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Supporting Statement
Applications for Solicitation for Applications for Medicare
Prescription Drug Plan 2015 Contracts
CMS-10137, OCN 0938-0936

BACKGROUND

The Medicare Prescription Drug Benefit program was established by section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and is codified in section 1860D of the Social Security Act (the Act).  Section 101 of the MMA amended Title XVIII of the Social Security Act by redesignating Part D as Part E and inserting a new Part D, which establishes the voluntary Prescription Drug Benefit Program (“Part D”).  The MMA was amended on July 15, 2008 by the enactment of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), on March 23, 2010 by the enactment of the Patient Protection and Affordable Care Act and on March 30, 2010 by the enactment the Health Care and Education Reconciliation Act of 2010 (collectively the Affordable Care Act).

Coverage for the prescription drug benefit is provided through contracted prescription drug plans (PDPs) or through Medicare Advantage (MA) plans that offer integrated prescription drug and health care coverage (MA-PD plans).  Cost Plans that are regulated under Section 1876 of the Social Security Act, and Employer Group Waiver Plans (EGWP) may also provide a Part D benefit. Organizations wishing to provide services under the Prescription Drug Benefit Program must complete an application, negotiate rates, and receive final approval from CMS.  Existing Part D Sponsors may also expand their contracted service area by completing the Service Area Expansion (SAE) application.

A.	JUSTIFICATION

1.  Need and Legal Basis

Collection of this information is mandated in Part D of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) in Subpart 3.  The application requirements are codified in Subpart K of 42 CFR 423 entitled “Application Procedures and Contracts with PDP Sponsors.”

Effective January 1, 2006, the Part D program established an optional prescription drug benefit for individuals who are entitled to Medicare Part A or enrolled in Part B.  In general, coverage for the prescription drug benefit is provided through PDPs that offer drug-only coverage, or through MA organizations that offer integrated prescription drug and health care coverage (MA-PD plans). PDPs must offer a basic drug benefit.  Medicare Advantage Coordinated Care Plans (MA-CCPs) must offer either a basic benefit or may offer broader coverage for no additional cost.  Medicare Advantage Private Fee for Service Plans (MA-PFFS) may choose to offer a Part D benefit.  Cost Plans that are regulated under Section 1876 of the Social Security Act, and Employer Group Plans may also provide a Part D benefit. If any of the contracting organizations meet basic requirements, they may also offer supplemental benefits through enhanced alternative coverage for an additional premium.

Applicants may offer either a PDP or MA-PD plan with a service area covering the nation (i.e., offering a plan in every region) or covering a limited number of regions.  MA-PD and Cost Plan applicants may offer local plans.

There are 34 PDP regions and 26 MA regions in which PDPs or regional MA-PDs may be offered respectively.  The MMA requires that each region have at least two Medicare prescription drug plans from which to choose, and at least one of those must be a PDP.

Requirements for contracting with Part D Sponsors are defined in Part 423 of 42 C.F.R.

This clearance request is for the information collected to ensure applicant compliance with CMS requirements and to gather data used to support determination of contract awards.

2.   Information Users

The information will be collected under the solicitation of proposals from PDP, MA-PD, Cost Plan, PACE, and EGWP applicants.  The collected information will be used by CMS to: (1) ensure that applicants meet CMS requirements, (2) support the determination of contract awards.

Participation in the Part D program is voluntary in nature.  Only organizations that are interested in participating in the program will respond to the solicitation.  MA-PDs that voluntarily participate in the Part C program must submit a Part D application and successful bid.

3.   Use of Information Technology

Applicants are asked to complete the application through CMS’ online Health Plan Management System (HPMS). This will entail clicking checkboxes, completing some minor text fields electronically, and uploading certain supporting documentation. Applicants are not asked to provide any documentation by CD or hardcopy.

Technology is used in the collection, processing and storage of the data used in the application and bidding process.  The paperwork burden is offset by requesting electronic copies of the applicant submissions for review by specific CMS program areas. Specifically the Applicant must submit the entire application and supporting documentation electronically through HPMS.

