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pdfMEDICARE PRESCRIPTION DRUG BENEFIT
2013 Part D Service Area Expansion Application for Prescription Drug Plan (PDP)
Sponsors and Medicare Advantage - Prescription Drug Plans (MA-PD) Sponsors
2013 Contract Year
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0938-0936. The time required to complete this information collection is estimated to
average 9.75 hours per response, including the time to review instructions, search
existing data resources, and 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.
Expiration:
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1.
2.
General Information ................................................................................................. 4
1.1.
Purpose of Solicitation ...................................................................................... 4
1.2.
Schedule ........................................................................................................... 4
INSTRUCTIONS ...................................................................................................... 6
2.1.
Overview ........................................................................................................... 6
2.2.
Other Technical Support ................................................................................... 6
2.3.
Health Plan Management System (HPMS) Data Entry ..................................... 6
2.4.
Instructions and Format of Qualifications .......................................................... 6
2.4.1.
Instructions ................................................................................................ 7
2.4.2.
Applicant Entity Same as Contracting Entity .............................................. 8
2.4.3.
Organizations Seeking to Only Expand the Employer Service Area .......... 9
2.4.4.
Withdrawal of an Service Area Expansion Application .............................. 9
2.4.5.
Technical Assistance ................................................................................. 9
2.5.
Submission Software Training .......................................................................... 9
2.6.
Summary Instruction and Format for Individual Market Bids ........................... 10
2.6.1.
Format of Bids ......................................................................................... 10
2.6.2.
CMS Review of Bids ................................................................................ 11
2.6.3.
Overview of Bid Negotiation..................................................................... 11
2.7.
Pharmacy Access ........................................................................................... 12
2.7.1.
Retail Pharmacy Access .......................................................................... 12
2.7.2.
Home Infusion Pharmacy Access ............................................................ 14
2.7.3.
Long-Term Care Pharmacy Access ......................................................... 14
2.7.4.
(I/T/U)
Indian Tribe and Tribal Organization, and Urban Indian Organization
14
2.7.5.
Waivers Related to Pharmacy Access ..................................................... 14
2.8.
Standard Contract with Part D Sponsors ........................................................ 15
2.9.
Protection of Confidential Information ............................................................. 15
2.10.
Waivers for MA-PD and Cost Plan SAE Applicants ..................................... 16
2.11.
Waivers Related to Attestations for EGWP, PDP Direct, and MA-PD Direct
Contract Applicants.................................................................................................... 17
3.
APPLICATION ....................................................................................................... 18
3.1.
Applicant Experience 42 CFR Part 423 Subpart K .......................................... 18
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3.2.
Service Area 42 CFR §423.112; Prescription Drug Benefit Manual, Chapter 5
18
3.3.
Licensure and Solvency 42 CFR §423.401; 42 CFR §423.410; 2008 Call Letter
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3.4. Private Fee-For-Service Pharmacy Access 42 CFR §423.120(a)(7);
Prescription Drug Benefit Manual, Chapter 5 ............................................................ 20
3.5. General Pharmacy Access 42 CFR §423.120(a); Prescription Drug Benefit
Manual, Chapter 5 ..................................................................................................... 21
3.5.1. Retail Pharmacy 42 CFR §423.120(a); 42 CFR §423.859(c); Prescription
Drug Benefit Manual, Chapter 5 ............................................................................. 21
3.5.2. Mail Order Pharmacy 42 CFR §423.120(a)(10); Prescription Drug Benefit
Manual, Chapter 5.................................................................................................. 23
3.5.3. Home Infusion Pharmacy 42 CFR §423.120(a)(4); Prescription Drug
Benefit Manual, Chapter 5 ..................................................................................... 24
3.5.4. Long -Term Care (LTC) Pharmacy 42 CFR §423.120(a)(5); Prescription
Drug Benefit Manual, Chapter 5 ............................................................................. 25
3.5.5. Indian Health Service, Indian Tribe and Tribal Organization, and Urban
Indian Organization (I/T/U) Pharmacy 42 CFR §423.120(a)(6); Prescription Drug
Benefit Manual, Chapter 5 ..................................................................................... 27
4.
Certification ............................................................................................................ 30
5.
Appendices ............................................................................................................ 32
APPENDIX I – Application to Request Federal Waiver of State Licensure
Requirement for Prescription Drug Plan (PDP) .................................................. 33
APPENDIX II -- Financial Solvency Documentation For Applicant Not Licensed
as a Risk-bearing Entity in Any State ................................................................. 42
1.
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General Information
1.1. Purpose of Solicitation
The Centers for Medicare & Medicaid Services is seeking applications from existing
Part D Benefit organizations to expand the current service area to which they are
offering qualified prescription drug coverage. Please submit your service area
applications (SAEs) according to the process described below.
This solicitation represents an abbreviated version of the Part D Sponsor Application
that is used for organizations seeking to participate in the Part D benefit for the first
time. The sections below must be completed for the new service area for which your
organization is seeking to expand the Part D benefit under an existing contract. Existing
Part D sponsors who offer either a PDP or MA-PD plan may expand their regional
coverage. CMS has identified 26 MA Regions and 34 PDP Regions; in addition, each
territory is its own PDP region. Additional information about the regions can be found
on the www.cms.gov/ website.
While CMS approval of a service area expansion requires completion of the sections
below, Part D sponsors are assumed to be able to maintain all requirements for the new
service area related to Part D as included in their existing Part D contract or contract
addendum. For instance, Part D sponsors are held to the attestations made for their
existing contract for the new service area. In addition, Part D sponsors are still required
to provide to CMS formulary and bid submissions on the appropriate dates.
1.2. Schedule
APPLICATION REVIEW PROCESS
Date
Milestone
November 11, 2011
Recommended date by which Applicants should
submit their Notice of Intent to Apply Form to CMS to
ensure access to Health Plan Management System
(HPMS) by the date applications are released
December 6, 2011
CMS User ID form due to CMS
January 10, 2012
Final Applications posted by CMS
February 7, 2012
Deadline for NOIA form submission to CMS
February 21 , 2012
Applications due
March 23, 2012
Release of Health Plan Management System
(HPMS) formulary submissions module
April 6, 2012
Plan Creation module, Plan Benefit Package (PBP),
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and Bid Pricing Tool (BPT) available on HPMS
April 16, 2012
Formulary submission due to CMS
Transition Policy Attestations and Policy due to
CMS
May 2012
CMS sends Part D contract eligibility determination
to Applicants, based on review of application.
Applicant‘s bids must still be negotiated (see below)
May 11, 2012
PBP/BPT Upload Module available on HPMS
June 4, 2012
All bids due
Early August 2012
CMS publishes national average Part D premium
September 2012
CMS completes review and approval of bid data.
CMS executes Part D contracts to those
organizations who submit an acceptable bid
October 15, 2012
2013 Annual Coordinated Election Period begins
NOTE: This timeline does not represent an all-inclusive list of key dates related to the
Medicare Prescription Drug Benefit program. CMS reserves the right to amend or
cancel this solicitation at any time. CMS also reserves the right to revise the Medicare
Prescription Drug Benefit program implementation schedule, including the solicitation
and bidding process timelines.
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2. INSTRUCTIONS
2.1. Overview
This application is to be completed by those Part D Sponsors that intend to expand their
Part D coverage during 2013 in the individual and/or employer markets. Please refer to
the guidance for MA and Cost Plan sponsors posted on the CMS web site for
instructions on the type of MA documentation your organization must provide to CMS to
qualify to expand an MA plan during 2013.
2.2. Other Technical Support
CMS conducts technical support calls, also known as User Group calls, for Applicants
and existing Part D sponsors. CMS operational experts (e.g., from areas such as
enrollment, information systems, marketing, bidding, formulary design, and coordination
of benefits) are available to discuss and answer questions regarding the agenda items
for each meeting. Registration for the technical support calls and to join the list serve to
get updates on CMS guidance can be found at www.mscginc.com/Registration/.
CMS also conducts special training sessions, including a user group call dedicated to
addressing issues unique to sponsors that are new to the Part D program.
CMS provides two user manuals to assist applicants with the technical requirements of
submitting the Part D application through the Health Plan Management System
(HPMS). The Basic Contract Management User‘s Manual provides information on
completing and maintaining basic information required in Contract Management. These
data must be completed prior to the final submission of any application. The Online
Application User‘s Manual provides detailed instructions on completing the various
online applications. Both manuals can be found in HPMS by clicking on Contract
Management>Basic Contract Management>Documentation.
2.3. Health Plan Management System (HPMS) Data Entry
Part D sponsors are assigned a contract number (H/R/S/E number) to use throughout
the application and subsequent operational processes. All Service Area Expansion
(SAE) Applicants have their CMS User ID(s) and password(s) for HPMS access and
need to input contact and other related information into the HPMS. Applicants are
required to provide prompt entry and ongoing maintenance of data in HPMS. By
keeping the information in HPMS current, the Applicant facilitates the tracking of their
application throughout the review process and ensures that CMS has the most current
information for application updates, guidance and other types of correspondence.
In the event that an Applicant is awarded a contract, this information will also be used
for frequent communications during implementation and throughout the contract year. It
is important that the information in HPMS is accurate at all times.
2.4. Instructions and Format of Qualifications
Applications may be submitted until February 21, 2012. Applicants must use the 2013
solicitation. CMS will not accept or review in anyway those submissions using the prior
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versions of the solicitation, including the use of CMS provided templates from prior
years (e.g. 2012 and earlier).
2.4.1. Instructions
Applicants will complete the entire solicitation via HPMS.
In preparing your application in response to the prompts in Section 3 of this solicitation,
please mark ―Yes‖ or ―No‖ or ―Not Applicable‖ in sections organized with that format
within HPMS.
In many instances Applicants are directed to affirm within HPMS that they meet
particular requirements by indicating ―Yes‖ next to a statement of a particular Part D
program requirement. By providing such attestation, an Applicant is committing that its
organization complies with the relevant requirements as of the date your application is
submitted to CMS, unless a different date is stated by CMS.
CMS will not accept any information in hard copy. If an Applicant submits the
information via hard copy, the application will not be considered received.
Organizations will receive a confirmation number from HPMS upon clicking final submit.
Failure to obtain a confirmation number indicates that an applicant failed to properly
submit itsr Part D application by the CMS-established deadline. Any entity that
experiences technical difficulties during the submission process must contact the HPMS
Help Desk and CMS will make case by case determinations where appropriate
regarding the timeliness of the application submission.
