Appendix A - CY2010 PBP Sprtng Stmnt - 12162008

CMS PBP and Formulary CY2010
Appendix A: Supporting Statement for
Paperwork Reduction Act Submissions
The Plan Benefit Package (PBP), Formulary, and Supporting Regulations
Contained in 42 Code of Federal Regulation (CFR): 422.100, 422.101, 422.102,
422.103, 422.105, 422.106, 422.108, 422.110, 422.111, 422.112, 422.113,
422.114, 422.250, 422.252, 422.254, 422.256, 422.258, 422.262, 422.264,
422.266, 422.270, 422.300, 422.304, 422.306, 422.308, 422.310, 422.312,
422.314, 422.316, 422.318, 422.320, 422.322, 422.324, 423.100, 423.104,
423.112, 423.120, 423.124, 423.128, 423.132, 423.136, 423.251, 423.258,
423.265, 423.272, 423.286, 423.293, 423.301, 423.308, 423.315, 423.322,
423.329, 423.336, 423.343, 423.346, 423.350
Specific Instructions
A. Background
Under the Medicare Modernization Act (MMA), Medicare Advantage (MA) and Prescription
Drug Plan (PDP) organizations are required to submit plan benefit packages for all Medicare
beneficiaries residing in their service area. The plan benefit package submission consists of the
formulary file, Plan Benefit Package (PBP) software, and supporting documentation as
necessary. MA and PDP organizations will generate a formulary to illustrate their list of drugs,
including information on prior authorization, step therapy, tiering, quantity limits, and
medication therapy management plan. Additionally, the PBP software will be used to describe
their organization’s plan benefit packages, including information on premiums, cost sharing,
authorization rules, and supplemental benefits. CMS uses the formulary and PBP data to review
and approve the plan benefit packages proposed by each MA and PDP organization.
After receiving OMB clearance in spring 2000, CMS implemented the PBP as part of the
Contract Year (CY) 2001 Adjusted Community Rate Proposal (ACRP) process. In addition,
information collected via the PBP and Formulary has been used to support the marketing
material review process, the National Medicare Education Program, and other program oversight
and development activities. For instance, the PBP software automatically generates the
standardized sentences for the Summary of Benefits (SB) by using the plan benefit package data
entered into the PBP software by the organization’s user. These standardized sentences are used
by the MA organizations in their SB marketing materials and by CMS to generate plan benefits
data for display in the Medicare & You handbook and on the www.medicare.gov website.
CMS is requesting to continue its use of the PBP software and formulary submission for the
collection of benefits and related information for CY 2010 through CY 2012. CMS estimates that
385 MA organizations and 90 PDP organizations will be required to submit the plan benefit
package information, in CY2010. Based on operational changes and policy clarifications to the
Medicare program and continued input and feedback by the industry, CMS has made the
necessary changes to the plan benefit package submission.

