CMS-10137 PACE Medicare Part D Application

Medicare Part D Application for New PACE Organizations
2021 Contract Year

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Expiration: TBD

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GENERAL INFORMATION ........................................................................................4

1.1 Background ........................................................................................................................ 4
1.2 Summary of PACE Organization’s Roles and Responsibilities ....................................... 4
1.3 Summary Instructions for Part D Formularies (42 CFR §423.120)................................... 5
1.4 Summary Instructions for Part D Bids (42 CFR §423.265) ............................................... 5

1.4.1 CMS Review of Part D Bids ................................................................................5
1.4.2 Overview of Part D Bid Negotiation .....................................................................6
1.5 Standard Contract with PACE Part D Sponsors ............................................................... 6
1.6 General Enrollment Processing......................................................................................... 6
1.7 Eligibility for the Low Income Subsidy Program .............................................................. 7
1.8 Protection of Confidential Information.............................................................................. 7
1.9 Payment to PACE Part D Sponsors................................................................................... 7
1.10 Applicability of the National Provider Identifier (NPI) to PACE Organizations .............. 8

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GENERAL INSTRUCTIONS ......................................................................................9

2.1 Summary Instructions and Technical Support ................................................................. 9
Applicants must use the 2021 solicitation. CMS will not accept or review in any way those
submissions using prior versions of the application. ..................................................... 9
2.2 Application Acceptance and Submission Timeframe .................................................... 10
2.3 Part D Waivers .................................................................................................................. 10

2.3.1 Applicant Requests for Additional Waivers .......................................................12
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APPLICATION FORMS ...........................................................................................14

3.1 Management and Operations........................................................................................... 14

3.1.1 Subcontractor (first tier, downstream, and related entities) Function Chart .......14
3.1.2 First Tier, Downstream, and Related Entity Relationship Chart ........................16
3.1.3 Requirements in Contracts/Administrative Services Agreements .....................16
3.1.4 Requirements for Long Term Care Pharmacy Access Contracts 42 CFR
§423.120(a)(5); Prescription Drug Benefit Manual, Chapter 5 ..........................22
3.2 HPMS Part D Contacts ..................................................................................................... 24
3.3 Program Integrity and Compliance Program 2 CFR part 376 and Compliance Program
42 CFR § 423.504(b)(4)(vi); Prescription Drug Benefit Manual, Chapter 9 .................... 25
3.4 Health Information Technology 42 CFR §423.159; Prescription Drug Benefit Manual,
Chapter 7; P.L. 111-5 (2009) ............................................................................................. 26

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3.5 Enrollment and Eligibility 42 CFR §423.30; Prescription Drug Benefit Manual,
Chapters 3, 4, and 13; Plan Communications User Guide............................................. 26
3.6 Complaints Tracking 42 CFR §423.505(b)(22); Prescription Drug Benefit Manual,
Chapter 7 ........................................................................................................................... 27
3.7 Coordination of Benefits 42 CFR Part 423 Subpart J; Prescription Drug Benefit
Manual, Chapter 14 .......................................................................................................... 27
3.8 Tracking True Out-of-Pocket Costs (TrOOP) Social Security Act § 1860D-2(b)(4); 42
CFR Part 423 Subpart J; Prescription Drug Benefit Manual, Chapters 13 and Chapter
14 ....................................................................................................................................... 27
3.9 Medicare Secondary Payer 42 CFR §423.462; Prescription Drug Benefit Manual,
Chapter 14 ......................................................................................................................... 28
3.10 Data Exchange between PACE Organizations and CMS 42 CFR §423.505(c) and (k) ... 29
3.11 Health Insurance Portability and Accountability Act of 1996 Health Information
Technology for Economic and Clinical Health Act (HITECH Act), and Related CMS
Requirements 45 CFR Parts 160, 162, and 164............................................................... 30
3.12 Prohibition on Use of SSN or Medicare Beneficiary Identifier Number on Enrollee ID
Cards Prescription Drug Benefit Manual, Chapter 2 ...................................................... 31
3.13 Prescription Drug Event (PDE) Records 42 CFR Part 423 Subpart G ........................... 31
3.14 Claims Processing 42 CFR §423.120(c)(4); 42 CFR §423.466 ........................................ 32
3.15 Record Retention 42 CFR §423.505(d) ............................................................................ 32
3.16 Formulary Submission Requirements ............................................................................ 32

3.16.1 Applicability of Formulary Submission Requirements .......................................32
3.16.2 Formulary/Pharmacy and Therapeutics (P&T) Committee................................33
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CERTIFICATION .....................................................................................................35

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APPENDICES ..........................................................................................................36

APPENDIX I – Applicant Submission of P&T Committee Member List ................................ 37

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1 GENERAL INFORMATION
1.1 Background
The Medicare Prescription Drug Benefit program was established by section 101 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), as
amended by the Patient Protection and Affordable Care Act, as amended, and is
codified in sections 1860D-1 through 1860D-43 of the Social Security Act (the Act).
PACE organizations have a longstanding history of providing statutorily required
prescription drugs to all participants. Prior to Part D, prescription drugs were included
as a portion of the Medicaid capitation rate. However, the MMA mandates that State
Medicaid programs may no longer cover Part D drugs on behalf of dual eligible
beneficiaries. PACE organizations may elect to offer a Part D plan in a similar manner
as MA-PD local plans in order to account for this shift in payer source for prescription
drugs.
This chapter of the PACE provider application serves as the Medicare Part D
application.
NOTE: 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.

1.2 Summary of PACE Organization’s Roles and Responsibilities
Each PACE Organization should have the ability to:
•

Submit a formulary each year for CMS approval (as applicable).

•

Submit a Part D bid each year for CMS approval.

•

Administer the Part D benefit.

•

Provide all required prescription drug services as outlined in the PACE statute and
regulation.

•

Operate quality assurance, drug utilization review, and medication therapy
management programs in accordance with existing PACE requirements.

•

Protect the privacy of beneficiaries and beneficiary-specific health information.

•

Develop and/or maintain systems to support enrollment, provide claims-based data
to CMS, accept CMS payment, and support e-prescribing.

•

Provide necessary data to CMS to support payment, oversight, and quality
improvement activities and otherwise cooperate with CMS oversight responsibilities.

•

Ensure the integrity of the Medicare Trust Fund by eliminating fraud, abuse, and
waste within its organization.

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1.3 Summary Instructions for Part D Formularies (42 CFR §423.120)
Applicants that meet one or more of the definitive criteria for formularies described later
in this document will be required to upload their plan formularies to HPMS using a predefined file format and record layout.

1.4 Summary Instructions for Part D Bids (42 CFR §423.265)
Each PACE applicant must submit to CMS, via HPMS, two Part D bids; 1 for dual
eligible enrollees and 1 for Medicare-only enrollees. Applicants using this solicitation
must apply to offer full risk Part D plans.
The applicants bid will represent the expected monthly cost to be incurred by the
applicant for qualified prescription drug coverage in the plan’s service area for a Part Deligible beneficiary on a standardized basis. The costs represented in each bid should
be those for which the applicant would be responsible. The bid will require 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
among all beneficiaries enrolled in the plan. The benefit packages submitted must be
cross walked appropriately from the formulary (as applicable). Pursuant to 42 CFR
§423.505(k)(4), the CEO, CFO, or an individual delegated 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 is accurate, complete, and truthful, and fully conforms to the requirements in
section 42 CFR §423.265 of the regulations (except section 42 CFR §423.265(b), the
applicability of which is discussed below). In addition, the pricing component of the bid
must be certified by a qualified actuary.
PACE organizations must submit annual Part D bids and receive CMS approval of the
Part D bids prior to providing or continuing to provide Part D benefits. Any PACE
organization that wishes to either continue receiving Part D payment or begin receiving
Part D payment in January of a given year, must submit their Part D bids no later than
the first Monday in June of the year prior. The June bid submission deadline (42 CFR
§423.265(b)) has been waived for newly forming PACE organizations pending the
development of a methodology for accepting mid-year bids.
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 (as applicable) must
accurately crosswalk to the PBP.
Once the PBP and BPT software has been completed for each plan being offered,
Applicants will upload their bids to HPMS.