CMS will check the application for completeness shortly after its receipt. Consistent
with the 2010 Call Letter, CMS will make determinations concerning the validity of each
organization‘s submission. Some examples of invalid submissions include but are not
limited to the following: Applicants that fail to upload executed agreements or contract
templates, Applicants that upload contract crosswalks instead of contracts, or
Applicants that fail to upload any pharmacy access reports. CMS will notify any
Applicants that are determined to have provided invalid submissions.
For those Applicants with valid submissions, CMS will notify your organization of any
deficiencies and afford a courtesy opportunity to amend the applications. CMS will only
review the last submission provided during this courtesy cure period.
CMS will provide communication back to all Applicants throughout the application
process via email. The email notifications will be generated through HPMS, so
organizations must ensure that the Part D application contract information provided
through the ―Notice of Intent to Apply‖ process is current and correct, and that there are
no firewalls in place that would prevent an email from the [email protected] web
address from being delivered.
CMS has established that all aspects of the program that the Applicant attests to must
be ready for operation by the application due date.
CMS clarified its Part D application review standards in a final rule (4085-F) published in
the Federal Register on April 15, 2010, with an effective date of June 7, 2010.
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Applicants must demonstrate that they meet all (not substantially all) Part D program
requirements to qualify as a Part D sponsor in their proposed service area.
As with all aspects of a Part D sponsor‘s operations under its contract with CMS, we
may verify a sponsor‘s compliance with qualifications it attests it meets through on-site
visits at the Part D sponsor‘s facilities as well as through other program monitoring
techniques. Failure to meet the requirements attested to in this solicitation and failure to
operate its Part D plan(s) consistent with the requirements of the applicable statutes,
regulations, call letter, and the Part D contract may delay a Part D sponsor‘s marketing
and enrollment activities or, if corrections cannot be made in a timely manner, the Part
D sponsor will be disqualified from participation in the Part D program.
An individual with legal authority to bind the Applicant shall execute the certification
found in Section 4. CMS reserves the right to request clarifications or corrections to a
submitted application. Failure to provide requested clarifications within the time period
specified by CMS for responding could result in the applicant receiving a notice of intent
to deny the application, in which case, the Applicant will then have 10 days to seek to
remedy its application. The end of the 10-day period is the last opportunity an Applicant
has to provide CMS with clarifications or corrections. CMS will only review the last
submission provided during this cure period. Such materials will not be accepted after
this 10-day time period.
This solicitation does not commit CMS to pay any cost for the preparation and
submission of an application.
CMS will not review applications received after 11:59 P.M. Eastern Standard Time
on February 21, 2012. CMS will lock access to application fields within HPMS as of
this time. CMS will not review any submissions based on earlier versions of the
solicitation. Applicants must complete the 2013 solicitation in order to be considered
for Part D sponsorship.
Separate entries MUST be submitted through HPMS for each pending contract
number/application.
If a subsidiary, parent, or otherwise related organization is also applying to offer Part D
benefits, these entities MUST submit separate applications. There are four types of
Part D solicitations for which applications are due on February 21, 2012; they are PDP,
MA-PD, Cost Plan solicitations, and the Service Area Expansion Application.
Organizations that intend to offer more than one of these types of Part D contracts must
submit a separate application for each type. (PACE sponsors will also have separate
solicitations). For example, a MA-PD and PDP product may not be represented in the
same application. Entities intending to have both local MA-PD and Regional PPO
contracts must submit separate MA-PD applications.
2.4.2. Applicant Entity Same as Contracting Entity
The legal entity that submits this application must be the same entity with which CMS
enters into a Part D contract, or in the case of an MA-PD and Cost Plan sponsor, the
same legal entity seeking an addendum to an MA or Cost Plan contract. An entity that
qualifies for a Part D contract, or for an addendum to an MA or Cost Plan contract, may
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hold multiple contracts for the same plan type (e.g. PDP, MA-PD, or Cost Plan) in the
service area described in the application.
2.4.3. Organizations Seeking to Only Expand the Employer Service Area
For those Part D Sponsors that currently offer the prescription drug benefit in both the
individual and employer market and are seeking to expand their service area for the
employer market only must complete specified attestation sections of this application.
2.4.4. Withdrawal of an Service Area Expansion Application
In those instances where an organization seeks to withdraw its SAE application or
reduce the service area of its pending SAE application prior to the execution of a Part D
contract or addendum to its MA or Cost Plan contract, then the organization must send
an official notice to CMS. The notice should be on organization letterhead and clearly
identify the pending application number and service area (as appropriate). The notice
should be delivered via email to [email protected] and the subject line of
the email should read ―Pending application withdrawal or reduction to pending service
area.‖ The withdrawal will be considered effective as of the deate of the email.
2.4.5. Technical Assistance
For technical assistance in the completion of this Application, contact:
Linda Anders by email at [email protected], or by phone at 410-786-0459. As
stated in section 2.4.1, Applicants must contact the HPMS Help Desk if they are
experiencing technical difficulties uploading or completing any part of this solicitation
within HPMS prior to the submission deadline. Applicants requesting technical
assistance with uploading or completing any part of the online HPMS application after
the published CMS application deadline will not be granted technical assistance, nor the
opportunity to complete their application submission.
2.5. Submission Software Training
Applicants use the CMS Health Plan Management System (HPMS) during the
application, formulary, and bid processes. Applicants are required to enter contact and
other information collected in HPMS in order to facilitate the application review process.
Applicants are required to upload their plan formularies to HPMS using a pre-defined file
format and record layout. The formulary upload functionality will be available on March
23, 2012. The deadline for formulary submission to CMS is 11:59 PM EDT on April 16,
2012. CMS will use the last successful upload received for an Applicant as the official
formulary submission.
In order to prepare plan bids, Applicants will use HPMS to define their plan structures
and associated plan service areas and then download the Plan Benefit Package (PBP)
and Bid Pricing Tool (BPT) software. For each plan being offered, Applicants will use
the PBP software to describe the detailed structure of their Part D benefit and the BPT
software to define their bid pricing information. The formulary must accurately
crosswalk to the PBP.
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Once the PBP and BPT software has been completed for each plan being offered,
Applicants will upload their bids to HPMS. Applicants will be able to submit bid uploads
to HPMS on their PBP or BPT one or more times between May 112012 and the CY
2013- bid deadline of June 4, 2012. CMS will use the last successful upload received
for a plan as the official bid submission.
CMS will provide technical instructions and guidance upon release of the HPMS
formulary and bid functionality as well as the PBP and BPT software. In addition,
systems training will be available at the Bid Training in April 2012.
2.6. Summary Instruction and Format for Individual Market Bids
Each Part D Sponsor must submit to CMS a bid for each prescription drug plan it
intends to offer. Applicants using this solicitation may apply to offer full risk Part D
plans. Applicants must submit their formularies to HPMS on or before April 16, 2012
and the PBPs and BPTs on or before the bid submission date.
2.6.1. Format of Bids
Bid-Related Sections Due Prior to Bid Submission Date
To facilitate the timely review of all the bid submissions, CMS requires Applicants to
submit the portion of their bid related to formulary and covered drugs from March 23April 16, 2012. CMS reviews areas of each proposed drug plan formulary by tier and
drug availability and evaluates each element against evidence-based standards such as
widely accepted treatment guidelines. Elements include, but may not be limited to the
list of drugs, the categories and classes, tier structures (not cost sharing), and utilization
management tools such as quantity limits, step therapy, and prior authorization. CMS
makes the review criteria available to Applicants well in advance of the date Applicants
must submit this information to CMS. Outliers are selected for further evaluation during
the formulary review process prior to CMS approval of the bid. CMS makes reasonable
efforts to inform Applicants of their outliers so that they may substantiate their offering.
If such substantiation is not satisfactory to CMS, the Applicant is given the opportunity
to modify the formulary. CMS intends to complete as much of this work as possible
before the PBP and BPT submissions so that any modification may be reflected in those
documents.
Bid Submissions
The Applicant‘s bid represents the expected monthly cost to be incurred by the
Applicant to provide qualified prescription drug coverage in the approved service area
for a Part D-eligible beneficiary on a standardized basis. The costs represented in each
bid should be those for which the Applicant would be responsible. These costs would
not include payments made by the plan enrollee for deductible, coinsurance, copayments, or payments for the difference between the plan‘s allowance and an out-ofnetwork pharmacy‘s usual and customary charge. The bid requires the separate
identification, calculation, and reporting of costs assumed to be reimbursed by CMS
through reinsurance. CMS requires that the bid represent a uniform benefit package
based upon a uniform level of premium and cost sharing among all beneficiaries
enrolled in the plan. The benefit packages submitted must be cross walked
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appropriately from the formulary. Pursuant to 42 CFR §423.505(k)(4), the CEO, CFO,
or a designee with the authority to sign on behalf of one of these officers, and who
reports directly to such officer, must certify (based on best knowledge, information and
belief) that the information in the bid submission, and assumptions related to projected
reinsurance and low-income cost sharing subsidies, is accurate, complete, and truthful,
and fully conforms to the requirements in 42 CFR §423.265. In addition, consistent with
42 CFR §423.265(c)(3), the pricing component of the bid must also be certified by a
qualified actuary.
As part of its review of Part D bids, CMS conducts an analysis to ensure that multiple
plan offerings by a sponsor represent meaningful variations based on plan
characteristics that will provide beneficiaries with substantially different options.
Pursuant to section 42 CFR §423.265(b), multiple bid submissions must reflect
differences in benefit packages or plan costs that CMS determines represent substantial
differences relative to a sponsor‘s other bid submissions. In order to be considered
―substantially different,‖ each bid must be significantly different from the sponsor‘s other
bids with respect to beneficiary out-of-pocket costs or formulary structures. Applicants
should review the CMS guidance on the submission of bids that are meaningfully
different released on April 16, 2010.
2.6.2. CMS Review of Bids
CMS evaluates the bids based on four broad areas: 1) administrative costs, 2)
aggregate costs, 3) benefit structure, and 4) plan management. CMS evaluates the
administrative costs for reasonableness in comparison to other bidders. CMS also
examines aggregate costs to determine whether the revenue requirements for qualified
prescription drug coverage are reasonable and equitable. In addition, CMS reviews the
steps the Part D sponsor is taking to control costs, such as through various programs
that encourage use of generic drugs. Finally, CMS examines indicators concerning plan
management, such as customer service.
CMS is also required to make certain that bids and plan designs meet statutory and
regulatory requirements. We conduct actuarial analysis to determine whether the
proposed benefit meets the standard of providing qualified prescription drug coverage.
Also, CMS reviews the structure of the premiums, deductibles, co-payments, and
coinsurance charged to beneficiaries and other features of the benefit plan design to
ensure that it is not discriminatory (that is, that it does not substantially discourage
enrollment by certain Part D eligible individuals).
