--- kind: "range" citation: "42 U.S.C. §§ 1395w–101–1395w–152" title: "42" from: "1395w–101" to: "1395w–152" count: 21 release: "119-102" url: "https://uscodex.org/usc/42/1395w-101..1395w-152" --- # §1395w–101. Eligibility, enrollment, and information - (a) **Provision of qualified prescription drug coverage through enrollment in plans—** - (1) **In general—** Subject to the succeeding provisions of this part, each [part D eligible individual](#a-3-A) (as defined in [paragraph (3)(A)](#a-3-A)) is entitled to obtain [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) (described in [section 1395w–102(a) of this title](/usc/42/1395w–102.md?p=a)) as follows: - (A) **Fee-for-service enrollees may receive coverage through a prescription drug plan—** A [part D eligible individual](#a-3-A) who is not enrolled in an [MA plan](#a-3-B) may obtain [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) through enrollment in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) (as defined in [section 1395w–151(a)(14) of this title](/usc/42/1395w–151.md?p=a-14)). - (B) **Medicare Advantage enrollees—** - (i) **Enrollees in a plan providing qualified prescription drug coverage receive coverage through the plan—** A [part D eligible individual](#a-3-A) who is enrolled in an [MA–PD plan](#a-3-C) obtains such coverage through such plan. - (ii) **Limitation on enrollment of MA plan enrollees in prescription drug plans—** Except as provided in clauses [(iii)](#a-1-B-iii) and [(iv)](#a-1-B-iv), a [part D eligible individual](#a-3-A) who is enrolled in an [MA plan](#a-3-B) may not enroll in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) under this part. - (iii) **Private fee-for-service enrollees in MA plans not providing qualified prescription drug coverage permitted to enroll in a prescription drug plan—** A [part D eligible individual](#a-3-A) who is enrolled in an MA private fee-for-service plan (as defined in [section 1395w–28(b)(2) of this title](/usc/42/1395w–28.md?p=b-2)) that does not provide [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) may obtain [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) through enrollment in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14). - (iv) **Enrollees in MSA plans permitted to enroll in a prescription drug plan—** A [part D eligible individual](#a-3-A) who is enrolled in an [MSA plan](/usc/42/1395w–28.md?p=b-3-A) (as defined in [section 1395w–28(b)(3) of this title](/usc/42/1395w–28.md?p=b-3)) may obtain [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) through enrollment in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14). - (2) **Coverage first effective January 1, 2006—** Coverage under [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](#a-3-C) shall first be effective on January 1, 2006. - (3) **Definitions—** For purposes of this part: - (A) **Part D eligible individual—** The term “part D eligible individual” means an individual who is entitled to benefits under part A or enrolled under part B (but not [including](/usc/42/1301.md?p=b) an individual enrolled solely for coverage of immunosuppressive [drugs](/usc/42/1395x.md?p=t-2-A) under [section 1395o(b)](/usc/42/1395o.md?p=b) of this title). - (B) **MA plan—** The term “MA plan” has the meaning given such term in [section 1395w–28(b)(1) of this title](/usc/42/1395w–28.md?p=b-1). - (C) **MA–PD plan—** The term “MA–PD plan” means an [MA plan](#a-3-B) that provides [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1). - (b) **Enrollment process for prescription drug plans—** - (1) **Establishment of process—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a process for the enrollment, disenrollment, termination, and change of enrollment of [part D eligible individuals](#a-3-A) in [prescription drug plans](/usc/42/1395w–151.md?p=a-14) consistent with this subsection. - (B) **Application of MA rules—** In establishing such process, the [Secretary](/usc/42/1301.md?p=a-6) shall use rules similar to (and coordinated with) the rules for enrollment, disenrollment, termination, and change of enrollment with an [MA–PD plan](#a-3-C) under the following provisions of [section 1395w–21 of this title](/usc/42/1395w–21.md): - (i) **Residence requirements—** [Section 1395w–21(b)(1)(A) of this title](/usc/42/1395w–21.md?p=b-1-A), relating to residence requirements. - (ii) **Exercise of choice—** [Section 1395w–21(c) of this title](/usc/42/1395w–21.md?p=c) (other than [paragraph (3)(A)](#b-3-A) and [paragraph (4)](/usc/42/1395w–21.md?p=c-4) of such section), relating to exercise of choice. - (iii) **Coverage election periods—** Subject to paragraphs (2) and (3) of this subsection, [section 1395w–21(e) of this title](/usc/42/1395w–21.md?p=e) (other than subparagraphs [(B)](#b-2-B), (C), (E), and (F) of paragraph (2) and the second sentence of [paragraph (4)](/usc/42/1395w–21.md?p=e-4) of such section), relating to coverage election periods, [including](/usc/42/1301.md?p=b) initial periods, annual coordinated election periods, special election periods, and election periods for exceptional circumstances. - (iv) **Coverage periods—** [Section 1395w–21(f) of this title](/usc/42/1395w–21.md?p=f), relating to effectiveness of elections and changes of elections. - (v) **Guaranteed issue and renewal—** [Section 1395w–21(g) of this title](/usc/42/1395w–21.md?p=g) (other than [paragraph (2)](/usc/42/1395w–21.md?p=g-2) of such section and [clause (i)](#b-1-B-i) and the second sentence of clause (ii) of paragraph (3)(C) of such section), relating to guaranteed issue and renewal. - (vi) **Marketing material and application forms—** [Section 1395w–21(h) of this title](/usc/42/1395w–21.md?p=h), relating to approval of marketing material and application forms. In applying clauses (ii), (iv), and (v) of this subparagraph, any reference to [section 1395w–21(e) of this title](/usc/42/1395w–21.md?p=e) shall be treated as a reference to such section as applied pursuant to clause (iii) of this subparagraph. - (C) **Special rule—** The process established under [subparagraph (A)](#b-1-A) shall include, except as provided in [subparagraph (D)](#b-1-D), in the case of a [part D eligible individual](#a-3-A) who is a full-benefit dual [eligible individual](/usc/42/239.md?p=a-6) (as defined in [section 1396u–5(c)(6) of this title](/usc/42/1396u–5.md?p=c-6)) who has failed to enroll in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](#a-3-C), for the enrollment in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that has a monthly beneficiary premium that does not exceed the premium assistance available under [section 1395w–114(a)(1)(A) of this title](/usc/42/1395w–114.md?p=a-1-A)).