Employer/Union Direct Contract MA-PD
MEDICARE PRESCRIPTION DRUG BENEFIT
2009 Solicitation for Applications for New Employer/Union Direct Contract Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors
2010 Contract YearJanuary 24, 2008
PUBLIC REPORTING BURDEN: According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0936. The time required to complete this information collection is estimated to average 37.25 hours per response, including the time to review instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have any comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500 Security Boulevard, C4-26-05, Baltimore, Maryland 21244-1850.
BACKGROUND:
The Medicare Modernization Act (MMA) provides employers and unions with a number of options for providing prescription drug coverage to their Medicare-eligible active employees or retirees. Under the MMA, those options include making special arrangements with Medicare Advantage Organizations (MAOs) and Section 1876 Cost Plans to purchase customized benefits, including drug benefits, for their members; purchasing benefits from sponsors of prescription drug-only plans (PDPs); and directly contracting with CMS to become Part D plan sponsors themselves. Each of these approaches involves the use of CMS waivers authorized under Sections 1857(i) or 1860D-22(b) of the Social Security Act (SSA). Under this authority, CMS may waive or modify requirements that “hinder the design of, the offering of, or the enrollment in” employer-sponsored group plans.
This application is to be used by employers or unions seeking to directly contract with CMS to become a Part D Medicare Advantage Organization (“Direct Contract MA-PD”) for their Medicare eligible active employees and/or retirees. Please follow the application instructions below and submit the required material in support of your application to offer a Direct Contract MA-PD.
Which Applicants Should Complete This Application?
This application is to be used by employers or unions seeking to directly contract with CMS to become Part D Medicare Advantage Organizations (“Direct Contract MA-PD”) for their Medicare eligible active employees and/or retirees. Please follow the application instructions below and submit the required material in support of your application to offer a Direct Contract MA-PD.
APPLICATION INSTRUCTIONS:
Applications must be submitted by 11:59 PM EST on February 26, 2009March 10, 2008, by all employers or unions seeking to offer a Direct Contract MA-PD.
Which Application Materials Must Be Submitted and How Must These Materials Be Submitted?
All Direct Contract MA-PD Applicants must complete and submit the following:
(1) The 20109 Medicare Advantage Application. This portion of the application is submitted electronically through the Health Plan Management System (HPMS).
(2) The 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors. This portion of the application is submitted electronically through the Health Plan Management System (HPMS).
(3) 20109 Initial Application For Employer/Union Direct Contract Private Fee-For-Service (PFFS) Medicare Advantage Organization. Appendices I and III (optional) of this application are to be submitted in hard copy and Appendix II is submitted electronically through HPMS.
(4) The 20109 Part D Financial Solvency & Capital Adequacy Documentation for Direct Contract MA-PD Applicants (Appendix I of this application). This portion of the application is submitted electronically through HPMS to the fiscal soundness section for the MA Supporting Files. in hard copy in accordance with the instructions below.
(5) The 20109 Direct Contract MA-PD Attestations. This portion of the application is submitted electronically through HPMS. A copy of these attestations is included with this application (Appendix II).
All of the above enumerated submissions will comprise a completed application for new Direct Contract MA-PDs. Failure to complete and submit items numbers 1 through 5 above will result in a denial of the Direct Contract MA-PD application.
Using HPMS to Submit Application Materials
In order to submit the electronic portions of this application through HPMS (items number 1, 2, 3 and 5 above), please log on to HPMS and follow the instructions. To complete these application materials, please access the following link in HPMS:
Contract Management > Basic Contract Management > Select Contract Number > Online Applications
Instructions for Submitting Hard Copy Application Materials
Please submit two (2) copies of all required hard copy application materials for Appendix I (Part D Financial Solvency & Capital Adequacy Documentation For Direct Contract MA-PD Applicants) to the following address:
Centers for Medicare & Medicaid Services (CMS)
Mail Stop: C1-22-06
ATTN: 2009 Direct Contract MA-PD Application (Appendix I)
(Contract #: EXXXX)
7500 Security Blvd.
Baltimore, MD 21244-1850
Please note: In addition to these hard copy submissions, the Applicant is also required to enclose with this submission a duplicate electronic copy of all of these materials on a CD.