2.6.3. Overview of Bid Negotiation
CMS evaluates the reasonableness of bids submitted by Part D sponsors by means of
an actuarial valuation analysis. This requires evaluating assumptions regarding the
expected distribution of costs, including average utilization and cost by drug coverage
tier. CMS may test these assumptions for reasonableness through actuarial analysis
and comparison to industry standards and other comparable bids. Bid negotiation may
take the form of negotiating changes upward or downward in the utilization and cost per
script assumptions underlying the bid‘s actuarial basis. We may exercise our authority
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to deny a bid if we do not believe that the bid and its underlying drug prices reflect
market rates.
2.7. Pharmacy Access
An integral component of this Solicitation concerns the pharmacy access standards
established under section 1860D-4(b)(1)(C) of the Social Security Act. The standards
require in part that each Part D sponsor must secure the participation in their pharmacy
networks of a sufficient number of pharmacies to dispense drugs directly to patients
(other than by mail order) to ensure convenient access to covered Part D drugs by Part
D plan enrollees. To implement this requirement, specific retail pharmacy access rules
consistent with the standards delineated in 42 CFR §423.120. Furthermore, Part D
sponsors must provide adequate access to home infusion and convenient access to
long-term care, and Indian Health Service, Indian Tribe and Tribal Organization, and
Urban Indian Organization (I/T/U) pharmacies in accordance with 42 CFR § 423.120
and related CMS instructions and guidance.
2.7.1. Retail Pharmacy Access
Applicants must ensure that their retail pharmacy network meets the criteria established
under 42 CFR §423.120. Applicants must ensure the pharmacy network has a
sufficient number of pharmacies that dispense drugs directly to patients (other than by
mail order) to ensure convenient access to Part D drugs. CMS rules require that
Applicants establish retail pharmacy networks in which:
In urban areas, at least 90 percent of Medicare beneficiaries in the Applicant‘s
service area, on average, live within 2 miles of a retail pharmacy participating in the
Applicant‘s network;
In suburban areas, at least 90 percent of Medicare beneficiaries in the Applicant‘s
service area, on average, live within 5 miles of a retail pharmacy participating in the
Applicant‘s network; and
In rural areas, at least 70 percent of Medicare beneficiaries in the Applicant‘s service
area, on average, live within 15 miles of a retail pharmacy participating in the
Applicant‘s network.
Applicants may count I/T/U pharmacies and pharmacies operated by Federally
Qualified Health Centers and Rural Health Centers towards the standards of
convenient access to retail pharmacy networks.
Applicants may use their contracted PBM‘s existing 2012 Part D network to
demonstrate compliance with retail pharmacy access standards. If an Applicant is
creating a new Part D network, the submission must be based on executed contracts for
Year 2013. CMS conducts the review of Retail Pharmacy Access based on the service
area that the Applicant has provided in HPMS by February 21, 2012. In an effort to
reduce Applicant errors, CMS has automated the retail pharmacy access review.
Applicants are required to input their pending service area into HPMS per the
instructions at section 3.2 and as explained in section 3.4.1 Applicants must upload the
retail pharmacy list in HPMS. Based on the pending service area documented in HPMS
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for PDPs and pending and existing service area for local MA-PDs, the retail pharmacy
list uploaded by the Applicant, and the Medicare Beneficiary Count file available on the
CMS application guidance website, CMS will generate access percentages for all
applicants. (In prior years, applicants provided their geo-reports as part of the
pharmacy uploads.) In addition, CMS will use the information gathered from the
pharmacy list upload to identify pharmacy addresses.
With limited exceptions, this information gathered from the pharmacy lists will be used
by CMS to geo-code the specific street-level locations of the pharmacies to precisely
determine retail pharmacy access. Exceptions to this process may include, but not be
limited to, those instances where a street-level address cannot be precisely geo-coded.
In those situations, CMS will utilize the ZIP code-level address information to geo-code
the approximate pharmacy location.
In previous years CMS allowed Part D applicants to use one of several geo-coding
methodologies: representative ZIP code geo-coding, or the more precise geo-coding
methods including ZIP+4 Centroid Method, ZIP+@ Centroid Method, referred to as
address-based geo-coding. As a result, some organizations may previously have
coded all pharmacy addresses at the ZIP code/county level as opposed to the more
precise street-level coding. CMS strongly encourages applicants conduct a closer and
more precise inspection of their retail pharmacy locations and network access prior to
submitting their pharmacy list.
The retail pharmacy lists may contain contracted pharmacies that are outside of the
Applicant‘s service area (to account for Applicants who contract for a national pharmacy
network); however, CMS will only evaluate the retail pharmacy access for the pending
service area for the PDPs and the existing and pending service area for local MA-PDs.
The retail pharmacy access calculations must meet the established standards at one of
the following points in time:
At the HPMS gate closing time of the initial application submission (a fully passing
retail access review at this point in the application process will not require a
subsequent review even if the service area is later reduced), or
At the HPMS gate closing time of the courtesy submission window after CMS has
issued an interim deficiency notice, if the initial application retail submission is found
to contain retail access related deficiencies of any type (a fully passing retail access
review at this point in the application process will not require a subsequent review
even if the service area is later reduced), or
At the HPMS gate closing time of the final submission window after CMS has issued
a Notice of Intent to Deny (see Section 2.4), if the courtesy retail submission is found
to contain retail access related deficiencies of any type.
While Applicants are required to demonstrate that they meet the Part D pharmacy
access requirements at the time this application is submitted to CMS, CMS expects that
pharmacy network contracting will be ongoing in order to maintain compliance with our
retail pharmacy access requirements.
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2.7.2. Home Infusion Pharmacy Access
Applicants must demonstrate that their contracted pharmacy network provides adequate
access to home infusion pharmacies. In order to demonstrate adequate access to home
infusion pharmacies, Applicants must provide a list of all contracted home infusion
pharmacies (see section 3.4.3). CMS uses this pharmacy listing to compare Applicants‘
home infusion pharmacy network against existing Part D sponsors in the same service
area to ensure that Applicants have contracted with an adequate number of home
infusion pharmacies. The adequate number of home infusion pharmacies is developed
based on data provided by all Part D sponsors through the annual Part D Reporting
Requirements. A reference file entitled ―Adequate Access to Home Infusion
Pharmacies‖ is provided on the CMS website.
2.7.3. Long-Term Care Pharmacy Access
Applicants must demonstrate that their contracted pharmacy network provides
convenient access to long-term care pharmacies. In order to demonstrate convenient
access to long-term care pharmacies, Applicants must provide a list of all contracted
long-term care pharmacies (see section 3.4.4). CMS uses this pharmacy listing, as well
as information reported as part of Applicants‘ reporting requirements and complaints
data, to evaluate initial and ongoing compliance with the convenient access standard.
2.7.4. Indian Tribe and Tribal Organization, and Urban Indian Organization
(I/T/U)
Applicants must demonstrate that they have offered standard contracts to all I/T/U
pharmacies residing within the Applicants‘ service areas. In order to demonstrate
convenient access to I/T/U pharmacies, Applicants must provide a list of all I/T/U
pharmacies to which they have offered contracts (see section 3.4.5). CMS provides the
current national list of all I/T/U pharmacies to assist Applicants in identifying the states
in which I/T/U pharmacies reside at the www.cms.gov/PrescriptionDrugCovContra/
website.
2.7.5. Waivers Related to Pharmacy Access
Waivers for MA-PD Plans CMS guidance regarding waivers of the pharmacy access
and any willing pharmacy requirements for certain MA-PD sponsors is contained at
sections 50.7 and 50.8.1 of Chapter 5 of the Prescription Drug Benefit Manual. These
waivers are described below.
Waiver of Retail Convenient Access Standards for MA-PDs
As described in section 50.7.1 of Chapter 5 of the Prescription Drug Benefit Manual, the
requirement that MA-PD sponsors must offer their Part D plan benefit through a
contracted retail pharmacy network that meets CMS convenient access standards is
waived for MA-PD sponsors that operate their own pharmacies. MA-PD sponsors must
demonstrate at the plan level that a majority (50%) of the prescriptions are filled at retail
pharmacies owned and operated by the organization in order to be granted the waiver.
Waiver of Convenient Access Standards for MA-PFFS
14
As described in section 50.7.2 of Chapter 5 of the Prescription Drug Benefit Manual, the
requirement that MA-PD sponsors must offer Part D plan benefits through a contracted
pharmacy network that meets CMS convenient access standards is waived for MAPFFS plans that meet the criteria in table 3.4.
Waiver of Any Willing Pharmacy Requirements for MA-PD
As described in section 50.8.2 of Chapter 5 of the Prescription Drug Benefit Manual, the
requirement that MA-PD sponsors must offer a network pharmacy contract to any willing
pharmacy that agrees to accept MA-PD sponsor‘s standard terms and conditions is
waived for MA-PD sponsors that own and operate the pharmacies in their network. MAPD sponsors must demonstrate at the plan level that at least 98% of prescriptions are
filled through pharmacies that are owned and operated by plan sponsor in order to be
granted the waiver.
Waivers for Plans in the Territories (excluding Puerto Rico)
To ensure access to coverage in the territories, §1860D-42(a) of the Social Security Act
grants CMS the authority to waive the necessary requirements to secure access to
qualified prescription drug coverage for Part D eligible individuals residing in the
territories. The regulations at 42 CFR §423.859(c) allow CMS to waive or modify the
requirement for access to coverage in the territories either at an Applicant‘s request or
at CMS‘ own determination. Under that authority, CMS will consider waiving the
convenient access requirements for a plan‘s Part D contracted retail pharmacy network,
found in 42 CFR §423.120(a)(1) for the Territories, if an Applicant requests such a
waiver, and demonstrates that it has made a good faith effort to meet the requirements
described in Section 3.5.1C of this solicitation.
2.8. Standard Contract with Part D Sponsors
Successful Applicants will be deemed qualified to enter into a Part D addendum to their
Medicare Advantage or Prescription Drug Plan contract after CMS has reviewed the
Applicant‘s entire submission. Under this addendum the Part D sponsor will be
authorized to operate one or more Medicare prescription drug plans. Only after the
qualified Applicant and CMS have reached agreement on the Applicant‘s bid
submissions will the Applicant be asked to execute its Part D addendum. Approved
Part D applications are valid for the forthcoming contract year. Should an Applicant
decide to not execute a contract after receiving application approval, then the
organization will need to submit a new application if it chooses to enter the Part D
market in a future contract year.
