Part D—Voluntary Prescription Drug Benefit Program
Prior Provisions
A prior part D of this subchapter, consisting of section 1395x et seq., was redesignated part E of this subchapter.
subpart 1—part d eligible individuals and prescription drug benefits
§1395w–101. Eligibility, enrollment, and information
(a) Provision of qualified prescription drug coverage through enrollment in plans
(1) In general
Subject to the succeeding provisions of this part, each part D eligible individual (as defined in paragraph (3)(A)) is entitled to obtain qualified prescription drug coverage (described in
(A) Fee-for-service enrollees may receive coverage through a prescription drug plan
A part D eligible individual who is not enrolled in an MA plan may obtain qualified prescription drug coverage through enrollment in a prescription drug plan (as defined in
(B) Medicare Advantage enrollees
(i) Enrollees in a plan providing qualified prescription drug coverage receive coverage through the plan
A part D eligible individual who is enrolled in an MA–PD plan obtains such coverage through such plan.
(ii) Limitation on enrollment of MA plan enrollees in prescription drug plans
Except as provided in clauses (iii) and (iv), a part D eligible individual who is enrolled in an MA plan may not enroll in a prescription drug plan under this part.
(iii) Private fee-for-service enrollees in MA plans not providing qualified prescription drug coverage permitted to enroll in a prescription drug plan
A part D eligible individual who is enrolled in an MA private fee-for-service plan (as defined in
(iv) Enrollees in MSA plans permitted to enroll in a prescription drug plan
A part D eligible individual who is enrolled in an MSA plan (as defined in
(2) Coverage first effective January 1, 2006
Coverage under prescription drug plans and MA–PD plans shall first be effective on January 1, 2006.
(3) Definitions
For purposes of this part:
(A) Part D eligible individual
The term "part D eligible individual" means an individual who is entitled to benefits under part A or enrolled under part B.
(B) MA plan
The term "MA plan" has the meaning given such term in
(C) MA–PD plan
The term "MA–PD plan" means an MA plan that provides qualified prescription drug coverage.
(b) Enrollment process for prescription drug plans
(1) Establishment of process
(A) In general
The Secretary shall establish a process for the enrollment, disenrollment, termination, and change of enrollment of part D eligible individuals in prescription drug plans consistent with this subsection.
(B) Application of MA rules
In establishing such process, the Secretary shall use rules similar to (and coordinated with) the rules for enrollment, disenrollment, termination, and change of enrollment with an MA–PD plan under the following provisions of
(i) Residence requirements
(ii) Exercise of choice
(iii) Coverage election periods
Subject to paragraphs (2) and (3) of this subsection,
(iv) Coverage periods
(v) Guaranteed issue and renewal
(vi) Marketing material and application forms
In applying clauses (ii), (iv), and (v) of this subparagraph, any reference to
(C) Special rule
The process established under subparagraph (A) shall include, except as provided in subparagraph (D), in the case of a part D eligible individual who is a full-benefit dual eligible individual (as defined in
(D) Special rule for plans that waive de minimis premiums
The process established under subparagraph (A) may include, in the case of a part D eligible individual who is a subsidy eligible individual (as defined in
(2) Initial enrollment period
(A) Program initiation
In the case of an individual who is a part D eligible individual as of November 15, 2005, there shall be an initial enrollment period that shall be the same as the annual, coordinated open election period described in
(B) Continuing periods
In the case of an individual who becomes a part D eligible individual after November 15, 2005, there shall be an initial enrollment period which is the period under
(3) Additional special enrollment periods
The Secretary shall establish special enrollment periods, including the following:
(A) Involuntary loss of creditable prescription drug coverage
(i) In general
In the case of a part D eligible individual who involuntarily loses creditable prescription drug coverage (as defined in
(ii) Notice
In establishing special enrollment periods under clause (i), the Secretary shall take into account when the part D eligible individuals are provided notice of the loss of creditable prescription drug coverage.
(iii) Failure to pay premium
For purposes of clause (i), a loss of coverage shall be treated as voluntary if the coverage is terminated because of failure to pay a required beneficiary premium.
(iv) Reduction in coverage
For purposes of clause (i), a reduction in coverage so that the coverage no longer meets the requirements under
(B) Errors in enrollment
In the case described in
(C) Exceptional circumstances
In the case of part D eligible individuals who meet such exceptional conditions (in addition to those conditions applied under paragraph (1)(B)(iii)) as the Secretary may provide.
(D) Medicaid coverage
In the case of an individual (as determined by the Secretary, subject to such limits as the Secretary may establish for individuals identified pursuant to
(E) Discontinuance of MA–PD election during first year of eligibility
In the case of a part D eligible individual who discontinues enrollment in an MA–PD plan under the second sentence of
(4) Information to facilitate enrollment
(A) In general
Notwithstanding any other provision of law but subject to subparagraph (B), the Secretary may provide to each PDP sponsor and MA organization such identifying information about part D eligible individuals as the Secretary determines to be necessary to facilitate efficient marketing of prescription drug plans and MA–PD plans to such individuals and enrollment of such individuals in such plans.
(B) Limitation
(i) Provision of information
The Secretary may provide the information under subparagraph (A) only to the extent necessary to carry out such subparagraph.
(ii) Use of information
Such information provided by the Secretary to a PDP sponsor or an MA organization may be used by such sponsor or organization only to facilitate marketing of, and enrollment of part D eligible individuals in, prescription drug plans and MA–PD plans.
(5) Reference to enrollment procedures for MA–PD plans
For rules applicable to enrollment, disenrollment, termination, and change of enrollment of part D eligible individuals in MA–PD plans, see
(6) Reference to penalties for late enrollment
(A) enroll in a prescription drug plan or an MA–PD plan after the initial enrollment period described in paragraph (2); and
(B) fail to maintain continuous creditable prescription drug coverage during the period of non-enrollment.
(c) Providing information to beneficiaries
(1) Activities
The Secretary shall conduct activities that are designed to broadly disseminate information to part D eligible individuals (and prospective part D eligible individuals) regarding the coverage provided under this part. Such activities shall ensure that such information is first made available at least 30 days prior to the initial enrollment period described in subsection (b)(2)(A).
(2) Requirements
The activities described in paragraph (1) shall—
(A) be similar to the activities performed by the Secretary under
(B) be coordinated with the activities performed by the Secretary under such section and under
(3) Comparative information
(A) In general
Subject to subparagraph (B), the comparative information referred to in paragraph (2)(A) shall include a comparison of the following with respect to qualified prescription drug coverage:
(i) Benefits
The benefits provided under the plan.
(ii) Monthly beneficiary premium
The monthly beneficiary premium under the plan.
(iii) Quality and performance
The quality and performance under the plan.
(iv) Beneficiary cost-sharing
The cost-sharing required of part D eligible individuals under the plan.
(v) Consumer satisfaction surveys
The results of consumer satisfaction surveys regarding the plan conducted pursuant to
(B) Exception for unavailability of information
The Secretary is not required to provide comparative information under clauses (iii) and (v) of subparagraph (A) with respect to a plan—
(i) for the first plan year in which it is offered; and
(ii) for the next plan year if it is impracticable or the information is otherwise unavailable.
(4) Information on late enrollment penalty
The information disseminated under paragraph (1) shall include information concerning the methodology for determining the late enrollment penalty under
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–1, as added
Amendments
2016—Subsec. (b)(3)(D).
2015—Subsec. (b)(1)(B)(ii).
Subsec. (b)(1)(B)(iii).
2010—Subsec. (b)(1)(C).
Subsec. (b)(1)(D).
2006—Subsec. (b)(1)(B)(iii).
Effective Date of 2016 Amendment
Effective Date of 2010 Amendment
Regulations
"(2)
"(A)
"(B)
"(i) the anticipated impact of drug management programs for at-risk beneficiaries under paragraph (5) of section 1860D–4(c) of the Social Security Act (
"(ii) the use of an expedited appeals process under which such an enrollee may appeal an identification of such enrollee as an at-risk beneficiary for prescription drug abuse under such paragraph (similar to the processes established under the Medicare Advantage program under part C of title XVIII of the Social Security Act [
"(iii) the types of enrollees that should be treated as exempted individuals, as described in subparagraph (C)(ii) of such paragraph;
"(iv) the manner in which terms and definitions in such paragraph should be applied, such as the use of clinical appropriateness in determining whether an enrollee is an at-risk beneficiary for prescription drug abuse as defined in subparagraph (C) of such paragraph;
"(v) the information to be included in the notices described in subparagraph (B) of such paragraph and the standardization of such notices;
"(vi) with respect to a PDP sponsor (or Medicare Advantage organization) that establishes a drug management program for at-risk beneficiaries under such paragraph, the responsibilities of such PDP sponsor (or organization) with respect to the implementation of such program;
"(vii) notices for plan enrollees at the point of sale that would explain why an at-risk beneficiary has been prohibited from receiving a prescription at a location outside of the designated pharmacy;
"(viii) evidence-based prescribing guidelines for opiates; and
"(ix) the sharing of claims data under parts A and B of title XVIII of the Social Security Act [
"(3)
Office of the Inspector General Studies and Reports
"(a)
"(1)
"(2)
"(b)
"(1)
"(A)
"(i) A comparison, with respect to the 200 most frequently dispensed covered part D drugs under such program and covered outpatient drugs under such title (as determined by the Inspector General based on volume and expenditures), of—
"(I) the prices paid for covered part D drugs by PDP sponsors of prescription drug plans and Medicare Advantage organizations offering MA–PD plans; and
"(II) the prices paid for covered outpatient drugs by a State plan under title XIX.
"(ii) An assessment of—
"(I) the financial impact of any discrepancies in such prices on the Federal Government; and
"(II) the financial impact of any such discrepancies on enrollees under part D or individuals eligible for medical assistance under a State plan under title XIX.
"(B)
"(C)
"(2)
"(A)
"(B)
"(3)
"(A)
"(B)
"(C) MA–PD
"(D)
"(E) PDP
"(F)
Submission of Legislative Proposal
Study on Transitioning Part B Prescription Drug Coverage
Report on Progress in Implementation of Prescription Drug Benefit
State Pharmaceutical Assistance Transition Commission
"(a)
"(1)
"(2)
"(A)
"(B)
"(b)
"(1) A representative of each Governor of each State that the Secretary [of Health and Human Services] identifies as operating on a statewide basis a State pharmaceutical assistance program that provides for eligibility and benefits that are comparable or more generous than the low-income assistance eligibility and benefits offered under section 1860D–14 of the Social Security Act [
"(2) Representatives from other States that the Secretary identifies have in operation other State pharmaceutical assistance programs, as appointed by the Secretary.
"(3) Representatives of organizations that have an inherent interest in program participants or the program itself, as appointed by the Secretary but not to exceed the number of representatives under paragraphs (1) and (2).
"(4) Representatives of Medicare Advantage organizations, pharmaceutical benefit managers, and other private health insurance plans, as appointed by the Secretary.
"(5) The Secretary (or the Secretary's designee) and such other members as the Secretary may specify.
The Secretary shall designate a member to serve as Chair of the Commission and the Commission shall meet at the call of the Chair.
"(c)
"(1) Protection of the interests of program participants in a manner that is the least disruptive to such participants and that includes a single point of contact for enrollment and processing of benefits.
"(2) Protection of the financial and flexibility interests of States so that States are not financially worse off as a result of the enactment of this title [see Tables for classification].
"(3) Principles of medicare modernization under this Act [see Tables for classification].
"(d)
"(e)
"(f)
Conflict of Interest Study
"(a)
"(1) An assessment of the differences in costs incurred by such enrollees and plans for prescription drugs dispensed by mail-order pharmacies owned by pharmaceutical benefit managers compared to mail-order pharmacies not owned by pharmaceutical benefit managers, and community pharmacies.
"(2) Whether such plans are acting in a manner that maximizes competition and results in lower prescription drug prices for enrollees.
"(b)
"(c)
1 So in original. The closing parenthesis probably should not appear.
2 So in original. Probably should be "of this subsection,".
§1395w–102. Prescription drug benefits
(a) Requirements
(1) In general
For purposes of this part and part C, the term "qualified prescription drug coverage" means either of the following:
(A) Standard prescription drug coverage with access to negotiated prices
Standard prescription drug coverage (as defined in subsection (b)) and access to negotiated prices under subsection (d).
(B) Alternative prescription drug coverage with at least actuarially equivalent benefits and access to negotiated prices
Coverage of covered part D drugs which meets the alternative prescription drug coverage requirements of subsection (c) and access to negotiated prices under subsection (d), but only if the benefit design of such coverage is approved by the Secretary, as provided under subsection (c).