Appendix I
Part D Financial Solvency & Capital Adequacy Documentation
For Direct Contract MA-PD Applicants
Background and Instructions:
An MAO generally must be licensed by at least one state as a risk-bearing entity (42 CFR 423.401(a)(1)). CMS has waived the requirement for Direct Contract MA-PDs. Direct Contract MA-PDs are not required to be licensed, but must meet CMS Part D financial solvency and capital adequacy requirements. Each Direct Contract MA-PD Applicant must demonstrate that it meets the requirements set forth in this Appendix and provide all required information set forth below. CMS may in its discretion approve, on a case-by-case basis, waivers of such requirements upon a demonstration from the Direct Contract MA-PD that its fiscal soundness is commensurate with its financial risk and that through other means the entity can assure that claims for benefits paid for by CMS and beneficiaries will be covered. In all cases, CMS will require that the employer’s/union’s contracts and sub-contracts provide beneficiary hold harmless provisions.
The information required in this Appendix must be submitted electronically through HPMS to the fiscal soundness section for the MA Supporting Files in hardcopy submission in accordance with the above instructions contained in this application.
The Direct Contract MA-PD Applicant must demonstrate financial solvency through furnishing two years of independently audited financial statements to CMS. If the Direct Contract MA-PD Applicant has not been in operation at least twelve months, it may choose to: 1) obtain independently audited financial statements for a shorter time period; or 2) demonstrate that it has the minimum net worth through presentation of un-audited financial statements that contain sufficient detail to allow CMS to verify the validity of the financial presentation. The un-audited financial statement must be accompanied by an actuarial opinion from a qualified actuary regarding the assumptions and methods used in determining loss reserves, actuarial liabilities and related items.
A “qualified actuary” for purposes of this application means a member in good standing of the American Academy of Actuaries, a person recognized by the Academy as qualified for membership, or a person who has otherwise demonstrated competency in the field of actuarial science and is satisfactory to CMS.
If the Direct Contract MA-PD Applicant’s auditor is not one of the 10 largest national accounting firms in accordance with the list of the 100 largest public accounting firms published by the CCH Public Accounting Report, the Applicant should enclose proof of the auditor’s good standing from the relevant state board of accountancy.
The Direct Contract MA-PD Applicant must have sufficient cash flow to meet its financial obligations as they become due. The amount of the minimum net worth requirement to be met by cash or cash equivalents is $750,000. Cash equivalents are short-term highly liquid investments that can be readily converted to cash. To be classified as cash equivalents, investments must have a maturity date not longer than 3 months from the date of purchase.
In determining the ability of a Direct Contract MA-PD Applicant to meet this requirement, CMS will consider the following:
The timeliness of payment,
The extent to which the current ratio is maintained at 1:1 or greater, or whether there is a change in the current ratio over a period of time; and
The availability of outside financial resources.
CMS may apply the following corresponding corrective remedies:
If a Direct Contract MA-PD fails to pay obligations as they become due, CMS will require the Direct Contract MA-PD to initiate corrective action to pay all overdue obligations.
CMS may require the Direct Contract MA-PD to initiate corrective action if any of the following are evident:
If there is a change in the availability of outside resources, CMS will require the Direct Contract MA-PD to obtain funding from alternative financial resources.
A Direct Contract MA-PD generally must use the standards of Generally Accepted Accounting Principles (GAAP). Generally Accepted Accounting Principles (GAAP) are those accounting principles or practices prescribed or permitted by the Financial Accounting Standards Board. However, a Direct Contract MA-PD whose audited financial statements are prepared using accounting principles or practices other than GAAP, such as a governmental entity that reports in accordance with the principles promulgated by the Governmental Accounting Standards Board (GASB), may utilize such alternative standard.
A Direct Contract MA-PD may request a waiver in writing of the bonding and/or insurance requirements set forth at 42 CFR 423.504(b)(4)(iv) and (v). Relevant considerations will include demonstration that either or both of the foregoing requirements are unnecessary based on the entity’s individualized circumstances, including maintenance of similar coverage pursuant to other law, such as the bonding requirement at ERISA Section 412.
A Direct Contract MA-PD must furnish the following financial information to CMS to the extent applicable:
Self-Insurance/Self Funding: If the Direct Contract MA-PD’s health plan(s) are self-insured or self-funded, it must forward proof of stop-loss coverage (if any) through copies of policy declarations.
Trust: If the Direct Contract MA-PD maintains one or more trusts with respect to its health plan(s), a copy of the trust documents, and if the trust is intended to meet the requirements of Section 501(c)(9) of the Internal Revenue Code, the most recent IRS approval letter.
Forms 5500 and M-1: The two most recent annual reports on Forms 5500 and M-1 (to the extent applicable) for the Direct Contract MA-PD health plans that cover prescription drugs for retirees that are Part D eligible individuals.
