispensed for an applicable beneficiary who has not incurred costs, as determined in accordance with
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent; and
(ee) for 2029 and each subsequent year, 90 percent; and
(II) for an applicable drug dispensed for an applicable beneficiary who has incurred costs, as determined in accordance with
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent;
(ee) for 2029, 90 percent;
(ff) for 2030, 85 percent; and
(gg) for 2031 and each subsequent year, 80 percent.
(D) Total expenditures
For purposes of this paragraph, the term "total expenditures" includes, in the case of expenditures with respect to part D, the total gross covered prescription drug costs as defined in
(E) Special case for certain claims
(i) Claims spanning deductible
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall above the annual deductible specified in
(ii) Claims spanning out-of-pocket threshold
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall entirely below or entirely above the annual out-of-pocket threshold specified in
(I) in accordance with subparagraph (A)(i) on the portion of the negotiated price of the applicable drug that falls below such threshold; and
(II) in accordance with subparagraph (A)(ii) on the portion of such price of such drug that falls at or above such threshold.
(5) Manufacturer
The term "manufacturer" means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.
(6) Negotiated price
The term "negotiated price" has the meaning given such term for purposes of
(7) Qualified retiree prescription drug plan
The term "qualified retiree prescription drug plan" has the meaning given such term in
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14C, as added
Editorial Notes
References in Text
Section 52 of the Internal Revenue Code of 1986, referred to in subsec. (g)(4)(B)(ii)(II)(bb), (C)(ii)(II)(bb), is classified to
1 So in original. Probably should not be capitalized.
§1395w–114d. Selected drug subsidy program
With respect to covered part D drugs that would be applicable drugs (as defined in
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14D, as added
§1395w–115. Subsidies for part D eligible individuals for qualified prescription drug coverage
(a) Subsidy payment
In order to reduce premium levels applicable to qualified prescription drug coverage for part D eligible individuals consistent with an overall subsidy level of 74.5 percent (or, for each of 2024 through 2029, the percent applicable as a result of the application of
(1) Direct subsidy
A direct subsidy for each part D eligible individual enrolled in a prescription drug plan or MA–PD plan for a month equal to—
(A) the amount of the plan's standardized bid amount (as defined in
(B) the base beneficiary premium (as computed under paragraph (2) or (8) of
(2) Subsidy through reinsurance
The reinsurance payment amount (as defined in subsection (b)).
This section constitutes budget authority in advance of appropriations Acts and represents the obligation of the Secretary to provide for the payment of amounts provided under this section.
(b) Reinsurance payment amount
(1) In general
The reinsurance payment amount under this subsection for a part D eligible individual enrolled in a prescription drug plan or MA–PD plan for a coverage year is an amount equal to—
(A) for a year preceding 2025, 80 percent of the allowable reinsurance costs (as specified in paragraph (2)) attributable to that portion of gross covered prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in
(B) for 2025 and each subsequent year, the sum of—
(i) with respect to applicable drugs (as defined in
(ii) with respect to covered part D drugs that are not applicable drugs (as so defined), an amount equal to 40 percent of such allowable reinsurance costs attributable to that portion of gross covered prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in
(2) Allowable reinsurance costs
(A) In general
Subject to subparagraph (B), for purposes of this section, the term "allowable reinsurance costs" means, with respect to gross covered prescription drug costs under a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization, the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization or by (or on behalf of) an enrollee under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription drug coverage under the plan were basic prescription drug coverage, or, in the case of a plan providing supplemental prescription drug coverage, if such coverage were standard prescription drug coverage.