(2) Permitting supplemental prescription drug coverage
(A) In general
Subject to subparagraph (B), qualified prescription drug coverage may include supplemental prescription drug coverage consisting of either or both of the following:
(i) Certain reductions in cost-sharing
(I) In general
A reduction in the annual deductible, a reduction in the coinsurance percentage, or an increase in the initial coverage limit with respect to covered part D drugs, or any combination thereof, insofar as such a reduction or increase increases the actuarial value of benefits above the actuarial value of basic prescription drug coverage.
(II) Construction
Nothing in this paragraph shall be construed as affecting the application of subsection (c)(3).
(ii) Optional drugs
Coverage of any product that would be a covered part D drug but for the application of subsection (e)(2)(A).
(B) Requirement
A PDP sponsor may not offer a prescription drug plan that provides supplemental prescription drug coverage pursuant to subparagraph (A) in an area unless the sponsor also offers a prescription drug plan in the area that only provides basic prescription drug coverage.
(3) Basic prescription drug coverage
For purposes of this part and part C, the term "basic prescription drug coverage" means either of the following:
(A) Coverage that meets the requirements of paragraph (1)(A).
(B) Coverage that meets the requirements of paragraph (1)(B) but does not have any supplemental prescription drug coverage described in paragraph (2)(A).
(4) Application of secondary payor provisions
The provisions of
(5) Construction
Nothing in this subsection shall be construed as changing the computation of incurred costs under subsection (b)(4).
(b) Standard prescription drug coverage
For purposes of this part and part C, the term "standard prescription drug coverage" means coverage of covered part D drugs that meets the following requirements:
(1) Deductible
(A) In general
The coverage has an annual deductible—
(i) for 2006, that is equal to $250; or
(ii) for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in paragraph (6) for the year involved.
(B) Rounding
Any amount determined under subparagraph (A)(ii) that is not a multiple of $5 shall be rounded to the nearest multiple of $5.
(2) Benefit structure
(A) 25 percent coinsurance
Subject to subparagraphs (C) and (D), the coverage has coinsurance (for costs above the annual deductible specified in paragraph (1) and up to the initial coverage limit under paragraph (3)) that is—
(i) equal to 25 percent; or
(ii) actuarially equivalent (using processes and methods established under
(B) Use of tiers
Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization from applying tiered copayments under a plan, so long as such tiered copayments are consistent with subparagraphs (A)(ii), (C), and (D).
(C) Coverage for generic drugs in coverage gap
(i) In general
Except as provided in paragraph (4), the coverage for an applicable beneficiary (as defined in
(I) equal to the generic-gap coinsurance percentage (specified in clause (ii)) for the year; or
(II) actuarially equivalent (using processes and methods established under
(ii) Generic-gap coinsurance percentage
The generic-gap coinsurance percentage specified in this clause for—
(I) 2011 is 93 percent;
(II) 2012 and each succeeding year before 2020 is the generic-gap coinsurance percentage under this clause for the previous year decreased by 7 percentage points; and
(III) 2020 and each subsequent year is 25 percent.
(D) Coverage for applicable drugs in coverage gap
(i) In general
Except as provided in paragraph (4), the coverage for an applicable beneficiary (as defined in
(I) equal to the difference between—
(aa) the applicable gap percentage (specified in clause (ii) for the year); and
(bb) the discount percentage specified in
(II) actuarially equivalent (using processes and methods established under
(ii) Applicable gap percentage
The applicable gap percentage specified in this clause for—
(I) 2013 and 2014 is 97.5 percent;
(II) 2015 and 2016 is 95 percent;
(III) 2017 is 90 percent;
(IV) 2018 is 85 percent; and
(V) 2019 and each subsequent year is 75 percent.
(3) Initial coverage limit
(A) In general
Except as provided in paragraphs (2)(C), (2)(D), and (4), the coverage has an initial coverage limit on the maximum costs that may be recognized for payment purposes (including the annual deductible)—
(i) for 2006, that is equal to $2,250; or
(ii) for a subsequent year, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved.
(B) Rounding
Any amount determined under subparagraph (A)(ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
(4) Protection against high out-of-pocket expenditures
(A) In general
(i) In general
The coverage provides benefits, after the part D eligible individual has incurred costs (as described in subparagraph (C)) for covered part D drugs in a year equal to the annual out-of-pocket threshold specified in subparagraph (B), with cost-sharing that is equal to the greater of—
(I) a copayment of $2 for a generic drug or a preferred drug that is a multiple source drug (as defined in
(II) coinsurance that is equal to 5 percent.
(ii) Adjustment of amount
For a year after 2006, the dollar amounts specified in clause (i)(I) shall be equal to the dollar amounts specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved. Any amount established under this clause that is not a multiple of a 5 cents shall be rounded to the nearest multiple of 5 cents.
(B) Annual out-of-pocket threshold
(i) In general
For purposes of this part, the "annual out-of-pocket threshold" specified in this subparagraph—
(I) for 2006, is equal to $3,600;
(II) for each of years 2007 through 2013, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved;
(III) for 2014 and 2015, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved, minus 0.25 percentage point;
(IV) for each of years 2016 through 2019, is equal to the amount specified in this subparagraph for the previous year, increased by the lesser of—
(aa) the annual percentage increase described in paragraph (7) for the year involved, plus 2 percentage points; or
(bb) the annual percentage increase described in paragraph (6) for the year;
(V) for 2020, is equal to the amount that would have been applied under this subparagraph for 2020 if the amendments made by section 1101(d)(1) of the Health Care and Education Reconciliation Act of 2010 had not been enacted; or
(VI) for a subsequent year, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved.
(ii) Rounding
Any amount determined under clause (i)(II) that is not a multiple of $50 shall be rounded to the nearest multiple of $50.
(C) Application
Except as provided in subparagraph (E), in applying subparagraph (A)—
(i) incurred costs shall only include costs incurred with respect to covered part D drugs for the annual deductible described in paragraph (1), for cost-sharing described in paragraph (2), and for amounts for which benefits are not provided because of the application of the initial coverage limit described in paragraph (3), but does not include any costs incurred for covered part D drugs which are not included (or treated as being included) in the plan's formulary;
(ii) subject to clause (iii), such costs shall be treated as incurred only if they are paid by the part D eligible individual (or by another person, such as a family member, on behalf of the individual) and the part D eligible individual (or other person) is not reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement (other than under such section or such a Program) for such costs; and
(iii) such costs shall be treated as incurred and shall not be considered to be reimbursed under clause (ii) if such costs are borne or paid—
(I) under
(II) under a State Pharmaceutical Assistance Program;
(III) by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization (as defined in
(IV) under an AIDS Drug Assistance Program under part B of title XXVI of the Public Health Service Act [
(D) Information regarding third-party reimbursement
(i) Procedures for exchanging information
In order to accurately apply the requirements of subparagraph (C)(ii), the Secretary is authorized to establish procedures, in coordination with the Secretary of the Treasury and the Secretary of Labor—
(I) for determining whether costs for part D eligible individuals are being reimbursed through insurance or otherwise, a group health plan, or other third-party payment arrangement; and
(II) for alerting the PDP sponsors and MA organizations that offer the prescription drug plans and MA–PD plans in which such individuals are enrolled about such reimbursement arrangements.
(ii) Authority to request information from enrollees
A PDP sponsor or an MA organization may periodically ask part D eligible individuals enrolled in a prescription drug plan or an MA–PD plan offered by the sponsor or organization whether such individuals have or expect to receive such third-party reimbursement. A material misrepresentation of the information described in the preceding sentence by an individual (as defined in standards set by the Secretary and determined through a process established by the Secretary) shall constitute grounds for termination of enrollment in any plan under
(E) Inclusion of costs of applicable drugs under medicare coverage gap discount program
In applying subparagraph (A), incurred costs shall include the negotiated price (as defined in paragraph (6) of
(5) Construction
Nothing in this part shall be construed as preventing a PDP sponsor or an MA organization offering an MA–PD plan from reducing to zero the cost-sharing otherwise applicable to preferred or generic drugs.
(6) Annual percentage increase
The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for covered part D drugs in the United States for part D eligible individuals, as determined by the Secretary for the 12-month period ending in July of the previous year using such methods as the Secretary shall specify.
(7) Additional annual percentage increase
The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period ending in July of the previous year.
(c) Alternative prescription drug coverage requirements
A prescription drug plan or an MA–PD plan may provide a different prescription drug benefit design from standard prescription drug coverage so long as the Secretary determines (consistent with
(1) Assuring at least actuarially equivalent coverage
(A) Assuring equivalent value of total coverage
The actuarial value of the total coverage is at least equal to the actuarial value of standard prescription drug coverage.
(B) Assuring equivalent unsubsidized value of coverage
The unsubsidized value of the coverage is at least equal to the unsubsidized value of standard prescription drug coverage. For purposes of this subparagraph, the unsubsidized value of coverage is the amount by which the actuarial value of the coverage exceeds the actuarial value of the subsidy payments under
(C) Assuring standard payment for costs at initial coverage limit
The coverage is designed, based upon an actuarially representative pattern of utilization, to provide for the payment, with respect to costs incurred that are equal to the initial coverage limit under subsection (b)(3) for the year, of an amount equal to at least the product of—
(i) the amount by which the initial coverage limit described in subsection (b)(3) for the year exceeds the deductible described in subsection (b)(1) for the year; and
(ii) 100 percent minus the coinsurance percentage specified in subsection (b)(2)(A)(i).
(2) Maximum required deductible
The deductible under the coverage shall not exceed the deductible amount specified under subsection (b)(1) for the year.
(3) Same protection against high out-of-pocket expenditures
The coverage provides the coverage required under subsection (b)(4).
(d) Access to negotiated prices
(1) Access
(A) In general
Under qualified prescription drug coverage offered by a PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan, the sponsor or organization shall provide enrollees with access to negotiated prices used for payment for covered part D drugs, regardless of the fact that no benefits may be payable under the coverage with respect to such drugs because of the application of a deductible or other cost-sharing or an initial coverage limit (described in subsection (b)(3)).
(B) Negotiated prices
For purposes of this part, negotiated prices shall take into account negotiated price concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for covered part D drugs, and include any dispensing fees for such drugs.
(C) Medicaid-related provisions
The prices negotiated by a prescription drug plan, by an MA–PD plan with respect to covered part D drugs, or by a qualified retiree prescription drug plan (as defined in
(2) Disclosure
A PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan shall disclose to the Secretary (in a manner specified by the Secretary) the aggregate negotiated price concessions described in paragraph (1)(B) made available to the sponsor or organization by a manufacturer which are passed through in the form of lower subsidies, lower monthly beneficiary prescription drug premiums, and lower prices through pharmacies and other dispensers. The provisions of
(3) Audits
To protect against fraud and abuse and to ensure proper disclosures and accounting under this part and in accordance with
(e) Covered part D drug defined
(1) In general
Except as provided in this subsection, for purposes of this part, the term "covered part D drug" means—
(A) a drug that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A)(ii), or (A)(iii) of
(B) a biological product described in clauses (i) through (iii) of subparagraph (B) of such section or insulin described in subparagraph (C) of such section and medical supplies associated with the injection of insulin (as defined in regulations of the Secretary),
and such term includes a vaccine licensed under
(2) Exclusions
(A) In general
Such term does not include drugs or classes of drugs, or their medical uses, which may be excluded from coverage or otherwise restricted under
(B) Medicare covered drugs
A drug prescribed for a part D eligible individual that would otherwise be a covered part D drug under this part shall not be so considered if payment for such drug as so prescribed and dispensed or administered with respect to that individual is available (or would be available but for the application of a deductible) under part A or B for that individual.
(3) Application of general exclusion provisions
A prescription drug plan or an MA–PD plan may exclude from qualified prescription drug coverage any covered part D drug—
(A) for which payment would not be made if
(B) which is not prescribed in accordance with the plan or this part.
Such exclusions are determinations subject to reconsideration and appeal pursuant to subsections (g) and (h), respectively, of
(4) Medically accepted indication defined
(A) In general
For purposes of paragraph (1), the term "medically accepted indication" has the meaning given that term—
(i) in the case of a covered part D drug used in an anticancer chemotherapeutic regimen, in
(I) "prescription drug plan or MA–PD plan" shall be substituted for "carrier" each place it appears; and
(II) subject to subparagraph (B), the compendia described in
(ii) in the case of any other covered part D drug, in
(B) Conflict of interest
On and after January 1, 2010, subparagraph (A)(i)(II) shall not apply unless the compendia described in
(C) Update
For purposes of applying subparagraph (A)(ii), the Secretary shall revise the list of compendia described in
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–2, as added
References in Text
Section 1101(d)(1) of the Health Care and Education Reconciliation Act of 2010, referred to in subsec. (b)(4)(B)(i)(V), is section 1101(d)(1) of
The Public Health Service Act, referred to in subsec. (b)(4)(C)(iii)(IV), is act July 1, 1944, ch. 373,
Amendments
2018—Subsec. (b)(2)(D)(i)(I).