ERISA Section 411(a) Attestation: Each Direct Contract MA-PD Applicant (including an applicant that is exempt from ERISA) must provide a signed attestation that no person serves as a fiduciary, administrator, trustee, custodian, counsel, agent, employee, consultant, adviser or in any capacity that involves decision-making authority, custody, or control of the assets or property of any employee benefit plan sponsored by the Direct Contract MA-PD Applicant if he or she has been convicted of, or has been imprisoned as a result of his or her conviction of, one of the felonies set forth in ERISA Section 411(a), for 13 years after such conviction or imprisonment (whichever is later).
II. INSOLVENCY REQUIREMENTS
A. Hold Harmless and Continuation of Coverage/Benefits
A Direct Contract MA-PD Applicant shall be subject to the same hold harmless and continuation of coverage/benefit requirements as Medicare Advantage contractors.
B. Insolvency Deposit
A Direct Contract MA-PD Applicant generally must forward confirmation of its establishment and maintenance of an insolvency deposit of at least $100,000, to be held in accordance with CMS requirements by a qualified U. S. Financial Institution. A “qualified financial institution” means an institution that:
A Direct Contract MA-PD Applicant may request a waiver in writing of this requirement.
III. GUARANTEES (only applies to an Applicant that utilizes a Guarantor)
A Direct Contract MA-PD Applicant, or the legal entity of which the Direct Contract MA-PD Applicant is a component, may apply to CMS to use the financial resources of a Guarantor for the purpose of meeting the requirements of a Direct Contract MA-PD Applicant set forth above. CMS has the sole discretion to approve or deny the use of a Guarantor.
To apply to use the financial resources of a Guarantor, a Direct Contract MA-PD must submit to CMS:
To serve as a Guarantor, an organization must meet the following requirements:
Is a legal entity authorized to conduct business within a State of the United States.
Not be under Federal or State bankruptcy or rehabilitation proceedings.
Have a net worth (not including other guarantees, intangibles and restricted reserves) equal to three times the amount of the Direct Contract MA-PD guarantee.
If a State insurance commissioner or other State official with authority for risk-bearing entities regulates the Guarantor, it must meet the net worth requirement in Section I.A above with all guarantees and all investments in and loans to organizations covered by guarantees excluded from its assets.
If the Guarantor is not regulated by a State insurance commissioner or other similar State official, it must meet the net worth requirement in Section I.A above with all guarantees and all investments in and loans to organizations covered by a guarantee and to related parties (subsidiaries and affiliates) excluded from its assets.
If the guarantee request is approved, a Direct Contract MA-PD Applicant must submit to CMS a written guarantee document signed by an appropriate Guarantor. The guarantee document must:
A Direct Contract MA-PD must submit to CMS the current internal financial statements and annual audited financial statements of the Guarantor according to the schedule, manner, and form that CMS requires.
A Direct Contract MA-PD cannot modify, substitute or terminate a guarantee unless the Direct Contract MA-PD:
Requests CMS's approval at least 90 days before the proposed effective date of the modification, substitution, or termination;
Demonstrates to CMS's satisfaction that the modification, substitution, or termination will not result in insolvency of the Direct Contract MA-PD; and
Demonstrates how the Direct Contract MA-PD will meet the requirements of this section.
If at any time the Guarantor or the guarantee ceases to meet the requirements of this section, CMS will notify the Direct Contract MA-PD that it ceases to recognize the guarantee document. In the event of this nullification, a Direct Contract MA-PD must:
Meet the applicable requirements of this section within 15 business days; and
If required by CMS, meet a portion of the applicable requirements in less than the 15 business days in paragraph (G.1.) of this section.
IV. ONGOING REPORTING REQUIREMENTS
An approved Direct Contract MA-PD Applicant is required to update financial information set forth in Sections I and II above to CMS on an ongoing basis. The schedule, manner, and form of reporting will be in accordance with CMS requirements.
Appendix II
Direct Contract MA-PD Attestations For Contract _________
1. EGWP Service Area & PHARMACY ACCESS Requirements
In general, Part D plans can only cover beneficiaries in the service areas in which they are licensed and approved by CMS to offer benefits. CMS has waived this requirement for Direct Contract MA-PD Sponsors. Direct Contract MA-PD Sponsors can extend coverage to all of their retirees, regardless of whether they reside in one or more MA regions in the nation. In order to provide coverage to retirees wherever they reside, Direct Contract MA-PD Sponsors must set their service areas to include all areas where retirees may reside during the plan year (no mid-year service area expansions will be permitted). Applicants will be required to submit retail and other pharmacy access information (mail order, home infusion, long-term care, I/T/U) for the entire defined service area during the application process and demonstrate sufficient access in these areas in accordance with employer group waiver pharmacy access policy.