2.9. Protection of Confidential Information
Applicants may seek to protect their information from disclosure under the Freedom of
Information Act (FOIA) by claiming that FOIA Exemption 4 applies. The Applicant is
required to label the information in question ―confidential‖ or ―proprietary‖, and explain
the applicability of the FOIA exemption it is claiming. This designation must be in
writing. When there is a request for information that is designated by the Applicant as
confidential or that could reasonably be considered exempt under Exemption 4, CMS is
required by its FOIA regulation at 45 CFR §5.65(d) and by Executive Order 12,600 to
15
give the submitter notice before the information is disclosed. To decide whether the
Applicant‘s information is protected by Exemption 4, CMS must determine whether the
Applicant has shown that— (1) disclosure of the information might impair the
government's ability to obtain necessary information in the future; (2) disclosure of the
information would cause substantial harm to the competitive position of the submitter;
(3) disclosure would impair other government interests, such as program effectiveness
and compliance; or (4) disclosure would impair other private interests, such as an
interest in controlling availability of intrinsically valuable records, which are sold in the
market. Consistent with our approach under the Medicare Advantage program, we
would not release information under the Medicare Part D program that would be
considered proprietary in nature.
2.10. Waivers for MA-PD and Cost Plan SAE Applicants
CMS is authorized to grant waivers of Part D program requirements where such a
requirement conflicts with or duplicates a Part C requirement, or where granting such a
waiver would improve the MA-PD sponsor‘s coordination of Part C and Part D benefits.
Accordingly, CMS has identified the waivers it is granting to all MA-PD sponsors in the
chart shown in Summary of Medicare Part D Regulatory Requirements Fulfilled
under Part C for Medicare Advantage Prescription Drug (MA-PD) Applicants
(Appendix II). As a result of these CMS-granted waivers, the MA-PD sponsor
application is less comprehensive than the PDP sponsor application. These waivers will
be reflected in each MA-PD sponsor‘s Part D addendum.
Applicant Requests for Additional Waivers: CMS may grant additional waivers upon an
MA-PD sponsor‘s request, provided that the waivers may be justified because the Part
D requirement is duplicative of or conflicting with Part C requirements or the waiver will
improve the coordination of Part C and Part D benefits. Any waiver granted by CMS will
apply to all similarly situated MA-PD sponsors.
For each waiver request, the Applicant must provide, as an upload in HPMS, a
statement that includes:
1. The Part D regulation reference.
2. The appropriate waiver criteria (e.g., duplicative, conflicts, improves benefit
coordination).
3. A discussion of how the requested waiver meets at least one of the three waiver
criteria.
CMS will notify Applicants whether their requests were approved via a CMS web
posting of all approved waivers. As noted above, waivers granted will be reflected in
each MA-PD sponsor‘s Part D addendum.
Where this application directs the Applicant to attest that it will meet a particular Part D
requirement for which the Applicant has requested a waiver, the Applicant should check
both the ―Yes‖ box and the ―Waiver Requested‖ box within HPMS. In the event that
CMS does not approve a particular waiver, the Applicant will still have attested that it
will meet all the applicable Part D program requirements and remain eligible to enter
into a Part D addendum upon approval of its bids. This process will prevent Applicants
16
from having to submit additional application responses after the original February 21,
2012 deadline. If, as a result of CMS‘ denial of its waiver request, the Applicant no
longer intends to offer a Part D benefit plan, the Applicant must notify CMS in writing on
or before June 30, 2012. CMS will not execute a Part D addendum with Applicants that
submit such a notice. This notice of withdrawal should be sent to:
Centers for Medicare & Medicaid Services (CMS)
Center for Medicare
Attention: Application Withdrawal
7500 Security Boulevard
Mail Stop C1-26-12
Baltimore, Maryland 21244-1850
2.11. Waivers Related to Attestations for EGWP, PDP Direct, and MAPD Direct Contract Applicants
As a part of the application process, those organizations seeking to offer 800 series
plans may submit individual waiver/modification requests to CMS. Applicants should
submit an attachment via an upload in the HPMS Part D Attestations section that
addresses the following:
Specific provisions of existing statutory, regulatory, and/or CMS policy
requirement(s) the entity is requesting to be waived or modified (please identify
the specific requirement (e.g., 42 CFR §423.32, Section 30.4 of the Part D
Enrollment Manual) and whether you are requesting a waiver or a modification of
these requirements);
How the particular requirement(s) hinder the design of, the offering of, or the
enrollment in, the employer-sponsored group plan;
Detailed description of the waiver/modification requested including how the
waiver/modification will remedy the impediment (i.e., hindrance) to the design of,
the offering of, or the enrollment in, the employer-sponsored group prescription
drug plan;
Other details specific to the particular waiver/modification that would assist CMS
in the evaluation of the request; and
Contact information (contract number, name, position, phone, fax and email
address) of the person who is available to answer inquiries about the
waiver/modification request.
Note: Applicants should review the waivers currently approved by CMS in Chapter 12
of the Medicare Prescription Drug Benefit Manual to assess whether the sponsoring
organization is similarly situated to qualify for an existing waiver prior to submitting a
request to CMS.
17
3. APPLICATION
NOTE: All uploads and templates will be accessed in HPMS through the HPMS
Contract Management Module. Applicants should refer to the Contract Management –
Online Application User‘s Guide Version 2.0 for further instructions.
3.1. Applicant Experience 42 CFR Part 423 Subpart K
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘NA’, to each of the following
qualification to be approved for a Part D contract. Attest
‘yes’, ‘no’, or ‘NA’ to each of the following qualifications by
clicking on the appropriate response in HPMS:
Yes
No
NA
1. If Applicant, Applicant‘s parent organization, or any
subsidiaries of Applicant‘s parent organization has an
existing contract(s) with CMS to operate a Prescription Drug
Plan(s), at least one of those contracts has been in effect
since January 1, 2011 or earlier.
3.2. Service Area 42 CFR §423.112; Prescription Drug Benefit
Manual, Chapter 5
Complete in HPMS, in the Contract Management/Contract Service Area/Service Area
Data page, the service area information indicating the regions (including territories) you
plan to serve. Information on PDP and MA-PD regions and Territories may be found on
the www.cms.gov website. Be sure to list both the region/territory name and associated
number. Note: CMS bases its pharmacy network analyses on the service area your
organization inputs into HPMS. Please make sure that the service area information you
input into HPMS corresponds to the pharmacy lists that are provided under the
Pharmacy Access section of the application.
3.3. Licensure and Solvency 42 CFR §423.401; 42 CFR §423.410;
2008 Call Letter
Note: MA-PD and Employer Direct Sponsors seeking to expand into another MA region
may skip this section and proceed directly to Section 3.3—Pharmacy Access.
A. Provide in HPMS the National Association of Insurance Commissioners (NAIC)
number if currently licensed. _______
B. In HPMS, complete the table below:
Attest ‘yes’ or ‘no’ to the following licensure
requirements.
18
Yes
No
Does
Not
Apply
2. Applicant is licensed under State law as a risk-bearing
entity eligible to offer health insurance or health
benefits coverage in each State in which the Applicant
proposes to offer Part D drug benefits.
If the answer to this attestation is ―YES,‖ then
upload in HPMS the documentation (e.g., licensing
certificate or letter), from each state licensing
authority of your organization‘s status as an entity
entitled to bear risk.
If the answer to this attestation is ―NO‖ see
Attestation #2.
3. If the Applicant is not State licensed as a risk-bearing
entity eligible to offer health insurance or health
benefits coverage in each State in which the Applicant
proposes to offer Part D benefits, is the Applicant
licensed as a risk-bearing entity in at least one State?
If the answer to this attestation is ―YES,‖ then
upload in HPMS the documentation (e.g., licensing
certificate or letter), from each state licensing
authority of your organization‘s status as an entity
entitled to bear risk.
If the answer to this attestation is ―NO,‖ the
Applicant must submit via HPMS the Appendix
entitled Financial Solvency Documentation.
4. If the Applicant does not meet Requirement #1, then
the Applicant has completed and provided, or will
within the requisite time period, to CMS via HPMS the
Appendix entitled Application to Request Federal
Waiver of State Licensure Requirement for
Prescription Drug Plan (PDP) for each State in which it
is not licensed but seeks to offer Part D drug benefits.
5. If Applicant is seeking a waiver of the licensure
requirement, the Applicant meets the CMS-published
financial solvency and capital adequacy requirements.
6. Applicant is currently under supervision, corrective
action plan or special monitoring by the State licensing
authority in any State.
If the answer to this attestation is ―YES‖, upload in
HPMS an explanation of the specific actions taken
by the State license regulator. In these cases,
19
CMS reserves the right to require the Applicant to
demonstrate that it meets the CMS-published
financial solvency and capital adequacy
requirements.
3.4. Private Fee-For-Service Pharmacy Access 42 CFR
§423.120(a)(7); Prescription Drug Benefit Manual, Chapter 5
A. In HPMS, complete the table below ONLY if you are a Private Fee For Service
Applicant. Otherwise, proceed directly to 3.4.1.
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS:
1. Applicant uses a contracted network of pharmacies and
therefore meets the retail pharmacy convenient access
standards; LTC and I/T/U pharmacy convenient access
standards; and home infusion pharmacy adequate access
standards. Note: If answer Yes, Applicant must complete all
of Section 3.4.
2. If Applicant attests ‗NO‘ to 3.3A1, Applicant provides
coverage for drugs purchased from all pharmacies,
regardless of whether they are network pharmacies.
3. If Applicant attests ‗NO‘ to 3.3A1, Applicant does not charge
additional cost-sharing to beneficiaries for obtaining their
drugs at a non-network pharmacy.
4. If Applicant attests ‗NO‘ to 3.3A1, Applicant provides access
at non-network pharmacies by reimbursing the pharmacy its
Usual and Customary price (defined as the price an out of
network pharmacy charges a customer who does not have
any form of prescription drug coverage for a covered Part D
drug) minus any applicable beneficiary cost sharing.
5. If Applicant attests ‗NO‘ to 3.3A1, Applicant does not
routinely rely on billing practices that require enrollee to pay
the usual and customary price upfront and then submit a
paper claim to the applicant for reimbursement.
6. If Applicant attests ‗NO‘ to 3.3A1, Applicant has policies and
procedures appropriately restricting the use of paper claims
only to the situations in which online claims processing is not
available at the point of sale in order to promote accurate
20
Yes
Requesting
No Waiver?
Yes or No
TrOOP accounting, as well as to minimize administrative
costs to the Part D plans and the Medicare program and
opportunities for fraudulent duplicate claims reimbursement.