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B. Justification
1. Need and Legal Basis
This information is mandated by the Social Security Act and is cited in the 42 CFR references
listed above. Copies of these references are provided in Appendix D.
2. Information Users
CMS requires that MA and PDP organizations submit a completed formulary and PBP as part of
the annual bidding process. During this process, organizations prepare their proposed plan
benefit packages for the upcoming contract year and submit them to CMS for review and
approval.
CMS publishes beneficiary education information using a variety of formats. The specific
education initiatives that utilize formulary and PBP data include web application tools on
www.medicare.gov and the plan benefit insert in the Medicare & You handbook. In addition,
organizations utilize the PBP data to generate their Summary of Benefits marketing information.
All other information collected through the PBP follows the rules described in Section 10:
Confidentiality.
3. Improved Information Technology
Since CY2001, the Health Plan Management System (HPMS) has been utilized to upload
completed benefit information during the ACRP process. Under MMA and in support of the
bidding process, CMS enhanced the HPMS upload functionality to incorporate the necessary
submission changes to include the formulary to supplement the plan benefit package submission.
CMS continues to improve the PBP software and formulary submission with guidance from
CMS policy and operations groups and the solicitation of industry comment. In Appendix C, the
hardcopy PBP screen prints and formulary submission materials are provided to illustrate a
thorough overview of the tools; however, this information cannot accurately display the
streamlining effect of the tools on the bidding process.
Prior experience coupled with the continued relationship with the industry for the past several
years has helped to further enhance the already user-friendly nature of the plan benefit package
submission process. CMS has maximized the usability of the PBP by using standardized pick
lists, intelligently pre-filled data fields, and integrated online help screens.
Also, the plan benefit package data and its many outputs have served to reduce burden as it
relates to the creation and publication of beneficiary education materials. The PBP serves
primarily as a tool for organizations to describe and report their benefits for the upcoming
contract year. The formulary supplements this information to include the drug lists associated
with the plan’s benefits. However, these data are also central to plan marketing and education
efforts. As a result, CMS chose to take advantage of these data being collected via an electronic
mechanism.
Specifically, CMS developed the PBP so that it automatically generates the standardized

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sentences for the SB by using the plan benefit package data already entered into the software by
the organization user. These standardized sentences are used by the organization in their SB
marketing materials. The formulary and SB are both used by CMS in the comparative web
application tools on www.medicare.gov that facilitate the comparison of health plan choices
available to beneficiaries. Finally, the PBP data is used by CMS to generate plan benefits
information in the Medicare & You handbook.
By consolidating this data reporting, CMS is able to use the information to perform numerous
activities without placing additional burden on the organization. Also, the SB standardization,
resulting from the PBP, has provided organizations with a more timely marketing approval
turnaround since these organizations now know precisely the language that will be approved
prior to submission.
4. Duplication of Similar Information
The information collected in the formulary and PBP is not duplicated through any other CMS
effort. In fact, CMS has eliminated potential duplication by consolidating the collection of plan
benefits data. The collected data are then used to support numerous activities, including the
marketing material review process, the generation of plan marketing materials, and other
program oversight and development activities. Because the formulary and PBP collects the
information that populates the www.medicare.gov website, Medicare & You Handbook and the
SB, there is no need for organizations to complete multiple marketing data reporting activities
for CMS.
5. Small Businesses
Small businesses are not significantly affected by this collection.
6. Less Frequent Collection
Since CY 2001, CMS has collected the benefit package once a year as required by the Social
Security Act. Under MMA, this collection is now part of the annual bidding process, where
organizations are required to submit their proposed plan benefit packages (including the
formulary and PBP) for the upcoming contract year. In the event that an organization would
propose mid-year benefit enhancements to their existing plans, propose new plans, or enter the
Medicare program as a new organization, the organization would be required to submit the
benefit package materials during the contract year.
If this collection were not conducted or were conducted less frequently than described above,
there would be adverse consequences, including but not limited to, the following:
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Organizations would not be able to increase the number of plan or enhance current plan
choices available to Medicare beneficiaries.
Organizations would not be able to make changes to the formulary that could enhance the
therapeutic options or lower cost-sharing for beneficiaries.
CMS would not be able to accurately or effectively educate Medicare beneficiaries on the
plan choices available to them.
CMS would not be able to effectively review and approve plan marketing materials.

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
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CMS would not be able to effectively review and approve the formulary and PBP, as
required by statute.
Beneficiaries would not receive accurate, updated information via the website.