1.4.1 CMS Review of Part D Bids
CMS will evaluate the bids based on four broad areas: 1) administrative costs, 2)
aggregate costs, 3) benefit structure, and 4) plan management. CMS will evaluate the

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administrative costs for reasonableness in comparison to other PACE bidders. CMS
will also examine aggregate costs to determine whether the revenue requirements for
qualified prescription drug coverage are reasonable and equitable. In addition, CMS will
review the steps the PACE Part D sponsor is taking to control costs, such as through
various programs to encourage use of generic drugs. Finally, CMS will examine
indicators concerning plan management.
CMS is also required to make certain that bids and plan designs meet statutory and
regulatory requirements. We will conduct an actuarial analysis to determine whether
the proposed benefit meets the standard of providing qualified prescription drug
coverage.

1.4.2

Overview of Part D Bid Negotiation

CMS evaluates the reasonableness of bids submitted by PACE 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 could test these assumptions for reasonableness through
actuarial analysis and comparison to industry standards and other comparable bids.
Bid negotiation could take the form of negotiating changes upward or downward in the
utilization and cost per script assumptions underlying the bid’s actuarial basis. We
could exercise our authority to deny a bid if we do not believe that the bid and its
underlying drug prices reflect market rates.

1.5 Standard Contract with PACE Part D Sponsors
Successful Applicants will be deemed qualified to enter into a PACE program
agreement that includes Part D coverage. Under this agreement the PACE Part D
sponsor will be authorized to operate the Medicare Part D benefit for all eligible PACE
participants. Only after the qualified Applicant and CMS have reached agreement on
the Applicant’s bid submissions will the Applicant be asked to execute its PACE
program agreement.

1.6 General Enrollment Processing
CMS has developed a system to review an individual’s eligibility for the Part D benefit.
For individuals applying for enrollment in a Part D plan, CMS reviews an individual’s
status as a Medicare beneficiary. CMS tracks enrollments and ensures that the
beneficiary does not enroll in more than one plan. Also, CMS tracks low-income
subsidy status and auto-enrollments of full-benefit dual eligible individuals into Part D
plans and facilitated enrollments for other low-income Medicare beneficiaries. Finally,
CMS tracks disenrollments from Part D plans and will deny new enrollments during any
given year unless the enrollment occurs during an allowable enrollment period. For
additional information regarding enrollment processing, refer to the http://www.cms.gov
website.

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1.7 Eligibility for the Low Income Subsidy Program
Low-income Medicare beneficiaries receive full or partial subsidies of premiums and
reductions in cost sharing under the Part D benefit. Certain groups of Medicare
beneficiaries are automatically be eligible for the low-income subsidy program. These
beneficiaries include Medicare beneficiaries who are full-benefit dual eligible individuals
(eligible for full benefits under Medicaid), Medicare beneficiaries who are recipients of
Supplemental Security Income benefits; and participants in Medicare Savings Programs
as Qualified Medicare Beneficiaries (QMBs), Specified Low-Income Medicare
Beneficiaries (SLMBs), and Qualifying Individuals (QIs). Beneficiaries who are lowincome and who do not fall into one of the automatic subsidy eligibility groups apply for
a low-income subsidy and have their eligibility determined by either the state in which
they reside or the Social Security Administration (SSA). CMS has developed a
database to track individuals who are automatically deemed subsidy-eligible or who are
determined subsidy-eligible by states or SSA, and communicates the names and
eligibility category of those individuals to Part D sponsors as part of the enrollment files
from the enrollment processing system described below. For additional information
regarding the low income subsidy program, refer to the www.cms.gov/ website.

1.8 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 45CFR §5.65(d) and by Executive Order 12,600 to
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 to 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.

1.9 Payment to PACE Part D Sponsors
Payments will be wired to the organization’s account on the first day of each month (or
the last business day of the prior month if the first day of the month is not a business
day). The monthly payment will include premiums that SSA or other agencies are
deducting from beneficiary Social Security payments or other payments as well as those
premiums CMS is paying on behalf of low-income individuals. Estimated monthly

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reinsurance subsidies, low-income subsidies, and gap discount amounts are also
included.

1.10 Applicability of the National Provider Identifier (NPI) to PACE
Organizations
The Administrative Simplification provisions of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) mandated the adoption of standard unique
identifiers for health care providers, as well as the adoption of standard unique
identifiers for health plans. The purpose of these provisions is to improve the efficiency
and effectiveness of the electronic transmission of health information. The NPI has
been adopted as the standard unique identifier for health care providers. The National
Plan and Provider Enumeration System (NPPES) is the entity that assigns these unique
identifiers.
For purposes of HIPAA, PACE organizations may be defined as both health plans and
health care providers. Any health care provider, as that term is defined for purposes of
HIPAA that transmits any health information in electronic form in connection with one of
the standard transactions, including electronically billing any health plan (including
Medicare), must obtain an NPI. Health care providers are defined at 45 CFR §160.103
as “a provider of services (as defined in section 1861 (u) of the Act, 42 USC 1395x (u)),
a provider of medical or health services (as defined in section 1861(s) of the Act, 42
USC 1395x(s)), and any other person or organization who furnishes, bills, or is paid for
health care in the normal course of business.”
Although PACE organizations may meet the definition or a health care provider, as
described above, only those that transmit health information in electronic form in
connection with one of the standard transactions, including billing any health plan
electronically must obtain an NPI. We note that in some instances, PACE organizations
may elect to provide Medicare services to a beneficiary prior to the beneficiary’s
effective date of PACE enrollment. These services may be billable under Medicare
Fee-For-Service. To the extent a PACE organization that is a HIPAA health care
provider elects to bill Medicare electronically for these non-PACE services, an NPI
would be needed.
In addition, consistent with HIPAA requirements, as health plans, all PACE
organizations (regardless of whether the NPI requirements apply to them as health care
providers) are required to accept and recognize the NPI as the health care provider
identifier in standard transactions that are submitted to them from health care providers
or other health plans.

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2 GENERAL INSTRUCTIONS
The following section provides instructions for completing this chapter of the application.
The actual application forms are included under section 3.
Note: Nothing in this chapter of the PACE Provider Application is intended to
supersede the regulations at 42 CFR Part 423 or Part 460. Failure to reference a
regulatory requirement in this application does not affect the applicability of such
requirement, and PACE Organizations are required to comply with all applicable
requirements of the regulations in Part 423 or Part 460 of 42 CFR.

2.1 Summary Instructions and Technical Support
This application is to be completed by those newly forming PACE organizations that
intend to provide the Part D benefit to eligible participants beginning in 2021.

Applicants must use the 2021 solicitation. CMS will not accept or
review in any way those submissions using prior versions of the
application.
Applicants must follow the instructions contained in the PACE Initial Application at
https://www.cms.gov/Medicare/Health-Plans/pace/Overview.html to submit a Notice of
Intent to Apply and initiate the application process. The Part D PACE application must
be completed in HPMS. Applicants should not rely on their understanding of
prior years’ applications and review standards in determining whether they are
complying with application requirements. If they are uncertain about how to
interpret application instructions and requirements, they should ask CMS for
guidance.
For technical assistance in the completion of this application, please send an email to the
DMAO portal at: https://dmao.lmi.org and click on the “PACE” tab. Instructions
In many instances Applicants are directed to affirm that they will 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 its organization
to complying with the relevant requirements as of the date your contract is signed,
unless an alternative date is noted.
Additional supporting documentation is notated in the following manner throughout the
application and is to be submitted as follows:
•

Forms: documents supplied by CMS that are contained at the end of this application.
They are to be completed by the Applicant and uploaded in HPMS as part of the
application.