4.   Duplication of Efforts

This form does not duplicate any information currently collected.  It contains information essential to the operation and implementation of the Medicare Prescription Drug Benefit program.  It is the only standardized mechanism available to record data from organizations interested in contracting with CMS.

5.   Small Businesses

The collection of information will have a minimal impact on small businesses or other small organizational entities since the applicants must possess an insurance license and be able to accept risk. Generally, state statutory licensure requirements effectively prevent small organizations from accepting the level of risk needed to provide the pharmacy benefits required in the Medicare Prescription Drug Benefit Program.

6.  Less Frequent Collection

If this information is not collected CMS will have no mechanism to: (1) ensure that applicants meet CMS requirements, (2) to support determination of new or expanding contract awards.  CMS is currently required by statute to provide an opportunity for organizations to apply for new or expanded contracts annually, so CMS cannot reduce the frequency of this collection.

7.  Special Circumstances

Each applicant is required to enter and maintain data HPMS.  Prompt entry and ongoing maintenance of these data in HPMS will facilitate the tracking of the applicant’s application throughout the review process.  If the applicant is awarded a contract after negotiation, the collected information will be used for frequent communications.  Applicants are expected to ensure the accuracy of the collected information on an ongoing basis.

8.  Federal Register Notice/Outside Consultation

The final rule was published January 28, 2005. Below is a table that identifies each of the subsequent publications of regulations related to the Part D program.

Additional Part D Regulations Since 2006
Reference
Title
Date Published
CMS-4124-FC
Medicare Program; Revisions to the Medicare Advantage
and Part D Prescription Drug Contract Determinations, Appeals, and Intermediate Sanctions Processes
December 5, 2007
CMS-0016-F and
CMS-0018-F
Medicare Programs; Standards for E-Prescribing Under
Medicare Part D and Identification of Backward
Compatible Version of Adopted Standard for E-Prescribing and the Medicare Prescription Drug Program (Version 8.1)
April 7, 2008
CMS-4133-F
Medicare Program; Weighting Methodology Used to
Calculate the Low-Income Benchmark Amount
April 3, 2008,
corrected April
17, 2008
CMS-4130-F
Medicare Program; Policy and Technical Changes to the
Medicare Prescription Drug Benefit
April 15, 2008
CMS-4119-F
Medicare Program; Medicare Part D Claims Data
May 28, 2008
CMS-4138-IFC
Medicare Program; Revisions to the Medicare Advantage
and Prescription Drug Benefit Programs
September 18,
2008
CMS-4131-F
Medicare Program; Medicare Advantage and Prescription
Drug Benefit Programs:  Final Marketing Provisions
September 18,
2008
CMS-4138-IFC2
Medicare Program; Revision to the Medicare Advantage
and Prescription Drug Benefit Programs:  Clarification of
Compensation Plans
November 10,
2008
CMS-4131-FC
Medicare Program; Medicare Advantage and Prescription
Drug Benefit Programs:  Negotiated Pricing and
Remaining Revisions
January 12, 2009
CMS-4138-IFC4
Medicare Programs; Medicare Advantage and Prescription
Drug Programs MIPPA Drug Formulary & Protected
Classes Policies
January 16, 2009
CMS-4085-F
Medicare Program; Policy and Technical Changes to the
Medicare Advantage and the Medicare Prescription Drug
Benefit Programs
April 15, 2010
CMS-4144-F
Medicare Program; Policy and Technical Changes to the
Medicare Advantage and the Medicare Prescription Drug
Benefit Programs
April 15, 2011

CMS-4157-FC
Medicare Program; Changes to the Medicare Advantage
and the Medicare Prescription Drug Benefit Programs for
Contract Year 2013 and Other Changes
April 12, 2012
CMS-4173-F
Medicare Program; Medical Loss Ratio Requirements for
the Medicare Advantage and Medicare Prescription Drug
Benefit Programs
May 23, 2013

Federal Register Notice
Volume & Page Number
Public Comments
Publication Date
78 FR 38986
60-Day FR notice. Comments received.
June 28, 2013

9.  Payment/Gift To Respondent

There are no payments or gifts associated with this collection.