7. If Applicant attests ‗NO‘ to 3.3A1, Applicant arranges for
automated, online billing at non-network pharmacies (similar
to the way in which our point-of-sale contractor has allowed
for online billing by non-contracted pharmacies).
Note: Only if SAE Applicant attests No to 3.3A1, and Yes to 3.3A2-7, SAE
Applicant may move directly to Section 4.0 and will be granted a waiver of
convenient access.
3.5. General Pharmacy Access 42 CFR §423.120(a); Prescription
Drug Benefit Manual, Chapter 5
3.5.1. Retail Pharmacy 42 CFR §423.120(a); 42 CFR §423.859(c);
Prescription Drug Benefit Manual, Chapter 5
A. In HPMS, complete the table below. Note: Employer Union/Only Group Waiver
Plan Applicants complete questions 1 and 2 only.
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following qualifications
by clicking on the appropriate response in HPMS.
Yes
No
1. Applicant meets the CMS Standards for Convenient
Access [42 CFR §423.120 (a) (1) and (2) no later than the
application submission date.
2. Applicant agrees that when Applicant is offering extended
supplies via mail order, it also has contracts with a
sufficient number of network retail pharmacies so as to
ensure that enrollees have reasonable access to the
same extended day supply benefits at retail that are
available at mail-order.
3. Applicant seeks to obtain a waiver of retail pharmacy
convenient access standards. If YES, complete table F
below in HPMS.
4. Applicant seeks to obtain a waiver of any willing
pharmacy requirements. If YES, complete table G below
in HPMS.
B. Upload in HPMS the Retail Pharmacy List (not applicable to Employer
Union/Only Group Waiver Plan Applicants):
21
Requesting
Waiver?
Yes or No
To submit retail pharmacy listings to CMS, Applicants must download the Microsoft
Excel worksheet template from HPMS that is located on the Pharmacy Upload page,
complete the worksheet and upload the finished document back into HPMS.
C. Submission of Supporting Discussion in Areas Failing to Meet Access
Standards (not applicable to Employer Union/Only Group Waiver Plan Applicants)
CMS will consider supporting discussion provided by an Applicant in evaluating the
applicant‘s application to determine if Applicant is qualified to be a Part D Sponsor.
While you have the opportunity to provide this discussion, CMS‘ expectation is that your
organization will meet the required access standards in all cases. Providing the
discussion below does not mean CMS will allow you to fail the access standards, but in
extreme or unusual circumstances, we may consider this information.
Provide as an upload in HPMS, in .pdf format, the following information to demonstrate
that meeting the access standard within the service area is not practical or is
impossible.
1. Indicate the geographic areas in which the applicant cannot demonstrate that it
meets the retail pharmacy convenient access standards.
2. Explain why these standards cannot be met. Include in the discussion relevant
information such as geographic barriers, pharmacy infrastructure barriers, and/or
market barriers;
3. Describe how the pharmacies in the Applicant‘s retail contracted network will provide
access to all eligible Part D individuals enrolled in the Applicant‘s plan(s) in each of
the geographic areas defined in item 1 above.
D. In HPMS, indicate whether you are seeking a waiver of the convenient access
standards for the territories in which your organization intends to offer the Part D
benefit. If your organization is not intending to offer the Part D benefit in the
territories check N/A within HPMS. (not applicable to Employer Union/Only Group
Waiver Plan Applicants)
Request for a Waiver of Convenient Access Standards for the Territories
Yes
No N/A
Region 35 – American Samoa
Region 36 – Guam
Region 37 – Northern Mariana Islands
Region 39 – US Virgin Islands
E. Complete the following if you marked YES to requesting a waiver of
convenient access standards for any of the territories in 3.4.1E. In HPMS, in .pdf
format, provide the following information: (not applicable to Employer Union/Only
Group Waiver Plan Applicants)
22
1. Explain why your organization cannot demonstrate compliance with the access
standards or why these standards cannot be met.
2. Describe the Applicant‘s efforts to identify and contract with all of the retail
pharmacies in each of the applicable territories.
3. Describe how the pharmacies in the Applicant‘s contracted network demonstrate
convenient access to all eligible Part D individuals enrolled in the Applicant‘s plan(s)
in each of the territories listed above as not meeting the standards in 42 CFR
§423.120(a)(1).
F. In HPMS complete the table below: (not applicable to Employer Union/Only
Group Waiver Plan Applicants)
Waiver of Retail Convenient Access Standards for MA-PDs
Provide the number of prescriptions provided in 2010 by retail
pharmacies owned and operated by Applicant
Provide the number of prescriptions provided in 2010 at all retail
pharmacies contracted by Applicant.
NOTE: CMS will determine the percentage of prescriptions provided at retail
pharmacies owned and operated by Applicant over total prescriptions provided at all
retail pharmacies contracted by Applicant.
G. In HPMS complete the table below: (not applicable to Employer Union/Only
Group Waiver Plan Applicants)
Waiver of Any Willing Pharmacy Requirements for MA-PDs
Provide the number of prescriptions provided in 2010 by all pharmacies
owned and operated by Applicant
Provide the number of prescriptions provided in 2010 at all pharmacies
contracted by Applicant.
NOTE: CMS will determine the percentage of prescriptions provided at all pharmacies
owned and operated by Applicant over total prescriptions provided at all pharmacies
contracted by Applicant.
3.5.2. Mail Order Pharmacy 42 CFR §423.120(a)(10); Prescription Drug
Benefit Manual, Chapter 5
A. In HPMS, complete the table below:
Applicants may offer a mail order option in addition to
their contracted Part D pharmacy network but mail
Yes
order pharmacies do not count in meeting network
adequacy standards. Indicate in HPMS ‘yes’ or ‘no’
23
No
Requesting
Waiver?
Yes or No
whether such mail order pharmacy is offered.
1. Applicant offers mail order pharmacy as part of its Part
D plan(s).
2. If Applicant attests ‗Yes‘ to 3.4.3A1, does Applicant‘s
mail order contract include an extended (e.g., 90) day
supply?
3. If Applicant attests ‗YES‘ to 3.4.3A2, then Applicant
includes in its contracts with at least some retail
pharmacies a provision that allows a retail pharmacy
to offer an extended supply of drugs to any Plan
beneficiary at the same price, reimbursement rate and
cost sharing as the Plan‘s mail order pharmacy or
pharmacies—the network mail order pharmacy rate; or
an Applicant may use an alternative retail/mail order
pharmacy rate with a higher contracted
reimbursement rate provided that any differential in
charge between the Network Mail Order Pharmacy
rate and the higher contract reimbursement rate would
be reflected in higher cost sharing paid by the
beneficiary. Applicant must ensure that the availability
of an extended day supply at retail does not increase
the costs to the government and that enrollee costsharing for an extended day supply never exceeds
what the enrollee would have paid had he/she filled
his/her prescription in multiple one-month supply
increments at retail pharmacy rates.
B. Mail Order Pharmacy List
(not applicable to Employer Union/Only Group Waiver Plan Applicants)
To submit mail order pharmacy listings to CMS, Applicants must download the Microsoft
Excel worksheet template from HPMS that is located on the Pharmacy Upload page,
complete the worksheet and upload the finished document back into HPMS.
3.5.3. Home Infusion Pharmacy 42 CFR §423.120(a)(4); Prescription Drug
Benefit Manual, Chapter 5
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Yes
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS:
24
No
Requesting
Waiver?
Yes or No
1. Applicant provides adequate access to home infusion
pharmacies.
2. Applicant‘s network contracts address Part D drugs
delivered and administered in the home setting.
3. Applicant‘s contracted home infusion pharmacies
deliver home infused drugs in a form that can be
administered in a clinically appropriate fashion in the
beneficiary‘s place of residence.
4. Applicant‘s home infusion pharmacy network in the
aggregate has a sufficient number of contracted
pharmacies capable of providing infusible Part D
drugs for both short term acute care (e.g. IV
antibiotics) and long term chronic care (e.g. alpha
protease inhibitor) therapies.
5. Applicant‘s contracted network pharmacies that deliver
home infusion drugs ensure that the professional
services and ancillary supplies necessary for home
infusion are in place before dispensing home infusion
drugs to the beneficiary in his/her place of residence.
6. Applicant‘s contracted network pharmacies that deliver
home infusion drugs provide home infusion drugs
within 24 hours of discharge from an acute setting,
unless the next required dose, as prescribed, is
required to be administered later than 24 hours after
discharge.
B. Home Infusion Pharmacy List
(not applicable to Employer Union/Only Group Waiver Plan Applicants) To submit
home infusion pharmacy listings to CMS, Applicants must download the Microsoft Excel
worksheet template from HPMS that is located on the Pharmacy Upload page, complete
the worksheet and upload the finished document back into HPMS.
3.5.4. Long -Term Care (LTC) Pharmacy 42 CFR §423.120(a)(5);
Prescription Drug Benefit Manual, Chapter 5
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Yes
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
25
No
Requesting
Waiver?
Yes or No
in HPMS:
1. Applicant offers standard contracting terms and
conditions to all long-term care pharmacies in its
service area. These terms and conditions must
include all the performance and service criteria for
long-term care pharmacies that are cited in section
50.5.2 of Chapter 5 of the Prescription Drug Benefit
Manual.
2. Applicant agrees that all of the Part D contracted
pharmacies in Applicant‘s LTC network have signed
directly or through a power of attorney a contract that
meets the LTC performance and service criteria
established by CMS.
3. Applicant recognizes the CMS special election period
(SEP) or open enrollment period for institutionalized
individuals for Part D drug plan enrollment and
disenrollment for beneficiaries entering, living in, or
leaving a long-term care facility.
4. Applicant ensures convenient access to network LTC
pharmacies for all of their enrollees residing in an IMD
or ICF-MR designated by the State as an institution
and in which any institutionalized individuals reside.
5. Applicant provides convenient access to network LTC
pharmacies for all of their enrollees who are inpatients
in a hospital that is a ―medical institution‖ under
section 1902(q)(1)(B) of the Act – and therefore would
meet the Part D definition of a LTC facility – and
whose Part A benefits have been exhausted.
6. Applicant contracts with a sufficient number of LTC
pharmacies to provide all of the plan‘s institutionalized
enrollees‘ convenient access to the plan‘s LTC
pharmacies.
7. Applicant does not rely upon beneficiary SEPs or on
out-of-network access in lieu of contracting with a
sufficient number of pharmacies to ensure that an
enrollee can remain in his/her current plan for as long
as he/she reside in a LTC facility in Applicant‘s service
area.
8. Applicant ensures that LTC pharmacy contracting is
26
ongoing as Applicant continues to identify LTC
facilities and LTC pharmacies, and as Applicant
examines auto-enrollment assignments and incoming
enrollments.