I certify that I am an authorized representative, officer, chief executive officer, or general partner of the business organization that is applying for qualification to offer employer/union Direct Contract MA-PD. I have read, understand, and agree to comply with the above statement about service areas and pharmacy access. If I need further information, I will contact one of the individuals listed in the instructions for this application.
{Entity MUST complete for a complete application.}
2. Certification
All provisions of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors apply to all plan benefit packages offered by the Direct Contract MA-PD except where the provisions are specifically modified and/or superseded by particular employer/union-only group waiver guidance, including those waivers/modifications set forth below (specific sections of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors that have been waived or modified for new Direct Contract MA-PD Applicants are noted in parentheses).
I, the undersigned, certify to the following:
1) Applicant is applying to offer new employer/union-only Direct Contract Medicare Advantage Prescription Drug Plans and agrees to be subject to and comply with all CMS employer/union-only group waiver guidance.
2) Applicant understands and agrees that it must complete and submit the 20109 Medicare Advantage Application, 20109 Initial Application For Employer/Union Direct Contract Private Fee-For-Service (PFFS) Medicare Advantage Organization, and 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors in addition to this application (which includes Appendix I - Part D Financial Solvency & Capital Adequacy Documentation for Direct Contract MA-PD Applicants). All these documents comprise new Direct Contract MA-PD Applicant’s entire Direct Contract MA-PD application.
3) Applicant agrees to restrict enrollment in its Direct Contract MA-PD plans to those Medicare eligible individuals eligible for the employer’s/union’s employment-based group coverage.
4) Applicant understands and agrees that it is not required to submit a 20109 Part D bid (i.e., bid pricing tool) to offer its Direct Contract MA-PD. (Section 3.2.6.A.1 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors)
5) In order to be eligible for the CMS retail pharmacy access waiver of 42 CFR 423.120(a)(1) (i.e., application of “TRICARE” standards), Applicant attests that its retail pharmacy network is sufficient to meet the needs of its enrollees throughout the Direct Contract MA-PD’s service area, including situations involving emergency access, as determined by CMS. Applicant acknowledges and understands that CMS may review the adequacy of the plan’s pharmacy networks and potentially require expanded access in the event of beneficiary complaints or for other reasons it determines in order to ensure that the plan’s network is sufficient to meet the needs of its employer group population. (Section 3.5.1.A of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors)
6) Applicant understands and agrees that as part of its completion of the 20109 Solicitation for Applications for New Prescription Drug Plan (MA-PD) Sponsors, it will submit GeoNetworks® retail pharmacy reports (Appendix entitled IX - Retail Pharmacy Network Access Instructions) and other pharmacy access submissions (mail order, home infusion, long-term care, I/T/U) required at the time of application in Section 3.5 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors for its entire designated service area. (Sections 3.3.B and 3.5 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors)
7) Applicant understands that its Direct Contract MA-PD plans will not be included in the processes for auto-enrollment (for full-dual eligible beneficiaries) or facilitated enrollment (for other low income subsidy eligible beneficiaries). (Section 3.6.A.2 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors)
8) Applicant understands that CMS has waived the requirement that the Direct Contract MA-PD must provide beneficiaries the option to pay their premium through Social Security withholding. Thus, the premium withhold option will not be available for enrollees in Applicant’s Direct Contract MA-PD. (Sections 3.6.A.9 and 3.24.A.2-4 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors)
9) Applicant understands that dissemination materials for its Direct Contract MA-PD plans are not subject to the requirements contained in 42 CFR 423.50 to be submitted for review and approval by CMS prior to use. However, Applicant agrees that it will submit these materials to CMS at the time of use in accordance with the procedures outlined in Chapter 9 of the Medicare Managed Care Manual (MMCM). Applicant also understands that CMS reserves the right to review these materials in the event of beneficiary complaints or for any other reason it determines to ensure the information accurately and adequately informs Medicare beneficiaries about their rights and obligations under the plan. (Section 3.14.A.1 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors)
10) Applicant understands that its Direct Contract MA-PD will not be subject to the requirements regarding the timing for issuance of certain dissemination materials, such as the Annual Notice of Change/ Evidence of Coverage (ANOC/EOC), Summary of Benefits (SB), Formulary, and LIS rider when an employer’s or union’s open enrollment period does not correspond to Medicare’s Annual Coordinated Election Period. For these employers and unions, the timing for issuance of the above dissemination materials should be appropriately based on the employer/union sponsor’s open enrollment period. For example, the Annual Notice of Change/Evidence of Coverage (ANOC/EOC), Summary of Benefits (SB), LIS rider, and Formulary are required to be received by beneficiaries no later than 15 days before the beginning of the employer/union group health plan’s open enrollment period. The timing for other dissemination materials that are based on the start of the Medicare plan (i.e., calendar) year should be appropriately based on the employer/union sponsor’s plan year. (Section 3.14.A.10 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plans (MA-PD) Sponsors)