Subsec. (b)(2)(D)(ii)(V), (VI).
2010—Subsec. (b)(2)(A).
Subsec. (b)(2)(B).
Subsec. (b)(2)(C), (D).
Subsec. (b)(3)(A).
Subsec. (b)(4)(B)(i)(II) to (VI).
Subsec. (b)(4)(C).
Subsec. (b)(4)(E).
Subsec. (b)(7).
"(A)
"(B)
"(i) except as otherwise provided in this subparagraph, there shall be no change in the premiums, bids, or any other parameters under this part or part C;
"(ii) costs that would be treated as incurred costs for purposes of applying paragraph (4) but for the application of subparagraph (A) shall continue to be treated as incurred costs;
"(iii) the Secretary shall establish procedures, which may include a reconciliation process, to fully reimburse PDP sponsors with respect to prescription drug plans and MA organizations with respect to MA–PD plans for the reduction in beneficiary cost sharing associated with the application of subparagraph (A);
"(iv) the Secretary shall develop an estimate of the additional increased costs attributable to the application of this paragraph for increased drug utilization and financing and administrative costs and shall use such estimate to adjust payments to PDP sponsors with respect to prescription drug plans under this part and MA organizations with respect to MA–PD plans under part C; and
"(v) the Secretary shall establish procedures for retroactive reimbursement of part D eligible individuals who are covered under such a plan for costs which are incurred before the date of initial implementation of subparagraph (A) and which would be reimbursed under such a plan if such implementation occurred as of January 1, 2010.
"(C)
See Construction of 2010 Amendment note below.
2008—Subsec. (e)(1).
Subsec. (e)(2)(A).
Subsec. (e)(4).
2006—Subsec. (e)(1).
2005—Subsec. (e)(2)(A).
Effective Date of 2010 Amendment
Effective Date of 2008 Amendment
Effective Date of 2005 Amendment
Construction of 2010 Amendment
Construction
Payment for Administration of Part D Vaccines in 2007
1 So in original. Probably should be "meet".
§1395w–103. Access to a choice of qualified prescription drug coverage
(a) Assuring access to a choice of coverage
(1) Choice of at least two plans in each area
The Secretary shall ensure that each part D eligible individual has available, consistent with paragraph (2), a choice of enrollment in at least 2 qualifying plans (as defined in paragraph (3)) in the area in which the individual resides, at least one of which is a prescription drug plan. In any such case in which such plans are not available, the part D eligible individual shall be given the opportunity to enroll in a fallback prescription drug plan.
(2) Requirement for different plan sponsors
The requirement in paragraph (1) is not satisfied with respect to an area if only one entity offers all the qualifying plans in the area.
(3) Qualifying plan defined
For purposes of this section, the term "qualifying plan" means—
(A) a prescription drug plan; or
(B) an MA–PD plan described in
(i) basic prescription drug coverage; or
(ii) qualified prescription drug coverage that provides supplemental prescription drug coverage so long as there is no MA monthly supplemental beneficiary premium applied under the plan, due to the application of a credit against such premium of a rebate under
(b) Flexibility in risk assumed and application of fallback plan
In order to ensure access pursuant to subsection (a) in an area—
(1) the Secretary may approve limited risk plans under
(2) only if such access is still not provided in the area after applying paragraph (1), the Secretary shall provide for the offering of a fallback prescription drug plan for that area under
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–3, as added
§1395w–104. Beneficiary protections for qualified prescription drug coverage
(a) Dissemination of information
(1) General information
(A) Application of MA information
A PDP sponsor shall disclose, in a clear, accurate, and standardized form to each enrollee with a prescription drug plan offered by the sponsor under this part at the time of enrollment and at least annually thereafter, the information described in
(B) Drug specific information
The information described in this subparagraph is information concerning the following:
(i) Access to specific covered part D drugs, including access through pharmacy networks.
(ii) How any formulary (including any tiered formulary structure) used by the sponsor functions, including a description of how a part D eligible individual may obtain information on the formulary consistent with paragraph (3).
(iii) Beneficiary cost-sharing requirements and how a part D eligible individual may obtain information on such requirements, including tiered or other copayment level applicable to each drug (or class of drugs), consistent with paragraph (3).
(iv) The medication therapy management program required under subsection (c).
(v) The drug management program for at-risk beneficiaries under subsection (c)(5).
(vi) For plan year 2021 and each subsequent plan year, subject to subparagraph (C), with respect to the treatment of pain—
(I) the risks associated with prolonged opioid use; and
(II) coverage of nonpharmacological therapies, devices, and nonopioid medications—
(aa) in the case of an MA–PD plan under part C, under such plan; and
(bb) in the case of a prescription drug plan, under such plan and under parts A and B.
(C) Targeted provision of information
A PDP sponsor of a prescription drug plan may, in lieu of disclosing the information described in subparagraph (B)(vi) to each enrollee under the plan, disclose such information through mail or electronic communications to a subset of enrollees under the plan, such as enrollees who have been prescribed an opioid in the previous 2-year period.
(2) Disclosure upon request of general coverage, utilization, and grievance information
Upon request of a part D eligible individual who is eligible to enroll in a prescription drug plan, the PDP sponsor offering such plan shall provide information similar (as determined by the Secretary) to the information described in subparagraphs (A), (B), and (C) of
(3) Provision of specific information
(A) Response to beneficiary questions
Each PDP sponsor offering a prescription drug plan shall have a mechanism for providing specific information on a timely basis to enrollees upon request. Such mechanism shall include access to information through the use of a toll-free telephone number and, upon request, the provision of such information in writing.
(B) Availability of information on changes in formulary through the Internet
A PDP sponsor offering a prescription drug plan shall make available on a timely basis through an Internet website information on specific changes in the formulary under the plan (including changes to tiered or preferred status of covered part D drugs).
(4) Claims information
A PDP sponsor offering a prescription drug plan must furnish to each enrollee in a form easily understandable to such enrollees—
(A) an explanation of benefits (in accordance with
(B) when prescription drug benefits are provided under this part, a notice of the benefits in relation to—
(i) the initial coverage limit for the current year; and
(ii) the annual out-of-pocket threshold for the current year.
Notices under subparagraph (B) need not be provided more often than as specified by the Secretary and notices under subparagraph (B)(ii) shall take into account the application of
(b) Access to covered part D drugs
(1) Assuring pharmacy access
(A) Participation of any willing pharmacy
A prescription drug plan shall permit the participation of any pharmacy that meets the terms and conditions under the plan.
(B) Discounts allowed for network pharmacies
For covered part D drugs dispensed through in-network pharmacies, a prescription drug plan may, notwithstanding subparagraph (A), reduce coinsurance or copayments for part D eligible individuals enrolled in the plan below the level otherwise required. In no case shall such a reduction result in an increase in payments made by the Secretary under
(C) Convenient access for network pharmacies
(i) In general
The PDP sponsor of the prescription drug plan shall secure the participation in its network of a sufficient number of pharmacies that dispense (other than by mail order) drugs directly to patients to ensure convenient access (consistent with rules established by the Secretary).
(ii) Application of TRICARE standards
The Secretary shall establish rules for convenient access to in-network pharmacies under this subparagraph that are no less favorable to enrollees than the rules for convenient access to pharmacies included in the statement of work of solicitation (#MDA906–03–R–0002) of the Department of Defense under the TRICARE Retail Pharmacy (TRRx) as of March 13, 2003.
(iii) Adequate emergency access
Such rules shall include adequate emergency access for enrollees.
(iv) Convenient access in long-term care facilities
Such rules may include standards with respect to access for enrollees who are residing in long-term care facilities and for pharmacies operated by the Indian Health Service, Indian tribes and tribal organizations, and urban Indian organizations (as defined in
(D) Level playing field
Such a sponsor shall permit enrollees to receive benefits (which may include a 90-day supply of drugs or biologicals) through a pharmacy (other than a mail order pharmacy), with any differential in charge paid by such enrollees.
(E) Not required to accept insurance risk
The terms and conditions under subparagraph (A) may not require participating pharmacies to accept insurance risk as a condition of participation.
(2) Use of standardized technology
(A) In general
The PDP sponsor of a prescription drug plan shall issue (and reissue, as appropriate) such a card (or other technology) that may be used by an enrollee to assure access to negotiated prices under
(B) Standards
(i) In general
The Secretary shall provide for the development, adoption, or recognition of standards relating to a standardized format for the card or other technology required under subparagraph (A). Such standards shall be compatible with part C of subchapter XI and may be based on standards developed by an appropriate standard setting organization.
(ii) Consultation
In developing the standards under clause (i), the Secretary shall consult with the National Council for Prescription Drug Programs and other standard setting organizations determined appropriate by the Secretary.
(iii) Implementation
The Secretary shall develop, adopt, or recognize the standards under clause (i) by such date as the Secretary determines shall be sufficient to ensure that PDP sponsors utilize such standards beginning January 1, 2006.
(3) Requirements on development and application of formularies
If a PDP sponsor of a prescription drug plan uses a formulary (including the use of tiered cost-sharing), the following requirements must be met:
(A) Development and revision by a pharmacy and therapeutic (P&T) committee
(i) In general
The formulary must be developed and reviewed by a pharmacy and therapeutic committee. A majority of the members of such committee shall consist of individuals who are practicing physicians or practicing pharmacists (or both).
(ii) Inclusion of independent experts
Such committee shall include at least one practicing physician and at least one practicing pharmacist, each of whom—
(I) is independent and free of conflict with respect to the sponsor and plan; and
(II) has expertise in the care of elderly or disabled persons.
(B) Formulary development
In developing and reviewing the formulary, the committee shall—
(i) base clinical decisions on the strength of scientific evidence and standards of practice, including assessing peer-reviewed medical literature, such as randomized clinical trials, pharmacoeconomic studies, outcomes research data, and on such other information as the committee determines to be appropriate; and
(ii) take into account whether including in the formulary (or in a tier in such formulary) particular covered part D drugs has therapeutic advantages in terms of safety and efficacy.
(C) Inclusion of drugs in all therapeutic categories and classes
(i) In general
Subject to subparagraph (G), the formulary must include drugs within each therapeutic category and class of covered part D drugs, although not necessarily all drugs within such categories and classes.
(ii) Model guidelines
The Secretary shall request the United States Pharmacopeia to develop, in consultation with pharmaceutical benefit managers and other interested parties, a list of categories and classes that may be used by prescription drug plans under this paragraph and to revise such classification from time to time to reflect changes in therapeutic uses of covered part D drugs and the additions of new covered part D drugs.
(iii) Limitation on changes in therapeutic classification
The PDP sponsor of a prescription drug plan may not change the therapeutic categories and classes in a formulary other than at the beginning of each plan year except as the Secretary may permit to take into account new therapeutic uses and newly approved covered part D drugs.
(D) Provider and patient education
The PDP sponsor shall establish policies and procedures to educate and inform health care providers and enrollees concerning the formulary.
(E) Notice before removing drug from formulary or changing preferred or tier status of drug
Any removal of a covered part D drug from a formulary and any change in the preferred or tiered cost-sharing status of such a drug shall take effect only after appropriate notice is made available (such as under subsection (a)(3)) to the Secretary, affected enrollees, physicians, pharmacies, and pharmacists.
(F) Periodic evaluation of protocols
In connection with the formulary, the sponsor of a prescription drug plan shall provide for the periodic evaluation and analysis of treatment protocols and procedures.
(G) Required inclusion of drugs in certain categories and classes
(i) Formulary requirements
(I) In general
Subject to subclause (II), a PDP sponsor offering a prescription drug plan shall be required to include all covered part D drugs in the categories and classes identified by the Secretary under clause (ii)(I).
(II) Exceptions
The Secretary may establish exceptions that permit a PDP sponsor offering a prescription drug plan to exclude from its formulary a particular covered part D drug in a category or class that is otherwise required to be included in the formulary under subclause (I) (or to otherwise limit access to such a drug, including through prior authorization or utilization management).
(ii) Identification of drugs in certain categories and classes
(I) In general
Subject to clause (iv), the Secretary shall identify, as appropriate, categories and classes of drugs for which the Secretary determines are of clinical concern.
(II) Criteria
The Secretary shall use criteria established by the Secretary in making any determination under subclause (I).
(iii) Implementation
The Secretary shall establish the criteria under clause (ii)(II) and any exceptions under clause (i)(II) through the promulgation of a regulation which includes a public notice and comment period.
(iv) Requirement for certain categories and classes until criteria established
Until such time as the Secretary establishes the criteria under clause (ii)(II) the following categories and classes of drugs shall be identified under clause (ii)(I):
(I) Anticonvulsants.