[^1] If there is more than one such plan available, the [Secretary](/usc/42/1301.md?p=a-6) shall enroll such an individual on a random basis among all such plans in the [PDP region](/usc/42/1395w–151.md?p=a-12). Nothing in the previous sentence shall prevent such an individual from declining or changing such enrollment. - (D) **Special rule for plans that waive de minimis premiums—** The process established under [subparagraph (A)](#b-1-A) may include, in the case of a [part D eligible individual](#a-3-A) who is a [subsidy eligible individual](/usc/42/1395w–114.md?p=a-3-A) (as defined in [section 1395w–114(a)(3) of this title](/usc/42/1395w–114.md?p=a-3)) who has failed to enroll in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](#a-3-C), for the enrollment in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](#a-3-C) that has waived the monthly beneficiary premium for such [subsidy eligible individual](/usc/42/1395w–114.md?p=a-3-A) under [section 1395w–114(a)(5) of this title](/usc/42/1395w–114.md?p=a-5). If there is more than one such plan available, the [Secretary](/usc/42/1301.md?p=a-6) shall enroll such an individual under the preceding sentence on a random basis among all such plans in the [PDP region](/usc/42/1395w–151.md?p=a-12). Nothing in the previous sentence shall prevent such an individual from declining or changing such enrollment. - (2) **Initial enrollment period—** - (A) **Program initiation—** In the case of an individual who is a [part D eligible individual](#a-3-A) as of November 15, 2005, there shall be an initial enrollment period that shall be the same as the annual, coordinated open election period described in [section 1395w–21(e)(3)(B)(iii) of this title](/usc/42/1395w–21.md?p=e-3-B-iii), as applied under [paragraph (1)(B)(iii)](#b-1-B-iii). - (B) **Continuing periods—** In the case of an individual who becomes a [part D eligible individual](#a-3-A) after November 15, 2005, there shall be an initial enrollment period which is the period under [section 1395w–21(e)(1) of this title](/usc/42/1395w–21.md?p=e-1), as applied under [paragraph (1)(B)(iii)](#b-1-B-iii) of this section,[^2] as if “entitled to benefits under part A or enrolled under part B” were substituted for “entitled to benefits under part A and enrolled under part B”, but in no case shall such period end before the period described in [subparagraph (A)](#b-2-A). - (3) **Additional special enrollment periods—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish special enrollment periods, [including](/usc/42/1301.md?p=b) the following: - (A) **Involuntary loss of creditable prescription drug coverage—** - (i) **In general—** In the case of a [part D eligible individual](#a-3-A) who involuntarily loses [creditable prescription drug coverage](/usc/42/1395w–113.md?p=b-4) (as defined in [section 1395w–113(b)(4) of this title](/usc/42/1395w–113.md?p=b-4)). - (ii) **Notice—** In establishing special enrollment periods under [clause (i)](#b-3-A-i), the [Secretary](/usc/42/1301.md?p=a-6) shall take into account when the [part D eligible individuals](#a-3-A) are provided notice of the loss of [creditable prescription drug coverage](/usc/42/1395w–113.md?p=b-4). - (iii) **Failure to pay premium—** For purposes of [clause (i)](#b-3-A-i), a loss of coverage shall be treated as voluntary if the coverage is terminated because of failure to pay a required beneficiary premium. - (iv) **Reduction in coverage—** For purposes of [clause (i)](#b-3-A-i), a reduction in coverage so that the coverage no longer meets the requirements under [section 1395w–113(b)(5) of this title](/usc/42/1395w–113.md?p=b-5) (relating to actuarial equivalence) shall be treated as an involuntary loss of coverage. - (B) **Errors in enrollment—** In the case described in [section 1395p(h) of this title](/usc/42/1395p.md?p=h) (relating to errors in enrollment), in the same manner as such section applies to part B. - (C) **Exceptional circumstances—** In the case of [part D eligible individuals](#a-3-A) who meet such exceptional conditions (in addition to those conditions applied under [paragraph (1)(B)(iii)](#b-1-B-iii)) as the [Secretary](/usc/42/1301.md?p=a-6) may provide. - (D) **Medicaid coverage—** In the case of an individual (as determined by the [Secretary](/usc/42/1301.md?p=a-6), subject to such limits as the [Secretary](/usc/42/1301.md?p=a-6) may establish for individuals identified pursuant to [section 1395w–104(c)(5) of this title](/usc/42/1395w–104.md?p=c-5)) who is a full-benefit dual [eligible individual](/usc/42/239.md?p=a-6) (as defined in [section 1396u–5(c)(6) of this title](/usc/42/1396u–5.md?p=c-6)). - (E) **Discontinuance of MA–PD election during first year of eligibility—** In the case of a [part D eligible individual](#a-3-A) who discontinues enrollment in an [MA–PD plan](#a-3-C) under the second sentence of [section 1395w–21(e)(4) of this title](/usc/42/1395w–21.md?p=e-4) at the time of the election of coverage under such sentence under the original medicare fee-for-service [program](/usc/42/274l–1.md?p=4). - (4) **Information to facilitate enrollment—** - (A) **In general—** Notwithstanding any other provision of law but subject to [subparagraph (B)](#b-4-B), the [Secretary](/usc/42/1301.md?p=a-6) may provide to each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) and MA organization such identifying information about [part D eligible individuals](#a-3-A) as the [Secretary](/usc/42/1301.md?p=a-6) determines to be necessary to facilitate efficient marketing of [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](#a-3-C) to such individuals and enrollment of such individuals in such plans. - (B) **Limitation—** - (i) **Provision of information—** The [Secretary](/usc/42/1301.md?p=a-6) may provide the information under [subparagraph (A)](#b-4-A) only to the extent necessary to carry out such subparagraph. - (ii) **Use of information—** Such information provided by the [Secretary](/usc/42/1301.md?p=a-6) to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an MA organization may be used by such sponsor or organization only to facilitate marketing of, and enrollment of [part D eligible individuals](#a-3-A) in, [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](#a-3-C). - (5) **Reference to enrollment procedures for MA–PD plans—** For rules applicable to enrollment, disenrollment, termination, and change of enrollment of [part D eligible individuals](#a-3-A) in [MA–PD plans](#a-3-C), see [section 1395w–21 of this title](/usc/42/1395w–21.md). - (6) **Reference to penalties for late enrollment—** [Section 1395w–113(b) of this title](/usc/42/1395w–113.md?p=b) imposes a late enrollment penalty for [part D eligible individuals](#a-3-A) who— - (A) enroll in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](#a-3-C) after the initial enrollment period described in [paragraph (2)](#b-2); and - (B) fail to maintain continuous [creditable prescription drug coverage](/usc/42/1395w–113.md?p=b-4) during the period of non-enrollment. - (c) **Providing information to beneficiaries—** - (1) **Activities—** The [Secretary](/usc/42/1301.md?p=a-6) shall conduct activities that are designed to broadly disseminate information to [part D eligible individuals](#a-3-A) (and prospective [part D eligible individuals](#a-3-A)) regarding the coverage provided under this part. Such activities shall ensure that such information is first made available at least 30 days prior to the initial enrollment period described in [subsection (b)(2)(A)](#b-2-A). - (2) **Requirements—** The activities described in [paragraph (1)](#c-1) shall— - (A) be similar to the activities performed by the [Secretary](/usc/42/1301.md?p=a-6) under [section 1395w–21(d) of this