10.  Confidentiality

Consistent with federal government and CMS policies, CMS will protect the confidentiality of the requested proprietary information.  Specifically, only information within a submitted application (or attachments thereto) that constitutes a trade secret, privileged or confidential information, (as such terms are interpreted under the Freedom of Information Act and applicable case law), and is clearly labeled as such by the Applicant, and which includes an explanation of how it meets one of the exceptions specified in 45 CFR Part 5, will be protected from release by CMS under 5 U.S.C. § 552(b) (4).  Information not labeled as trade secret, privileged, or confidential or not including an explanation of why it meets one of the FOIA exceptions in 45 CFR Part 5 will not be withheld from release under 5 U.S.C. § 552(b)(4).

11.  Sensitive Questions

Other than the labeled information noted above in section 10, there are no sensitive questions included in the information request.

12.  Burden Estimate (Total Hours & Wages) update

Tables 1 and 2 provide an estimate of the total hours and costs by activity related to the application processes. Our estimates include the review of application instructions, and completion of the application.  The completion of the application encompasses completing attestations and uploading supporting documentation.  Overall, the estimated hour burden for completion of the prescription drug applications is 2,319 hours. This is a 187 hour increase from the 2014 prescription drug application.  Based on prior years’ experience CMS has determined that the estimated the number of 2015 applicants should be adjusted to properly reflect the increase in MAPD organizations
seeking to apply to contract with CMS.  Specifically, CMS estimates that for 2015 there will be 5% more applications received, and the majority of those received will be expansions of existing contracts, which require 60% fewer hours to complete (see Section 15 for further detail).  The estimated wage burden for the Prescription Drug Applications is $127,565 and estimates of overall wages were calculated by assuming a $55.00 per hour wage rate.  CMS kept the hour wage rate constant from 2014 calculations.

The overall paperwork burden is increased for PDP, MA-PD, Cost Plan, PACE, EGWP Plan, and SAE applicants because of the increase in the estimated number of applicants.  The burden per applicant has not changed.

Table 1
Summary of Hour Burden by Type of Applicant and Process

Hours Estimate

Activity

PDP

MA-PD

Cost Plans

PACE

Direct
EGWP
800 Series
Only
EGWP

SAE

Total
Hours
Review of
Instructions
26
175
1
3
1
4
336
546
Complete
Application

80

546

9

25

12

26

1,076

1,773
Total All
103
570
10
28
14
32
1,376
2,319


Table 2
Summary of Wage Burden by Type of Applicant and Process

Wages Estimate
Activity
PDP
MA-PD
Cost Plans
PACE
Direct
EGWP
800 Series Only EGWP
SAE
Total Wages
Review of
Instructions
$1,430
$ 9,625
$55
$165
$55
$220
$18,480
$30,030
Complete
Application
$4,376
$30,051
$501
$1,368
$655
$1,405
$59,179
$97,535
Total All
$5,806
$39,676
$556
$1,533
$710
$1,625
$77,659
$127,565

Table 3
Summary of Burden Hours per Application by Type of Application

Type of Part D Application
2014 Estimates
(rounded to nearest quarter hour)
2015 Estimates
(rounded to nearest quarter hour)
PDP
13.00
13.00
MA-PD
10.25
10.25
Cost Plan
10.25
10.25
PACE
10.00
10.00
Direct EGWP
14.25
14.25
800 Series Only EGWP
14.25
14.25
SAE
8.75
8.75

13.  Capital Costs (Maintenance of Capital Costs)

We do not anticipate that additional capital costs are incurred.  CMS requirements do not require the acquisition of new systems or the development of new technology to complete the application. CMS anticipates that all qualified applicants maintain systems for maintenance of their pharmacy network contracts, pharmacy benefits, and financial records.