(II) Antidepressants.
(III) Antineoplastics.
(IV) Antipsychotics.
(V) Antiretrovirals.
(VI) Immunosuppressants for the treatment of transplant rejection.
(H) Use of single, uniform exceptions and appeals process
Notwithstanding any other provision of this part, each PDP sponsor of a prescription drug plan shall—
(i) use a single, uniform exceptions and appeals process (including, to the extent the Secretary determines feasible, a single, uniform model form for use under such process) with respect to the determination of prescription drug coverage for an enrollee under the plan; and
(ii) provide instant access to such process by enrollees through a toll-free telephone number and an Internet website.
(4) Ensuring access during COVID–19 public health emergency period
(A) In general
During the emergency period described in
(B) Safety edit exception
A prescription drug plan or MA–PD plan may not permit a part D eligible individual to obtain a single fill or refill inconsistent with an applicable safety edit.
(c) Cost and utilization management; quality assurance; medication therapy management program
(1) In general
The PDP sponsor shall have in place, directly or through appropriate arrangements, with respect to covered part D drugs, the following:
(A) A cost-effective drug utilization management program, including incentives to reduce costs when medically appropriate, such as through the use of multiple source drugs (as defined in
(B) Quality assurance measures and systems to reduce medication errors and adverse drug interactions and improve medication use.
(C) A medication therapy management program described in paragraph (2).
(D) A program to control fraud, abuse, and waste.
(E) A utilization management tool to prevent drug abuse (as described in paragraph (6)(A)).1
(F) With respect to plan years beginning on or after January 1, 2022, a drug management program for at-risk beneficiaries described in paragraph (5).
Nothing in this section shall be construed as impairing a PDP sponsor from utilizing cost management tools (including differential payments) under all methods of operation.
(2) Medication therapy management program
(A) Description
(i) In general
A medication therapy management program described in this paragraph is a program of drug therapy management that may be furnished by a pharmacist and that is designed to assure, with respect to targeted beneficiaries described in clause (ii), that covered part D drugs under the prescription drug plan are appropriately used to optimize therapeutic outcomes through improved medication use, and to reduce the risk of adverse events, including adverse drug interactions. Such a program may distinguish between services in ambulatory and institutional settings.
(ii) Targeted beneficiaries described
Targeted beneficiaries described in this clause are the following:
(I) Part D eligible individuals who—
(aa) have multiple chronic diseases (such as diabetes, asthma, hypertension, hyperlipidemia, and congestive heart failure);
(bb) are taking multiple covered part D drugs; and
(cc) are identified as likely to incur annual costs for covered part D drugs that exceed a level specified by the Secretary.
(II) Beginning January 1, 2021, at-risk beneficiaries for prescription drug abuse (as defined in paragraph (5)(C)).
(B) Elements
Such program—
(i) may include elements that promote—
(I) enhanced enrollee understanding to promote the appropriate use of medications by enrollees and to reduce the risk of potential adverse events associated with medications, through beneficiary education, counseling, and other appropriate means;
(II) increased enrollee adherence with prescription medication regimens through medication refill reminders, special packaging, and other compliance programs and other appropriate means; and
(III) detection of adverse drug events and patterns of overuse and underuse of prescription drugs; and
(ii) with respect to plan years beginning on or after January 1, 2021, shall provide for—
(I) the provision of information to the enrollee on the safe disposal of prescription drugs that are controlled substances that meets the criteria established under
(II) cost-effective means by which an enrollee may so safely dispose of such drugs.
(C) Required interventions
For plan years beginning on or after the date that is 2 years after March 23, 2010, prescription drug plan sponsors shall offer medication therapy management services to targeted beneficiaries described in subparagraph (A)(ii) that include, at a minimum, the following to increase adherence to prescription medications or other goals deemed necessary by the Secretary:
(i) An annual comprehensive medication review furnished person-to-person or using telehealth technologies (as defined by the Secretary) by a licensed pharmacist or other qualified provider. The comprehensive medication review—
(I) shall include a review of the individual's medications and may result in the creation of a recommended medication action plan or other actions in consultation with the individual and with input from the prescriber to the extent necessary and practicable; and
(II) shall include providing the individual with a written or printed summary of the results of the review.
The Secretary, in consultation with relevant stakeholders, shall develop a standardized format for the action plan under subclause (I) and the summary under subclause (II).
(ii) Follow-up interventions as warranted based on the findings of the annual medication review or the targeted medication enrollment and which may be provided person-to-person or using telehealth technologies (as defined by the Secretary).
(D) Assessment
The prescription drug plan sponsor shall have in place a process to assess, at least on a quarterly basis, the medication use of individuals who are at risk but not enrolled in the medication therapy management program, including individuals who have experienced a transition in care, if the prescription drug plan sponsor has access to that information.
(E) 2 Automatic enrollment with ability to opt-out
The prescription drug plan sponsor shall have in place a process to—
(i) subject to clause (ii), automatically enroll targeted beneficiaries described in subparagraph (A)(ii), including beneficiaries identified under subparagraph (D), in the medication therapy management program required under this subsection; and
(ii) permit such beneficiaries to opt-out of enrollment in such program.
(E) 2 Development of program in cooperation with licensed pharmacists
Such program shall be developed in cooperation with licensed and practicing pharmacists and physicians.
(F) Coordination with care management plans
The Secretary shall establish guidelines for the coordination of any medication therapy management program under this paragraph with respect to a targeted beneficiary with any care management plan established with respect to such beneficiary under a chronic care improvement program under
(G) Considerations in pharmacy fees
The PDP sponsor of a prescription drug plan shall take into account, in establishing fees for pharmacists and others providing services under such plan, the resources used, and time required to, implement the medication therapy management program under this paragraph. Each such sponsor shall disclose to the Secretary upon request the amount of any such management or dispensing fees. The provisions of
(3) Reducing wasteful dispensing of outpatient prescription drugs in long-term care facilities
The Secretary shall require PDP sponsors of prescription drug plans to utilize specific, uniform dispensing techniques, as determined by the Secretary, in consultation with relevant stakeholders (including representatives of nursing facilities, residents of nursing facilities, pharmacists, the pharmacy industry (including retail and long-term care pharmacy), prescription drug plans, MA–PD plans, and any other stakeholders the Secretary determines appropriate), such as weekly, daily, or automated dose dispensing, when dispensing covered part D drugs to enrollees who reside in a long-term care facility in order to reduce waste associated with 30-day fills.
(4) Requiring valid prescriber National Provider Identifiers on pharmacy claims
(A) In general
For plan year 2016 and subsequent plan years, the Secretary shall require a claim for a covered part D drug for a part D eligible individual enrolled in a prescription drug plan under this part or an MA–PD plan under part C to include a prescriber National Provider Identifier that is determined to be valid under the procedures established under subparagraph (B)(i).
(B) Procedures
(i) Validity of prescriber National Provider Identifiers
The Secretary, in consultation with appropriate stakeholders, shall establish procedures for determining the validity of prescriber National Provider Identifiers under subparagraph (A).
(ii) Informing beneficiaries of reason for denial
The Secretary shall establish procedures to ensure that, in the case that a claim for a covered part D drug of an individual described in subparagraph (A) is denied because the claim does not meet the requirements of this paragraph, the individual is properly informed at the point of service of the reason for the denial.
(C) Report
Not later than January 1, 2018, the Inspector General of the Department of Health and Human Services shall submit to Congress a report on the effectiveness of the procedures established under subparagraph (B)(i).
(D) Notification and additional requirements with respect to outlier prescribers of opioids
(i) Notification
Not later than January 1, 2021, the Secretary shall, in the case of a prescriber identified by the Secretary under clause (ii) to be an outlier prescriber of opioids, provide, subject to clause (iv), an annual notification to such prescriber that such prescriber has been so identified and that includes resources on proper prescribing methods and other information as specified in accordance with clause (iii).
(ii) Identification of outlier prescribers of opioids
(I) In general
The Secretary shall, subject to subclause (III), using the valid prescriber National Provider Identifiers included pursuant to subparagraph (A) on claims for covered part D drugs for part D eligible individuals enrolled in prescription drug plans under this part or MA–PD plans under part C and based on the thresholds established under subclause (II), identify prescribers that are outlier opioids prescribers for a period of time specified by the Secretary.
(II) Establishment of thresholds
For purposes of subclause (I) and subject to subclause (III), the Secretary shall, after consultation with stakeholders, establish thresholds, based on prescriber specialty and geographic area, for identifying whether a prescriber in a specialty and geographic area is an outlier prescriber of opioids as compared to other prescribers of opioids within such specialty and area.
(III) Exclusions
The following shall not be included in the analysis for identifying outlier prescribers of opioids under this clause:
(aa) Claims for covered part D drugs for part D eligible individuals who are receiving hospice care under this subchapter.
(bb) Claims for covered part D drugs for part D eligible individuals who are receiving oncology services under this subchapter.
(cc) Prescribers who are the subject of an investigation by the Centers for Medicare & Medicaid Services or the Inspector General of the Department of Health and Human Services.
(iii) Contents of notification
The Secretary shall include the following information in the notifications provided under clause (i):
(I) Information on how such prescriber compares to other prescribers within the same specialty and geographic area.
(II) Information on opioid prescribing guidelines, based on input from stakeholders, that may include the Centers for Disease Control and Prevention guidelines for prescribing opioids for chronic pain and guidelines developed by physician organizations.
(III) Other information determined appropriate by the Secretary.
(iv) Modifications and expansions
(I) Frequency
Beginning 5 years after October 24, 2018, the Secretary may change the frequency of the notifications described in clause (i) based on stakeholder input and changes in opioid prescribing utilization and trends.
(II) Expansion to other prescriptions
The Secretary may expand notifications under this subparagraph to include identifications and notifications with respect to concurrent prescriptions of covered Part D drugs used in combination with opioids that are considered to have adverse side effects when so used in such combination, as determined by the Secretary.
(v) Additional requirements for persistent outlier prescribers
In the case of a prescriber who the Secretary determines is persistently identified under clause (ii) as an outlier prescriber of opioids, the following shall apply:
(I) Such prescriber may be required to enroll in the program under this subchapter under
(II) Not less frequently than annually (and in a form and manner determined appropriate by the Secretary), the Secretary, consistent with clause(iv)(I), shall communicate information on such prescribers to sponsors of a prescription drug plan and Medicare Advantage organizations offering an MA–PD plan.
(vi) Public availability of information
The Secretary shall make aggregate information under this subparagraph available on the internet website of the Centers for Medicare & Medicaid Services. Such information shall be in a form and manner determined appropriate by the Secretary and shall not identify any specific prescriber. In carrying out this clause, the Secretary shall consult with interested stakeholders.
(vii) Opioids defined
For purposes of this subparagraph, the term "opioids" has such meaning as specified by the Secretary.
(viii) Other activities
Nothing in this subparagraph shall preclude the Secretary from conducting activities that provide prescribers with information as to how they compare to other prescribers that are in addition to the activities under this subparagraph, including activities that were being conducted as October 24, 2018.
(5) Drug management program for at-risk beneficiaries
(A) Authority to establish
A PDP sponsor may (and for plan years beginning on or after January 1, 2022, a PDP sponsor shall) establish a drug management program for at-risk beneficiaries under which, subject to subparagraph (B), the PDP sponsor may, in the case of an at-risk beneficiary for prescription drug abuse who is an enrollee in a prescription drug plan of such PDP sponsor, limit such beneficiary's access to coverage for frequently abused drugs under such plan to frequently abused drugs that are prescribed for such beneficiary by one or more prescribers selected under subparagraph (D), and dispensed for such beneficiary by one or more pharmacies selected under such subparagraph.
(B) Requirement for notices
(i) In general
A PDP sponsor may not limit the access of an at-risk beneficiary for prescription drug abuse to coverage for frequently abused drugs under a prescription drug plan until such sponsor—
(I) provides to the beneficiary an initial notice described in clause (ii) and a second notice described in clause (iii); and
(II) verifies with the providers of the beneficiary that the beneficiary is an at-risk beneficiary for prescription drug abuse.