•

Legal documents such as subcontracts should be provided as an upload in the
Contracting section of the HPMS application.

CMS will check the Part D application for completeness shortly after its receipt. We will
notify Applicants of any deficiencies and afford them the opportunity to amend their Part
D applications.
CMS may verify a sponsor’s compliance with qualifications it attests it will meet, through
on-site facility visits as well as through other program monitoring techniques.
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Failure to meet the requirements attested to in the Applicant’s response to this
solicitation and failure to operate its Part D plan(s) consistent with the
requirements of the applicable statutes, regulations, and the Part D contract may
disqualify it from participation in the Part D program.
An individual with legal authority to bind the Applicant shall sign and submit the
certification.
This solicitation does not commit CMS to pay any cost for the preparation and
submission of a Part D application.

2.2 Application Acceptance and Submission Timeframe
PACE Applications are reviewed on a quarterly basis in accordance with the timeline in
the PACE application.

2.3 Part D Waivers
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

423.44

Involuntary disenrollment

423.48

Information about Part D

423.104(g)(1)

Access to negotiated prices

423.112

Establishment of PDP service areas

423.120(a)

Access to covered Part D drugs

423.120(c)

Use of standardized technology

423.124

Out-of-network access to covered Part D
drugs at out-of-network pharmacies

423.128

Dissemination of Part D plan information

423.132

Public disclosure of pharmaceutical prices for
equivalent drugs

423.136

Privacy, confidentiality, and accuracy of
enrollee records
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Part D Regulation

Regulatory Requirement(s)
Description

423.153(a)-423.153(d)
Note: Organizations are required to
abide by 423.153(f).

Drug utilization management, quality
assurance, and medication therapy
management programs (MTMPs)

423.156

Consumer satisfaction surveys

423.159(c), 423.160(a)

Electronic prescribing

423.162

Quality Improvement organization activities

423.265(b)

Part D bid submission deadline

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.
423.401(a)(1)

Licensure

423.420

Solvency standards for non-licensed entities

423.462

Medicare secondary payer procedures

423.464(c)

Coordination of benefits and user fees

423.464(f)(2) and 423.464(f)(4)

Coordination with other prescription drug
coverage

423.502(b)(1)(i-ii)

Documentation of State licensure or Federal
waiver

423.504(b)(2-3), 423.504(b)(4)(i-v)
and (vi)(A-E)

Conditions necessary to contract as a Part D
plan sponsor

Note: Organizations are required
to abide by 423.504(b)(4)(vi)(F-H),
423.504(b)(5), 423.504(c)-(e)

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Part D Regulation

Regulatory Requirement(s)
Description

423.505(a-c) and 423.505(e-i)

Contract provisions

Note: Organizations are required
to abide by 423.505(d and j)
423.505(k)(6)

Certification for purposes of price compare

Note: Organizations are required
to abide by 423.505(k)(1-5)
423.506(a)-(b)

Effective date and term of contract

Note: Organizations are required
to abide by 423.506(c)-(e)
423.512 – 423.514

Contracting terms

423.551-423.552

Change of ownership or leasing of facilities
during term of contract

423.560-423.638

Grievances, coverage determinations, and
appeals

423.2262

Approval of marketing materials and
enrollment forms

N/A

A PDP sponsor is required to be a
nongovernmental entity

2.3.1 Applicant Requests for Additional Waivers
CMS may grant additional waivers upon a PACE Organization’s request, provided that
the waivers may be justified because the Part D requirement is duplicative of or
conflicting with PACE requirements, or the waiver will improve the coordination of PACE
and Part D benefits. Any waiver granted by CMS will apply to all similarly situated
PACE Organizations.
PACE Organizations that identify the need for additional Part D waivers should submit
a waiver request in conjunction with the PACE application. Please use the naming
convention “waiver request” and include as separate document in the PACE application
zip file. The Part D waiver request package must include:
1. Information identifying the submitted document(s) as a waiver request;
2. The regulatory provision to be waived;
3. Specific reason(s) for requesting the waiver;

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4. Policies and procedures put into place by the PACE organization to ensure
participant care will not be compromised by the waiver, if applicable;
5. Point of contact for waiver; and,
6. PACE Waiver Crosswalk (Attachment A) indicating that the PACE organization
has provided all necessary information, if applicable.
Finally, the PACE Organization should also copy their State Administering Agency on
the request.
Determinations will be coordinated between Part D and PACE policy staff and issued to
applicants following a comprehensive review of the request in a similar manner as
PACE BIPA 903 waivers are evaluated in accordance with sections 42 CFR §460.26(b)
and 42 CFR §460.28 of the PACE regulation.

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3 APPLICATION FORMS
3.1 Management and Operations
3.1.1 Subcontractor (first tier, downstream, and related entities) Function
Chart
A Part D sponsor may meet program requirements by delegating the performance of
certain required functions to entities with which it contracts directly, referred to in the
Part D regulations (§423.501) as “first tier entities.” These entities may in turn contract
with other entities, defined as “downstream entities,” for the performance of the
delegated function. A related entity is an entity that is a parent, subsidiary, or subsidiary
of the parent of the Part D Sponsor. A related entity may be either a first tier or
downstream entity.
Where an applicant has elected to use subcontractors to meet Part D requirements, it
must demonstrate that it has binding contracts in place that reflect these relationships.
These contracts serve as the legal links that form the applicant’s “chain of delegation,”
extending from the applicant to the entities (first tier or downstream) that will actually
perform the stated function on the applicant’s behalf. Where the function is to be
performed by a downstream entity, there must be contracts in place through which the
applicant has delegated a function to a first tier entity, which has in turn delegated that
function to the downstream entity.
Applicants must identify in HPMS the first tier and downstream entities with which it
has contracted to perform the listed Part D functions. The chart below is provided to
assist applicants in identifying the information that must be provided in HPMS.
Note concerning parent and subsidiary relationships: In establishing its
subcontracting arrangements, an applicant must clearly demonstrate that it has elected
to delegate certain Part D functions to first tier and downstream entities. Where an
applicant is a subsidiary to a parent organization and that organization purports to
contract with other entities on the applicant’s behalf, the applicant must consider the
parent organization a first tier entity and provide a contract between itself and its parent
that meets Part D requirements. CMS will not consider any other types of materials,
including articles of incorporation, organizational charts, or lists of board members or
senior executives, that the applicant might believe demonstrate that the parent is
authorized to contract on the applicant’s behalf.

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In HPMS, on the Contract & Management/Part D Information/Part D Data Page, provide
names of the first tier, downstream and related entities you will use to carry out each of
the functions listed in this chart and whether the first tier, downstream and related
entities are off-shore. Organizations applying for an SAE should ensure that the
information in HPMS is up-to-date for the current contract year.
(Indicate with “name of Applicant’s Organization” where applicant will perform those
functions)
Function

First tier, Downstream
and Related entities

A pharmacy benefit program that
performs adjudication and
processing of pharmacy claims at
the point of sale.
A pharmacy benefit program that
performs negotiation with
prescription drug manufacturers
and others for rebates, discounts,
or other price concessions on
prescription drugs.
A pharmacy benefit program that
performs administration and
tracking of enrollees’ drug benefits
in real time, including TrOOP
balance processing.
A pharmacy benefit program that
performs coordination with other
drug benefit programs, including,
for example, Medicaid, state
pharmaceutical assistance
programs, or other insurance.
A pharmacy benefit program that
develops and maintains a
pharmacy network.
A pharmacy benefit program that
operates an enrollee grievance
and appeals process

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Off-Shore
yes/no

Function

First tier, Downstream
and Related entities

Off-Shore
yes/no

A pharmacy benefit program that
performs customer service
functionality, that includes serving
seniors and persons with a
disability.
A pharmacy benefit program that
performs pharmacy technical
assistance service functionality.
A pharmacy benefit program that
maintains a pharmaceutical and
therapeutic committee.
A pharmacy benefit program that
performs enrollment processing.
For this item, applicant may
list the organization as “TBD”.