System requirements for submitting HPMS applicant information are minimal.  PDPs will need the following to access HPMS: (1) Internet or Medicare Data Communications Network (MDCN) connectivity, (2) use of a Microsoft Internet Explorer web browser (version 5.1 or higher) with 128- bit encryption, and (3) a CMS-issued user ID and password with access rights to HPMS for each user within the PDP organization who will require such access.  CMS anticipates that all qualified applicants meet these systems requirements and will not incur additional capital costs.

14.  Cost to Federal Government

The estimated cost for preparation, review, and evaluation of the prescription drug applications is approximately $140,000.00.  This estimated cost is based on the budgeted amount for application review and support and is inclusive of wages, operational expenses (equipment, overhead,  and support staff), and other expenses incurred in the application effort.  Due to increased efficiencies in the application review process, the cost to the Federal Government remains unchanged from 2013.

15.  Changes to Burden

The 9% increase in total burden represents an increase in the total number of MAPD applications (from 241 to 254) expected in 2015 compared to the 2014 estimates.  

The application has been revised by adding clarifying language and by revising a definition. There has been no change in the estimated burden per applicant.

The burden hours represent the time it takes for an applicant to complete the Part D solicitation and not the time that applicants spend drafting and negotiating contracts with downstream and related entities to perform key Part D functions on their behalf.

16.  Publication and Tabulation Dates

This information is not published or tabulated.

17.  Expiration Date

This collection of information applies to contract years 2015-2017.

18.  Certification Statement

There are no exceptions to the certification statement.

B.	COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS

There have been no statistical methods employed in this collection.
Attachment 1


Summary of Medicare Part D Regulatory Requirements Waived for
Medicare Advantage Prescription Drug (MA-PD) Applicants
Part D Regulation
Regulatory Requirement(s) Description
Basis  for Waiver
42 CFR 423 Subpart I,
excepting 42 CFR
§423.440 (which concerns Federal preemption of State law and prohibition of State premium taxes)
Licensure and Solvency – Applicant must be
licensed to bear risk in the State in which it intends to operate or apply for a licensure
waiver and meet CMS solvency standards.
Duplicative of MA Organization requirements
for licensure and solvency under 42 CFR
§422.6 (i); 42 CFR §422.400; and 42 CFR
§422.501).
42 CFR §423.153(b)
&(d)
Waiver applies to MA- PFFS only
Utilization Management – Applicant must
have a cost effective utilization management system.
Waiver stated in regulations at 42 CFR
§423.153 (e) excuses MA PFFS organizations from meeting the utilization management requirements specified in 42 CFR §423.153 (b).

42 CFR §423.153(b)
&(d)
Waiver applies to MA- PFFS only
Medication Therapy Management Program –
Applicant must have a program to manage medication therapy to optimize outcomes,
reduce adverse drug interactions.
Waiver stated in regulations at 42 CFR
§423.153 (e) excuses MA PFFS organizations from meeting Medication Therapy Management
Program requirements specified in 42 CFR
§423.155.

42 CFR §423.112 (a)
Service Area – Applicant must offer a Part D
plan that serves at least an entire PDP region.
Conflicts with MA regulations (42 CFR §422.2)
that allow MA organizations to offer local MA plans (i.e., plans that serve less than an entire state).

42 CFR §423.120 (a)(7)(i)
Waiver applies only to MA-PDs that operate their own pharmacies
Pharmacy Network – Applicant must offer its
Part D plan benefit through a contracted retail pharmacy network that meets CMS convenient
access standards.
Waiver stated in regulations at 42 CFR
§423.120(a)(7) (i) excuses from the CMS
convenient access standards  those MA organizations that administer their Part D benefit through pharmacies owned by the MA organization if that organization’s pharmacy network access is  comparable to the CMS convenient access standards .