(ii) Initial notice
An initial notice described in this clause is a notice that provides to the beneficiary—
(I) notice that the PDP sponsor has identified the beneficiary as potentially being an at-risk beneficiary for prescription drug abuse;
(II) information describing all State and Federal public health resources that are designed to address prescription drug abuse to which the beneficiary has access, including mental health services and other counseling services;
(III) notice of, and information about, the right of the beneficiary to appeal such identification under subsection (h), including notice that if on reconsideration a PDP sponsor affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the Secretary for review and resolution;
(IV) a request for the beneficiary to submit to the PDP sponsor preferences for which prescribers and pharmacies the beneficiary would prefer the PDP sponsor to select under subparagraph (D) in the case that the beneficiary is identified as an at-risk beneficiary for prescription drug abuse as described in clause (iii)(I);
(V) an explanation of the meaning and consequences of the identification of the beneficiary as potentially being an at-risk beneficiary for prescription drug abuse, including an explanation of the drug management program established by the PDP sponsor pursuant to subparagraph (A);
(VI) clear instructions that explain how the beneficiary can contact the PDP sponsor in order to submit to the PDP sponsor the preferences described in subclause (IV) and any other communications relating to the drug management program for at-risk beneficiaries established by the PDP sponsor; and
(VII) contact information for other organizations that can provide the beneficiary with assistance regarding such drug management program (similar to the information provided by the Secretary in other standardized notices provided to part D eligible individuals enrolled in prescription drug plans under this part).
(iii) Second notice
A second notice described in this clause is a notice that provides to the beneficiary notice—
(I) that the PDP sponsor has identified the beneficiary as an at-risk beneficiary for prescription drug abuse;
(II) that such beneficiary is subject to the requirements of the drug management program for at-risk beneficiaries established by such PDP sponsor for such plan;
(III) of the prescriber (or prescribers) and pharmacy (or pharmacies) selected for such individual under subparagraph (D);
(IV) of, and information about, the beneficiary's right to appeal such identification under subsection (h), including notice that if on reconsideration a PDP sponsor affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the Secretary for review and resolution;
(V) that the beneficiary can, in the case that the beneficiary has not previously submitted to the PDP sponsor preferences for which prescribers and pharmacies the beneficiary would prefer the PDP sponsor select under subparagraph (D), submit such preferences to the PDP sponsor; and
(VI) that includes clear instructions that explain how the beneficiary can contact the PDP sponsor.
(iv) Timing of notices
(I) In general
Subject to subclause (II), a second notice described in clause (iii) shall be provided to the beneficiary on a date that is not less than 30 days after an initial notice described in clause (ii) is provided to the beneficiary.
(II) Exception
In the case that the PDP sponsor, in conjunction with the Secretary, determines that concerns identified through rulemaking by the Secretary regarding the health or safety of the beneficiary or regarding significant drug diversion activities require the PDP sponsor to provide a second notice described in clause (iii) to the beneficiary on a date that is earlier than the date described in subclause (I), the PDP sponsor may provide such second notice on such earlier date.
(C) At-risk beneficiary for prescription drug abuse
(i) In general
Except as provided in clause (v), for purposes of this paragraph, the term "at-risk beneficiary for prescription drug abuse" means a part D eligible individual who is not an exempted individual described in clause (ii) and—
(I) who is identified as such an at-risk beneficiary through the use of clinical guidelines that indicate misuse or abuse of prescription drugs described in subparagraph (G) and that are developed by the Secretary in consultation with PDP sponsors and other stakeholders, including individuals entitled to benefits under part A or enrolled under part B, advocacy groups representing such individuals, physicians, pharmacists, and other clinicians, retail pharmacies, plan sponsors, entities delegated by plan sponsors, and biopharmaceutical manufacturers; or
(II) with respect to whom the PDP sponsor of a prescription drug plan, upon enrolling such individual in such plan, received notice from the Secretary that such individual was identified under this paragraph to be an at-risk beneficiary for prescription drug abuse under the prescription drug plan in which such individual was most recently previously enrolled and such identification has not been terminated under subparagraph (F).
(ii) Exempted individual described
An exempted individual described in this clause is an individual who—
(I) receives hospice care under this subchapter;
(II) is a resident of a long-term care facility, of a facility described in
(III) the Secretary elects to treat as an exempted individual for purposes of clause (i).
(iii) Program size
The Secretary shall establish policies, including the guidelines developed under clause (i)(I) and the exemptions under clause (ii)(III), to ensure that the population of enrollees in a drug management program for at-risk beneficiaries operated by a prescription drug plan can be effectively managed by such plans.
(iv) Clinical contact
With respect to each at-risk beneficiary for prescription drug abuse enrolled in a prescription drug plan offered by a PDP sponsor, the PDP sponsor shall contact the beneficiary's providers who have prescribed frequently abused drugs regarding whether prescribed medications are appropriate for such beneficiary's medical conditions.
(v) Treatment of enrollees with a history of opioid-related overdose
(I) In general
For plan years beginning not later than January 1, 2021, a part D eligible individual who is not an exempted individual described in clause (ii) and who is identified under this clause as a part D eligible individual with a history of opioid-related overdose (as defined by the Secretary) shall be included as a potentially at-risk beneficiary for prescription drug abuse under the drug management program under this paragraph.
(II) Identification and notice
For purposes of this clause, the Secretary shall—
(aa) identify part D eligible individuals with a history of opioid-related overdose (as so defined); and
(bb) notify the PDP sponsor of the prescription drug plan in which such an individual is enrolled of such identification.
(D) Selection of prescribers and pharmacies
(i) In general
With respect to each at-risk beneficiary for prescription drug abuse enrolled in a prescription drug plan offered by such sponsor, a PDP sponsor shall, based on the preferences submitted to the PDP sponsor by the beneficiary pursuant to clauses (ii)(IV) and (iii)(V) of subparagraph (B) (except as otherwise provided in this subparagraph) select—
(I) one, or, if the PDP sponsor reasonably determines it necessary to provide the beneficiary with reasonable access under clause (ii), more than one, individual who is authorized to prescribe frequently abused drugs (referred to in this paragraph as a "prescriber") who may write prescriptions for such drugs for such beneficiary; and
(II) one, or, if the PDP sponsor reasonably determines it necessary to provide the beneficiary with reasonable access under clause (ii), more than one, pharmacy that may dispense such drugs to such beneficiary.
For purposes of subclause (II), in the case of a pharmacy that has multiple locations that share real-time electronic data, all such locations of the pharmacy shall collectively be treated as one pharmacy.
(ii) Reasonable access
In making the selections under this subparagraph—
(I) a PDP sponsor shall ensure that the beneficiary continues to have reasonable access to frequently abused drugs (as defined in subparagraph (G)), taking into account geographic location, beneficiary preference, impact on costsharing, and reasonable travel time; and
(II) a PDP sponsor shall ensure such access (including access to prescribers and pharmacies with respect to frequently abused drugs) in the case of individuals with multiple residences, in the case of natural disasters and similar situations, and in the case of the provision of emergency services.
(iii) Beneficiary preferences
If an at-risk beneficiary for prescription drug abuse submits preferences for which in-network prescribers and pharmacies the beneficiary would prefer the PDP sponsor select in response to a notice under subparagraph (B), the PDP sponsor shall—
(I) review such preferences;
(II) select or change the selection of prescribers and pharmacies for the beneficiary based on such preferences; and
(III) inform the beneficiary of such selection or change of selection.
(iv) Exception regarding beneficiary preferences
In the case that the PDP sponsor determines that a change to the selection of prescriber or pharmacy under clause (iii)(II) by the PDP sponsor is contributing or would contribute to prescription drug abuse or drug diversion by the beneficiary, the PDP sponsor may change the selection of prescriber or pharmacy for the beneficiary without regard to the preferences of the beneficiary described in clause (iii). If the PDP sponsor changes the selection pursuant to the preceding sentence, the PDP sponsor shall provide the beneficiary with—
(I) at least 30 days written notice of the change of selection; and
(II) a rationale for the change.
(v) Confirmation
Before selecting a prescriber or pharmacy under this subparagraph, a PDP sponsor must notify the prescriber and pharmacy that the beneficiary involved has been identified for inclusion in the drug management program for at-risk beneficiaries and that the prescriber and pharmacy has been selected as the beneficiary's designated prescriber and pharmacy.
(E) Terminations and appeals
The identification of an individual as an at-risk beneficiary for prescription drug abuse under this paragraph, a coverage determination made under a drug management program for at-risk beneficiaries, the selection of prescriber or pharmacy under subparagraph (D), and information to be shared under subparagraph (I), with respect to such individual, shall be subject to reconsideration and appeal under subsection (h) and if on reconsideration a PDP sponsor affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the Secretary for review and resolution.
(F) Termination of identification
(i) In general
The Secretary shall develop standards for the termination of identification of an individual as an at-risk beneficiary for prescription drug abuse under this paragraph. Under such standards such identification shall terminate as of the earlier of—
(I) the date the individual demonstrates that the individual is no longer likely, in the absence of the restrictions under this paragraph, to be an at-risk beneficiary for prescription drug abuse described in subparagraph (C)(i); and
(II) the end of such maximum period of identification as the Secretary may specify.
(ii) Rule of construction
Nothing in clause (i) shall be construed as preventing a plan from identifying an individual as an at-risk beneficiary for prescription drug abuse under subparagraph (C)(i) after such termination on the basis of additional information on drug use occurring after the date of notice of such termination.
(G) Frequently abused drug
For purposes of this subsection, the term "frequently abused drug" means a drug that is a controlled substance that the Secretary determines to be frequently abused or diverted.
(H) Data disclosure
(i) Data on decision to impose limitation
In the case of an at-risk beneficiary for prescription drug abuse (or an individual who is a potentially at-risk beneficiary for prescription drug abuse) whose access to coverage for frequently abused drugs under a prescription drug plan has been limited by a PDP sponsor under this paragraph, the Secretary shall establish rules and procedures to require the PDP sponsor to disclose data, including any necessary individually identifiable health information, in a form and manner specified by the Secretary, about the decision to impose such limitations and the limitations imposed by the sponsor under this part.
(ii) Data to reduce fraud, abuse, and waste
The Secretary shall establish rules and procedures to require PDP sponsors operating a drug management program for at-risk beneficiaries under this paragraph to provide the Secretary with such data as the Secretary determines appropriate for purposes of identifying patterns of prescription drug utilization for plan enrollees that are outside normal patterns and that may indicate fraudulent, medically unnecessary, or unsafe use.
(I) Sharing of information for subsequent plan enrollments
The Secretary shall establish procedures under which PDP sponsors who offer prescription drug plans shall share information with respect to individuals who are at-risk beneficiaries for prescription drug abuse (or individuals who are potentially at-risk beneficiaries for prescription drug abuse) and enrolled in a prescription drug plan and who subsequently disenroll from such plan and enroll in another prescription drug plan offered by another PDP sponsor.
(J) Privacy issues
Prior to the implementation of the rules and procedures under this paragraph, the Secretary shall clarify privacy requirements, including requirements under the regulations promulgated pursuant to section 264(c) of the Health Insurance Portability and Accountability Act of 1996 (
(K) Education
The Secretary shall provide education to enrollees in prescription drug plans of PDP sponsors and providers regarding the drug management program for at-risk beneficiaries described in this paragraph, including education—
(i) provided by Medicare administrative contractors through the improper payment outreach and education program described in
(ii) through current education efforts (such as State health insurance assistance programs described in subsection (a)(1)(A) of section 119 of the Medicare Improvements for Patients and Providers Act of 2008 (
(L) Application under MA–PD plans
Pursuant to
(M) CMS compliance review
The Secretary shall ensure that existing plan sponsor compliance reviews and audit processes include the drug management programs for at-risk beneficiaries under this paragraph, including appeals processes under such programs.
(6) 3 Utilization management tool to prevent drug abuse
(A) In general
A tool described in this paragraph is any of the following:
(i) A utilization tool designed to prevent the abuse of frequently abused drugs by individuals and to prevent the diversion of such drugs at pharmacies.
(ii) Retrospective utilization review to identify—
(I) individuals that receive frequently abused drugs at a frequency or in amounts that are not clinically appropriate; and
(II) providers of services or suppliers that may facilitate the abuse or diversion of frequently abused drugs by beneficiaries.
(iii) Consultation with the contractor described in subparagraph (B) to verify if an individual enrolling in a prescription drug plan offered by a PDP sponsor has been previously identified by another PDP sponsor as an individual described in clause (ii)(I).
(B) Reporting
A PDP sponsor offering a prescription drug plan (and an MA organization offering an MA–PD plan) in a State shall submit to the Secretary and the Medicare drug integrity contractor with which the Secretary has entered into a contract under
(i) any provider of services or supplier described in subparagraph (A)(ii)(II) that is identified by such plan sponsor (or organization) during the 30-day period before such report is submitted; and
(ii) the name and prescription records of individuals described in paragraph (5)(C).
(C) CMS compliance review
The Secretary shall ensure that plan sponsor compliance reviews and program audits biennially include a certification that utilization management tools under this paragraph are in compliance with the requirements for such tools.
(6) 3 Providing prescription drug plans with parts A and B claims data to promote the appropriate use of medications and improve health outcomes
(A) Process
Subject to subparagraph (B), the Secretary shall establish a process under which a PDP sponsor of a prescription drug plan may submit a request for the Secretary to provide the sponsor, on a periodic basis and in an electronic format, beginning in plan year 2020, data described in subparagraph (D) with respect to enrollees in such plan. Such data shall be provided without regard to whether such enrollees are described in clause (ii) of paragraph (2)(A).