9. Applicant agrees that the appropriate action to take
when a beneficiary is enrolled in its plan and Applicant
does not have a contract with an LTC pharmacy that
can serve the LTC facility in which that enrollee
resides is to sign a contract with the facility‘s
contracted pharmacy, or – if that pharmacy will not
sign a contract – with another pharmacy that can
serve that facility. Applicant recognizes that, in some
cases, a retroactive contract may be necessary to
ensure convenient access to LTC pharmacies.
10. Applicant readily negotiates with States with regard to
contracting with State-run and operated LTC
pharmacies in facilities such as ICFs/MR, IMDs, and
LTC hospitals, and that timely and – in some cases,
retroactive – contracting may be necessary to ensure
convenient access to LTC facilities for enrollees
residing in such LTC facilities.
11. Applicant utilizes CMS data on beneficiary residence
in LTC facilities to facilitate its LTC contracting efforts.
12. Applicant, in contracting with LTC pharmacies, does
not agree to particular contracting terms and
conditions containing provisions that have the net
result of creating a non-uniform benefit for plan
enrollees served by those LTC pharmacies relative to
those residing in LTC facilities serviced by other
network LTC pharmacies whose contracts with the
Applicant may not include the same provisions.
B. LTC Pharmacy List
(not applicable to Employer Union/Only Group Waiver Plan Applicants)To submit
LTC pharmacy listings to CMS, Applicants must download the Microsoft Excel
worksheet template from HPMS that is located on the Pharmacy Upload page, complete
the worksheet and upload the finished document back into HPMS.
3.5.5. Indian Health Service, Indian Tribe and Tribal Organization, and
Urban Indian Organization (I/T/U) Pharmacy 42 CFR §423.120(a)(6);
Prescription Drug Benefit Manual, Chapter 5
A.
In HPMS, complete the table below:
27
Applicant must attest ‘yes’ or ‘no’ to each of
the following qualifications by clicking on the
appropriate response in HPMS to be
approved for a Part D contract:
Yes
No
N/A
Requesting
Waiver?
Yes or No
1. Using the list of I/T/U pharmacies provided at
the
www.cms.gov/PrescriptionDrugCovContra/
indicate whether your service area includes at
least one state in which an I/T/U pharmacy
resides.
Not all Part D regions have I/T/U pharmacies.
If the Applicant’s service area covers any
region that includes I/T/U pharmacies, then
the Applicant must attest ‘yes’ to each of the
following qualifications to be approved for a
Part D contract. If all of the Applicant’s
service area does not include I/T/U
pharmacies, then the Applicant may answer
‘no’ or n/a and still be approved for a Part D
contract since these requirements do not
apply. Attest ‘yes,’ ‘no’ or n/a to each of the
following qualifications by clicking on the
appropriate response in HPMS.
2. Applicant offers standard terms and
conditions that conform to the model contract
addendum provided by CMS to all I/T/U
pharmacies in its service area by sending a
conforming contract offer to all such
pharmacies. The model contract addendum
is posted on the
www.cms.gov/PrescriptionDrugCovContra/
website. The model contract addendum
account for differences in the operations of
I/T/U pharmacies and retail pharmacies.
3. Applicant agrees to submit documentation
upon CMS‘ request to demonstrate offering all
I/T/U pharmacies in its service area a
conforming contract. Such documentation
may be proof of fax or U.S. postage or other
carrier‘s receipt of delivery.
B.
I/T/U Pharmacy List
28
Requesting
Waiver?
Yes
No
N/A
Yes or No
(not applicable to Employer Union/Only Group Waiver Plan Applicants)In order to
demonstrate that a Part D Applicant meets these requirements Applicants must submit,
a complete list of all I/T/U pharmacies to which it has offered contracts, CMS provides
the current list of all I/T/U pharmacies, including the official name, address, and provider
number (when applicable). The Applicant‘s list must be submitted using the Microsoft
Excel template provided by CMS on the HPMS Pharmacy Upload page, and must
include all I/T/U pharmacies residing in any part of its service area.
To submit I/T/U pharmacy listings to CMS, Applicants must download the Microsoft
Excel worksheet template from HPMS that is located on the Pharmacy Upload page,
complete the worksheet and upload the finished document back into HPMS.
29
Upload in HPMS, in a .pdf format, the following certification:
4. Certification
I, ___________________________, attest to the following:
Name, Title
1. 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 the Centers for
Medicare & Medicaid Services (CMS) immediately and in writing.
2. 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.
3. I agree that if my organization meets the minimum qualifications and is Medicareapproved, and my organization enters into a Part D contract with CMS, I will abide
by the requirements contained in Section 3.0 of this Application and provide the
services outlined in my application.
4. I agree that CMS may inspect any and all information necessary including inspecting
of the premises of the Applicant‘s organization or plan to ensure compliance with
stated Federal requirements including specific provisions for which I have attested. I
further agree to immediately notify CMS if despite these attestations I become aware
of circumstances which preclude full compliance by January 1 of the upcoming
contract year with the requirements stated here in this application as well as in Part
423 of 42 CFR of the regulation.
5. 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.
6. I further certify that I am an authorized representative, officer, chief executive officer,
or general partner of the business organization that is applying for qualification to
enter into a Part D contract with CMS.
7. I acknowledge that I am aware that there is operational policy guidance, including
the forthcoming 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 for a SAE to their existing contract.
30
__________________________
____________________
Authorized Representative Name (printed)
Title
__________________________________
_________________________
Authorized Representative Signature
Date (MM/DD/YYYY)
31
5. Appendices
32
APPENDIX I – Application to Request Federal Waiver of State
Licensure Requirement for Prescription Drug Plan (PDP)
Only if applying to request a federal waiver of state licensure requirement for
Prescription Drug Plan then download, complete and upload into HPMS the following
form:
Application to Request Federal Waiver of State Licensure Requirement for
Prescription Drug Plan (PDP)
I. Complete the table below.
Contract# ________________
Identify the corporation seeking waiver of state licensure requirement for PDP
plan
Full Legal Corporate Name:
D.B.A:
Full Address of Corporation: (Street, City, State, Zip – No Post Office Boxes):
Corporation Telephone Number:
Corporation Fax Number:
Provide the corporation‘s contact information for the person who will act as the
main contact
Name of Individual:
Title:
Address of Individual: (Street, City, State, Zip – No Post Office Boxes):
Direct Telephone Number:
Fax Number:
Email Address:
II. Request
I, on behalf of the legal entity identified in Section A, above, hereby request that the
Secretary of the Department of Health and Human Services, pursuant to the authority
granted under Section 1855(a) (2) and Section 1860D-12(c) of the Social Security Act,
grant a waiver of the requirement that our organization be licensed under (Name of
State or for Regional Plan Waiver, States) ________________ State laws as a riskbearing entity eligible to sponsor prescription drug benefits coverage.
33
III. Certification
The undersigned officer has read this completed request for federal waiver form and
does hereby declare that the facts, representations, and statements made in this form
together with any attached information are true and complete to the best of my
knowledge, information, and belief. The information herein declared by me represents
matters about which I am competent, qualified, and authorized to represent the
corporation. If any events, including the passage of time, should occur that materially
change any of the answers to this request for federal waiver, the corporation agrees to
notify the Centers for Medicare & Medicaid services immediately.
Corporate Name: __________________________
Date: _______________________________
By: ______________________________________
Print Name: _______________________________
Title: _____________________________________
Witness/Attest: ____________________________
IV. Instructions for completing the cover sheet of licensure waiver application
Section A
Contract #____________
Enter the corporate name
Enter the name under which your PDP will do business (D.B.A)
Enter the street address, telephone number and facsimile number of the Corporation
at its corporate headquarters
Enter the name, title, telephone number, fax number, and email address of the main
contact person
Section B
Indicate the State for which you are requesting a waiver or the States for which you
are requesting a Regional Plan Waiver
Section C
Have a duly appointed corporate officer sign and date this form in the presence of a
witness
If you have any questions regarding this form please contact:
Joseph Millstone
410-786-2976
34
Instructions Follow
(THIS SECTION FOR OFFICIAL USE ONLY)
35
Supporting Documentation for Request of Federal Waiver of State Licensure
Requirement for Prescription Drug Plan (PDP) Sponsors
Complete Sections II and IV
I. Background and Purpose
This waiver request form is for use by Applicants who wish to enter into a contract with
the Centers for Medicare and Medicaid Services (CMS) to become Prescription Drug
Plan (PDP) sponsors and provide prescription drug plan benefits to eligible Medicare
beneficiaries without a State risk-bearing entity license.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)
generally requires Applicants who wish to become PDP sponsors to be licensed under
State law as a risk-bearing entity eligible to offer health insurance or health benefits
coverage in each State in which the Applicant wishes to offer a PDP. However, the
MMA created several exceptions to this State licensure requirement.
In general, there are 2 types of waivers – both of which are more fully explained in
Section II below. The waivers are: (1) Single State waivers. For these waivers, the
Applicant should submit a separate waiver request for each State, and the waiver is
effective only with respect to the single State. (2) Regional plan waivers. These waivers
may be obtained if an Applicant is licensed in one State in a region and wishes to
receive a waiver for all the other States in the region in which it is not licensed. In this
case, the entity need only submit one waiver request – not one for each and every State
in which it is not licensed.
Waiver requests should be submitted to CMS using the criteria described below.
Approval of a waiver request, in no way suggests that the Applicant is approved for a
Medicare contract with CMS. In addition to approval of a waiver request, the Applicant is
required to submit a Medicare contract application that demonstrates that the Applicant
meets the Federal definition of a PDP sponsor and that the prescription drug plan being
offered meets all plan requirements for PDPs.
Waiver Applicants must also comply with CMS standards for financial solvency and
capital adequacy.
II. Waiver Eligibility
The following constitute the waivers available to Applicants. These are the sole grounds
for receiving waivers.
A. Single State Waiver
The Applicant is requesting a single state waiver for the following state: _________.
36
Please indicate in your response to section IV. (Information to be included in this
request/ the grounds upon which you are requesting a waiver (cover all applicable
areas).)
1. The State has failed to complete action on a licensing application within 90 days
of the date of the State‘s receipt of a substantially complete application. 42 CFR
§423. 410(b) (1).
a) In order to apply for a CMS waiver based on the ground that a State did not
act within 90 days of receiving a substantially complete application, the State
must have had a substantially complete application for at least 90 days at the
time the waiver applicant applies to CMS for a waiver. Therefore, in order to
use this ground as a basis for a waiver, any new State license application
must have been received by a State(s) no later than November 1, 2011. This
will insure that the State had time to confirm ―the receipt and completeness of
the application‖ which is necessary to establish that the 90-day period has
been met. A state‘s denial of an application that was not complete does not
create grounds for waiver approval.