Data Validation Contractor
Data Validation Pre-Assessment
Consultant

For this item, applicant may
list the organization as “TBD”.

3.1.2 First Tier, Downstream, and Related Entity Relationship Chart
Provide a chart showing the relationship between the applicant and each first tier,
downstream, and related entity identified in section 3.2.1. This chart must include the names
of all entities in the contracting chain between the applicant and the entity performing the
identified function. An example of a chart is provided below for reference

Applicant

Parent (First Tier Entity)

PBM (Downstream Entity)

3.1.3 Requirements in Contracts/Administrative Services Agreements
Except for SAE applicants, upload copies of executed contracts, fully executed letters of
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agreement, administrative services agreements, or intercompany agreements (in wordsearchable .pdf format) with each first tier, downstream or related entity identified in Sections
3.2.2 (EXCEPT for the Data Validation Contractor and Data Validation Pre-Assessment
Consultant) and with any first tier, downstream, or related entity that contracts with any of
the identified entities on the applicant’s behalf. As noted above, this requirement applies
even if an entity contracting on the applicant’s behalf is the applicant’s parent organization or
a subsidiary of the applicant’s parent organization. Unless otherwise indicated, each and
every contract must:
Clearly identify the parties to the contract (or letter of agreement). If the applicant is not a
direct party to the contract (e.g., if one of the contracting entities is entering into the contract
on the applicant’s behalf), the applicant must be identified as an entity that will benefit
from the services described in the contract.
1. Clearly identify the parties to the contract (or letter of agreement). If the applicant is not a
direct party to the contract (e.g., if one of the contracting entities is entering into the
contract on the applicant’s behalf), the applicant must be identified as an entity that
will benefit from the services described in the contract.
2. Describe the functions to be performed by the first tier, downstream or related entity, and
the reporting requirements the first tier, downstream, or related entity has to the applicant.
42 CFR §423.505(i)(4)(i)
3. Contain language clearly indicating that the first tier, downstream, or related entity has
agreed to participate in your Medicare Prescription Drug Benefit program (except for a
network pharmacy if the existing contract would allow participation in this program).
4. Contain flow-down clauses requiring that any services or other activity they perform in
accordance with the contract be consistent and comply with the applicant’s contractual
obligations as a Part D sponsor. 42 CFR §423.505(i)(3)(iii)
5. Describe the payment or other consideration the parties have agreed that the first tier,
downstream, or related entity will receive for performance under the contract.
Applicants may not redact this information.
6. Be signed by a representative of each party with legal authority to bind the entity.
7. Contain language obligating the first tier, downstream, or related entity to abide by all
applicable Federal laws and regulations and CMS instructions. 42 CFR
§423.505(i)(4)(iv)
8. Contain language obligating the first tier, downstream, or related entity to abide by
State and Federal privacy and security requirements, including the confidentiality and
security provisions stated in the regulations for this program at 42 CFR
§423.136.
9. Contain language ensuring that the first tier, downstream, or related entity will make its
books and other records available in accordance with 42 CFR §423.505(e)(2) and 42
CFR §423.505(i)(2). Generally stated, these regulations give HHS, the Comptroller
General, or their designees the right to audit, evaluate and inspect any books, contracts,
records, including medical records and documentation involving transactions related to
CMS’ contract with the Part D sponsor and that these rights continue for a period of 10
years from the final date of the contract period or the date of audit completion, whichever
is later. 42 CFR §423.505(e)(2) and (i)(2)
17

10. Contain language that the first tier, downstream, or related entity will ensure that
beneficiaries are not held liable for fees that are the responsibility of the Part D
sponsor. 42 CFR §423.505(i)(3)(i)
11. Contain language that delegated activities or reporting responsibilities may be revoked if
CMS or the Part D sponsor determines the first tier, downstream, or related entity has
not performed satisfactorily. The contract/administrative services agreement may
include remedies in lieu of revocation to address this requirement. 42 CFR §
423.505(i)(4)(ii)
12. Contain language specifying that the applicant, upon becoming a Part D sponsor, will
monitor the performance of the first tier, downstream, or related entity on an ongoing
basis. The contract must explicitly provide that the sponsor itself will perform
ongoing monitoring. Language indicating that the sponsor has the right to
monitor is not sufficient; the contract must affirmatively state that the sponsor will
monitor the entity on an ongoing basis. 42 CFR §423.505(i)(4)(iii)
13. If the first tier, downstream, or related entity will establish the pharmacy network or
select pharmacies to be included in the network, contain language that the Part D
sponsor retains the right to approve, suspend, or terminate any arrangement with a
pharmacy. 42 CFR §423.505(i)(5)
14. If the first tier, downstream, or related entity will establish the pharmacy network or
select pharmacies to be included in the network, contain language that payment to such
pharmacies (excluding long-term care and mail order) shall be issued, mailed, or
otherwise transmitted with respect to all clean claims submitted by or on behalf of
pharmacies within 14 days for electronic claims and within 30 days for claims submitted
otherwise. 42 CFR §§423.505(i)(3)(vi) and 423.520
15. If the first tier, downstream, or related entity will establish the pharmacy network or
select pharmacies to be included in the network, contain language that if a prescription
drug pricing standard is used for reimbursement, identify the source used by the Part D
sponsor for the standard of reimbursement. 42 CFR §§423.505(b)(21) and
423.505(i)(3)(viii)(B)
16. If the first tier, downstream, or related entity will establish the pharmacy network or
select pharmacies to be included in the network, and the source for any prescription
drug pricing standard is not publicly available, a provision for disclosing all individual
drug prices to be updated to the applicable pharmacies in advance of their use for
reimbursement of claims. 42 CFR §423.505(i)(3)(vii).
17. If the first tier, downstream, or related entity will establish the pharmacy network or
select pharmacies to be included in the network and a prescription drug pricing standard
is used for reimbursement, contain a provision that updates to such a prescription drug
pricing standard occur not less frequently than once every 7 days beginning with an
initial update on January 1 of each year, to accurately reflect the market price of
acquiring the drug. 42 CFR §423.505(b)(21) and (i)(3)(viii)(A)
18. If the first tier, downstream, or related entity will establish the pharmacy network or
select pharmacies to be included in the network, contain language requiring the network
pharmacies to submit claims to the Part D sponsor or first tier, downstream or related
entity whenever the membership ID card is presented or on file at the pharmacy unless
the enrollee expressly requests that a particular claim not be submitted. 42 CFR §
18

423.120(c)(3)
Each complete contract must meet all of the above requirements when read on its own.
DO NOT UPLOAD a contract for the Data Validation Contractor or the Data Validation
Pre-Assessment Consultant. It is not required and will not be reviewed.
A. Crosswalk of Requirements in Contracts/Administrative Services Agreements
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart for
each contract/administrative services agreement submitted under Section 3.1.1D.
Applicants must identify where specifically (i.e., the pdf page number) in each
contract/administrative services agreement the following elements are found.
Requirement

Citation

The parties to the contract. If the applicant is not a party to the contract, it must
be identified as an entity that will benefit from the services described in the
contract.
The functions to be performed by the first tier, downstream, or related entity.
Describe the reporting requirements the first tier, downstream, or related entity
identified in Section 3.1.1C of the application has to the applicant. 42 CFR
§423.505(i)(4)(i)
Language clearly indicating that the first tier, downstream, or related entity has
agreed to participate in your Medicare Prescription Drug Benefit program
(except for a network pharmacy if the existing contract would allow participation
in this program).
Contains flow-down clauses requiring the first tier, downstream, or related
entity’s activities to be consistent and comply with the Applicant’s contractual
obligations as a Part D sponsor. 42 CFR §423.505(i)(3)(iii)
The payment the parties have agreed that the first tier, downstream,
or related entity will receive for performance under the contract,
Applicants may not redact this information.
Are signed by a representative of each party with legal authority to bind the
entity.
Language obligating the first tier, downstream, or related entity to abide by all
applicable Federal laws and regulations and CMS instructions. 42 CFR
§423.505(i)(4)(iv)

