CMS-10147_Supporting_Statement_(clean)

Supporting Statement for the
Paperwork Burden Requirement
Medicare Prescription Drug Coverage and Your Rights
Standardized Pharmacy Notice (CMS-10147/OMB 0938-0975)

A. Background
This is a request for approval of changes to a currently approved collection under 42 CFR §
423.562(a)(3). This regulatory provision has recently been modified to eliminate the
previously available option of posting the standardized notice at the pharmacy. Revised
423.562(a)(3) and an associated regulatory provision at § 423.128(b)(7)(iii) require the
pharmacy to provide the Part D enrollee with a printed copy of this standardized notice if the
prescription cannot be filled.
B. Justification
1 . Need and Legal Basis
The purpose of this notice is to provide enrollees with information about how to contact their
Part D plans to request a coverage determination, including a request for an exception to the
Part D plan’s formulary. The notice reminds enrollees about certain rights and protections
related to their Medicare prescription drug benefits, including the right to receive a written
explanation from the drug plan about why a prescription drug is not covered. A Part D plan
sponsor’s network pharmacies are in the best position to notify enrollees about how to contact
their Part D plan if the prescription cannot be filled.
As noted in a final rule published April 15, 2011 (CMS-4144-F), the option of posting this
notice at the pharmacy has been eliminated. If a prescription cannot be filled, the pharmacy
must provide the enrollee with this written notice.
Statutory/Regulatory Basis
§ 1860D-4(g)(1) – A Part D plan sponsor shall provide coverage determination and
redetermination procedures with respect to covered prescription drug benefits offered by the
plan.
§ 423.562(a)(3) –A Part D plan sponsor must arrange with its network pharmacies to distribute
notices instructing enrollees to contact their plans to obtain a coverage determination or
request an exception if they disagree with the information provided by the pharmacist.
§ 423.128(b)(7)(iii)–Network pharmacies must provide a printed notice at the point-of-sale to
an enrollee explaining how the enrollee can request a coverage determination by contacting the
plan sponsor’s toll free customer service line or by accessing the plan sponsor’s internet Web
site.

2.

Information Users
Medicare beneficiaries who are enrolled in a Part D plan will be informed of their right to
request a coverage determination (including an exception) and will be better able to access
their Medicare prescription drug benefits.

3.

Use of Information Technology
Part D plans and their network pharmacies are free to take advantage of any information
technology they find appropriate for their business operations in order to meet this
requirement.
*To comply with the Government Paperwork Elimination Act (GPEA), you must also include
the following information in this section:
Is this collection currently available for completion electronically? No.
Does this collection require a signature from the respondent(s)? No.
If CMS had the capability of accepting electronic signature(s), could this collection
be made available electronically? Not applicable. No signature required.
If this collection isn’t currently electronic but will be made electronic in the future,
please give a date (month & year) as to when this will be available electronically
and explain why it can’t be done sooner. Not applicable.
If this collection cannot be made electronic or if it isn’t cost beneficial to make it
electronic, please explain. This written notice must be given to a Part D plan
enrollee if the enrollee’s prescription cannot be filled under the Medicare Part D
benefit and the rejection cannot be resolved at point of sale. Electronic distribution
of the written notice via e-mail is not prohibited if the pharmacy has the capability
to transmit the written notice electronically and the enrollee has indicated a
preference for receiving it electronically.

4.

Duplication of Efforts
This information collection is not duplicative of another collection.

5.

Small Businesses
There is no significant impact on small businesses. The notice requirement is fulfilled
by the pharmacy providing the enrollee with the written notice.

6.

Less Frequent Collection
There are no opportunities for less frequent collection. Failure to issue the notice at the
pharmacy may result in denying beneficiaries important due process rights. The pharmacist
cannot issue a coverage determination on behalf of the plan. As a result, the enrollee may not

be aware of the right to contact the plan for a written coverage determination or to request an
exception.
7.

Special Circumstances
Not applicable. A written copy of this notice is provided to a Part D enrollee if the
prescription cannot be filled under the Medicare Part D benefit.

8.

Federal Register/Outside Consultation
A 30-day Federal Register notice will be published. Interested parties will have an
opportunity to comment.

9.

Payments/Gifts to Respondents
Neither Part D plans nor pharmacies will receive any payment or gifts related to
issuance of this notice.

10. Confidentiality
No assurances for confidentiality are necessary as data are not being collected.
11. Sensitive Questions
No questions of a sensitive nature will be asked.
12. Burden Estimates (Hours & Wages)
We estimate that the paperwork burden associated with the requirement to distribute the
written standardized pharmacy notice entitled Medicare Prescription Drug Coverage and
Your Rights is one minute per enrollee. Assuming that the staff person distributing the
notice will most likely be a pharmacy technician, we estimate the relevant salary to be $13.50
per hour, based on the Bureau of Labor Statistics/2009 National Occupational Employment &
Wage Estimates.
Based on current prescription drug event data, the projected number of transactions (filled
prescriptions) for 2010 is 1,123,860,661. Further, based on anecdotal information provided
by pharmacy benefits managers (PBMs), approximately 10% (or 112,386,066) of these
transactions do not get automatically processed and require some type of action at point of
sale in an attempt to remedy the rejection. For example, a keying or data entry error may
need to be corrected in order to process the transaction or the pharmacy may need to contact
the plan to obtain an override on a systems edit. We estimate that these types of issues can be
resolved at the point of sale for about two-thirds of the 112,386,066 rejected claims. In other
words, for one-third (or 37,087,402) of the rejected claims, the pharmacy will not be able to
process the transaction (fill the prescription under the Part D benefit) and will be required to

provide the enrollee with the written standardized pharmacy notice. Again, assuming an
average time per response of one minute (0.01666 hour), we estimate the total annual hour
burden to be 617,876 hours (0.01666 multiplied by 37,087,402 notices). Applying the
aforementioned hourly rate of $13.50 per hour, this results in an estimated annual cost burden
of $8,341,326 (617,876 hours multiplied by $13.50).
13. Capital Costs
There are no capital costs.
14. Cost to Federal Government
There are no direct costs to the Federal government for the distribution of the notice by Part D
plans’ network pharmacies.
15. Changes to Burden
The annual hour burden associated with this collection is estimated to be 617,876 hours. The
annual hour burden in the 2008 PRA submission for this collection was 500,000 hours. The
increase in the burden hours from the previous PRA submission is due to an adjustment in the
agency’s estimate of the number of standardized pharmacy notices that are likely to be
distributed based on current prescription drug event data, and increased enrollment in the Part
D program.
16. Publication/Tabulation Dates
CMS does not intend to publish data related to the notices.
17. Expiration Date
Display of the notice expiration date is acceptable.
18. Certification Statement
Not applicable.