2. The State does not have a licensing process in effect with respect to PDP
sponsors. 42 CFR §423.410(c).
3. The State has denied the license application on the basis of one of the following:
a) material requirements, procedures, or standards (other than solvency
requirements) not generally applied by the State to other entities engaged in a
substantially similar business; or
b) the State requires, as a condition of licensure, the Applicant to offer any
product or plan other than a PDP. 42 CFR §423.410(b)(2).
4. The State has denied the licensure application, in whole or in part, for one of the
following reasons:
a) on the basis of the Applicant‘s failure to meet solvency requirements that are
different from the solvency standards developed by CMS; or
b) the State has imposed, as a condition of licensing, any documentation or
information requirements relating to solvency that are different from the
information or documentation requirements in the solvency standards
developed by CMS. 42 CFR §423.410(b)(3).
5. The State has denied the licensure application on the basis of grounds other than
those required under Federal law. 42 CFR §423.410(b)(4).
37
NOTE: To meet the conditions for CMS to grant a state licensure waiver
pursuant to 42 CFR §423.410(b), the waiver applicant must demonstrate that by
the time the waiver application is submitted to CMS, either:
a) The State failed to complete action on the licensing application within 90 days
of the date that the state received a substantially complete application.
States must confirm the receipt and completeness of the application, which is
necessary to establish that the 90-day period has been met; or
b) The State denied the substantially complete license application for one of the
reasons specified in 42 CFR §423.410 (b)(2) through (b)(4), relating to Single
State Waivers.
B. Regional Plan Waivers
The Applicant is State-licensed in the State(s) of __________________ and is applying
for a regional plan waiver in the following region(s): __________________________ as
provided under 42 CFR §423.415(a). The Applicant must demonstrate that it submitted
a substantially complete licensure application in each State in the region for which it
does not already have State licensure, except that no such application is necessary if
CMS determines that the State does not have a licensing process for potential PDP
sponsors.
III. Waiver Duration
A. Single State Waiver
The Single State waiver listed in II.A is effective for up to 36 months only and cannot be
renewed unless CMS determines that the State in question does not have a licensing
process in effect with respect to PDP sponsors. Thus, prior to the CMS renewal notice
deadline for the fourth year the PDP sponsor must be State-licensed if it wishes to
continue as a PDP sponsor and receive a contract for the subsequent year, unless CMS
determines that the State in question has chosen not to create a licensing process for
PDP sponsors – in which case the waiver can continue until CMS determines that a
licensure process has been created. Single State waivers automatically terminate if the
PDP sponsor obtains State licensure.
B. Regional Plan Waivers
The Regional Plan waivers expire at the end of the time period the Secretary
determines is appropriate for timely processing of the licensure application, but in no
case will a waiver extend beyond the end of the calendar year.
C. All Waivers
For both Single State and Regional Plan waivers, the waiver will terminate if the
contract with Medicare terminates.
38
IV. Information to be Included in this Request
While the applicant should provide information concerning each of the following areas,
the specific information and documentation requested below are not necessarily all
inclusive for CMS to approve or deny the request. Applicants should provide any
information and all documentation necessary to substantiate their request.
A. Single-State Waiver:
1. Specify the grounds from section II.A above, upon which you are requesting a
waiver. Provide a narrative of the circumstances leading to the PDP‘s eligibility
for a waiver based on one of the grounds listed above. Include information about
the state risk-bearing entity license for which the PDP applied, the application
process that the PDP followed, and any relevant interaction with the state.
2. Provide documentation to substantiate the narrative required in (1). Depending
on the grounds for waiver eligibility, this documentation should include but is not
necessarily limited to the list below:
a) Evidence of state‘s failure to act on a licensure application on a timely basis,
including a copy of the dated cover sheet to the application submitted to the
state, state confirmation of the receipt and completeness of the application,
state requests for additional information, and all pertinent correspondence
with the state relating to the status of the application, etc.
b) Evidence of denial of the application based on discriminatory treatment,
including:
(i) Documentation in 2.a above, and,
(ii) Copy of denial letter from the state, copy of ―discriminatory‖ material
requirements (including, state laws and regulation), procedures or
standards to which the PDP was required to comply that are not generally
applicable to other entities engaged in a substantially similar business, a
copy of state licensure requirements that the PDP offer a particular
product or plan in addition to a Medicare plan, and any supplemental
material received from the state explaining its rationale for the denial, etc.
3. PDPs seeking a waiver on the grounds that they are subject to requirements,
procedures and standards not applicable to entities engaged in a ―substantially
similar business‖ must demonstrate through submission of these and other
appropriate materials:
a)
The types of entities subject to the different requirements, procedures and
standards are engaged in a ―substantially similar business‖.
39
b) The state requirements, procedures and standards imposed on the PDP
entity are not applicable to other ―substantially similar business‖ entities.
4. Evidence of denial of the application based on solvency requirements
a) Documentation in 2.a above, and,
b) Copy of denial letter from the state, copy of state solvency requirements,
demonstration of the difference between state solvency requirements,
procedures and standards and Federal PDP solvency requirements,
procedures and standards, any other state information regarding
documentation, information, and other material requirements, procedures or
standards relating to solvency, or any correspondence detailing the reason
the application was denied, etc.
5. Evidence of State denial of the application based on licensure standards other
than those required by Federal law
a) Documentation in 2.a above, and,
b) Copy of denial letter from the state, memo identifying the state licensure
standards by reference to relevant state law, regulation, or policy guidance
and describing how those standards differ from those required by Federal
law.
6. Provide the name, address and telephone number of all state regulatory officials
involved in the state application and/or denial proceedings.
7. Provide any other information that you believe supports your request for a
waiver.
B. Regional Plan Waivers
1. Evidence of licensure in one state within the region and
2. Copy of the dated cover sheet to the application(s) submitted to the unlicensed
state(s), state confirmation of the receipt and completeness of each application,
state requests for additional information, and all pertinent correspondence with
the state(s) relating to the status of the application, etc. – unless CMS
determines that there is no PDP licensing process in effect in a state.
3. Provide the name, address and telephone number of all state regulatory officials
involved in the state application and/or denial proceedings.
4. Provide any other information that you believe supports your request for a
waiver.
40
V. Overview of Waiver Request Process
For single-state waivers, section 1860D-12(c) and section 1855(a)(2) of the Act require
the Secretary to grant or deny this waiver request within 60 days after the date the
Secretary determines that a substantially complete application has been filed. Upon
receipt of a waiver request, CMS will review it to determine whether it contains sufficient
information to approve or deny the request. The 60-day review period begins at the time
CMS determines that the application is substantially complete.
41
APPENDIX II -- Financial Solvency Documentation For Applicant Not
Licensed as a Risk-bearing Entity in Any State
Upload all appropriate documentation in pdf format into HPMS on the Part D Financial
Solvency Upload Page.
I. DOCUMENTATION
A. Documentation of Net Worth - Minimum Net Worth: $1.5 million
At the time of application, the potential PDP Sponsor not licensed in any state must
show evidence of the required minimum net worth. The PDP Sponsor must demonstrate
this through an independently audited financial statement if it has been in operation at
least twelve months.
If the organization has not been in operation at least twelve months it may choose to 1)
obtain an independently audited financial statement for a shorter time period; or 2)
demonstrate that it has the minimum net worth through presentation of an unaudited
financial statement that contains sufficient detail that CMS may verify the validity of the
financial presentation. The unaudited financial statement must be accompanied by an
actuarial opinion by a qualified actuary regarding the assumptions and methods used in
determining loss reserves, actuarial liabilities and related items.
A qualified actuary for the purposes of this application means a member in good
standing of the American Academy of Actuaries or a person recognized by the
Academy as qualified for membership, or a person who has otherwise demonstrated
competency in the field of actuarial determination and is satisfactory to CMS.
B. Financial Plan
1. Plan Content and Coverage
At the time of application, the PDP Sponsor must upload in HPMS on the Part D
Financial Solvency Upload page a business plan (with supporting financial
projections and assumptions, satisfactory to CMS), covering the first twelve
months of operation under the Medicare contract and meeting the requirements
stated below. If the plan projects losses, the business plan must cover the period
for twelve months past the date of projected break-even.
42
The business plan must include a financial plan with:
a) A detailed marketing plan;
b) Statements of revenue and expense on an accrual basis;
c) A cash flow statement;
d) Balance sheets;
e) The assumptions in support of the financial plan;
f) If applicable, availability of financial resources to meet projected losses; (if no
projected losses this does not preclude applicant from calculating projected
losses as prescribed by CMS in 2. b. below)and
g) Independent actuarial certification of business plan assumptions and plan
feasibility by a qualified actuary.
2. Funding for Projected Losses
a) Allowable sources of funding:
In the financial plan, the PDP Sponsor must demonstrate that it has the
resources available to meet the projected losses for the time-period to
breakeven. Except for the use of guarantees as provided in section (i) below,
letters of credit as provided in section (ii) below, and other means as provided
in section (iii) below, the resources must be assets on the balance sheet of
the PDP Sponsor in a form that is either cash or is convertible to cash in a
timely manner (i.e. cash or cash equivalents), pursuant to the financial plan.
(i) Guarantees will be acceptable as a resource to meet projected losses
under the conditions detailed in Section III, Guarantees.
(ii) An irrevocable, clean, unconditional, evergreen letter of credit may be
used in place of cash or cash equivalents if prior approval is obtained from
CMS. It must be issued or confirmed by a qualified United States financial
institution as defined in Section II.B, Insolvency, below. The letter of credit
shall contain an issue date and expiration date and shall stipulate that the
beneficiary need only draw a sight draft under the letter of credit and
present it to obtain funds and that no other document need be presented.
―Beneficiary‖ means the PDP sponsor for whose benefit the credit has
been established and any successor of the PDP sponsor by operation of
law. If a court of law appoints a successor in interest to the named
43
beneficiary, then the named beneficiary includes the court appointed
bankruptcy trustee or receiver.
The letter of credit also shall indicate that it is not subject to any condition
or qualifications any other agreement, documents or entities.
CMS must be notified in writing thirty days prior to the expiration without
renewal or the reduction of a proposed or existing letter of credit or
replacement of a letter of credit by one for a reduced amount.
Prior written approval of CMS should be secured by the PDP sponsor of
any form of proposed letter of credit arrangements before it is concluded
for purposes of funding for projected losses.