42 CFR
§423.120(a)(7)(ii) Waiver applies to MA- PFFS plan that provides access through all pharmacies.
Pharmacy Network – Applicant must offer its
Part D plan benefit through a contracted retail pharmacy network that meets CMS convenient
access standards
Waiver stated in regulations at 42 CFR
§423.120 (a) (7) (ii) excuses from the CMS
convenient access standards those MA-PFFS
organizations that offer a qualified prescription drug coverage, and  provide plan enrollees with access to covered Part D drugs dispensed at all pharmacies, without regard to whether they are contracted network pharmacies  and without charging cost-sharing in excess of the requirements for qualified prescription drug coverage.
42 CFR
§423.120(a)(8)(i)
Waiver applies only to MA-PDs that operate their own pharmacies
Pharmacy Network – Applicant must offer its
Part D benefit through any willing pharmacy that agrees to meet reasonable and relevant
standard network terms and conditions.
Waiver promotes the coordination of Parts C
and D benefits.  Excuses from CMS any willing pharmacy requirement those MA organizations
that administer their Part D benefit through pharmacies owned by the MA organization and dispense at least 98% of all prescriptions through pharmacies owned and operated by
Applicant.

42CFR §423.34
42 CFR §423.36
42 CFR §423.38
42 CFR §423.42
Enrollment and Eligibility – Applicant agrees
to accept Part D plan enrollments and determine Part D plan eligibility consistent
with Part D program requirements.
Duplicative of MA requirements under 42 CFR
422 Subpart B - Eligibility, Election, and
Enrollment.  MA organizations will conduct enrollment and determine eligibility consistent
with MA program requirements. These

Part D Regulation
Regulatory Requirement(s) Description
Basis  for Waiver
42 CFR §423.44

requirements mirror those stated in the Part D
regulation.

42 CFR §423.514(b)
and (c)
Reporting Requirements – Applicant must
report information concerning significant business transactions.
Duplicative of MA requirements for reporting
significant transactions under 42 CFR §422.500 and 42 CFR §422.516(b) and (c) and requirements for providing annual financial statements.
42 CFR §423.514(e)
Reporting Requirements – Applicant must
notify CMS of any loans or any other special arrangements it makes with contractors, subcontractors, and related entities.
Duplicative of MA requirement for reporting
loans or special arrangements under 42 CFR
§422.516(e).
42 CFR §423.512
Experience and Capabilities – Applicant must
reach the minimum enrollment standard within the first year it offers a Part D benefit.
Conflicts with MA regulation that permits three
years to achieve the minimum enrollment level.

Summary of PDP Application Requirements Fulfilled under Part C for
Cost Plan Prescription Drug Applicants
Part D Regulation
Waived
Regulatory Requirement(s) Description
Basis and Rationale
42 CFR 423 Subpart I,
excepting 42 CFR
§423.440 ( which concerns Federal
preemption of State law
and prohibition of State premium taxes)
Licensure and Solvency – Applicant must be
licensed to bear risk in the State in which it intends to operate or apply for a licensure waiver
and meet CMS solvency standards.
Duplicative of Cost Plan requirements for licensure
and solvency under 42 CFR §417.404 (General requirements) and 42 CFR §417.407 (Requirements
for a Competitive Medical Plan (CMP)). All Cost Plans are State licensed in some manner or have authority to offer a Cost Plan in all states in which they operate.
42 CFR §423.112 (a)
Service Area – Applicant must offer a Part D
plan that serves at least an entire PDP region.
Conflicts with Cost Plan regulations (42 CFR §417.1)
defining the service area for HMOs and CMPs offering Medicare reasonable Cost Plans.
42 CFR §423.120(a)(3)
Waiver applies only to Cost contractors that operate their own
pharmacies
Pharmacy Network – Applicant must offer its
Part D plan benefit through a contracted retail pharmacy network that meets CMS standards for convenient access.
Waiver stated in regulations at 42 CFR
§423.120(a)(7)(i) excuses from the CMS standards for convenient access  those Cost contractors that administer their Part D benefit through pharmacies
owned by the Cost contractor if that organization’s pharmacy network access is comparable to the CMS convenient access standards .  {Note: Applicants will be expected to provide comparable information in the
application for organizational pharmacies}
42 CFR §423.120(a)(8)(i)
Waiver applies only to
Cost contractors that operate their own pharmacies
Pharmacy Network – Applicant must offer its
Part D benefit through any willing pharmacy that agrees to meet reasonable and relevant standard
network terms and conditions.
Waiver promotes the coordination of Parts C and D
benefits.  Excuses from CMS any willing pharmacy requirement those Cost contractors that administer
their Part D benefit through pharmacies owned by the
Cost contractor and dispense at least 98% of all prescriptions through pharmacies owned and operated
by Applicant.