(B) Purposes
A PDP sponsor may use the data provided to the sponsor pursuant to subparagraph (A) for any of the following purposes:
(i) To optimize therapeutic outcomes through improved medication use, as such phrase is used in clause (i) of paragraph (2)(A).
(ii) To improving care coordination so as to prevent adverse health outcomes, such as preventable emergency department visits and hospital readmissions.
(iii) For any other purpose determined appropriate by the Secretary.
(C) Limitations on data use
A PDP sponsor shall not use data provided to the sponsor pursuant to subparagraph (A) for any of the following purposes:
(i) To inform coverage determinations under this part.
(ii) To conduct retroactive reviews of medically accepted indications determinations.
(iii) To facilitate enrollment changes to a different prescription drug plan or an MA–PD plan offered by the same parent organization.
(iv) To inform marketing of benefits.
(v) For any other purpose that the Secretary determines is necessary to include in order to protect the identity of individuals entitled to, or enrolled for, benefits under this subchapter and to protect the security of personal health information.
(D) Data described
The data described in this clause are standardized extracts (as determined by the Secretary) of claims data under parts A and B for items and services furnished under such parts for time periods specified by the Secretary. Such data shall include data as current as practicable.
(d) Consumer satisfaction surveys
In order to provide for comparative information under
(e) Electronic prescription program
(1) Application of standards
As of such date as the Secretary may specify, but not later than 1 year after the date of promulgation of final standards under paragraph (4)(D), prescriptions and other information described in paragraph (2)(A) for covered part D drugs prescribed for part D eligible individuals that are transmitted electronically shall be transmitted only in accordance with such standards under an electronic prescription drug program that meets the requirements of paragraph (2).
(2) Program requirements
Consistent with uniform standards established under paragraph (3)—
(A) Provision of information to prescribing health care professional and dispensing pharmacies and pharmacists
An electronic prescription drug program shall provide for the electronic transmittal to the prescribing health care professional and to the dispensing pharmacy and pharmacist of the prescription and information on eligibility and benefits (including the drugs included in the applicable formulary, any tiered formulary structure, and any requirements for prior authorization) and of the following information with respect to the prescribing and dispensing of a covered part D drug:
(i) Information on the drug being prescribed or dispensed and other drugs listed on the medication history, including information on drug-drug interactions, warnings or cautions, and, when indicated, dosage adjustments.
(ii) Information on the availability of lower cost, therapeutically appropriate alternatives (if any) for the drug prescribed.
(B) Application to medical history information
Effective on and after such date as the Secretary specifies and after the establishment of appropriate standards to carry out this subparagraph, the program shall provide for the electronic transmittal in a manner similar to the manner under subparagraph (A) of information that relates to the medical history concerning the individual and related to a covered part D drug being prescribed or dispensed, upon request of the professional or pharmacist involved.
(C) Limitations
Information shall only be disclosed under subparagraph (A) or (B) if the disclosure of such information is permitted under the Federal regulations (concerning the privacy of individually identifiable health information) promulgated under section 264(c) of the Health Insurance Portability and Accountability Act of 1996.
(D) Timing
To the extent feasible, the information exchanged under this paragraph shall be on an interactive, real-time basis.
(E) Electronic prior authorization
(i) In general
Not later than January 1, 2021, the program shall provide for the secure electronic transmission of—
(I) a prior authorization request from the prescribing health care professional for coverage of a covered part D drug for a part D eligible individual enrolled in a part D plan (as defined in
(II) a response, in accordance with this subparagraph, from such PDP sponsor or Medicare Advantage organization, respectively, to such professional.
(ii) Electronic transmission
(I) Exclusions
For purposes of this subparagraph, a facsimile, a proprietary payer portal that does not meet standards specified by the Secretary, or an electronic form shall not be treated as an electronic transmission described in clause (i).
(II) Standards
In order to be treated, for purposes of this subparagraph, as an electronic transmission described in clause (i), such transmission shall comply with technical standards adopted by the Secretary in consultation with the National Council for Prescription Drug Programs, other standard setting organizations determined appropriate by the Secretary, and stakeholders including PDP sponsors, Medicare Advantage organizations, health care professionals, and health information technology software vendors.
(III) Application
Notwithstanding any other provision of law, for purposes of this subparagraph, the Secretary may require the use of such standards adopted under subclause (II) in lieu of any other applicable standards for an electronic transmission described in clause (i) for a covered part D drug for a part D eligible individual.
(3) Standards
(A) In general
The Secretary shall provide consistent with this subsection for the promulgation of uniform standards relating to the requirements for electronic prescription drug programs under paragraph (2).
(B) Objectives
Such standards shall be consistent with the objectives of improving—
(i) patient safety;
(ii) the quality of care provided to patients; and
(iii) efficiencies, including cost savings, in the delivery of care.
(C) Design criteria
Such standards shall—
(i) be designed so that, to the extent practicable, the standards do not impose an undue administrative burden on prescribing health care professionals and dispensing pharmacies and pharmacists;
(ii) be compatible with standards established under part C of subchapter XI, standards established under subsection (b)(2)(B)(i), and with general health information technology standards; and
(iii) be designed so that they permit electronic exchange of drug labeling and drug listing information maintained by the Food and Drug Administration and the National Library of Medicine.
(D) Permitting use of appropriate messaging
Such standards shall allow for the messaging of information only if it relates to the appropriate prescribing of drugs, including quality assurance measures and systems referred to in subsection (c)(1)(B).
(E) Permitting patient designation of dispensing pharmacy
(i) In general
Consistent with clause (ii), such standards shall permit a part D eligible individual to designate a particular pharmacy to dispense a prescribed drug.
(ii) No change in benefits
Clause (i) shall not be construed as affecting—
(I) the access required to be provided to pharmacies by a prescription drug plan; or
(II) the application of any differences in benefits or payments under such a plan based on the pharmacy dispensing a covered part D drug.
(4) Development, promulgation, and modification of standards
(A) Initial standards
Not later than September 1, 2005, the Secretary shall develop, adopt, recognize, or modify initial uniform standards relating to the requirements for electronic prescription drug programs described in paragraph (2) taking into consideration the recommendations (if any) from the National Committee on Vital and Health Statistics (as established under
(B) Role of NCVHS
The National Committee on Vital and Health Statistics shall develop recommendations for uniform standards relating to such requirements in consultation with the following:
(i) Standard setting organizations (as defined in
(ii) Practicing physicians.
(iii) Hospitals.
(iv) Pharmacies.
(v) Practicing pharmacists.
(vi) Pharmacy benefit managers.
(vii) State boards of pharmacy.
(viii) State boards of medicine.
(ix) Experts on electronic prescribing.
(x) Other appropriate Federal agencies.
(C) Pilot project to test initial standards
(i) In general
During the 1-year period that begins on January 1, 2006, the Secretary shall conduct a pilot project to test the initial standards developed under subparagraph (A) prior to the promulgation of the final uniform standards under subparagraph (D) in order to provide for the efficient implementation of the requirements described in paragraph (2).
(ii) Exception
Pilot testing of standards is not required under clause (i) where there already is adequate industry experience with such standards, as determined by the Secretary after consultation with effected standard setting organizations and industry users.
(iii) Voluntary participation of physicians and pharmacies
In order to conduct the pilot project under clause (i), the Secretary shall enter into agreements with physicians, physician groups, pharmacies, hospitals, PDP sponsors, MA organizations, and other appropriate entities under which health care professionals electronically transmit prescriptions to dispensing pharmacies and pharmacists in accordance with such standards.
(iv) Evaluation and report
(I) Evaluation
The Secretary shall conduct an evaluation of the pilot project conducted under clause (i).
(II) Report to Congress
Not later than April 1, 2007, the Secretary shall submit to Congress a report on the evaluation conducted under subclause (I).
(D) Final standards
Based upon the evaluation of the pilot project under subparagraph (C)(iv)(I) and not later than April 1, 2008, the Secretary shall promulgate uniform standards relating to the requirements described in paragraph (2).
(5) Relation to State laws
The standards promulgated under this subsection shall supersede any State law or regulation that—
(A) is contrary to the standards or restricts the ability to carry out this part; and
(B) pertains to the electronic transmission of medication history and of information on eligibility, benefits, and prescriptions with respect to covered part D drugs under this part.
(6) Establishment of safe harbor
The Secretary, in consultation with the Attorney General, shall promulgate regulations that provide for a safe harbor from sanctions under paragraphs (1) and (2) of
(A) in the case of a hospital, by the hospital to members of its medical staff;
(B) in the case of a group practice (as defined in
(C) in the case of a PDP sponsor or MA organization, by the sponsor or organization to pharmacists and pharmacies participating in the network of such sponsor or organization, and to prescribing health care professionals.
(7) Requirement of e-prescribing for controlled substances
(A) In general
Subject to subparagraph (B), a prescription for a covered part D drug under a prescription drug plan (or under an MA–PD plan) for a schedule II, III, IV, or V controlled substance shall be transmitted by a health care practitioner electronically in accordance with an electronic prescription drug program that meets the requirements of paragraph (2).
(B) Exception for certain circumstances
The Secretary shall, through rulemaking, specify circumstances and processes by which the Secretary may waive the requirement under subparagraph (A), with respect to a covered part D drug, including in the case of—
(i) a prescription issued when the practitioner and dispensing pharmacy are the same entity;
(ii) a prescription issued that cannot be transmitted electronically under the most recently implemented version of the National Council for Prescription Drug Programs SCRIPT Standard;
(iii) a prescription issued by a practitioner who received a waiver or a renewal thereof for a period of time as determined by the Secretary, not to exceed one year, from the requirement to use electronic prescribing due to demonstrated economic hardship, technological limitations that are not reasonably within the control of the practitioner, or other exceptional circumstance demonstrated by the practitioner;
(iv) a prescription issued by a practitioner under circumstances in which, notwithstanding the practitioner's ability to submit a prescription electronically as required by this subsection, such practitioner reasonably determines that it would be impractical for the individual involved to obtain substances prescribed by electronic prescription in a timely manner, and such delay would adversely impact the individual's medical condition involved;
(v) a prescription issued by a practitioner prescribing a drug under a research protocol;
(vi) a prescription issued by a practitioner for a drug for which the Food and Drug Administration requires a prescription to contain elements that are not able to be included in electronic prescribing, such as a drug with risk evaluation and mitigation strategies that include elements to assure safe use;
(vii) a prescription issued by a practitioner—
(I) for an individual who receives hospice care under this subchapter; and
(II) that is not covered under the hospice benefit under this subchapter; and
(viii) a prescription issued by a practitioner for an individual who is—
(I) a resident of a nursing facility (as defined in
(II) dually eligible for benefits under this subchapter and subchapter XIX.
(C) Dispensing
(i) Nothing in this paragraph shall be construed as requiring a sponsor of a prescription drug plan under this part, MA organization offering an MA–PD plan under part C, or a pharmacist to verify that a practitioner, with respect to a prescription for a covered part D drug, has a waiver (or is otherwise exempt) under subparagraph (B) from the requirement under subparagraph (A).
(ii) Nothing in this paragraph shall be construed as affecting the ability of the plan to cover or the pharmacists' ability to continue to dispense covered part D drugs from otherwise valid written, oral, or fax prescriptions that are consistent with laws and regulations.
(iii) Nothing in this paragraph shall be construed as affecting the ability of an individual who is being prescribed a covered part D drug to designate a particular pharmacy to dispense the covered part D drug to the extent consistent with the requirements under subsection (b)(1) and under this paragraph.
(D) Enforcement
The Secretary shall, through rulemaking, have authority to enforce and specify appropriate penalties for non-compliance with the requirement under subparagraph (A).
(f) Grievance mechanism
Each PDP sponsor shall provide meaningful procedures for hearing and resolving grievances between the sponsor (including any entity or individual through which the sponsor provides covered benefits) and enrollees with prescription drug plans of the sponsor under this part in accordance with
(g) Coverage determinations and reconsiderations
(1) Application of coverage determination and reconsideration provisions
A PDP sponsor shall meet the requirements of paragraphs (1) through (3) of
(2) Request for a determination for the treatment of tiered formulary drug
In the case of a prescription drug plan offered by a PDP sponsor that provides for tiered cost-sharing for drugs included within a formulary and provides lower cost-sharing for preferred drugs included within the formulary, a part D eligible individual who is enrolled in the plan may request an exception to the tiered cost-sharing structure. Under such an exception, a nonpreferred drug could be covered under the terms applicable for preferred drugs if the prescribing physician determines that the preferred drug for treatment of the same condition either would not be as effective for the individual or would have adverse effects for the individual or both. A PDP sponsor shall have an exceptions process under this paragraph consistent with guidelines established by the Secretary for making a determination with respect to such a request. Denial of such an exception shall be treated as a coverage denial for purposes of applying subsection (h).