(B) Inclusion of manufacturer discounts on applicable drugs
For purposes of applying subparagraph (A), the term "allowable reinsurance costs" shall include the portion of the negotiated price (as defined in
(3) Gross covered prescription drug costs
Subject to paragraph (2)(B), for purposes of this section, the term "gross covered prescription drug costs" means, with respect to a part D eligible individual enrolled in a prescription drug plan or MA–PD plan during a coverage year, the costs incurred under the plan, not including administrative costs, but including costs directly related to the dispensing of covered part D drugs during the year and costs relating to the deductible. Such costs shall be determined whether they are paid by the individual or under the plan (or, with respect to 2025 and subsequent years, in the case of an applicable drug, as defined in
(4) Coverage year defined
For purposes of this section, the term "coverage year" means a calendar year in which covered part D drugs are dispensed if the claim for such drugs (and payment on such claim) is made not later than such period after the end of such year as the Secretary specifies.
(c) Adjustments relating to bids
(1) Health status risk adjustment
(A) Establishment of risk adjustors
The Secretary shall establish an appropriate methodology for adjusting the standardized bid amount under subsection (a)(1)(A) to take into account variation in costs for basic prescription drug coverage among prescription drug plans and MA–PD plans based on the differences in actuarial risk of different enrollees being served. Any such risk adjustment shall be designed in a manner so as not to result in a change in the aggregate amounts payable to such plans under subsection (a)(1) and through that portion of the monthly beneficiary prescription drug premiums described in subsection (a)(1)(B) and MA monthly prescription drug beneficiary premiums.
(B) Considerations
In establishing the methodology under subparagraph (A), the Secretary may take into account the similar methodologies used under
(C) Data collection
In order to carry out this paragraph, the Secretary shall require—
(i) PDP sponsors to submit data regarding drug claims that can be linked at the individual level to part A and part B data and such other information as the Secretary determines necessary; and
(ii) MA organizations that offer MA–PD plans to submit data regarding drug claims that can be linked at the individual level to other data that such organizations are required to submit to the Secretary and such other information as the Secretary determines necessary.
(D) Publication
At the time of publication of risk adjustment factors under
(2) Geographic adjustment
(A) In general
Subject to subparagraph (B), for purposes of
(B) De minimis rule
If the Secretary determines that the price variations described in subparagraph (A) among PDP regions are de minimis, the Secretary shall not provide for adjustment under this paragraph.
(C) Budget neutral adjustment
Any adjustment under this paragraph shall be applied in a manner so as to not result in a change in the aggregate payments made under this part that would have been made if the Secretary had not applied such adjustment.
(d) Payment methods
(1) In general
Payments under this section shall be based on such a method as the Secretary determines. The Secretary may establish a payment method by which interim payments of amounts under this section are made during a year based on the Secretary's best estimate of amounts that will be payable after obtaining all of the information.
(2) Requirement for provision of information
(A) Requirement
Payments under this section to a PDP sponsor or MA organization are conditioned upon the furnishing to the Secretary, in a form and manner specified by the Secretary, of such information as may be required to carry out this section.
(B) Restriction on use of information
Information disclosed or obtained pursuant to subparagraph (A) may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this section.
(3) Source of payments
Payments under this section shall be made from the Medicare Prescription Drug Account.
(4) Application of enrollee adjustment
The provisions of
(e) Portion of total payments to a sponsor or organization subject to risk (application of risk corridors)
(1) Computation of adjusted allowable risk corridor costs
(A) In general
For purposes of this subsection, the term "adjusted allowable risk corridor costs" means, for a plan for a coverage year (as defined in subsection (b)(4))—
(i) the allowable risk corridor costs (as defined in subparagraph (B)) for the plan for the year, reduced by
(ii) the sum of (I) the total reinsurance payments made under subsection (b) to the sponsor of the plan for the year, and (II) the total subsidy payments made under
(B) Allowable risk corridor costs
For purposes of this subsection, the term "allowable risk corridor costs" means, with respect to a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization, the part of costs (not including administrative costs, but including costs directly related to the dispensing of covered part D drugs during the year) incurred by the sponsor or organization under the plan that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription drug coverage under the plan were basic prescription drug coverage, or, in the case of a plan providing supplemental prescription drug coverage, if such coverage were basic prescription drug coverage taking into account the adjustment under
(2) Adjustment of payment
(A) No adjustment if adjusted allowable risk corridor costs within risk corridor
If the adjusted allowable risk corridor costs (as defined in paragraph (1)) for the plan for the year are at least equal to the first threshold lower limit of the risk corridor (specified in paragraph (3)(A)(i)), but not greater than the first threshold upper limit of the risk corridor (specified in paragraph (3)(A)(iii)) for the plan for the year, then no payment adjustment shall be made under this subsection.