Summary of Part D Application Requirements Waived or Modified for
Employer/Union-Only Group Waiver Plan (EGWP) Applicants

Part D Regulation
Type of EGWP Applicant
Waiver or Modification
Applies To
Application
Requirement(s) Description
Waiver/Modification
42 CFR §423.104(b)
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Enrollment: Applicant will
permit the enrollment of all
Medicare beneficiaries that reside in the service area.
The requirement to enroll all
beneficiaries residing in service area is waived for all EGWP
applicants. Enrollment in these
plans is restricted to the
employer/union plan sponsor’s
retirees.
42 CFR
§423.120(a)(1)
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Retail Pharmacy Access:
Applicant agrees to meet the
“TRICARE” retail pharmacy
access standards defined in
42 CFR §423.120(a).
EGWP applicants are required to
submit retail pharmacy access for review in the same manner as
individual plans but are not held
to the same “TRICARE”
measurement standards as individual plans. EGWPs are
required to attest that their retail
networks are sufficient to meet
the needs of its retiree population, and that CMS reserves the right to
review the adequacy of the networks and potentially require expanded access.
42 CFR §423.50(a)
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Prior Review and Approval
of Dissemination Materials: Applicant must submit all marketing/dissemination
materials for CMS prior review and approval.
EGWP applicants are waived
from the requirement for prior review and approval requirements of beneficiary dissemination
materials.  EGWPs must provide informational copies of dissemination materials to CMS at time of use in accordance with
the specific requirements that apply to these applicants.
42 CFR §423.128;
Medicare Marketing
Guidelines
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Timing of Certain
Dissemination Materials: Annual Notice of Change
(ANOC) Summary of
Benefits (SB), and
Formulary Materials must be mailed to beneficiaries by October 31st of each year (15 days before annual coordinated election period).
These rules have been modified
for all EGWP applicants when the employer or union sponsor has an
open enrollment period that does
not correspond with Medicare’s annual open coordinated election period.  In these cases, the materials must be sent at least 15 days before the beginning of the employer or union sponsor’s annual open enrollment period.

Part D Regulation
Type of EGWP Applicant
Waiver or Modification
Applies To
Application
Requirement(s) Description
Waiver/Modification
42 CFR
§423.128(d)(2)
“800 Series” PDP
“800 Series” MAO “800 Series” Cost PD
Internet Website: Applicants
are required to provide specific Information via an
Internet website.
The requirement to post “800
Series” plan information on the
Applicant’s internet plan website has been waived.  These plans are not open to general enrollment
and the posting of this
information usually takes place on a separate website or on a website provided by the employer or
union group plan sponsor.
42 CFR §423.48
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
CMS Reporting
Requirements Re: Information About Part D: Applicants are required to submit certain information to CMS such as pricing and pharmacy network information to be publicly reported to beneficiaries on www.medicare.gov to make informed enrollment decisions.
These requirements have been
waived for all EGWPs.  These plans are not open to general enrollment and thus this information would be inapplicable and confusing to Medicare beneficiaries.
42 CFR §423.265
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Part D Bid Submission:   All
applicants are required to submit a Part D bid and to receive approval from CMS
for the bid.
The requirement to submit a Part
D bid (i.e., Bid Pricing Tool) has been waived for all Part D EGWPs beginning in 2008.
42 CFR
§423.272(b)(3)(i)
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Meaningful Differences:  All
Applicants are required to submit plan offerings that represent meaningful
differences to beneficiaries with respect to benefit packages and plan cost structures.
The requirement to have
meaningful differences in plan offerings by the sponsor in the service area has been waived for
all EGWPs.
42 CFR §423.293(a)
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Premium Withholding
Requirements:  All applicants are required to
allow beneficiaries to request premium withholding from their Social Security check.
The requirement to offer premium
withholding to beneficiaries has been waived for all EGWPs. This
option is not available to any
EGWP enrollees.
42 CFR §423.34
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Auto and Facilitated
Enrollment Requirements: Part D applicants must accept auto and facilitated
enrollments.
These requirements are waived
for all EGWPs.  These plans do not receive auto or facilitated enrollments.