(h) Appeals
(1) In general
Subject to paragraph (2), a PDP sponsor shall meet the requirements of paragraphs (4) and (5) of
(2) Limitation in cases on nonformulary determinations
A part D eligible individual who is enrolled in a prescription drug plan offered by a PDP sponsor may appeal under paragraph (1) a determination not to provide for coverage of a covered part D drug that is not on the formulary under the plan only if the prescribing physician determines that all covered part D drugs on any tier of the formulary for treatment of the same condition would not be as effective for the individual as the nonformulary drug, would have adverse effects for the individual, or both.
(3) Treatment of nonformulary determinations
If a PDP sponsor determines that a plan provides coverage for a covered part D drug that is not on the formulary of the plan, the drug shall be treated as being included on the formulary for purposes of
(i) Privacy, confidentiality, and accuracy of enrollee records
The provisions of
(j) Treatment of accreditation
Subparagraph (A) of
(1) Subsection (b) of this section (relating to access to covered part D drugs).
(2) Subsection (c) of this section (including quality assurance and medication therapy management).
(3) Subsection (i) of this section (relating to confidentiality and accuracy of enrollee records).
(k) Public disclosure of pharmaceutical prices for equivalent drugs
(1) In general
A PDP sponsor offering a prescription drug plan shall provide that each pharmacy that dispenses a covered part D drug shall inform an enrollee of any differential between the price of the drug to the enrollee and the price of the lowest priced generic covered part D drug under the plan that is therapeutically equivalent and bioequivalent and available at such pharmacy.
(2) Timing of notice
(A) In general
Subject to subparagraph (B), the information under paragraph (1) shall be provided at the time of purchase of the drug involved, or, in the case of dispensing by mail order, at the time of delivery of such drug.
(B) Waiver
The Secretary may waive subparagraph (A) in such circumstances as the Secretary may specify.
(l) Requirements with respect to sales and marketing activities
The following provisions shall apply to a PDP sponsor (and the agents, brokers, and other third parties representing such sponsor) in the same manner as such provisions apply to a Medicare Advantage organization (and the agents, brokers, and other third parties representing such organization):
(1) The prohibition under
(2) The requirement under
(3) The inclusion of the plan type in the plan name under
(4) The requirements regarding the appointment of agents and brokers and compliance with State information requests under subparagraphs (A) and (B), respectively, of
(m) 5 Prohibition on limiting certain information on drug prices
A PDP sponsor and a Medicare Advantage organization shall ensure that each prescription drug plan or MA–PD plan offered by the sponsor or organization does not restrict a pharmacy that dispenses a prescription drug or biological from informing, nor penalize such pharmacy for informing, an enrollee in such plan of any differential between the negotiated price of, or copayment or coinsurance for, the drug or biological to the enrollee under the plan and a lower price the individual would pay for the drug or biological if the enrollee obtained the drug without using any health insurance coverage.
(m) 5 Program integrity transparency measures
For program integrity transparency measures applied with respect to prescription drug plan and MA plans, see
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–4, as added
Applicability of Amendments
Amendment of section by section 2003(a) of
Amendment of section by section 2007(a) of
References in Text
Section 6052 of the SUPPORT for Patients and Communities Act, referred to in subsec. (c)(4)(D)(v)(I), is section 6052 of title VI of
Section 264(c) of the Health Insurance Portability and Accountability Act of 1996, referred to in subsecs. (c)(5)(J) and (e)(2)(C), is section 264(c) of
Section 119 of the Medicare Improvements for Patients and Providers Act of 2008, referred to in subsec. (c)(5)(K)(ii), is section 119 of
Amendments
2020—Subsec. (b)(4).
2018—Subsec. (a)(1)(A).
Subsec. (a)(1)(B)(vi).
Subsec. (a)(1)(C).
Subsec. (c)(1)(F).
Subsec. (c)(2)(A)(ii).
Subsec. (c)(2)(B).
Subsec. (c)(4)(D).
Subsec. (c)(5)(A).
Subsec. (c)(5)(B)(ii)(III), (iii)(IV).
Subsec. (c)(5)(C)(i).
Subsec. (c)(5)(C)(v).
Subsec. (c)(5)(E).
Subsec. (c)(6).
Subsec. (e)(2)(E).
Subsec. (e)(7).
Subsec. (m).
2016—Subsec. (a)(1)(B)(v).
Subsec. (c)(1)(E).
Subsec. (c)(5).
Subsec. (c)(6).
2015—Subsec. (c)(4).
2010—Subsec. (b)(3)(G).
Subsec. (b)(3)(H).
Subsec. (c)(2)(C) to (G).
Subsec. (c)(3).
2008—Subsec. (b)(3)(C)(i).
Subsec. (b)(3)(G).
Subsec. (l).
Subsec. (l)(2).
Subsec. (l)(3).
Subsec. (l)(4).
Effective Date of 2018 Amendment
Effective Date of 2016 Amendment
Amendment by
Effective Date of 2010 Amendment
Effective Date of 2008 Amendment
Amendment by section 103(a)(2) of
Amendment by section 103(b)(2) of
Amendment by section 103(d)(2) of
Rule of Construction
Implementation of 2020 Amendment
Update of Biometric Component of Multifactor Authentication
Grants To Provide Technical Assistance to Outlier Prescribers of Opioids
"(a)
"(b)
"(1) to educate and provide outreach to outlier prescribers of opioids about best practices for prescribing opioids;
"(2) to educate and provide outreach to outlier prescribers of opioids about non-opioid pain management therapies; and
"(3) to reduce the amount of opioid prescriptions prescribed by outlier prescribers of opioids.
"(c)
"(d)
"(e)
"(1)
"(A) an organization—
"(i) that has demonstrated experience providing technical assistance to health care professionals on a State or regional basis; and
"(ii) that has at least—
"(I) one individual who is a representative of consumers on its governing body; and
"(II) one individual who is a representative of health care providers on its governing body; or
"(B) an entity that is a quality improvement entity with a contract under part B of title XI of the Social Security Act (
"(2)
"(3)
"(f)
Grants to Physicians To Implement Electronic Prescription Drug Programs
"(a)
"(b)
"(1)
"(2)
"(A) give special consideration to physicians who serve a disproportionate number of medicare patients; and
"(B) give preference to physicians who serve a rural or underserved area.
"(3)
"(c)
"(1)
"(2)
"(A) For purchasing, leasing, and installing computer software and hardware, including handheld computer technologies.
"(B) Making upgrades and other improvements to existing computer software and hardware to enable e-prescribing.
"(C) Providing education and training to eligible physician staff on the use of technology to implement the electronic transmission of prescription and patient information.
"(3)
"(A) evaluate the project for which the grant is made; and
"(B) ensure that funding provided under the grant is expended only for the purposes for which it is made.
"(4)
"(5)
"(d)
1 So in original. Probably means first par. (6).
2 So in original. Two subpars. (E) have been enacted.
3 So in original. Two pars. (6) have been enacted.
4 So in original. Probably should be followed by a period.
5 So in original. Two subsecs. (m) have been enacted.
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; and
(2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.
(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
References in Text
Codification
In subsec. (g)(1)(B)(iii), "
Amendments
2010—Subsec. (d)(3).
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)".
§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); 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.
(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
Amendments
2018—Subsec. (b)(7).
2008—Subsec. (b)(3)(D).
Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (b)(6).
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) 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
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; 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; and
(ii) the base beneficiary premium (as computed under paragraph (2)).
(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)) 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.
(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 subsection (a)(2)) 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
Amendments
2010—Subsec. (a)(1)(F), (G).
Subsec. (a)(7).
Subsec. (c)(1).
Subsec. (c)(4).
2008—Subsec. (b)(8).
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 individuals with income up to 150 percent of poverty line
(1) Individuals with income below 135 percent of poverty line
In the case of a subsidy eligible individual (as defined in paragraph (3)) who is determined to have income that is below 135 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 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
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
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
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
The elimination of any cost-sharing imposed under
(2) Other individuals with income below 150 percent of poverty line
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
A reduction in the annual deductible applicable under
(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
The substitution for the beneficiary coinsurance described in
(E) Reduction of cost-sharing above annual out-of-pocket threshold
Subject to 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.
(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) 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
Amendments
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).
Effective Date of 2010 Amendment
Amendment by section 3303(a) of
Effective Date of 2008 Amendment
Amendment by section 114(a)(2) 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
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
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14A, as added
Amendments
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–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 for basic prescription drug coverage, to reduce adverse selection among prescription drug plans and MA–PD plans, and to promote the participation of PDP sponsors under this part and MA organizations under part C, the Secretary shall provide for payment to a PDP sponsor that offers a prescription drug plan and an MA organization that offers an MA–PD plan of the following subsidies in accordance with this section:
(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) 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 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
(2) Allowable reinsurance costs
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.
(3) Gross covered prescription drug costs
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, regardless of whether the coverage under the plan exceeds basic prescription drug coverage.
(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; and
(ii) conducting oversight, evaluation, and enforcement under this subchapter; and
(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.
(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
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–15, as added
References in Text
Amendments
2010—Subsec. (f)(2).
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
(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
subpart 3—application to medicare advantage program and treatment of employer-sponsored programs and other prescription drug plans
§1395w–131. Application to Medicare Advantage program and related managed care programs
(a) Special rules relating to offering of qualified prescription drug coverage
(1) In general
An MA organization on and after January 1, 2006—
(A) may not offer an MA plan described in
(B) may not offer prescription drug coverage (other than that required under parts A and B) to an enrollee—
(i) under an MSA plan; or
(ii) under another MA plan unless such drug coverage under such other plan provides qualified prescription drug coverage and unless the requirements of this section with respect to such coverage are met.
(2) Qualifying coverage
For purposes of paragraph (1)(A), the term "required coverage" means with respect to an MA–PD plan—
(A) basic prescription drug coverage; or
(B) qualified prescription drug coverage that provides supplemental prescription drug coverage, so long as there is no MA monthly supplemental beneficiary premium applied under the plan (due to the application of a credit against such premium of a rebate under
(b) Application of default enrollment rules
(1) Seamless continuation
In applying
(2) MA continuation
In applying
(A) for purposes of the election as of January 1, 2006, the MA plan provided as of December 31, 2005, any prescription drug coverage; or
(B) for periods after January 1, 2006, such MA plan is an MA–PD plan.
(3) Discontinuance of MA–PD election during first year of eligibility
In applying the second sentence of
(4) Rules regarding enrollees in MA plans not providing qualified prescription drug coverage
In the case of an individual who is enrolled in an MA plan (other than an MSA plan) that does not provide qualified prescription drug coverage, if the organization offering such coverage discontinues the offering with respect to the individual of all MA plans that do not provide such coverage—
(i) the individual is deemed to have elected the original medicare fee-for-service program option, unless the individual affirmatively elects to enroll in an MA–PD plan; and
(ii) in the case of such a deemed election, the disenrollment shall be treated as an involuntary termination of the MA plan described in subparagraph (B)(ii) of
The information disclosed under
(c) Application of part D rules for prescription drug coverage
With respect to the offering of qualified prescription drug coverage by an MA organization under this part on and after January 1, 2006—
(1) In general
Except as otherwise provided, the provisions of this part shall apply under part C with respect to prescription drug coverage provided under MA–PD plans in lieu of the other provisions of part C that would apply to such coverage under such plans.
(2) Waiver
The Secretary shall waive the provisions referred to in paragraph (1) to the extent the Secretary determines that such provisions duplicate, or are in conflict with, provisions otherwise applicable to the organization or plan under part C or as may be necessary in order to improve coordination of this part with the benefits under this part.
(3) Treatment of MA owned and operated pharmacies
The Secretary may waive the requirement of
(d) Special rules for private fee-for-service plans that offer prescription drug coverage
With respect to an MA plan described in
(1) Requirements regarding negotiated prices
Subsections (a)(1) and (d)(1) of
(2) Modification of pharmacy access standard and disclosure requirement
If the plan provides coverage for drugs purchased from all pharmacies, without charging additional cost-sharing, and without regard to whether they are participating pharmacies in a network or have entered into contracts or agreements with pharmacies to provide drugs to enrollees covered by the plan, subsections (b)(1)(C) and (k) of
(3) Drug utilization management program and medication therapy management program not required
The requirements of subparagraphs (A) and (C) of
(4) Application of reinsurance
The Secretary shall determine the amount of reinsurance payments under
(A) bases such amount on the Secretary's estimate of the amount of such payments that would be payable if the plan were an MA–PD plan described in
(B) takes into account the average reinsurance payments made under
(5) Exemption from risk corridor provisions
The provisions of
(6) Exemption from negotiations
Subsections (d) and (e)(2)(C) of
(7) Treatment of incurred costs without regard to formulary
The exclusion of costs incurred for covered part D drugs which are not included (or treated as being included) in a plan's formulary under
(e) Application to reasonable cost reimbursement contractors
(1) In general
Subject to paragraphs (2) and (3) and rules established by the Secretary, in the case of an organization that is providing benefits under a reasonable cost reimbursement contract under
(2) Limitation on enrollment
In applying paragraph (1), the organization may not enroll part D eligible individuals who are not enrolled under the reasonable cost reimbursement contract involved.