title](/usc/42/1395w–21.md?p=d), [including](/usc/42/1301.md?p=b) dissemination ([including](/usc/42/1301.md?p=b) through the toll-free telephone number 1–800–MEDICARE) of comparative information for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](#a-3-C); and - (B) be coordinated with the activities performed by the [Secretary](/usc/42/1301.md?p=a-6) under such section and under [section 1395b–2 of this title](/usc/42/1395b–2.md). - (3) **Comparative information—** - (A) **In general—** Subject to [subparagraph (B)](#c-3-B), the comparative information referred to in [paragraph (2)(A)](#c-2-A) shall include a comparison of the following with respect to [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1): - (i) **Benefits—** The benefits provided under the plan. - (ii) **Monthly beneficiary premium—** The monthly beneficiary premium under the plan. - (iii) **Quality and performance—** The quality and performance under the plan. - (iv) **Beneficiary cost-sharing—** The [cost-sharing](/usc/42/18022.md?p=c-3-A) required of [part D eligible individuals](#a-3-A) under the plan. - (v) **Consumer satisfaction surveys—** The results of consumer satisfaction surveys regarding the plan conducted pursuant to [section 1395w–104(d) of this title](/usc/42/1395w–104.md?p=d). - (B) **Exception for unavailability of information—** The [Secretary](/usc/42/1301.md?p=a-6) is not required to provide comparative information under clauses [(iii)](#c-3-A-iii) and [(v)](#c-3-A-v) of subparagraph (A) with respect to a plan— - (i) for the first plan year in which it is offered; and - (ii) for the next plan year if it is impracticable or the information is otherwise unavailable. - (4) **Information on late enrollment penalty—** The information disseminated under [paragraph (1)](#c-1) shall include information concerning the methodology for determining the late enrollment penalty under [section 1395w–113(b) of this title](/usc/42/1395w–113.md?p=b). # §1395w–102. Prescription drug benefits - (a) **Requirements—** - (1) **In general—** For purposes of this part and part C, the term “qualified prescription drug coverage” means either of the following: - (A) **Standard prescription drug coverage with access to negotiated prices—** [Standard prescription drug coverage](#b) (as defined in [subsection (b)](#b)) and access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6) under [subsection (d)](#d). - (B) **Alternative prescription drug coverage with at least actuarially equivalent benefits and access to negotiated prices—** Coverage of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) which meets the alternative prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage requirements of [subsection (c)](#c) and access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6) under [subsection (d)](#d), but only if the benefit design of such coverage is approved by the [Secretary](/usc/42/1301.md?p=a-6), as provided under [subsection (c)](#c). - (2) **Permitting supplemental prescription drug coverage—** - (A) **In general—** Subject to [subparagraph (B)](#a-2-B), [qualified prescription drug coverage](#a-1) may include supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage consisting of either or both of the following: - (i) **Certain reductions in cost-sharing—** - (I) **In general—** A reduction in the annual deductible, a reduction in the coinsurance percentage or, for a year preceding 2025, an increase in the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), or any combination thereof, insofar as such a reduction or increase increases the actuarial value of benefits above the actuarial value of [basic prescription drug coverage](#a-3). - (II) **Construction—** Nothing in this paragraph shall be construed as affecting the application of [subsection (c)(3)](#c-3). - (ii) **Optional drugs—** Coverage of any product that would be a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) but for the application of [subsection (e)(2)(A)](#e-2-A). - (B) **Requirement—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may not offer a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that provides supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage pursuant to [subparagraph (A)](#a-2-A) in an area unless the sponsor also offers a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) in the area that only provides [basic prescription drug coverage](#a-3). - (3) **Basic prescription drug coverage—** For purposes of this part and part C, the term “basic prescription drug coverage” means either of the following: - (A) Coverage that meets the requirements of [paragraph (1)(A)](#a-1-A). - (B) Coverage that meets the requirements of [paragraph (1)(B)](#a-1-B) but does not have any supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage described in [paragraph (2)(A)](#a-2-A). - (4) **Application of secondary payor provisions—** The provisions of [section 1395w–22(a)(4) of this title](/usc/42/1395w–22.md?p=a-4) shall apply under this part in the same manner as they apply under part C. - (5) **Construction—** Nothing in this subsection shall be construed as changing the computation of incurred costs under [subsection (b)(4)](#b-4). - (b) **Standard prescription drug coverage—** For purposes of this part and part C, the term “standard prescription drug coverage” means coverage of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that meets the following requirements: - (1) **Deductible—** - (A) **In general—** Subject to paragraphs [(8)](#b-8) and [(9)](#b-9), the coverage has an annual deductible— - (i) for 2006, that is equal to $250; or - (ii) for a subsequent year, that is equal to the amount specified under this paragraph for the previous year increased by the percentage specified in [paragraph (6)](#b-6) for the year involved. - (B) **Rounding—** Any amount determined under [subparagraph (A)(ii)](#b-1-A-ii) that is not a multiple of $5 shall be rounded to the nearest multiple of $5. - (2) **Benefit structure—** - (A) **25 percent coinsurance—** Subject to subparagraphs [(C)](#b-2-C), [(D)](#b-2-D), and [(E)](#b-2-E) and paragraphs [(8)](#b-8) and [(9)](#b-9), the coverage has coinsurance (for costs above the annual deductible specified in [paragraph (1)](#b-1) and up to the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [paragraph (3)](#b-3) for a year preceding 2025 and for costs above the annual deductible specified in [paragraph (1)](#b-1) and up to the annual out-of-pocket threshold specified in [paragraph (4)(B)](#b-4-B) for 2025 and each subsequent year) that is— - (i) equal to 25 percent; or - (ii) actuarially equivalent (using processes and methods established under [section 1395w–111(c) of this title](/usc/42/1395w–111.md?p=c)) to an average expected payment of 25 percent of such costs. - (B) **Use of tiers—** Nothing in this part shall be construed as preventing a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an MA organization from applying tiered copayments under a plan, so long as such tiered copayments are consistent with subparagraphs [(A)(ii)](#b-2-A-ii), (C), and (D). - (C) **Coverage for generic drugs in coverage gap—** - (i) **In general—** Except as provided in paragraphs [(4)](#b-4), [(8)](#b-8), and [(9)](#b-9), for a year preceding 2025, the coverage for an applicable beneficiary (as defined in [section 1395w–114a(g)(1) of this title](/usc/42/1395w–114a.md?p=g-1)) has coinsurance (for costs above the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [paragraph (3)](#b-3) and below the out-of-pocket threshold) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that are not applicable [drugs](/usc/42/1395x.md?p=t-2-A) under [section 1395w–114a(g)(2) of this title](/usc/42/1395w–114a.md?p=g-2) that is— - (I) equal to the generic-gap coinsurance percentage (specified in [clause (ii)](#b-2-C-ii)) for the year; or - (II) actuarially equivalent (using processes and methods established under [section 1395w–111(c) of this title](/usc/42/1395w–111.md?p=c)) to an average expected payment of such percentage of such costs for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that are not applicable [drugs](/usc/42/1395x.md?p=t-2-A) under [section 1395w–114a(g)(2) of this title](/usc/42/1395w–114a.md?p=g-2). - (ii) **Generic-gap coinsurance percentage—** The generic-gap coinsurance percentage specified in this clause for— - (I) 2011 is 93 percent; - (II) 2012 and each succeeding year before 2020 is the generic-gap coinsurance percentage under this clause for the previous year decreased by 7 percentage points; and - (III) 2020 through 2024 is 25 percent. - (D) **Coverage for applicable drugs in coverage gap—** - (i) **In general—** Except as provided in paragraphs [(4)](#b-4), [(8)](#b-8), and [(9)](#b-9), for a year preceding 2025, the coverage for an applicable beneficiary (as defined in [section 1395w–114a(g)(1) of this title](/usc/42/1395w–114a.md?p=g-1)) has coinsurance (for costs above the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [paragraph (3)](#b-3) and below the out-of-pocket threshold) for the [negotiated price](/usc/42/1395w–114c.md?p=g-6) (as defined in [section 1395w–114a(g)(6) of this title](/usc/42/1395w–114a.md?p=g-6)) of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that are applicable [drugs](/usc/42/1395x.md?p=t-2-A) under [section 1395w–114a(g)(2) of this title](/usc/42/1395w–114a.md?p=g-2) that is— - (I) equal to the difference between— - (aa) the applicable gap percentage (specified in [clause (ii)](#b-2-D-ii) for the year); and - (bb) the discount percentage specified in [section 1395w–114a(g)(4)(A) of this title](/usc/42/1395w–114a.md?p=g-4-A) for such applicable [drugs](/usc/42/1395x.md?p=t-2-A) (or, in the case of each of years 2019 through 2024, 50 percent); or - (II) actuarially equivalent (using processes and methods established under [section 1395w–111(c) of this title](/usc/42/1395w–111.md?p=c)) to an average expected payment of such percentage of such costs, for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that are applicable [drugs](/usc/42/1395x.md?p=t-2-A) under [section 1395w–114a(g)(2) of this title](/usc/42/1395w–114a.md?p=g-2). - (ii) **Applicable gap percentage—** The applicable gap percentage specified in this clause for— - (I) 2013 and 2014 is 97.5 percent; - (II) 2015 and 2016 is 95 percent; - (III) 2017 is 90 percent; - (IV) 2018 is 85 percent; and - (V) each of years 2019 through 2024 is 75 percent. - (E) **Maximum monthly cap on cost-sharing payments—** - (i) **In general—** For plan years beginning on or after January 1, 2025, each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and each MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) shall provide to any enrollee of such plan, [including](/usc/42/1301.md?p=b) an enrollee who is a [subsidy eligible individual](/usc/42/1395w–114.md?p=a-3-A) (as defined in paragraph (3) of [section 1395w–114(a) of this title](/usc/42/1395w–114.md?p=a)), the option to elect with respect to a plan year to pay [cost-sharing](/usc/42/18022.md?p=c-3-A) under the plan in monthly amounts that are capped in accordance with this subparagraph. - (ii) **Determination of maximum monthly cap—** For each month in the plan year for which an enrollee in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) has made an election pursuant to [clause (i)](#b-2-E-i), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization shall determine a [maximum monthly cap](#b-2-E-iv) (as defined in [clause (iv)](#b-2-E-iv)) for such enrollee. - (iii) **Beneficiary monthly payments—** With respect to an enrollee who has made an election pursuant to [clause (i)](#b-2-E-i), for each month described in [clause (ii)](#b-2-E-ii), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization shall bill such enrollee an amount (not to exceed the [maximum monthly cap](#b-2-E-iv)) for the out-of-pocket costs of such enrollee in such month. - (iv) **Maximum monthly cap defined—** In this subparagraph, the term “maximum monthly cap” means, with respect to an enrollee— - (I) for the first month for which the enrollee has made an election pursuant to [clause (i)](#b-2-E-i), an amount determined by calculating— - (aa) the annual out-of-pocket threshold specified in [paragraph (4)(B)](#b-4-B) minus the incurred costs of the enrollee as described in [paragraph (4)(C)](#b-4-C); divided by - (bb) the number of months remaining in the plan year; and - (II) for a subsequent month, an amount determined by calculating— - (aa) the sum of any remaining out-of-pocket costs owed by the enrollee from a previous month that have not yet been billed to the enrollee and any additional out-of-pocket costs incurred by the enrollee; divided by - (bb) the number of months remaining in the plan year. - (v) **Additional requirements—** The following requirements shall apply with respect to the option to make an election pursuant to [clause (i)](#b-2-E-i) under this subparagraph: - (I) **Secretarial responsibilities—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide information to [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) on the option to make such election through educational materials, [including](/usc/42/1301.md?p=b) through the notices provided under [section 1395b–2(a) of this title](/usc/42/1395b–2.md?p=a). - (II) **Timing of election—** An enrollee in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) may make such an election— - (aa) prior to the beginning of the plan year; or - (bb) in any month during the plan year. - (III) **PDP sponsor and MA organization responsibilities—** Each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)— - (aa) may not limit the option for an enrollee to make such an election to certain [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A); - (bb) shall, prior to the plan year, notify prospective enrollees of the option to make such an election in promotional materials; - (cc) shall include information on such option in enrollee educational materials; - (dd) shall have in place a mechanism to notify a pharmacy during the plan year when an enrollee incurs out-of-pocket costs with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that make it likely the enrollee may benefit from making such an election; - (ee) shall provide that a pharmacy, after receiving a notification described in item (dd) with respect to an enrollee, informs the enrollee of such