(B) Increase in payment if adjusted allowable risk corridor costs above upper limit of risk corridor
(i) Costs between first and second threshold upper limits
If the adjusted allowable risk corridor costs for the plan for the year are greater than the first threshold upper limit, but not greater than the second threshold upper limit, of the risk corridor for the plan for the year, the Secretary shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to 50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in clause (iii) are met for the year) of the difference between such adjusted allowable risk corridor costs and the first threshold upper limit of the risk corridor.
(ii) Costs above second threshold upper limits
If the adjusted allowable risk corridor costs for the plan for the year are greater than the second threshold upper limit of the risk corridor for the plan for the year, the Secretary shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to the sum of—
(I) 50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in clause (iii) are met for the year) of the difference between the second threshold upper limit and the first threshold upper limit; and
(II) 80 percent of the difference between such adjusted allowable risk corridor costs and the second threshold upper limit of the risk corridor.
(iii) Conditions for application of higher percentage for 2006 and 2007
The conditions described in this clause are met for 2006 or 2007 if the Secretary determines with respect to such year that—
(I) at least 60 percent of prescription drug plans and MA–PD plans to which this subsection applies have adjusted allowable risk corridor costs for the plan for the year that are more than the first threshold upper limit of the risk corridor for the plan for the year; and
(II) such plans represent at least 60 percent of part D eligible individuals enrolled in any prescription drug plan or MA–PD plan.
(C) Reduction in payment if adjusted allowable risk corridor costs below lower limit of risk corridor
(i) Costs between first and second threshold lower limits
If the adjusted allowable risk corridor costs for the plan for the year are less than the first threshold lower limit, but not less than the second threshold lower limit, of the risk corridor for the plan for the year, the Secretary shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to 50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit of the risk corridor and such adjusted allowable risk corridor costs.
(ii) Costs below second threshold lower limit
If the adjusted allowable risk corridor costs for the plan for the year are less the second threshold lower limit of the risk corridor for the plan for the year, the Secretary shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to the sum of—
(I) 50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit and the second threshold lower limit; and
(II) 80 percent of the difference between the second threshold upper limit of the risk corridor and such adjusted allowable risk corridor costs.
(3) Establishment of risk corridors
(A) In general
For each plan year the Secretary shall establish a risk corridor for each prescription drug plan and each MA–PD plan. The risk corridor for a plan for a year shall be equal to a range as follows:
(i) First threshold lower limit
The first threshold lower limit of such corridor shall be equal to—
(I) the target amount described in subparagraph (B) for the plan; minus
(II) an amount equal to the first threshold risk percentage for the plan (as determined under subparagraph (C)(i)) of such target amount.
(ii) Second threshold lower limit
The second threshold lower limit of such corridor shall be equal to—
(I) the target amount described in subparagraph (B) for the plan; minus
(II) an amount equal to the second threshold risk percentage for the plan (as determined under subparagraph (C)(ii)) of such target amount.
(iii) First threshold upper limit
The first threshold upper limit of such corridor shall be equal to the sum of—
(I) such target amount; and
(II) the amount described in clause (i)(II).
(iv) Second threshold upper limit
The second threshold upper limit of such corridor shall be equal to the sum of—
(I) such target amount; and
(II) the amount described in clause (ii)(II).