(3) Bids not included in determining national average monthly bid amount
The bid of an organization offering prescription drug coverage under this subsection shall not be taken into account in computing the national average monthly bid amount and low-income benchmark premium amount under this part.
(f) Application to PACE
(1) In general
Subject to paragraphs (2) and (3) and rules established by the Secretary, in the case of a PACE program under
(2) Limitation on enrollment
In applying paragraph (1), the organization may not enroll part D eligible individuals who are not enrolled under the PACE program involved.
(3) Bids not included in determining standardized bid amount
The bid of an organization offering prescription drug coverage under this subsection is not be taken into account in computing any average benchmark bid amount and low-income benchmark premium amount under this part.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–21, as added
§1395w–132. Special rules for employer-sponsored programs
(a) Subsidy payment
(1) In general
The Secretary shall provide in accordance with this subsection for payment to the sponsor of a qualified retiree prescription drug plan (as defined in paragraph (2)) of a special subsidy payment equal to the amount specified in paragraph (3) for each qualified covered retiree under the plan (as defined in paragraph (4)). This subsection 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.
(2) Qualified retiree prescription drug plan defined
For purposes of this subsection, the term "qualified retiree prescription drug plan" means employment-based retiree health coverage (as defined in subsection (c)(1)) if, with respect to a part D eligible individual who is a participant or beneficiary under such coverage, the following requirements are met:
(A) Attestation of actuarial equivalence to standard coverage
The sponsor of the plan provides the Secretary, annually or at such other time as the Secretary may require, with an attestation that the actuarial value of prescription drug coverage under the plan (as determined using the processes and methods described in
(B) Audits
The sponsor of the plan, or an administrator of the plan designated by the sponsor, shall maintain (and afford the Secretary access to) such records as the Secretary may require for purposes of audits and other oversight activities necessary to ensure the adequacy of prescription drug coverage and the accuracy of payments made under this section. The provisions of
(C) Provision of disclosure regarding prescription drug coverage
The sponsor of the plan shall provide for disclosure of information regarding prescription drug coverage in accordance with
(3) Employer and union special subsidy amounts
(A) In general
For purposes of this subsection, the special subsidy payment amount under this paragraph for a qualifying covered retiree for a coverage year enrolled with the sponsor of a qualified retiree prescription drug plan is, for the portion of the retiree's gross covered retiree plan-related prescription drug costs (as defined in subparagraph (C)(ii)) for such year that exceeds the cost threshold amount specified in subparagraph (B) and does not exceed the cost limit under such subparagraph, an amount equal to 28 percent of the allowable retiree costs (as defined in subparagraph (C)(i)) attributable to such gross covered prescription drug costs.
(B) Cost threshold and cost limit applicable
(i) In general
Subject to clause (ii)—
(I) the cost threshold under this subparagraph is equal to $250 for plan years that end in 2006; and
(II) the cost limit under this subparagraph is equal to $5,000 for plan years that end in 2006.
(ii) Indexing
The cost threshold and cost limit amounts specified in subclauses (I) and (II) of clause (i) for a plan year that ends after 2006 shall be adjusted in the same manner as the annual deductible and the annual out-of-pocket threshold, respectively, are annually adjusted under paragraphs (1) and (4)(B) of
(C) Definitions
For purposes of this paragraph:
(i) Allowable retiree costs
The term "allowable retiree costs" means, with respect to gross covered prescription drug costs under a qualified retiree prescription drug plan by a plan sponsor, the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or by or on behalf of a qualifying covered retiree under the plan.
(ii) Gross covered retiree plan-related prescription drug costs
For purposes of this section, the term "gross covered retiree plan-related prescription drug costs" means, with respect to a qualifying covered retiree enrolled in a qualified retiree prescription drug 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. Such costs shall be determined whether they are paid by the retiree or under the plan.
(iii) Coverage year
The term "coverage year" has the meaning given such term in
(4) Qualifying covered retiree defined
For purposes of this subsection, the term "qualifying covered retiree" means a part D eligible individual who is not enrolled in a prescription drug plan or an MA–PD plan but is covered under a qualified retiree prescription drug plan.
(5) Payment methods, including provision of necessary information
The provisions of
(6) Construction
Nothing in this subsection shall be construed as—
(A) precluding a part D eligible individual who is covered under employment-based retiree health coverage from enrolling in a prescription drug plan or in an MA–PD plan;
(B) precluding such employment-based retiree health coverage or an employer or other person from paying all or any portion of any premium required for coverage under a prescription drug plan or MA–PD plan on behalf of such an individual;
(C) preventing such employment-based retiree health coverage from providing coverage—
(i) that is better than standard prescription drug coverage to retirees who are covered under a qualified retiree prescription drug plan; or
(ii) that is supplemental to the benefits provided under a prescription drug plan or an MA–PD plan, including benefits to retirees who are not covered under a qualified retiree prescription drug plan but who are enrolled in such a prescription drug plan or MA–PD plan; or
(D) preventing employers to provide for flexibility in benefit design and pharmacy access provisions, without regard to the requirements for basic prescription drug coverage, so long as the actuarial equivalence requirement of paragraph (2)(A) is met.
(b) Application of MA waiver authority
The provisions of
(c) Definitions
For purposes of this section:
(1) Employment-based retiree health coverage
The term "employment-based retiree health coverage" means health insurance or other coverage of health care costs (whether provided by voluntary insurance coverage or pursuant to statutory or contractual obligation) for part D eligible individuals (or for such individuals and their spouses and dependents) under a group health plan based on their status as retired participants in such plan.
(2) Sponsor
The term "sponsor" means a plan sponsor, as defined in
(3) Group health plan
The term "group health plan" includes such a plan as defined in
(A) Federal and State governmental plans
Such a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing, including a health benefits plan offered under
(B) Collectively bargained plans
Such a plan established or maintained under or pursuant to one or more collective bargaining agreements.
(C) Church plans
Such a plan established and maintained for its employees (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under section 501 of the Internal Revenue Code of 1986.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–22, as added
References in Text
The Internal Revenue Code of 1986, referred to in subsec. (c)(3)(C), is classified generally to Title 26, Internal Revenue Code.
Amendments
2010—Subsec. (a)(2)(A).
Study on Employment-Based Retiree Health Coverage
"(a)
"(b)
"(1) Trends in employment-based retiree health coverage prior to the date of the enactment of this Act [Dec. 8, 2003].
"(2) The opinions of sponsors of employment-based retiree health coverage concerning which of the options available under this Act [see Tables for classification] they are most likely to utilize for the provision of health coverage to their medicare-eligible retirees, including an assessment of the administrative burdens associated with the available options.
"(3) The likelihood of sponsors of employment-based retiree health coverage to maintain or adjust their levels of retiree health benefits beyond coordination with medicare, including for prescription drug coverage, provided to medicare-eligible retirees after the date of the enactment of this Act.
"(4) The factors that sponsors of employment-based retiree health coverage expect to consider in making decisions about any changes they may make in the health coverage provided to medicare-eligible retirees.
"(5) Whether the prescription drug plan options available, or the health plan options available under the Medicare Advantage program, are likely to cause employers and other entities that did not provide health coverage to retirees prior to the date of the enactment of this Act to provide supplemental coverage or contributions toward premium expenses for medicare-eligible retirees who may enroll in such options in the future.
"(c)
"(1) Changes in the trends in employment-based retiree health coverage since the completion of the initial study by the Comptroller General.
"(2) Factors contributing to any changes in coverage levels.
"(3) The number and characteristics of sponsors of employment-based retiree health coverage who receive the special subsidy payments under section 1860D–22 of the Social Security Act [
"(4) The extent to which sponsors of employment-based retiree health coverage provide supplemental health coverage or contribute to the premiums for medicare-eligible retirees who enroll in a prescription drug plan or an MA–PD plan.
"(5) Other coverage options, including tax-preferred retirement or health savings accounts, consumer-directed health plans, or other vehicles that sponsors of employment-based retiree health coverage believe would assist retirees with their future health care needs and their willingness to sponsor such alternative plan designs.
"(6) The extent to which employers or other entities that did not provide employment-based retiree health coverage prior to the date of the enactment of this Act [Dec. 8, 2003] provided some form of coverage or financial assistance for retiree health care needs after the date of the enactment of this Act.
"(7) Recommendations by employers, benefits experts, academics, and others on ways that the voluntary provision of employment-based retiree health coverage may be improved and expanded.
"(d)
"(1) the initial study under subsection (b) not later than 1 year after the date of the enactment of this Act [Dec. 8, 2003]; and
"(2) the final study under subsection (c) not later than January 1, 2007.
"(e)
§1395w–133. State Pharmaceutical Assistance Programs
(a) Requirements for benefit coordination
(1) In general
Before July 1, 2005, the Secretary shall establish consistent with this section requirements for prescription drug plans to ensure the effective coordination between a part D plan (as defined in paragraph (5)) and a State Pharmaceutical Assistance Program (as defined in subsection (b)) with respect to—
(A) payment of premiums and coverage; and
(B) payment for supplemental prescription drug benefits,
for part D eligible individuals enrolled under both types of plans.
(2) Coordination elements
The requirements under paragraph (1) shall include requirements relating to coordination of each of the following:
(A) Enrollment file sharing.
(B) The processing of claims, including electronic processing.
(C) Claims payment.
(D) Claims reconciliation reports.
(E) Application of the protection against high out-of-pocket expenditures under
(F) Other administrative processes specified by the Secretary.
Such requirements shall be consistent with applicable law to safeguard the privacy of any individually identifiable beneficiary information.
(3) Use of lump sum per capita method
Such requirements shall include a method for the application by a part D plan of specified funding amounts from a State Pharmaceutical Assistance Program for enrolled individuals for supplemental prescription drug benefits.
(4) Consultation
In establishing requirements under this subsection, the Secretary shall consult with State Pharmaceutical Assistance Programs, MA organizations, States, pharmaceutical benefit managers, employers, representatives of part D eligible individuals, the data processing experts, pharmacists, pharmaceutical manufacturers, and other experts.
(5) Part D plan defined
For purposes of this section and
(b) State Pharmaceutical Assistance Program
For purposes of this part, the term "State Pharmaceutical Assistance Program" means a State program—
(1) which provides financial assistance for the purchase or provision of supplemental prescription drug coverage or benefits on behalf of part D eligible individuals;
(2) which, in determining eligibility and the amount of assistance to part D eligible individuals under the Program, provides assistance to such individuals in all part D plans and does not discriminate based upon the part D plan in which the individual is enrolled; and
(3) which satisfies the requirements of subsections (a) and (c).
(c) Relation to other provisions
(1) Medicare as primary payor
The requirements of this section shall not change or affect the primary payor status of a part D plan.
(2) Use of a single card
A card that is issued under
(3) Other provisions
The provisions of
(4) Special treatment under out-of-pocket rule
In applying
(5) Construction
Nothing in this section shall be construed as requiring a State Pharmaceutical Assistance Program to coordinate or provide financial assistance with respect to any part D plan.
(d) Facilitation of transition and coordination with State Pharmaceutical Assistance Programs
(1) Transitional grant program
The Secretary shall provide payments to State Pharmaceutical Assistance Programs with an application approved under this subsection.
(2) Use of funds
Payments under this section may be used by a Program for any of the following:
(A) Educating part D eligible individuals enrolled in the Program about the prescription drug coverage available through part D plans under this part.
(B) Providing technical assistance, phone support, and counseling for such enrollees to facilitate selection and enrollment in such plans.
(C) Other activities designed to promote the effective coordination of enrollment, coverage, and payment between such Program and such plans.
(3) Allocation of funds
Of the amount appropriated to carry out this subsection for a fiscal year, the Secretary shall allocate payments among Programs that have applications approved under paragraph (4) for such fiscal year in proportion to the number of enrollees enrolled in each such Program as of October 1, 2003.
(4) Application
No payments may be made under this subsection except pursuant to an application that is submitted and approved in a time, manner, and form specified by the Secretary.
(5) Funding
Out of any funds in the Treasury not otherwise appropriated, there are appropriated for each of fiscal years 2005 and 2006, $62,500,000 to carry out this subsectio