19

Requirement

Citation

Language obligating the first tier, downstream, or related entity to abide by State
and Federal privacy and security requirements, including the confidentiality and
security provisions stated in the regulations for the program at 42 CFR
§423.136.
Language ensuring that the first tier, downstream, or related entity will make its
books and other records available in accordance with 42 CFR 423.505(e)(2) and
42 CFR 423.505(i)(2). Generally stated these regulations give HHS, the
Comptroller General, or their designees the right to audit, evaluate and inspect
any books, contracts, records, including medical records and documentation
involving transactions related to CMS’ contract with the Part D sponsor and that
these rights continue for a period of 10 years from the final date of the contract
period or the date of audit completion, whichever is later. 42 CFR §423.505
Language stating that the first tier, downstream, or related entity will ensure that
beneficiaries are not held liable for fees that are the responsibility of the
Applicant. 42 CFR §423.505(i)(3)(i)
Language ensuring that if the Applicant, upon becoming a Part D sponsor,
delegates an activity or responsibility to the first tier, downstream, or related
entity, that such activity or responsibility may be revoked if CMS or the Part D
sponsor determines the first tier, downstream, or related entity has not
performed satisfactorily. Note: The contract/administrative services agreement
may include remedies in lieu of revocation to address this requirement. 42 CFR
§423.505(i)(4)(ii)
Language specifying that the Applicant, upon becoming a Part D sponsor, will
monitor the performance of the first tier, downstream, or related entity on an
ongoing basis. 42 CFR §423.505(i)(4)(iii)
Language that the Part D sponsor retains the right to approve, suspend, or
terminate any arrangement with a pharmacy if the first tier, downstream, or
related entity will establish the pharmacy network or select pharmacies to be
included in the network. 42 CFR §423.505(i)(5)
Language that if the first tier, downstream, or related entity will establish the
pharmacy network or select pharmacies to be included in the network contain
language that payment to such pharmacies (excluding long-term care and mail
order) shall be issued, mailed, or otherwise transmitted with respect to all clean
claims submitted by or on behalf of pharmacies within 14 days for electronic
claims and within 30 days for claims submitted otherwise. 42 CFR
§423.505(i)(3)(vi)

20

Requirement

Citation

Language that if the first tier, downstream, or related entity will establish the
pharmacy network or select pharmacies to be included in the network and a
prescription drug pricing standard is used for reimbursement, identifies the
source used by the Part D sponsor for the prescription drug pricing standard of
reimbursement. 42 CFR §423.505(i)(3)(viii)(B)
If the first tier, downstream, or related entity will establish the pharmacy network
or select pharmacies to be included in the network, and the source for any
prescription drug pricing standard is not publicly available, a provision for
disclosing all individual drug prices to be updated to the applicable pharmacies
in advance of their use for reimbursement of claims. 42 CFR §423.505(i)(3)(vii).

If the first tier, downstream, or related entity will establish the pharmacy network
or select pharmacies to be included in the network and a prescription drug
pricing standard is used for reimbursement, a provision requiring that updates to
such a standard occur not less frequently than once every 7 days beginning with
an initial update on January 1 of each year, to accurately reflect the market price
of acquiring the drug. 42 CFR §423.505(i)(3)(viii)(A)
If the first tier, downstream, or related entity will establish the pharmacy network
or select pharmacies to be included in the network, language requiring the
network pharmacies to submit claims to the Part D sponsor or first tier,
downstream or related entity whenever the membership ID card is presented or
on file at the pharmacy unless the enrollee expressly requests that a particular
claim not be submitted. 42 CFR §423.120(c)(3)

21

3.1.4 Requirements for Long Term Care Pharmacy Access Contracts 42 CFR
§423.120(a)(5); Prescription Drug Benefit Manual, Chapter 5
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart
(which contains applicable requirements from above AND additional requirements
specific to Pharmacy Access) for each long term care pharmacy contract template
submitted. Applicants must identify where specifically (i.e., section numbers, page
numbers, paragraph numbers, etc.) in each contract template the following elements
are found. [E.g., Medicare Part D Long-Term Care Pharmacy Addendum, page 14,
section 3.2, paragraph 2.]
The provisions listed below must be in all pharmacy contracts. If contracts reference
policies and procedures with which the pharmacy must comply, provide the relevant
documentation as evidence and cite this documentation accordingly.
Requirement

Citation

The functions to be performed by the first tier, downstream, or related entity, and
describes the reporting requirements the first tier, downstream, or related entity
identified in 3.1.1C of the application has to the Applicant. 42 CFR
§423.505(i)(4)(i)
Language obligating the first tier, downstream, or related entity to abide by all
applicable Federal laws and regulations and CMS instructions. 42 CFR
§423.505(i)(4)(iv)
Language obligating the first tier, downstream, or related entity to abide by State
and Federal privacy and security requirements, including the confidentiality and
security provisions stated in the regulations for the program at 42 CFR
§423.136. 42 CFR §423.136
Language ensuring that the first tier, downstream, or related entity will make its
books and other records available in accordance with 42 CFR 423.505(e)(2) and
42 CFR 423.505(i)(2). Generally stated these regulations give HHS, the
Comptroller General, or their designees the right to audit, evaluate and inspect
any books, contracts, records, including medical records and documentation
involving transactions related to CMS’ contract with the Part D sponsor and that
these rights continue for a period of 10 years from the final date of the contract
period or the date of audit completion, whichever is later. 42 CFR §423.505
Language stating that the first tier, downstream, or related entity will ensure that
beneficiaries are not held liable for fees that are the responsibility of the
Applicant. 42 CFR §423.505(i)(3)(i)

22

Requirement

Citation

Language ensuring that if the Applicant, upon becoming a Part D sponsor,
delegates an activity or responsibility to the first tier, downstream, or related
entity, that such activity or responsibility may be revoked if CMS or the Part D
sponsor determines the first tier, downstream, or related entity has not
performed satisfactorily. Note: The contract may include remedies in lieu of
revocation to address this requirement. 42 CFR §423.505(i)(4)(ii)
Language specifying that the Applicant, upon becoming a Part D sponsor, will
monitor the performance of the first tier, downstream, or related entity on an
ongoing basis. 42 CFR §423.505(i)(4)(iii)
For those contracts that use a standard for reimbursement, a provision indicating
the source used by the Part D sponsor for the standard of reimbursement. 42
CFR §423.505(i)(3)(viii)(B)
If the source for any prescription drug pricing standard is not publicly available, a
provision for disclosing all individual drug prices to be updated to the applicable
pharmacies in advance of their use for reimbursement of claims. 42 CFR
§423.505(i)(3)(vii).
For those contracts that use a standard for reimbursement, a provision that
updates to such a standard occur not less frequently than once every 7 days
beginning with an initial update on January 1 of each year, to accurately reflect
the market price of acquiring the drug.42 CFR §423.505(i)(3)(viii)(A)
Language requiring the network pharmacy to submit claims to the Part D
sponsor or first tier, downstream or related entity whenever the membership ID
card is presented or on file at the pharmacy unless the enrollee expressly
requests that a particular claim not be submitted. 42 CFR 423.120(c)(3)
Provisions governing submitting claims to a real-time claims adjudication
system. 42 CFR §423.505(j) and §423.505(b)(17)
Note: Applicant may indicate for I/T/U pharmacies and for certain pharmacies
that are allowed to submit claims in the X 12 format that these may be batch
processed.
Provisions governing providing Part D enrollees access to negotiated prices as
defined in 42 CFR 423.100. 42 CFR §423.104(g)

23

Requirement

Citation

Provisions regarding charging/applying the correct cost-sharing amount. 42 CFR
§423.104
Provisions governing informing the Part D enrollee at the point of sale (or at the
point of delivery for mail order drugs) of the lowest-priced, generically equivalent
drug, if one exists for the beneficiary's prescription, as well as any associated
differential in price. 42 CFR §423.132
Provide that long-term care pharmacies must have not less than 30 days, nor
more than 90 days, to submit to the Part D Sponsor claims for reimbursement
under the plan. 42 CFR § 423.505(b)(20)
Provisions requiring that long-term care pharmacies dispense drugs and report
information as required by 42 CFR §423.154.