notification; - (ff) shall ensure that such an election by an enrollee has no effect on the amount paid to pharmacies (or the timing of such payments) with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) dispensed to the enrollee; and - (gg) shall have in place a financial reconciliation process to correct inaccuracies in payments made by an enrollee under this subparagraph with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) during the plan year. - (IV) **Failure to pay amount billed—** If an enrollee fails to pay the amount billed for a month as required under this subparagraph— - (aa) the election of the enrollee pursuant to [clause (i)](#b-2-E-i) shall be terminated and the enrollee shall pay the [cost-sharing](/usc/42/18022.md?p=c-3-A) otherwise applicable for any [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) subsequently dispensed to the enrollee up to the annual out-of-pocket threshold specified in [paragraph (4)(B)](#b-4-B); and - (bb) the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization may preclude the enrollee from making an election pursuant to [clause (i)](#b-2-E-i) in a subsequent plan year. - (V) **Clarification regarding past due amounts—** Nothing in this subparagraph shall be construed as prohibiting a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an MA organization from billing an enrollee for an amount owed under this subparagraph. - (VI) **Treatment of unsettled balances—** Any unsettled balances with respect to amounts owed under this subparagraph shall be treated as plan losses and the [Secretary](/usc/42/1301.md?p=a-6) shall not be liable for any such balances outside of those assumed as losses estimated in plan bids. - (3) **Initial coverage limit—** - (A) **In general—** Except as provided in paragraphs [(2)(C)](#b-2-C), [(2)(D)](#b-2-D), [(4)](#b-4), [(8)](#b-8), and [(9)](#b-9), for a year preceding 2025, the coverage has an [initial coverage limit](/usc/42/1395w–151.md?p=a-6) on the maximum costs that may be recognized for payment purposes ([including](/usc/42/1301.md?p=b) the annual deductible)— - (i) for 2006, that is equal to $2,250; or - (ii) for each of years 2007 through 2024, that is equal to the amount specified in this paragraph for the previous year, increased by the annual percentage increase described in [paragraph (6)](#b-6) for the year involved. - (B) **Rounding—** Any amount determined under [subparagraph (A)(ii)](#b-3-A-ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10. - (4) **Protection against high out-of-pocket expenditures—** - (A) **In general—** - (i) **In general—** Subject to paragraphs [(8)](#b-8) and [(9)](#b-9), the coverage provides benefits, after the [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) has incurred costs (as described in [subparagraph (C)](#b-4-C)) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in a year equal to the annual out-of-pocket threshold specified in [subparagraph (B)](#b-4-B), with [cost-sharing](/usc/42/18022.md?p=c-3-A) that is equal to— - (I) for a year preceding 2024, the greater of— - (aa) a copayment of $2 for a generic [drug](/usc/42/282.md?p=j-1-A-vii) or a preferred [drug](/usc/42/282.md?p=j-1-A-vii) that is a multiple source [drug](/usc/42/282.md?p=j-1-A-vii) (as defined in [section 1396r–8(k)(7)(A)(i) of this title](/usc/42/1396r–8.md?p=k-7-A-i)) and $5 for any other [drug](/usc/42/282.md?p=j-1-A-vii); or - (bb) coinsurance that is equal to 5 percent; and - (II) for 2024 and each succeeding year, $0. - (ii) **Adjustment of amount—** For a year after 2006, the dollar amounts specified in [clause (i)(I)(aa)](#b-4-A-i-I-aa) shall be equal to the dollar amounts specified in this subparagraph for the previous year, increased by the annual percentage increase described in [paragraph (6)](#b-6) for the year involved. Any amount established under this clause that is not a multiple of a 5 cents shall be rounded to the nearest multiple of 5 cents. The [Secretary](/usc/42/1301.md?p=a-6) shall continue to calculate the dollar amounts specified in [clause (i)(I)(aa)](#b-4-A-i-I-aa), [including](/usc/42/1301.md?p=b) with the adjustment under this clause, after 2023 for purposes of [section 1395w–114(a)(1)(D)(iii) of this title](/usc/42/1395w–114.md?p=a-1-D-iii). - (B) **Annual out-of-pocket threshold—** - (i) **In general—** For purposes of this part, the “annual out-of-pocket threshold” specified in this subparagraph— - (I) for 2006, is equal to $3,600; - (II) for each of years 2007 through 2013, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in [paragraph (6)](#b-6) for the year involved; - (III) for 2014 and 2015, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in [paragraph (6)](#b-6) for the year involved, minus 0.25 percentage point; - (IV) for each of years 2016 through 2019, is equal to the amount specified in this subparagraph for the previous year, increased by the lesser of— - (aa) the annual percentage increase described in [paragraph (7)](#b-7) for the year involved, plus 2 percentage points; or - (bb) the annual percentage increase described in [paragraph (6)](#b-6) for the year; - (V) for 2020, is equal to the amount that would have been applied under this subparagraph for 2020 if the amendments made by [section 1101(d)(1)](/usc/42/1101.md?p=d-1) of the Health Care and Education Reconciliation Act of 2010 had not been enacted; - (VI) for each of years 2021 through 2024, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in [paragraph (6)](#b-6) for the year involved; - (VII) for 2025, is equal to $2,000; or - (VIII) for a subsequent year, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in [paragraph (6)](#b-6) for the year involved. - (ii) **Rounding—** Any amount determined under [clause (i)](#b-4-B-i) that is not a multiple of $50 shall be rounded to the nearest multiple of $50. - (C) **Application—** Except as provided in [subparagraph (E)](#b-4-E) or [subparagraph (F)](#b-4-F), in applying [subparagraph (A)](#b-4-A)— - (i) incurred costs shall only include costs incurred with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) for the annual deductible described in [paragraph (1)](#b-1), for [cost-sharing](/usc/42/18022.md?p=c-3-A) described in [paragraph (2)](#b-2), and, for a year preceding 2025, for amounts for which benefits are not provided because of the application of the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) described in [paragraph (3)](#b-3), but does not include any costs incurred for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) which are not included (or treated as being included) in the plan’s formulary; - (ii) subject to [clause (iii)](#b-4-C-iii), such costs shall be treated as incurred only if they are paid by the [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) (or by another [person](/usc/42/1301.md?p=a-3), such as a [family member](/usc/42/1320d–9.md?p=b-1), on behalf of the individual) and the [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) (or other [person](/usc/42/1301.md?p=a-3)) is not reimbursed through insurance or otherwise, a [group health plan](/usc/42/1320d–9.md?p=b-2), or other third-party payment arrangement (other than under such section or such a [Program](/usc/42/274l–1.md?p=4)) for such costs; and - (iii) such costs shall be treated as incurred and shall not be considered to be reimbursed under [clause (ii)](#b-4-C-ii) if such costs— - (I) are borne or paid——[^1] - (aa) under [section 1395w–114 of this title](/usc/42/1395w–114.md); - (bb) under a [State Pharmaceutical Assistance Program](/usc/42/1395w–133.md?p=b); - (cc) by the [Indian](/usc/42/6862.md?p=6) Health Service, an [Indian tribe](/usc/42/1397j.md?p=12-A) or [tribal organization](/usc/42/629a.md?p=a-6), or an urban [Indian](/usc/42/6862.md?p=6) organization (as defined in [section 1603 of title 25](/usc/25/1603.md)); - (dd) [^2] under an AIDS [Drug](/usc/42/282.md?p=j-1-A-vii) Assistance [Program](/usc/42/274l–1.md?p=4) under part B of title XXVI of the Public Health Service Act [[42 U.S.C. 300ff–21](/usc/42/300ff–21.md) et seq.]; or - (dd) [^2] under [section 1395w–115(h) of this title](/usc/42/1395w–115.md?p=h); or - (II) for 2025 and subsequent years, are reimbursed through insurance, a [group health plan](/usc/42/1320d–9.md?p=b-2), or certain other third party payment [arrangements](/usc/42/1395x.md?p=w-1), but not [including](/usc/42/1301.md?p=b) the coverage provided by a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that is [basic prescription drug coverage](#a-3) (as defined in [subsection (a)(3)](#a-3)) or any payments by a [manufacturer](/usc/42/300aa–33.md?p=3) under the [manufacturer](/usc/42/300aa–33.md?p=3) discount [program](/usc/42/274l–1.md?p=4) under [section 1395w–114c of this title](/usc/42/1395w–114c.md). - (D) **Information regarding third-party reimbursement—** - (i) **Procedures for exchanging information—** In order to accurately apply the requirements of [subparagraph (C)(ii)](#b-4-C-ii), the [Secretary](/usc/42/1301.md?p=a-6) is authorized to establish procedures, in coordination with the [Secretary](/usc/42/1301.md?p=a-6) of the Treasury and the [Secretary](/usc/42/1301.md?p=a-6) of Labor— - (I) for determining whether costs for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) are being reimbursed through insurance or otherwise, a [group health plan](/usc/42/1320d–9.md?p=b-2), or other third-party payment arrangement; and - (II) for alerting the [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and MA organizations that offer the [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) in which such individuals are enrolled about such reimbursement [arrangements](/usc/42/1395x.md?p=w-1). - (ii) **Authority to request information from enrollees—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an MA organization may periodically ask [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) offered by the sponsor or organization whether such individuals have or expect to receive such third-party reimbursement. A material misrepresentation of the information described in the preceding sentence by an individual (as defined in [standards](/usc/42/1320d.md?p=7) set by the [Secretary](/usc/42/1301.md?p=a-6) and determined through a process established by the [Secretary](/usc/42/1301.md?p=a-6)) shall constitute grounds for termination of enrollment in any plan under [section 1395w–21(g)(3)(B) of this title](/usc/42/1395w–21.md?p=g-3-B) (and as applied under this part under [section 1395w–101(b)(1)(B)(v) of this title](/usc/42/1395w–101.md?p=b-1-B-v)) for a period specified by the [Secretary](/usc/42/1301.md?p=a-6). - (E) **Inclusion of costs of applicable drugs under medicare coverage gap discount program—** For each of years 2011 through 2024, in applying [subparagraph (A)](#b-4-A), incurred costs shall include the [negotiated price](/usc/42/1395w–114c.md?p=g-6) (as defined in paragraph (6) of [section 1395w–114a(g) of this title](/usc/42/1395w–114a.md?p=g)) of an applicable [drug](/usc/42/282.md?p=j-1-A-vii) (as defined in [paragraph (2)](/usc/42/1395w–114a.md?p=g-2) of such section) of a [manufacturer](/usc/42/300aa–33.md?p=3) that is furnished to an applicable beneficiary (as defined in [paragraph (1)](/usc/42/1395w–114a.md?p=g-1) of such section) under the Medicare coverage gap discount [program](/usc/42/274l–1.md?p=4) under [section 1395w–114a of this title](/usc/42/1395w–114a.md), regardless of whether part of such costs were paid by a [manufacturer](/usc/42/300aa–33.md?p=3) under such [program](/usc/42/274l–1.md?p=4), except that incurred costs shall not include the portion of the [negotiated price](/usc/42/1395w–114c.md?p=g-6) that represents the reduction in coinsurance resulting from the application of [paragraph (2)(D)](#b-2-D). - (F) **Inclusion of costs paid under maximum monthly cap option—** In applying [subparagraph (A)](#b-4-A), with respect to an enrollee who has made an election pursuant to [clause (i)](#b-2-E-i) of paragraph (2)(E), costs shall be treated as incurred if such costs are paid by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an MA organization under the option provided under such paragraph. - (5) **Construction—** Nothing in this part shall be construed as preventing a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) from reducing to zero the [cost-sharing](/usc/42/18022.md?p=c-3-A) otherwise applicable to preferred or generic [drugs](/usc/42/1395x.md?p=t-2-A). - (6) **Annual percentage increase—** The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in average per capita aggregate expenditures for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the [United States](/usc/42/1301.md?p=a-2) for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A), as determined by the [Secretary](/usc/42/1301.md?p=a-6) for the 12-month period ending in July of the previous year using such methods as the [Secretary](/usc/42/1301.md?p=a-6) shall specify. - (7) **Additional annual percentage increase—** The annual percentage increase specified in this paragraph for a year is equal to the annual percentage increase in the consumer price index for all urban consumers ([United States](/usc/42/1301.md?p=a-2) [city](/usc/42/12902.md?p=11) average) for the 12-month period ending in July of the previous year. - (8) **Treatment of cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices consistent with treatment of vaccines under part B—** - (A) **In general—** For plan years beginning on or after January 1, 2023, with respect to an [adult vaccine recommended by the Advisory Committee on Immunization Practices](#b-8-B) (as defined in [subparagraph (B)](#b-8-B))— - (i) the deductible under [paragraph (1)](#b-1) shall not apply; and - (ii) there shall be no coinsurance or other [cost-sharing](/usc/42/18022.md?p=c-3-A) under this part with respect to such vaccine. - (B) **Adult vaccines recommended by the Advisory Committee on Immunization Practices—** For purposes of this paragraph, the term “adult vaccine recommended by the Advisory Committee on Immunization Practices” means a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) that is a vaccine licensed under section 351 of the Public Health Service Act [[42 U.S.C. 262](/usc/42/262.md)] for use by adult populations and administered in accordance with recommendations of the [Advisory Committee](/usc/42/7703.md?p=9) on Immunization [Practices](/usc/42/17061.md?p=19) of the