---
kind: "section"
citation: "42 C.F.R. § 423.294"
title: "42"
number: "423.294"
heading: "Failure to collect and incorrect collections of premiums and cost sharing."
url: "https://uscodex.org/cfr/42/423.294"
---

# §423.294. Failure to collect and incorrect collections of premiums and cost sharing.

- (a) **Requirement to collect premiums and cost sharing.** A Part D sponsor violates the uniform benefit provisions at [§ 423.104(b)](/cfr/42/423.104.md?p=b) if it fails to collect or incorrectly collects applicable cost sharing, or fails to collect or incorrectly collects premiums as required by [§ 422.262(e)](/cfr/42/422.262.md?p=e) of this chapter—
  - (1) In accordance with the timing of premium payments;
  - (2) At the time a drug is dispensed; or
  - (3) **By billing the enrollee or another appropriate party after the fact.**
- (b) **Refunds of incorrect collections—**
  - (1) **Definitions.** As used in this section the following definitions are applicable:

    Amounts incorrectly collected. (A) Means amounts that exceed the monthly Part D enrollee premium limits under [§ 423.286](/cfr/42/423.286.md) or exceed permissible cost-sharing or copayment amounts as specified in [§ 423.104(d) through (f)](/cfr/42/423.104.md?p=d..f), whether paid by or on behalf of the enrollee;

    - (B) Includes amounts collected with respect to an enrollee who was believed to be entitled to Medicare benefits but was later found not to be entitled; and
    - (C) **Excludes de minimis amounts, as calculated per PDE transaction or per monthly premium billing.** De minimis amounts means an amount per PDE transaction for claims adjustments and per month for premium adjustments that does not exceed the de minimis amount determined for purposes of [§ 423.34(c)(2)](/cfr/42/423.34.md?p=c-2).

      Other amounts due means amounts due to affected enrollees or others on their behalf (other than de minimis amounts) for covered Part D drugs that were—

    - (A) Accessed at an out-of-network pharmacy in accordance with the requirements at [§ 423.124](/cfr/42/423.124.md); or
    - (B) Initially denied but, upon appeal, found to be covered Part D drugs the enrollee was entitled to have provided by the Part D plan.
  - (2) **General rule.** A Part D sponsor must make a reasonable effort to identify all amounts incorrectly collected and to pay any other amounts due during the timeframe for coordination of benefits as established at [§ 423.466(b)](/cfr/42/423.466.md?p=b). A Part D sponsor must issue a refund for an identified enrollee overpayment within the timeframe specified at [§ 423.466(a)](/cfr/42/423.466.md?p=a).
  - (3) **Refund methods—**
    - (i) **Lump-sum payment.** The Part D sponsor must use lump-sum payments for the following:
      - (A) **Amounts incorrectly collected as cost-sharing.**
      - (B) **Other amounts due.**
      - (C) All amounts due if the Part D plan is going out of business or terminating its Part D contract for a prescription drug plan(s).
    - (ii) **Premium adjustment, lump-sum payment, or both.** If the amounts incorrectly collected were in the form of premiums, or included premiums as well as other charges, the Part D sponsor may refund by adjustment of future premiums or by a combination of premium adjustment and lump-sum payments.
    - (iii) **Refund when enrollee has died or cannot be located.** If an enrollee has died or cannot be located after reasonable effort, the Part D sponsor must make the refund in accordance with State law.
  - (4) **Premium reduction and compliance.**
    - (i) If the Part D sponsor does not issue the refund as required under this section within the timeframe specified at [§ 423.466(a)](/cfr/42/423.466.md?p=a), CMS reduces the premium the Part D sponsor is allowed to charge a Part D enrollee by the amounts incorrectly collected or otherwise due.
    - (ii) The Part D plan may receive compliance notices from CMS or, depending on the extent of the non-compliance, be the subject of an intermediate sanction (for example, suspension of marketing and enrollment activities) in accordance with [subpart O](/cfr/42/subpartO.md) of this part.
- (c) **Collections of cost-sharing and premium amounts—**
  - (1) **General rule.** A Part D sponsor must make a reasonable effort to attempt to collect cost sharing from a beneficiary or to bill cost sharing or premiums to another appropriate party for all amounts other than de minimis amounts.
  - (2) **Timeframe.** Recovery notices must be processed and issued in accordance with the timeframe specified at [§ 423.466(a)](/cfr/42/423.466.md?p=a). A Part D sponsor must make a reasonable effort to attempt to collect these amounts during the timeframe for coordination of benefits as established at [§ 423.466(b)](/cfr/42/423.466.md?p=b).
  - (3) **Retroactive collection of premiums.** Nothing in this section alters the requirements of [§ 423.293(a)(4)](/cfr/42/423.293.md?p=a-4) of this part with respect to retroactive collection of premiums.

## Notes

### Amendments

[89 FR 30836, Apr. 23, 2024]

### Authority

Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, and 1395hh.

### Source

Source: 70 FR 4525, Jan. 28, 2005, unless otherwise noted.

### Amendments

[89 FR 30836, Apr. 23, 2024]