7. Special Circumstances
Organizations may be required to submit benefit data more often under certain circumstances.
Each organization must submit an updated formulary and a new PBP on an annual basis as part
of the annual bidding process. Under certain circumstances, an organization could choose to
enhance an existing plan benefit package mid-year or offer new plans, which would require a
second submission. Additionally organizations must submit any changes in their formulary prior
to removing a covered Part D drug or when making any change in the preferred or tiered costsharing status of a covered Part D drug as required by the regulations.
8. Federal Register Notice/Outside Consultation
Formulary: CMS and one of its consultants first drafted the formulary submission for use
during CY2006 by utilizing the vast, internal experience on the Medicare Prescription Drug Card
program and by conferring with the industry on numerous occasions. The 2010 format is
included in the formulary guidelines.
PBP: CMS, with contractor support, prepared the initial draft of the PBP for use during CY2001
by performing extensive market research, screening, and testing. Since the initial PBP
development, CMS has taken numerous opportunities to confer with representatives from the
Medicare managed care industry, including MA and PDP organizations and Medicare managed
care trade groups, to solicit comments and feedback on the PBP software. CMS also included
internal users of the PBP data in these efforts. Participants included staff from each CMS
Regional Office, Central Office Medicare Advantage and Prescription Drug staff, and staff from
the CMS beneficiary education campaign. These comment opportunities have included the
following:
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Alpha Testing - During the PBP/SB Alpha testing, CMS provides screen shots of the
PBP software and the draft SB sentences and select focus group testers used functional
test PBP software. The PBP/SB 2010 Alpha testing period was held from September 29,
2008 through October 3, 2008.
Beta Testing – The functional test PBP software is then distributed for the Beta testing to
allow for hands-on data entry testing and SB sentence generation. CMS is scheduled to
hold the PBP/SB 2010 Beta in early February 2009. This process has occurred each year
since the start of the PBP.
Lessons Learned Comments – CMS has implemented a formal process for the
electronic submission of comments and feedback through the HPMS website. The
annual comment period serves as an opportunity to account for lessons learned on the
PBP/SB post production and use. The 2009 Lessons Learned comment period was held
from August 11, 2008 through September 5, 2008.
Ongoing Discussions – As part of our daily business of assisting organizations and
others, CMS has informally received comments concerning the PBP from organizations,
trade associations, and Regional Offices.

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After collecting and compiling these requests and comments during the various timeframes,
CMS reviews each one and makes a determination as to whether the change should be made in
the software. The CMS review team consists of the agency component areas that serve as
stakeholders for the PBP/SB, including MA and Part D operations, beneficiary education, and
systems. Appendix B provides a detailed list of the changes made in the PBP software package
and the formulary file for CY2010 as a result of feedback from the Medicare plan industry
community and administrative and legislative directives.
Lastly, CMS is providing numerous instructional sessions and user instructions for the formulary
and PBP submission during the upcoming months.
9. Payments/Gifts To Respondents
There were no payments/gifts to respondents.
10. Confidentiality
Information collected through the formulary and PBP contains proprietary information, trade
secret, commercial and/or financial information, therefore it is privileged, confidential and
protected from disclosure. Formulary supporting documentation is considered confidential and
will not be disclosed to the public.
This information is not published in a manner that identifies individual business decisions, unless
otherwise indicated. Information provided for the CMS beneficiary education campaign (i.e.,
www.medicare.gov and the Medicare & You handbook) is published no earlier than the time
frames required for the legislatively mandated Open Season. The PBP software enables the user
to view the data elements that are used for the beneficiary education campaign.
11. Sensitive Questions
There are no sensitive questions included in this collection effort.
12. Burden Estimate (Total Hours & Wages)
The estimated hour burden for the formulary and PBP submission for CY2010 is 12,112.5 total
burden hours, or 25.5 hours per organization.
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475 Organization [475 = 385 Medicare Advantage + 90 Prescription Drug Plans]
9 plans/PBPs per organization*
1.5 formularies per organization*
4,987.5 total annual responses [4,987.5 = (475*9) + (475*1.5)]
2 hours to complete PBP*
5 hours to complete Formulary*
8,550 hours for industry to complete the PBPs [8,550 = 475*9*2]
3,562.5 hours for industry to complete the Formularies [3,562.5 = 475*1.5*5]
12,112.5 total hours for industry to complete entire submission [ 12,112.5 = 8,550 +
3,562.5]

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An estimate of the annualized cost to the industry in burden hours for the complete submission is
approximately $726,750 (12,112.5 hours * $60.00 per hour*).
Key
*
Source: Estimated amounts were derived from the results of industry experience.