(B) Target amount described
The target amount described in this paragraph is, with respect to a prescription drug plan or an MA–PD plan in a year, the total amount of payments paid to the PDP sponsor or MA–PD organization for the plan for the year, taking into account amounts paid by the Secretary and enrollees, based upon the standardized bid amount (as defined in
(C) First and second threshold risk percentage defined
(i) First threshold risk percentage
Subject to clause (iii), for purposes of this section, the first threshold risk percentage is—
(I) for 2006 and 2007, and 1 2.5 percent;
(II) for 2008 through 2011, 5 percent; and
(III) for 2012 and subsequent years, a percentage established by the Secretary, but in no case less than 5 percent.
(ii) Second threshold risk percentage
Subject to clause (iii), for purposes of this section, the second threshold risk percentage is—
(I) for 2006 and 2007, 5 percent;
(II) for 2008 through 2011, 10 percent; and
(III) for 2012 and subsequent years, a percentage established by the Secretary that is greater than the percent established for the year under clause (i)(III), but in no case less than 10 percent.
(iii) Reduction of risk percentage to ensure 2 plans in an area
Pursuant to
(4) Plans at risk for entire amount of supplemental prescription drug coverage
A PDP sponsor and MA organization that offers a plan that provides supplemental prescription drug benefits shall be at full financial risk for the provision of such supplemental benefits.
(5) No effect on monthly premium
No adjustment in payments made by reason of this subsection shall affect the monthly beneficiary premium or the MA monthly prescription drug beneficiary premium.
(f) Disclosure of information
(1) In general
Each contract under this part and under part C shall provide that—
(A) the PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan shall provide the Secretary with such information as the Secretary determines is necessary to carry out this section; and
(B) the Secretary shall have the right in accordance with
(2) Restriction on use of information
Information disclosed or obtained pursuant to the provisions of this section may be used—
(A) by officers, employees, and contractors of the Department of Health and Human Services for the purposes of, and to the extent necessary in—
(i) carrying out this section or part E of subchapter XI; and
(ii) conducting oversight, evaluation, and enforcement under this subchapter;
(B) by the Attorney General and the Comptroller General of the United States for the purposes of, and to the extent necessary in, carrying out health oversight activities;
(C) by the Executive Director of the Medicare Payment Advisory Commission for purposes of monitoring, making recommendations for, and analysis of the program under this subchapter and by the Executive Director of the Medicaid and CHIP Payment and Access Commission for purposes of monitoring, making recommendations for, and analysis of the Medicaid program established under subchapter XIX and the Children's Health Insurance Program under subchapter XXI; and
(D) by the Director of the Congressional Budget Office for the purposes of analysis of programs authorized under this chapter, as applicable, and the fulfilment of such Director's duties under the Congressional Budget and Impoundment Control Act of 1974.
(3) Additional restrictions on disclosure of information
(A) In general
The Executive Directors described in paragraph (2)(C) shall not disclose any of the following information disclosed to such Executive Directors or obtained by such Executive Directors pursuant to such paragraph, with respect to a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization:
(i) The specific amounts or the identity of the source of any rebates, discounts, price concessions, or other forms of direct or indirect remuneration under such prescription drug plan or such MA–PD plan.
(ii) Information submitted with the bid submitted under
(iii) In the case of such information from prescription drug event records, information in a form that would not be permitted under section 423.505(m) of title 42, Code of Federal Regulations, or any successor regulation, if released by the Centers for Medicare & Medicaid Services.
(B) Clarification
The restrictions on disclosures described in subparagraph (A) shall also apply to disclosures to individual Commissioners of the Medicare Payment Advisory Commission or of the Medicaid and CHIP Payment and Access Commission.