11) Applicant understands that the dissemination/disclosure requirements set forth in 42 CFR 423.128 will not apply to its Direct Contract MA-PD plans when the employer/union sponsor is subject to alternative disclosure requirements (e.g., the Employee Retirement Income Security Act of 1974 (“ERISA”)) and complies with such alternative requirements. Applicant agrees to comply with the requirements for this waiver contained in employer/union-only group waiver guidance, including those requirements contained in Chapter 9 of the MMCM. (Sections 3.14.A.1-2, 8 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plans (MA-PD) Sponsors)
12) Applicant understands that its Direct Contract MA-PD plans will not be subject to the requirements contained in 42 CFR 423.48 to submit information to CMS, including the requirements to submit information (e.g., pricing and pharmacy network information) to be publicly reported on www.medicare.gov (Medicare Prescription Drug Plan Finder). (Sections 3.8.A and 3.17.A.17 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plans (MA-PD) Sponsors)
13) Applicant understands that its Direct Contract MA-PD plans will not be subject to the Part D beneficiary customer service call center hours and call center performance requirements. Applicant attests that it will ensure that a sufficient mechanism is available to respond to beneficiary inquiries and will provide customer service call center services to these members during normal business hours. However, CMS may review the adequacy of these call center hours and potentially require expanded beneficiary customer service call center hours in the event of beneficiary complaints or for other reasons in order to ensure that the entity’s customer service call center hours are sufficient to meet the needs of its enrollee population. (Section 3.14.A.5 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plans (MA-PD) Sponsors)
14) In general, Part D plan Sponsors must report certain information to CMS, to their enrollees, and to the general public (such as the cost of their operations and financial statements) under 42 CFR 423.514(a). Applicant understands that in order to avoid imposing additional and possibly conflicting public disclosure obligations that would hinder the offering of employer sponsored group plans, CMS will modify these reporting requirements for Direct MA-PDs to allow information to be reported to enrollees and to the general public to the extent required by other law (including ERISA or securities laws), or by contract. (Section 3.17.A.15-16 of the 20109 Solicitation for Applications for New Medicare Advantage Prescription Drug Plan (MA-PD) Sponsors)
15) This Certification is deemed to incorporate any changes that are required by statute to be implemented during the term of the contract, and any regulations and policies implementing or interpreting such statutory provisions.
16) I have read the contents of the completed application and the information contained herein is true, correct, and complete. If I become aware that any information in this application is not true, correct, or complete, I agree to notify CMS immediately and in writing.
17) I authorize CMS to verify the information contained herein. I agree to notify CMS in writing of any changes that may jeopardize my ability to meet the qualifications stated in this application prior to such change or within 30 days of the effective date of such change. I understand that such a change may result in termination of the approval.
18) I understand that in accordance with 18 U.S.C. § 1001, any omission, misrepresentation or falsification of any information contained in this application or contained in any communication supplying information to CMS to complete or clarify this application may be punishable by criminal, civil, or other administrative actions including revocation of approval, fines, and/or imprisonment under Federal law.
19) I acknowledge that I am aware that there is operational policy guidance, including the forthcoming 20109 Call Letter, relevant to this application that is posted on the CMS website and that it is continually updated. Organizations submitting an application in response to this solicitation acknowledge that they will comply with such guidance should they be approved to offer employer/union-only group waiver plans in association with the organization’s MA-PD Contract with CMS.
I certify that I am an authorized representative, officer, chief executive officer, or general partner of the business organization that is applying for qualification to offer employer/union Direct Contract plans in association with my organization’s MA-PD Contract with CMS. I have read and agree to comply with the above certifications.
{Entity MUST check box for a complete application.}
ASSISTANCE:
If you have any questions about this application, please contact:
Marla Rothouse Usree Bandyopadhyay by email at Marla Rothouse@[email protected] or by phone at 410-786-80636650 or Linda Anders by email at [email protected] or by phone at 410-786-0459..
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| File Type | application/msword |
| File Title | MEDICARE PRESCRIPTION DRUG BENEFIT |
| Author | CMS |
| Last Modified By | Marla Rothouse |
| File Modified | 2008-08-19 |
| File Created | 2007-08-17 |