Part D Regulation
Type of EGWP Applicant
Waiver or Modification
Applies To
Application
Requirement(s) Description
Waiver/Modification
Medicare Marketing
Guidelines
Direct Contract PDP
Direct Contract MA-PD

“800 Series” PDP “800 Series” MAO “800 Series” Cost PD
Part D Beneficiary Customer
Service Call Center
Requirements:  Applicants are required to comply with certain beneficiary customer service call center hour and performance requirements.
These service call center hours
and performance requirements are waived for all EGWP applicants.
EGWPs must provide beneficiary
customer call center services during normal business hours.
CMS may require expanded call center hours in the event of beneficiary complaints or for other reasons to ensure hours are sufficient to meet the needs of
beneficiaries.
42 CFR
§423.401(a)(1);
§423.504(b)(2);
§422.400(a);
§422.503(b)(2)
Direct Contract PDP
Direct Contract MA-PD
Licensure and Financial
Solvency: Applicant must be licensed under State law as a
risk bearing entity eligible to
offer health benefits coverage in each State in
which the benefits are offered.
Direct Contract EGWPs are not
required to be licensed as they are providing benefits solely to their
retirees.  However, in exchange
for the waiver of licensing requirements, Direct Contract
EGWPs are required to meet certain ongoing Part C and/or Part D financial solvency and capital adequacy requirements.  These
requirements demonstrate that the entity’s fiscal soundness is commensurate with its financial risk and that through other means
the entity can assure that claims for benefits paid for by CMS and beneficiaries will be covered.
42 CFR
§423.504(b)(4)(i)-(iii)
Direct Contract PDP
Direct Contract MA-PD
Administrative and
Management Requirements: Applicant must comply with certain administrative and management requirements.
These requirements have been
waived for all Direct Contract EGWPs that meet certain requirements.  A waiver applies when the Applicant is subject to other administrative and management requirements such as ERISA fiduciary standards or other similar state or federal standards.
42 CFR §423.514(a)
Direct Contract PDP
Direct Contract MA-PD
Reporting Requirements to
the Public and Enrollees: Applicants are required to report certain information to CMS, to the public and to enrollees (such as the cost of their operations or financial statements).
This requirement to report to the
public and enrollees is waived for Direct Contract EGWPs under certain circumstances.  To avoid imposing additional and possible conflicting public disclosure obligations, CMS modified these reporting requirements for Direct EGWPs to allow information to
be reported to enrollees and to the general public to the extent
required by other law (e.g., ERISA or securities laws) or by contract.

Part D Regulation
Type of EGWP Applicant
Waiver or Modification
Applies To
Application
Requirement(s) Description
Waiver/Modification
42 CFR §423.4
Direct Contract PDP
Non-Governmental Entity
Requirement:  Governmental entities are not permitted to
be PDP Sponsors
This prohibition is waived for
Direct Contract PDPs so that governmental entities (state and
local governments and
municipalities) may apply to sponsor a PDP for their retirees.



PART D WAIVERS
Summary of PDP Application Requirements Waived for
PACE Prescription Drug Applicants
CMS is authorized to grant waivers of Part D program requirements where such a requirement conflicts with or duplicates a PACE requirement, or where granting such a waiver would improve the PACE Organization’s coordination of PACE and Part D benefits. The following waivers are in effect for all PACE organizations.