3.2 HPMS Part D Contacts
A. In HPMS, on the Contract Management/Contact Information/Contact Data Page
provide the name/title, mailing address, phone number, fax number, and email
address for the following Applicant contacts.
Note: The same individual should not be identified for each of these contacts. If a
general phone number is given then CMS requires specific extensions for the
individual identified. Under no circumstances should these numbers merely lead to a
company’s general automated phone response system. Further, Applicants must
provide specific email addresses for the individuals named.
Note: Contact definitions are provided in HPMS in the Contract
Management/Contact Information/Contact Data/Documentation link entitled Contact
Definitions.

24

B. In HPMS, complete the table below:
Applicant must attest ‘yes’ to the following qualification to be
approved for a Part D contract. Attest ‘yes’ or ‘no’ to the following
qualification by clicking on the appropriate response in HPMS:

Yes

No

Applicant agrees that CMS may release contact information to States,
SPAPs, providers, Part D sponsors, and others who need the contact
information for legitimate purposes.

3.3 Program Integrity and Compliance Program 2 CFR part 376 and
Compliance Program 42 CFR § 423.504(b)(4)(vi); Prescription Drug
Benefit Manual, Chapter 9
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following qualification to
be approved for a Part D contract. Attest ‘yes’ or ‘no’ to the
following qualification by clicking on the appropriate response in
HPMS:
Applicant, applicant staff, and its affiliated companies, subsidiaries or first
tier, downstream and related entities, and staff of the first tier,
downstream and related entities agree that they are bound by 2 CFR
Part 376 and attest that they are not excluded by the Department of
Health and Human Services Office of Inspector General or by the
General Services Administration exclusion lists. Please note that this
includes any member of its board of directors, and any key management
or executive staff or any major stockholder.
Additionally, given
Medicare payment may not be made for items or services furnished by
an excluded provider or entity, applicant should follow the guidance
provided in the January 13, 2010 HPMS memo entitled Claims for Drugs
Prescribed or Dispensed by Excluded Providers.

25

Yes

No

3.4 Health Information Technology 42 CFR §423.159; Prescription Drug
Benefit Manual, Chapter 7; P.L. 111-5 (2009)
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:

YES

NO

Requesting
Waiver?

Applicant has reviewed, understands, and complies with
electronic prescription and Health Information Technology
requirements contained in P.L. 111-5 (2009), 42 CFR
§423.159, Chapter 7 of the Prescription Drug Benefit Manual,
and all related guidance.

3.5 Enrollment and Eligibility 42 CFR §423.30; Prescription Drug Benefit
Manual, Chapters 3, 4, and 13; Plan Communications User Guide
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:
Applicant has reviewed, understands, and complies with
requirements related to enrollment, disenrollment, and
eligibility contained in 42 CFR §423.30, Chapters 3, 4, and 13
of the Prescription Drug Benefit Manual, the Plan
Communications User Guide, and all related enrollment and
disenrollment guidance and technical specifications.
Applicant has reviewed, understands, and complies with
CMS operational guidance on Creditable Coverage and the
Late Enrollment Penalty, including the Best Available
Evidence requirements contained in 42 CFR §423.800(d).

26

YES

NO

Requesting
Waiver?

3.6 Complaints Tracking 42 CFR §423.505(b)(22); Prescription Drug
Benefit Manual, Chapter 7
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:

YES

NO

Requesting
Waiver?

Applicant has reviewed, understands, and complies with all
requirements related to complaints tracking and resolution
contained in 42 CFR §423.505(b)(22),Chapter 7 of the
Prescription Drug Benefit Manual, and all related guidance.

3.7 Coordination of Benefits 42 CFR Part 423 Subpart J; Prescription Drug
Benefit Manual, Chapter 14
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:

YES

NO

Requesting
Waiver?

Applicant has reviewed, understands, and complies with
requirements related to coordination of benefits contained
in 42 CFR Part 423 Subpart J, Chapter 14 of the
Prescription Drug Benefit Manual, and related guidance.

3.8 Tracking True Out-of-Pocket Costs (TrOOP) Social Security Act §
1860D-2(b)(4); 42 CFR Part 423 Subpart J; Prescription Drug Benefit
Manual, Chapters 13 and Chapter 14
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:
Applicant has reviewed, understands, and complies with
requirements for tracking each enrollee’s true out of pocket
(TrOOP) costs contained in section 1860D-2(b)(4) of the
Act, 42 CFR Part 423 subpart J, Chapters 13 and 14 of the
Prescription Drug Benefit Manual, and all related guidance.
27

YES

NO

Requesting
Waiver?

NOTE: For information regarding the TrOOP facilitator, Applicant may link to
http://medifacd.ndchealth.com/

3.9 Medicare Secondary Payer 42 CFR §423.462; Prescription Drug
Benefit Manual, Chapter 14
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:
Applicant has reviewed, understands, and complies with all
Medicare Secondary Payer (MSP) requirements, including
those contained in 42 CFR §423.462, Chapter 14 of the
Prescription Drug Benefit Manual, and related guidance.
Applicant adheres to MSP laws and any other Federal and
State laws in establishing payers of last resort.
Applicant follows the Rules for Coordination of Benefits
adopted in the most current National Association of
Insurance Commissioner Coordination of Benefits Model
Regulation.

28

YES

NO

Requesting
Waiver?

3.10 Data Exchange between PACE Organizations and CMS 42 CFR
§423.505(c) and (k)
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:
Applicant uses HPMS to communicate with CMS in support of
the application process, formulary submission process, bid
submission process, ongoing operations of the Part D
program, and reporting and oversight activities. Part D
sponsors are required to secure access to HPMS in order to
carry out these functions.
Applicant establishes connectivity to CMS as noted in the
instructions provided by the MAPD Help Desk at 1-800-9278069 or via the MAPD HelpDesk webpage,
https://www.cms.gov/Research-Statistics-Data-andSystems/CMS-InformationTechnology/mapdhelpdesk/index.html, in the Plan Reference
Guide for CMS Part C/D Systems link.
Applicant has reviewed, understands, and complies with all
requirements related to data exchange between sponsors and
CMS, including those contained in 42 CFR §423.505(c) & (k).
In accordance with 42 CFR §423.322, the Applicant provides
CMS with any data required to ensure accurate prospective,
interim, and/or final reconciled payments including, but not
limited to, the following: test data, Prescription Drug Event
(PDE) records, enrollment transactions, Direct and Indirect
Remuneration (DIR) data, discrepancy records, and premium
payment data.

29

YES

NO

Requesting
Waiver?

3.11 Health Insurance Portability and Accountability Act of 1996 Health
Information Technology for Economic and Clinical Health Act
(HITECH Act), and Related CMS Requirements 45 CFR Parts 160, 162,
and 164
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:
Applicant has reviewed, understands, and complies with all
applicable standards, implementation specifications, and
requirements in the Standards for Privacy of Individually
Identifiable Health Information and Security Standards,
Standards for Electronic Transactions, and the Standard
Unique Health Identifier for Health Care Providers under 45
CFR Parts 160, 162, and 164.
Applicant transmits payment and remittance advice consistent
with the HIPAA-adopted ACS X12N 835, Version 5010: Health
Care Claim Payment and Remittance Advice Implementation
Guide (“835”).
Applicant has reviewed, understands, and complies with the
Offshore Subcontractor requirements, and as applicable,
submits the Offshore Subcontract Information and Attestation
via HPMS for each offshore subcontractor (first tier,
downstream and related entities) (including downstream
offshore subcontractors’ first tier, downstream and related
entities) that receive, process, transfer, handle, store, or
access Medicare beneficiary protected health information
(PHI) by the last Friday in September for the upcoming
contract year.