13. Capital Costs
There are no capital costs needed for this collection effort.
14. Cost to the Federal Government
The initial burden to the Federal government for the collection of the formulary and PBP data
was borne through the development cycle as a one-time cost. The PBP and the formulary are
now in maintenance mode with regard to development and enhancements. The maintenance cost
and the cost to enhance of the PBP and formulary software as well as the cost of CMS
employees’ time are calculated to be: $835,243.80. The calculations for CMS employees’
hourly salary was obtained from the OPM website:
http://www.opm.gov/oca/08tables/html/dcb_h.asp.
PBP - Maintenance and Enhancements
Medicare Part D Help PBP:
2 GS-13: 2 x $39.75 x 20 hours
1 GS -14: 1 x $46.97 x 20 hours

Medicare MA Help PBP:
2 GS-15: 2 x $55.25 x 20 hours
4 GS-13: 4 x $39.75 x 20 hours

$618,000

$1,590.00
$939.40
$2,529.40

$2,210.00
$3,180.00
$5,390.00

TOTAL PBP COST:

$625,919.40

Formulary - Maintenance and
Enhancements
Medicare Part D Help FDR:
3 GS-13: 3 x $39.75 x 20 hours
1 GS -14: 1 x $46.97 x 20 hours

$206,000

TOTAL FORMULARY COST:

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$2,385.00
$939.40
$3,324.40
$209,324.40

Total Cost to the Government:

$835,243.80

15. Program Changes
The change in the total burden hours is attributable to an additional submission as part of the
formulary package regarding the organization’s Medication Therapy Management Program.
This information is critical for CMS to ensure the protection of Medicare beneficiaries and
provide sufficient oversight of the Part D program.
16. Publication and Tabulation Dates
Using the plan benefits data entry already completed by the user, the PBP software automatically
generates standardized sentences that are then displayed to the public through several
mechanisms, including the SB marketing material, the www.medicare.gov website, and the
Medicare & You handbook. The completed formulary is utilized to display drug benefit
information on the www.medicare.gov website.
In all cases below, the organization is required to electronically submit their formulary no later
than the third Monday of April and the PBP no later than the first Monday of June. The
organization may start developing their formulary at any time and may submit the formulary as
early as the last Monday of March. Additionally, the organization may start developing their
PBP on the first Friday of April.
The following gives a description of each publication of this data:
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SB Marketing Material - The PBP generates a standardized SB for each plan benefit
package offered by an organization. The organization is then required to produce a
hardcopy version of the SB for its plan members. The organization can begin developing
their hardcopy SB as soon as their PBP is completed. CMS will begin reviewing their
hard copy SB after the PBP is submitted.
CMS Website - The formulary information and standardized SB sentences generated by
the PBP are displayed on an interactive web tool on www.medicare.gov that enables
beneficiaries to compare plan benefit packages. Prior to posting, organizations are
allowed to preview only their own plan benefit data. The initial posting of the benefits
data for a new contract year occurs in mid-October (e.g., posting of CY 2010 data in
October 2009).
Medicare & You Handbook - CMS uses a small subset of the PBP data to generate highlevel, limited plan benefits information (e.g. plan name, monthly premium, physician cost
sharing) for the Medicare & You handbook. Organizations are provided a preview
opportunity prior to printing. The initial printing of the plan benefits portion of the
handbook occurs in late September to early October with the handbook being delivered
to Medicare beneficiaries in October.

17. Expiration Date
CMS has no objections to displaying the expiration date.

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18. Certification Statement
There are no exceptions to the certification statement.
19. Collections of Information Employing Statistical Methods
Not Applicable. No statistical methods will be used in this collection effort.

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