(iii) If approved by CMS, based on appropriate standards promulgated by
CMS, a PDP sponsor may use the following to fund projected fund losses
for periods after the first year: lines of credit from regulated financial
institutions, legally binding agreements for capital contributions, or other
legally binding contracts of a similar level of reliability.
NOTE: A plan needs to maintain its $1.5 million in net worth to meet the
net worth standard (Section A, above) and may not use any portion of the
$1.5 million in net worth to fund the projected losses. Net worth in excess
of $1.5 million, which is funded through the forms allowable for meeting
projected losses (i.e., cash, or cash equivalents,) may be counted in the
projected losses funding however the minimum $750,000 liquidity
requirement (Section C, below) must still be met and may not be used to
meet the projected losses.
b) Calculation of projected losses:
An applicant that has had state licensure waived must demonstrate that in
order to cover projected losses, the applicant possesses allowable sources of
funding sufficient to cover the greater of:
(i) 7.5 percent of the aggregated projected target amount for a given year
(aggregated projected target amount is calculated by estimating the
average monthly per capita cost of benefits (excluding administrative
costs) and multiplying that amount by member months for a 12 month
period), or
(ii) Resources to cover 100% of any projected losses, if the business plan
projects losses greater than 7.5% of the aggregated projected target
amount.
44
The applicant must upload in HPMS with the application, a worksheet
calculating the aggregated projected target amount as defined above.
Enrollment projections, once submitted to CMS as part of the Applicant‘s
originally submitted financial solvency documentation, may be revised only
when accompanied by supporting documentation providing an explanation for
the revision along with a revised financial plan. CMS will not accept revisions
made solely to ensure that the calculation of required funding for projected
losses results in an amount less than or equal to the Applicant‘s available
financial resources. Additionally, the Applicant must upload in HPMS an
attestation signed by the CEO, CFO, or an individual designated to sign on
his or her behalf and who reports directly to the officer, describing the basis
for the changes in enrollment projections (e.g., updated Medicare Part D
market analysis information).
C. Liquidity
The PDP Sponsor must have sufficient cash flow to meet its financial obligations as
they become due. The amount of 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 these
investments must have a maturity date not longer than 3 months from the date of
purchase
1. In determining the ability of a PDP Sponsor to meet this requirement, CMS will
consider the following:
a) The timeliness of payment,
b) 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
c) The availability of outside financial resources.
2. CMS may apply the following corresponding corrective action remedies:
a) If the PDP Sponsor fails to pay obligations as they become due, CMS will
require the PDP Sponsor to initiate corrective action to pay all overdue
obligations.
b) CMS may require the PDP Sponsor to initiate corrective action if any of the
following are evident:
(i) The current ratio declines significantly; or
45
(ii) A continued downward trend in the current ratio. The corrective action
may include a change in the distribution of assets, a reduction of liabilities
or alternative arrangements to secure additional funding to restore the
current ratio to at least 1:1.
c) If there is a change in the availability of the outside resources, CMS will
require the PDP Sponsor to obtain funding from alternative financial
resources.
D. Methods of Accounting
1. The PDP Sponsor may use the standards of Generally Accepted Accounting
Principles (GAAP) or it may use the standards of Statutory Accounting Principles
(SAP) applicable to the type of organization it would have been licensed as at the
state level if a waiver were not granted by CMS. Whether GAAP or SAP is
utilized however, there are certain additional differences cited below for waivered
PDP Sponsors.
a) Generally Accepted Accounting Principles (GAAP) are those accounting
principles or practices prescribed or permitted by the Financial Accounting
Standards Board.
b) Statutory Accounting Principles are those accounting principles or practices
prescribed or permitted by the domiciliary State insurance department in the
State in which the PDP Sponsor operates.
2. Waivered organizations should note that the maximum period of waiver is limited
by Federal regulation. At such time as the waiver expires, the PDP Sponsor
would have to obtain a risk bearing license.
3. Waivered PDP Sponsors should adjust their balance sheets as follows:
a) Calculation-Assets
The following asset classes will not be admitted as assets:
(i) Good will;
(ii) Acquisition costs;
(iii) Other similar intangible assets.
b) Calculation- Liabilities
(i) Net worth means the excess of total admitted assets over total liabilities,
but the liabilities shall not include fully subordinated debt.
46
(ii) Subordinated debt means an obligation that is owed by an organization,
that the creditor of the obligation, by law, agreement, or otherwise, has a
lower repayment rank in the hierarchy of creditors than another creditor.
The creditor would be entitled to repayment only after all higher ranking
creditor‘s claims have been satisfied. A debt is fully subordinated if it has a
lower repayment rank than all other classes of creditors and is payable out
of net worth in excess of that required under Section IA, Net Worth and
under Section IC, Liquidity above.
In order to be considered fully subordinated debt for the purpose of
calculating net worth, the subordinated debt obligation must be a written
instrument and include:
(A) The effective date, amount, interest and parties involved.
(B) The principal sum and/or any interest accrued thereon that are subject
to and subordinate to all other liabilities of the PDP sponsor, and upon
dissolution or liquidation, no payment of any kind shall be made until all
other liabilities of the PDP sponsor have been paid.
(C) The instrument states that the parties agree that the PDP sponsor
must obtain written approval from CMS prior to the payment of interest
or repayment of principal.
E. Financial Indicators and Reporting
1. The PDP Sponsor must upload a Health Blank Form (in the same format as
utilized by the National Association of Insurance Commissioners) to CMS. The
portion of the Health Blank Form submitted to CMS will be limited to the following
pages:
a) Jurat Page;
b) Assets;
c) Liabilities, Capital and Surplus;
d) Statement of Revenue and Expenses;
e) Capital and Surplus Account;
f) Cash Flow;
g) Actuarial Opinion (the actuarial opinion is required only of annual report
filings).
47
In addition, the PDP Sponsor shall submit an annual independently audited
financial statement with management letter.
2. Reporting shall be on the following schedule:
a) Quarterly reporting PDP sponsors shall report within 45 days of the close of a
calendar quarter ending on the last day of March, June and September. No
separate quarterly report shall be required for the final quarter of the year.
b) Annually reporting and quarterly reporting PDP sponsors shall report annually
within 120 days of the close of the calendar year i.e. by April 30th or within 10
days of the receipt of the annual audited financial statement, whichever is
earlier.
c) Financial reporting may be the General Accepted Accounting Principles
(GAAP) or under Statutory Accounting Principles (SAP) applicable to similar
organizations of similar type within the state where the organization is based.
However, if an organization chooses to report under GAAP, it may not report
under GAAP for a period longer than 36 months unless a state has chosen to
not license such organizations.
Note: Future frequency of reporting will be both quarterly (first, second, and third
quarters only) and annually to CMS. CMS may choose to initiate monthly
reporting from certain PDP Sponsors who because of their financial status CMS
deems may require additional monitoring.
II. INSOLVENCY
A. Hold Harmless and Continuation of Coverage/Benefits
PDP Sponsors shall be subject to the same hold harmless and continuation of
coverage/benefit requirements as Medicare Advantage contractors.
B. Insolvency Deposit
$100,000 held in accordance with CMS requirements by a qualified U. S. Financial
Institution. A qualified financial institution means an institution that:
1. Is organized or (in the case of a U. S. office of a foreign banking organization)
licensed, under the laws of the United States or any state thereof; and
2. Is regulated, supervised and examined by U. S. Federal or State authorities
having regulatory authority over banks and trust companies.
48
III. GUARANTEES
A. General policy.
A PDP Sponsor, or the legal entity of which the PDP Sponsor is a Component, may
apply to CMS to use the financial resources of a Guarantor for the purpose of meeting
the requirements of a PDP Sponsor. CMS has the discretion to approve or deny
approval of the use of a Guarantor.
B. Request to use a Guarantor.
To apply to use the financial resources of a Guarantor, a PDP Sponsor must upload in
HPMS:
1. Documentation that the Guarantor meets the requirements for a Guarantor under
paragraph (C) of this section; and
2. The Guarantor's independently audited financial statements for the current yearto-date and for the two most recent fiscal years. The financial statements must
include the Guarantor's balance sheets, profit and loss statements, and cash flow
statements.
C. Requirements for Guarantor.
To serve as a Guarantor, an organization must meet the following requirements:
1. Be a legal entity authorized to conduct business within a State of the United
States.
2. Not be under Federal or State bankruptcy or rehabilitation proceedings.
3. Have an adjusted net worth (not including other guarantees, intangibles and
restricted reserves) equal to three times the amount of the PDP Sponsor
guarantee.
4. If a State insurance commissioner regulates the Guarantor, or other State official
with authority for risk-bearing entities, it must meet the adjusted net worth
requirement in this document with all guarantees and all investments in and
loans to organizations covered by guarantees excluded from its assets.
5. If the Guarantor is not regulated by a State insurance commissioner, or other
similar State official it must meet the adjusted net worth requirement in this
document 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 and determination of adjusted net worth.
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D. Guarantee document.
If the guarantee request is approved, a PDP Sponsor must upload in HPMS a written
guarantee document signed by an appropriate Guarantor. The guarantee document
must:
1. State the financial obligation covered by the guarantee;
2. Agree to:
a) Unconditionally fulfill the financial obligation covered by the guarantee; and
b) Not subordinate the guarantee to any other claim on the resources of the
Guarantor;
3. Declare that the Guarantor must act on a timely basis, in any case not more than
5 business days, to satisfy the financial obligation covered by the guarantee; and
4. Meet other conditions as CMS may establish from time to time.
E. Reporting requirement.
A PDP Sponsor 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 requests.
F. Modification, substitution, and termination of a guarantee.
A PDP Sponsor cannot modify, substitute or terminate a guarantee unless the PDP
Sponsor:
1. Requests CMS' approval at least 90 days before the proposed effective date of
the modification, substitution, or termination;
2. Demonstrates to CMS' satisfaction that the modification, substitution, or
termination will not result in insolvency of the PDP Sponsor; and
3. Demonstrates how the PDP Sponsor will meet the requirements of this section.
G. Nullification.
If at any time the Guarantor or the guarantee ceases to meet the requirements of this
section, CMS will notify the PDP Sponsor that it ceases to recognize the guarantee
document. In the event of this nullification, a PDP Sponsor must:
1. Meet the applicable requirements of this section within 15 business days; and
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2. If required by CMS, meet a portion of the applicable requirements in less than the
time period granted in paragraph (G.1.) of this section.
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| File Type | application/pdf |
| File Title | MEDICARE PRESCRIPTION DRUG BENEFIT |
| Author | Marla Rothouse |
| File Modified | 2011-09-23 |
| File Created | 2011-09-23 |