30

YES

NO

Requesting
Waiver?

3.12 Prohibition on Use of SSN or Medicare Beneficiary Identifier
Number on Enrollee ID Cards Prescription Drug Benefit
Manual, Chapter 2
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:

YES

NO

Requesting
Waiver?

Applicant does not use an enrollee’s Social Security
Number (SSN) or Medicare Beneficiary Identifier number
on the enrollee’s identification card.

3.13 Prescription Drug Event (PDE) Records 42 CFR Part 423 Subpart G
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:
Applicant has reviewed, understands, and complies with
CMS requirements and guidance related to submission of
PDE data, including 42 CFR Part 423 Subpart G, the
Regional Prescription Drug Event Data Participant Training
Guide and Technical Assistance Resource Guides under
the link, USERGROUP/technical Assistance
(www.csscoperations.com/) and related guidance.
Applicant meets all data submission deadlines.
Applicant pays all Plan-to-Plan payables on time.
Applicant complies with Medicare Coverage Gap Discount
Program requirements.

31

YES

NO

Requesting
Waiver?

3.14 Claims Processing 42 CFR §423.120(c)(4); 42 CFR §423.466
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:

YES

NO

Requesting
Waiver?

NO

Requesting
Waiver?

Applicant has reviewed, understands, and complies with all
requirements related to processing of electronic and paper
claims contained in 42 CFR §§423.120(c)(4), 423.466, &
423.520 and all related CMS guidance.

3.15 Record Retention 42 CFR §423.505(d)
In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:

YES

The applicant maintains, and requires its first tier,
downstream, and related entities to maintain, books,
records, documents, and other evidence of accounting
procedures and practices consistent with 42 CFR
§423.505(d).

3.16 Formulary Submission Requirements
3.16.1

Applicability of Formulary Submission Requirements

For purposes of formulary submission and review, the following paragraphs describe the
definition of a formulary.
•

Cost sharing tiers: Any coverage list that utilizes more than one cost sharing tier with
differential co-pay or coinsurance, is considered a formulary.

•

Prior authorization: Any coverage list that contains one or more drugs that must
undergo prior authorization before dispensing is considered a formulary. If in the normal
course of clinical practice, the prescribing physician uses FDA-approved indications and
use criteria to determine appropriateness of therapy, this is not considered prior
authorization.

•

Step therapy: Any coverage list that contains one or more drugs that are part of a step
therapy management program is considered a formulary. This includes any program that
requires a certain drug to be used first, before a different drug can be dispensed. Step
therapy can apply to certain drug classes or among brand and generic drug combinations.
32

•

Quantity limitations: Any coverage list that contains one or more drugs with quantity
limits is considered a formulary. Quantity limits are often used in cases where FDAapproved prescribing instructions state that only a certain number of doses should be
used in a certain time period.

•

Steerage: Any coverage list that contains one or more drugs that are considered
preferred or drugs that are steered towards is considered a formulary. Common
prescribing patterns are not considered steerage as long as there are no adverse
consequences to physicians or patients if a particular drug is not chosen.

If a plan meets any of the five criteria referenced above, then their coverage list is
considered a formulary and needs to be submitted to CMS for review and approval.
Only those applicants that have a coverage list that includes one of the items listed above will
be required to adhere to formulary requirements specified in 42 CFR §423.120(b) and complete
the application sections that follow.

3.16.2

Formulary/Pharmacy and Therapeutics (P&T) Committee

A. In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:
Applicant will submit a formulary to CMS for the Part D
benefit by the CMS specified dates. Applicant will link all
associated contracts to an initial formulary submission on
or before the formulary submission deadline; otherwise,
Applicant will be considered to have missed the formulary
submission deadline.
Applicant has reviewed, understands, and complies with
formulary guidance that is contained in the Code of Federal
Regulations (42 CFR §423.120(b)), Chapter 6 of the
Prescription Drug Benefit Manual, the HPMS Formulary
Submission Module and Reports Technical Manual, and all
other formulary instructions.
Applicant agrees, when using a formulary, to meet all
formulary submission deadlines established by CMS.
Applicant further agrees that CMS may discontinue its
review of the applicant’s formulary submission upon the
applicant’s failure to meet any of the formulary submission
deadlines. Applicant acknowledges that failure to receive
CMS approval of its formulary may prevent CMS from
approving the applicant’s bid(s) and contracting with the
applicant for the following benefit year.

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YES

NO

NA

B. In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to the following
qualification to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to the following qualification by
clicking on the appropriate response in HPMS:

YES

NO

NA

Applicant is using the P&T Committee of its PBM for
purposes of the Part D benefit.
If answered yes to B1, Applicant’s PBM is operating under
a confidentiality agreement for purposes of the P&T
Committee (meaning Applicant has no knowledge of the
membership of the PBM’s P&T Committee). (If not
applicable, check “NO.”) Note: If answer is YES, then
applicant must complete P&T Committee Certification
Statement and PBM must complete the P&T Committee
Member List located in Appendix XVI entitled Applicant
Submission of P&T Committee Member List and
Certification Statement.
Applicant has reviewed, understands, and complies with the
requirements related to the use and development of a P&T
Committee contained in the Code of Federal Regulations (42
CFR §423.120(b)(1)), Chapter 6 of the Prescription Drug
Benefit Manual, the HPMS Formulary Submission Module
and Reports Technical Manual, and all other guidance
related to P&T committees..
Note: While the P&T committee may be involved in
providing recommendations regarding the placement of a
particular Part D drug on a formulary cost-sharing tier, the
ultimate decision maker on such formulary design issues is
the Part D plan sponsor, and that decision weighs both
clinical and non-clinical factors.

C. If Applicant is intending for its Part D benefit to include use of a formulary,
then the members of the P&T committee must be provided either directly by
the Applicant or by the Applicant’s PBM. The membership of the P&T
committee must be comprised as described in items B, 10, 11 and 13 above. If
Applicant is providing names of P&T committee directly, then provide the
membership in HPMS’ Contract Management/Part D Data page. If the PBM
operates under a confidentiality agreement (where the Applicant does not
know the membership of the PBM’s P&T Committee) refer to the Appendix
entitled Applicant Submission of P & T Committee Member List and
Certification Statement for additional instructions.

34

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.
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 relevant
to this application that is posted on the CMS website and that it is continually
updated. My organization will comply with such guidance should it be approved
for a Part D contract.
Authorized Representative Name (printed)

Title

Authorized Representative Signature

Date (MM/DD/YYYY)

35

5 APPENDICES

36

APPENDIX I – Applicant Submission of P&T Committee Member List
and Certification Statement
This appendix summarizes CMS policy on Part D Applicant/Sponsor and PBM
submission of P&T Committee membership, and the accountability that each Part D
Applicant/Sponsor holds regarding the integrity of the P&T Committee whose
membership is submitted either directly by the Part D Applicant/Sponsor or by the
applicant/sponsor’s PBM. This appendix also instructs Part D Applicants (or their
PBM’s) on how to submit the Applicant’s P&T Committee membership list, and a
Certification of P&T Integrity and Quality in the event the Applicant is planning to
operate under a confidentiality agreement with its PBM (such that the PBM does not
disclose the membership to the Applicant).
I. P&T Committee Member Disclosure to CMS
As provided in the regulation at 42 CFR 423.120(b)(1), a Part D Sponsor’s P&T
Committee list must contain a majority of members who are practicing physicians and/or
pharmacists, include at least one practicing physician and one practicing pharmacist
who are experts regarding care of the elderly or disabled individuals, and includes at
least one practicing physician and one practicing pharmacist who are independent and
free of conflict relative to the Part D Sponsor or Plan and pharmaceutical
manufacturers.
In the event the Part D Applicant/Sponsor has entered into a confidential agreement
such that the PBM will not disclose its P&T Committee membership to the Part D
Applicant/Sponsor, then it is the Part D Sponsor’s responsibility to notify CMS that this
information will be submitted by the Sponsor’s PBM. Moreover, the Part D
Applicant/Sponsor must ensure that the PBM notifies CMS of the P&T Committee
membership. Also, the Part D Applicant/Sponsor should ensure that the PBM notifies
the Sponsor that this information has been successfully submitted to CMS.
II. Instructions to Plans and PBMs
A. If the Part D Applicant sub-contracts with a PBM for its P&T Committee and

operates under a Confidentiality Agreement (such that its members are not
disclosed to the Part D Applicant) then the Applicant must (1) complete the attached
Certification in HPMS, and (2) forward the attached P&T Committee Member
Disclosure form to the sub-contracted PBM and direct the PBM to submit the form to
CMS by February TBD, 2017. The PBM should email the P&T Committee Member
Disclosure form to the following email box: [email protected].
B. In the event of any future changes to the membership of the Part D Sponsor’s P&T