(g) Payment for fallback prescription drug plans
In lieu of the amounts otherwise payable under this section to a PDP sponsor offering a fallback prescription drug plan (as defined in
(h) Temporary retrospective subsidy for reduction in cost-sharing and deductible for adult vaccines recommended by the Advisory Committee on Immunization Practices and Insulin During 2023
(1) In general
In addition to amounts otherwise payable under this section to a PDP sponsor of a prescription drug plan or an MA organization offering an MA–PD plan, for plan year 2023, the Secretary shall provide the PDP sponsor or MA organization offering the plan subsidies in an amount equal to the aggregate reduction in cost-sharing and deductible by reason of the application of paragraph (8) or (9) of
(2) Timing
The Secretary shall provide a subsidy under paragraph (1), as applicable, not later than 18 months following the end of the applicable plan year.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–15, as added
Editorial Notes
References in Text
This chapter, referred to in subsec. (f)(2)(D), is act Aug. 14, 1935, ch. 531,
The Congressional Budget and Impoundment Control Act of 1974, referred to in subsec. (f)(2)(D), is
Amendments
2022—Subsec. (a).
Subsec. (a)(1)(B).
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (b)(3).
Subsec. (f)(2)(A)(i).
Subsec. (f)(2)(D).
Subsec. (h).
Subsec. (h)(1).
2020—Subsec. (f)(2)(C).
Subsec. (f)(3).
2010—Subsec. (f)(2).
Statutory Notes and Related Subsidiaries
Construction of 2022 Amendment
Nothing in amendment by section 11401(c)(1) of
1 So in original. The word "and" probably should not appear.
2 See References in Text note below.
§1395w–116. Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund
(a) Establishment and operation of Account
(1) Establishment
There is created within the Federal Supplementary Medical Insurance Trust Fund established by
(2) Funding
The Account shall consist of such gifts and bequests as may be made as provided in
(3) Separate from rest of Trust Fund
Funds provided under this part to the Account shall be kept separate from all other funds within the Federal Supplementary Medical Insurance Trust Fund, but shall be invested, and such investments redeemed, in the same manner as all other funds and investments within such Trust Fund.
(b) Payments from Account
(1) In general
The Managing Trustee shall pay from time to time from the Account such amounts as the Secretary certifies are necessary to make payments to operate the program under this part, including—
(A) payments under
(B) payments under
(C) payments to sponsors of qualified retiree prescription drug plans under
(D) payments with respect to administrative expenses under this part in accordance with
(E) payments under
(2) Transfers to Medicaid account for increased administrative costs
The Managing Trustee shall transfer from time to time from the Account to the Grants to States for Medicaid account amounts the Secretary certifies are attributable to increases in payment resulting from the application of
(3) Payments of premiums withheld
The Managing Trustee shall make payment to the PDP sponsor or MA organization involved of the premiums (and the portion of late enrollment penalties) that are collected in the manner described in
(4) Treatment in relation to part B premium
Amounts payable from the Account shall not be taken into account in computing actuarial rates or premium amounts under
(c) Deposits into Account
(1) Low-income transfer
Amounts paid under
(2) Amounts withheld
Pursuant to
(3) Appropriations to cover Government contributions
There are authorized to be appropriated from time to time, out of any moneys in the Treasury not otherwise appropriated, to the Account, an amount equivalent to the amount of payments made from the Account under subsection (b) plus such amounts as the Managing Trustee certifies is necessary to maintain an appropriate contingency margin, reduced by the amounts deposited under paragraph (1) or subsection (a)(2).
(4) Initial funding and reserve
In order to assure prompt payment of benefits provided under this part and the administrative expenses thereunder during the early months of the program established by this part and to provide an initial contingency reserve, there are authorized to be appropriated to the Account, out of any moneys in the Treasury not otherwise appropriated, such amount as the Secretary certifies are required, but not to exceed 10 percent of the estimated total expenditures from such Account in 2006.
(5) Transfer of any remaining balance from Transitional Assistance Account
Any balance in the Transitional Assistance Account that is transferred under
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–16, as added
Editorial Notes
Amendments
2022—Subsec. (b)(1)(E).