Summary of Medicare Part D Regulatory Requirements Waived for PACE Organizations

Part D Regulation
Regulatory Requirement(s)
Description
42 CFR §423.44
Involuntary disenrollment
42 CFR §423.48
Information about Part D
42 CFR §423.50
Approval of marketing materials and enrollment forms
42 CFR §423.104(g)(1)
Access to negotiated prices
42 CFR §423.112
Establishment of PDP service areas
42 CFR §423.120(a)
Access to covered Part D drugs
42 CFR §423.120(c)
Use of standardized technology
42 CFR §423.124
Out-of-network access to covered Part D drugs at out-of-network pharmacies
42 CFR §423.128
Dissemination of Part D plan information
42 CFR §423.132
Public disclosure of pharmaceutical prices for equivalent drugs
42 CFR §423.136
Privacy, confidentiality, and accuracy of enrollee records
42 CFR §423.153(a)- 42 CFR
§423.153(d)
Drug utilization management, quality assurance, and medication therapy
management programs (MTMPs)
42 CFR §423.156
Consumer satisfaction surveys
42 CFR §423.159(c), 42 CFR §423.160(a)
Electronic prescribing
42 CFR §423.162
Quality Improvement organization activities
42 CFR §423.265(b)
Note: Automatic waiver applies to new or potential organizations that are not operational by the June deadline.

Those organizations with effective program agreements must submit a Part D waiver request in the event they are unable to meet the June deadline.
Part D bid submission deadline
42 CFR §423.401(a)(1)
Licensure
42 CFR §423.420
Solvency standards for non-licensed entities
42 CFR §423.462
Medicare secondary payer procedures
42 CFR §423.464(c)
Coordination of benefits and user fees
42 CFR §423.464(f)(2) and 42 CFR
§423.464(f)(4)
Coordination with other prescription drug coverage
42 CFR §423.502(b)(1)(i-ii)
Documentation of State licensure or Federal waiver
42 CFR §423.504(b)(2-3), 42 CFR
§423.504(b)(4)(i-v) and (vi)(A-E), and
42 CFR §423.504(d)
Note: Organizations are required to abide by 42 CFR §423.504(b)(4)(vi)(F- H), 42 CFR §423.504(b)(5), 42 CFR
§423.504(c), and 42 CFR §423.504(e)
Conditions necessary to contract as a Part D plan sponsor

Part D Regulation
Regulatory Requirement(s)
Description
42 CFR §423.505(a-c) and 42 CFR
§423.505(e-i)
Note: Organizations are required to abide by 42 CFR §423.505(dand j)
Contract provisions
42 CFR §423.505(k)(6)
Note: Organizations are required to abide by 42 CFR §423.505(k)(1-5)
Certification for purposes of price compare
42 CFR §423.506(a)-(b)
Note: Organizations are required to abide by 423.506(c)-(e)
Effective date and term of contract
42 CFR §423.512 – 42 CFR §423.514
Contracting terms
42 CFR §423.551-42 CFR §423.552
Change of ownership or leasing of facilities during term of contract
42 CFR §423.560-42 CFR §423.638
Grievances, coverage determinations, and appeals
N/A
A PDP sponsor is required to be a nongovernmental entity
Summary of Part D Application Requirements Needed for
All Service Area Expansion Applicants
Note: SAE Applicants are currently under contract with CMS for the Part D benefit. CMS is only requesting the
sections identified below for the service area not under contract with CMS for 2011. The remaining application sections are reviewed through the contract renewal process.
Application Section
Rationale
Contract Number
SAE will be expanding regions covered under an existing CMS contract number.
Service Area
Provided to identify the new service area/region that Part D sponsor is seeking to cover.
Licensure and Solvency
For those Part D sponsors operating a PDP, state licensure and solvency requirements
will need to be met for the new service area/region.
Pharmacy Access
Part D sponsors will need to meet the pharmacy access requirements for the new service
area/region.
Certification
Part D sponsors will need to have an authorized representative submit a signed
certification to ensure that submission meets CMS requirements.