Committee or the PBM’s P&T Committee, Part D Sponsors must (or in the case of a
confidential agreement the Part D Sponsor) assure that the PBM will notify the
appropriate CMS account manager (to be assigned at a future date) and make the

37

correct changes in HPMS on the Contract Management/Part D Data page within 30
days of the effective date of such change.
III. PHARMACY AND THERAPEUTICS COMMITTEE MEMBER DISCLOSURE
PBM must email the following form to [email protected] by February
TBD, 2017.
Name of Part D Plan or PBM:
If Part D Plan, provide Part D Contract number(s):
Contact Person:
Phone Number:
Email:
A. Complete the table below.

PROVIDE THE NAMES OF THE MEMBERS OF YOUR ORGANIZATION’S P&T
COMMITTEE. INDICATE WHICH MEMBERS ARE PRACTICING PHYSICIANS OR
PRACTICING PHARMACISTS. FURTHER, INDICATE WHICH MEMBERS ARE
EXPERTS IN THE CARE OF THE ELDERLY OR DISABLED, AND FREE OF ANY
CONFLICT OF INTEREST WITH YOUR ORGANIZATION AND
PHARMACEUTICAL MANUFACTURERS. (APPLICANTS SHOULD MARK THE
INFORMATION AS PROPRIETARY.) SUBMIT THIS DATA BY CREATING A
SPREADSHEET IN MICROSOFT EXCEL THAT MIMICS THE TABLE BELOW.
Full
Practicing Practicing Elderly/Disabled
Free of
Name of Physician Pharmacist
Expert
Conflict of
Member
Interest With
Your
Start
Organization
Date
and End
Date

38

Free of Conflict
of Interest With
Pharmaceutical
Manufacturers

B. Complete the table below if a PBM submitting on behalf of Part D plan.

PROVIDE THE NAMES OF THOSE APPLICANTS FOR THE PART D BENEFIT
FOR WHICH YOUR ORGANIZATION IS PROVIDING PHARMACY BENEFIT
MANAGEMENT SERVICES, THE TYPE OF APPLICATION, AND THE CONTRACT
NUMBER(S). ADD ADDITIONAL ROWS AS NECESSARY.
Organization Name

Type of Application

39

Contract Number(s)

Applicant must upload in HPMS:
CERTIFICATION FOR PART D SPONSORS USING A PHARMACY BENEFIT
MANAGER’S PHARMACY& THERAPEUTICS COMMITTEE UNDER A
CONFIDENTIALITY AGREEMENT
I, attest, on behalf of LEGAL NAME OF PART D SPONSOR APPLICANT (“Applicant”),
to the following:
I certify that APPLICANT has entered into a contract with LEGAL NAME OF PBM
(“PBM”) to perform pharmacy benefit management services related to the operation of a
Medicare Part D benefit plan(s) on behalf of APPLICANT.
I agree, to the best of my knowledge, that “PBM,” has a Pharmacy and Therapeutics
(P&T) Committee that contains a majority of members who are practicing physicians
and/or pharmacists, includes at least one practicing physician and one practicing
pharmacist who are experts regarding the care of the elderly or disabled individuals,
and includes at least one practicing physician and one practicing pharmacist who are
independent and free of conflict relative to my plan and organization and
pharmaceutical manufacturers.
I agree that the PBM will supply to CMS the following information, including but not
limited to, the full legal name of each member of its P&T Committee designated as a
practicing physician or pharmacist specializing in elderly and/or disabled care. Each
member must also disclose any conflict of interest with my organization, and/or
pharmaceutical manufacturers.
I agree that my organization has policies and procedures to ensure and confirm the
ongoing integrity, qualifications and expertise of the PBM’s P&T Committee.
I agree that in the event CMS identifies a PBM’s P&T Committee member is listed on
the OIG exclusion list, my organization will be notified by CMS of such a problem. In
such an instance, my organization must assure that the PBM takes appropriate steps to
correct the problem or my organization will be at risk of being subject to a corrective
action plan and sanctions, depending on the nature of the problem.
I agree that CMS may inspect the records and premises of my organization or my
subcontractor (first tier, downstream and related entities) to ensure compliance with
the statements to which I have attested above.
I certify that I am authorized to sign on behalf of the Applicant.

40

Part D Applicant’s Contract Number:

Authorized Representative Name (printed)

Authorized Representative Signature

Title

Date (MM/DD/YYYY)

41

Question
How to
submit

Instruction
All applications are to be submitted to CMS Central Office.
Initial applications: Send in a zipped file to [email protected] and
[email protected].
SAE applications: Send in a zipped file to [email protected] and
[email protected].

What to
submit

The initial PACE application and service area expansion application can be
found at: http://www.medicaid.gov/medicaid-chip-program-information/bytopics/long-term-services-and-supports/integrating-care/program-of-allinclusive-care-for-the-elderly-pace/pace-4-states.html .
The Medicare Part D application for new PACE organizations for contract year
2017 can be found at: http://www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/RxContracting_ApplicationGuidance.ht
ml.

Complete
application

Incomplete applications will not be accepted. A complete application includes:
• *SAA certification pages and SAA signature
• Cover sheet with the appropriate signatures
• Table of Contents for the Narrative part
• Narrative part, with each question answered and divided into chapters
• Table of Contents for Documents section
• Documents section, arranged by chapters
• *Medicare Part D application
*required for complete initial application

How to label
the files in the
Documents
sections

Each chapter’s documents should be consolidated into a single pdf file. Please
use the following naming convention: “Organization Name_Ch
[Number]_Documents.pdf”.

42

Question
State
administering
agency (SAA)
signature page
Medicare Part
D Application
for New
PACE
Organizations
SAA
certification
pages-[Initial
PACE
applications
only]
Submission
Date

File Size

HPMS
Contract
Number (H#)
Receipt
Confirmation

Instruction
SAA signature page is required for both initial PACE applications and SAE
applications.

Effective immediately the Medicare Part D application for new PACE
organizations must be submitted with the initial application. Submit the Part D
application in the initial PACE application zipped file described above using the
following naming convention: “Organization name_Part D application.pdf”.
Completed and signed SAA certification pages are required for initial PACE
applications, and must include the Medicaid capitation rates.

The date of submission is the date the applicant emails the complete application
in a zipped file to CMS. CMS will send a reply email confirming receipt of the
application submission.
Note: Incomplete applications will not be accepted and will need to be
resubmitted during a future application timeframe. See above for a list of
requirements for a complete application.
The CMS mail server will not accept an attachment greater than 25MB. If your
zip file exceeds that size, please separate your zip files into two zip files and
send separately.
For service area expansion applications, please include the H# in the “Subject”
line.
CMS will send an email confirming receipt of an application. This does not
replace the “Completeness Letter” which is part of the application review
process.

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44