Centers for Disease Control and Prevention. - (9) **Treatment of cost-sharing for covered insulin products—** - (A) **No application of deductible—** For plan year 2023 and subsequent plan years, the deductible under [paragraph (1)](#b-1) shall not apply with respect to any [covered insulin product](#b-9-C). - (B) **Application of cost-sharing—** - (i) **Plan years 2023 and 2024—** For plan years 2023 and 2024, the coverage provides benefits for any [covered insulin product](#b-9-C), regardless of whether an individual has reached the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [paragraph (3)](#b-3) or the out-of-pocket threshold under [paragraph (4)](#b-4), with [cost-sharing](/usc/42/18022.md?p=c-3-A) for a month’s supply that does not exceed the [applicable copayment amount](#b-9-D). - (ii) **Plan year 2025 and subsequent plan years—** For a plan year beginning on or after January 1, 2025, the coverage provides benefits for any [covered insulin product](#b-9-C), prior to an individual reaching the out-of-pocket threshold under [paragraph (4)](#b-4), with [cost-sharing](/usc/42/18022.md?p=c-3-A) for a month’s supply that does not exceed the [applicable copayment amount](#b-9-D). - (C) **Covered insulin product—** In this paragraph, the term “covered insulin product” means an insulin product that is a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) covered under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that is approved under [section 355 of title 21](/usc/21/355.md) or licensed under section 351 of the Public Health Service Act [[42 U.S.C. 262](/usc/42/262.md)] and marketed pursuant to such approval or licensure, [including](/usc/42/1301.md?p=b) any covered insulin product that has been deemed to be licensed under section 351 of the Public Health Service Act pursuant to section 7002(e)(4) of the Biologics Price Competition and Innovation Act of 2009 and marketed pursuant to such section. - (D) **Applicable copayment amount—** In this paragraph, the term “applicable copayment amount” means, with respect to a [covered insulin product](#b-9-C) under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) dispensed— - (i) during plan years 2023, 2024, and 2025, $35; and - (ii) during plan year 2026 and each subsequent plan year, the lesser of— - (I) $35; - (II) an amount equal to 25 percent of the [maximum fair price](/usc/42/1320f.md?p=c-3) established for the [covered insulin product](#b-9-C) in accordance with part E of subchapter XI; or - (III) an amount equal to 25 percent of the [negotiated price](/usc/42/1395w–114c.md?p=g-6) of the [covered insulin product](#b-9-C) under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (E) **Special rule for first 3 months of 2023—** With respect to a month’s supply of a [covered insulin product](#b-9-C) dispensed during the period beginning on January 1, 2023, and ending on March 31, 2023, a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) shall reimburse an enrollee within 30 days for any [cost-sharing](/usc/42/18022.md?p=c-3-A) paid by such enrollee that exceeds the [cost-sharing](/usc/42/18022.md?p=c-3-A) applied by the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) under [subparagraph (B)(i)](#b-9-B-i) at the point-of-sale for such month’s supply. - (c) **Alternative prescription drug coverage requirements—** A [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) may provide a different prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefit design from [standard prescription drug coverage](#b) so long as the [Secretary](/usc/42/1301.md?p=a-6) determines (consistent with [section 1395w–111(c) of this title](/usc/42/1395w–111.md?p=c)) that the following requirements are met and the plan applies for, and receives, the approval of the [Secretary](/usc/42/1301.md?p=a-6) for such benefit design: - (1) **Assuring at least actuarially equivalent coverage—** - (A) **Assuring equivalent value of total coverage—** The actuarial value of the total coverage is at least equal to the actuarial value of [standard prescription drug coverage](#b). - (B) **Assuring equivalent unsubsidized value of coverage—** The unsubsidized value of the coverage is at least equal to the unsubsidized value of [standard prescription drug coverage](#b). For purposes of this subparagraph, the unsubsidized value of coverage is the amount by which the actuarial value of the coverage exceeds the actuarial value of the subsidy payments under [section 1395w–115 of this title](/usc/42/1395w–115.md) with respect to such coverage. - (C) **Assuring standard payment for costs—** The coverage is designed, based upon an actuarially [representative](/usc/42/3058f.md?p=5) pattern of utilization, to provide for the payment, with respect to costs incurred that are equal to the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [subsection (b)(3)](#b-3) for the year for a year preceding 2025 or the annual out-of-pocket threshold specified in [subsection (b)(4)(B)](#b-4-B) for the year for 2025 and each subsequent year, of an amount equal to at least the product of— - (i) the amount by which the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) described in [subsection (b)(3)](#b-3) for the year for a year preceding 2025 or the annual out-of-pocket threshold specified in [subsection (b)(4)(B)](#b-4-B) for the year for 2025 and each subsequent year exceeds the deductible described in [subsection (b)(1)](#b-1) for the year; and - (ii) 100 percent minus the coinsurance percentage specified in [subsection (b)(2)(A)(i)](#b-2-A-i). - (2) **Maximum required deductible—** The deductible under the coverage shall not exceed the deductible amount specified under [subsection (b)(1)](#b-1) for the year. - (3) **Same protection against high out-of-pocket expenditures—** The coverage provides the coverage required under [subsection (b)(4)](#b-4). - (4) **Same maximum monthly cap on cost-sharing—** The maximum monthly cap on [cost-sharing](/usc/42/18022.md?p=c-3-A) payments shall apply to coverage with respect to an enrollee who has made an election pursuant to [clause (i)](#b-2-E-i) of subsection (b)(2)(E) under the option provided under such subsection. - (5) **Treatment of cost-sharing for adult vaccines recommended by the Advisory Committee on Immunization Practices—** The coverage is in accordance with [subsection (b)(8)](#b-8). - (6) **Treatment of cost-sharing for covered insulin products—** The coverage is provided in accordance with [subsection (b)(9)](#b-9). - (d) **Access to negotiated prices—** - (1) **Access—** - (A) **In general—** Under [qualified prescription drug coverage](#a-1) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), the sponsor or organization shall provide enrollees with access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6) used for payment for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), regardless of the fact that no benefits may be payable under the coverage with respect to such [drugs](/usc/42/1395x.md?p=t-2-A) because of the application of a deductible or other [cost-sharing](/usc/42/18022.md?p=c-3-A) or, for a year preceding 2025, an [initial coverage limit](/usc/42/1395w–151.md?p=a-6) (described in [subsection (b)(3)](#b-3)). - (B) **Negotiated prices—** For purposes of this part, [negotiated prices](/usc/42/1395w–114c.md?p=g-6), subject to [subparagraph (D)](#d-1-D), shall take into account [negotiated price](/usc/42/1395w–114c.md?p=g-6) concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), and include any dispensing fees for such [drugs](/usc/42/1395x.md?p=t-2-A). - (C) **Medicaid-related provisions—** The prices negotiated by a [prescription drug plan](/usc/42/1395w–151.md?p=a-14), by an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), or by a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7) (as defined in [section 1395w–132(a)(2) of this title](/usc/42/1395w–132.md?p=a-2)) with respect to such [drugs](/usc/42/1395x.md?p=t-2-A) on behalf of [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A), shall (notwithstanding any other provision of law) not be taken into account for the purposes of establishing the best price under [section 1396r–8(c)(1)(C) of this title](/usc/42/1396r–8.md?p=c-1-C). - (D) **Application of maximum fair price for selected drugs—** In applying this section, in the case of a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) that is a selected [drug](/usc/42/282.md?p=j-1-A-vii) (as referred to in [section 1320f–1(c) of this title](/usc/42/1320f–1.md?p=c)), with respect to a price applicability period (as defined in [section 1320f(b)(2) of this title](/usc/42/1320f.md?p=b-2)), the [negotiated prices](/usc/42/1395w–114c.md?p=g-6) used for payment (as described in this subsection) shall be no greater than the [maximum fair price](/usc/42/1320f.md?p=c-3) (as defined in [section 1320f(c)(3) of this title](/usc/42/1320f.md?p=c-3)) for such [drug](/usc/42/282.md?p=j-1-A-vii) and for each year during such period plus any dispensing fees for such [drug](/usc/42/282.md?p=j-1-A-vii). - (2) **Disclosure—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) shall disclose to the [Secretary](/usc/42/1301.md?p=a-6) (in a manner specified by the [Secretary](/usc/42/1301.md?p=a-6)) the aggregate [negotiated price](/usc/42/1395w–114c.md?p=g-6) concessions described in [paragraph (1)(B)](#d-1-B) made available to the sponsor or organization by a [manufacturer](/usc/42/300aa–33.md?p=3) which are passed through in the form of lower subsidies, lower monthly beneficiary prescription [drug](/usc/42/282.md?p=j-1-A-vii) premiums, and lower prices through pharmacies and other dispensers. The provisions of [section 1396r–8(b)(3)(D) of this title](/usc/42/1396r–8.md?p=b-3-D) apply to information disclosed to the [Secretary](/usc/42/1301.md?p=a-6) under this paragraph. - (3) **Audits—** To protect against fraud and [abuse](/usc/42/1397j.md?p=1) and to ensure proper disclosures and accounting under this part and in accordance with [section 1395w–27(d)(2)(B) of this title](/usc/42/1395w–27.md?p=d-2-B) (as applied under [section 1395w–112(b)(3)(C) of this title](/usc/42/1395w–112.md?p=b-3-C)), the [Secretary](/usc/42/1301.md?p=a-6) may conduct periodic audits, directly or through contracts, of the financial statements and records of [PDP sponsors](/usc/42/1395w–151.md?p=a-13) with respect to [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and MA organizations with respect to [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C). - (e) **Covered part D drug defined—** - (1) **In general—** Except as provided in this subsection, for purposes of this part, the term “covered part D drug” means— - (A) a [drug](/usc/42/282.md?p=j-1-A-vii) that may be dispensed only upon a prescription and that is described in subparagraph (A)(i), (A)(ii), or (A)(iii) of [section 1396r–8(k)(2) of this title](/usc/42/1396r–8.md?p=k-2); - (B) a [biological product](/usc/42/287a.md?p=a-1) described in [clauses (i) through (iii)](#e-1-B-i..e-1-B-iii) of subparagraph (B) of such section or insulin described in subparagraph (C) of such section and medical supplies associated with the injection of insulin (as defined in [regulations](/usc/42/1395hh.md?p=a-1) of the [Secretary](/usc/42/1301.md?p=a-6)); or - (C) for the period beginning on December 29, 2022, and ending on December 31, 2026, an oral antiviral [drug](/usc/42/282.md?p=j-1-A-vii) that may be dispensed only upon a prescription and is authorized under [section 360bbb–3 of title 21](/usc/21/360bbb–3.md), on the basis of the [declaration](/usc/42/247d–6e.md?p=e-4) published in the Federal Register by the [Secretary](/usc/42/1301.md?p=a-6) of Health and Human Services on April 1, 2020 (85 Fed. Reg. 18250 et seq.), and such term [includes](/usc/42/1301.md?p=b) a vaccine licensed under [section 262 of this title](/usc/42/262.md) (and, for vaccines administered on or after January 1, 2008, its [administration](/usc/42/1301.md?p=a-10)) and any use of a covered part D drug for a [medically accepted indication](#e-4-A) (as defined in [paragraph (4)](#e-4)). - (2) **Exclusions—** - (A) **In general—** Such term does not include [drugs](/usc/42/1395x.md?p=t-2-A) or classes of [drugs](/usc/42/1395x.md?p=t-2-A), or their medical uses, which may be excluded from coverage or otherwise restricted under [section 1396r–8(d)(2) of this title](/usc/42/1396r–8.md?p=d-2), other than [subparagraph (E)](/usc/42/1396r–8.md?p=d-2-E) of such section (relating to smoking cessation agents), other than [subparagraph (I)](/usc/42/1396r–8.md) of such section (relating to barbiturates) if the barbiturate is used in the [treatment](/usc/42/11851.md?p=11) of epilepsy, cancer, or a chronic mental health disorder, and other than [subparagraph (J)](/usc/42/1396r–8.md) of such section (relating to benzodiazepines), or under [section 1396r–8(d)(3) of this title](/usc/42/1396r–8.md?p=d-3), as such sections were in effect on December 8, 2003. Such term also does not include a [drug](/usc/42/282.md?p=j-1-A-vii) when used for the [treatment](/usc/42/11851.md?p=11) of sexual or erectile dysfunction, unless such [drug](/usc/42/282.md?p=j-1-A-vii) were used to treat a condition, other than sexual or erectile dysfunction, for which the [drug](/usc/42/282.md?p=j-1-A-vii) has been approved by the Food and [Drug](/usc/42/282.md?p=j-1-A-vii) [Administration](/usc/42/1301.md?p=a-10). - (B) **Medicare covered drugs—** A [drug](/usc/42/282.md?p=j-1-A-vii) prescribed for a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) that would otherwise be a [covered part D drug](#e-1) under this part shall not be so considered if payment for such [drug](/usc/42/282.md?p=j-1-A-vii) as so prescribed and dispensed or administered with respect to that individual is available (or would be available but for the application of a deductible) under part A or B for that individual. - (3) **Application of general exclusion provisions—** A [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) may exclude from [qualified prescription drug coverage](#a-1) any [covered part D drug](#e-1)— - (A) for which payment would not be made if [section 1395y(a) of this title](/usc/42/1395y.md?p=a) applied to this part; or - (B) which is not prescribed in accordance with the plan or this part. Such exclusions are determinations subject to reconsideration and appeal pursuant to subsections (g) and (h), respectively, of [section 1395w–104 of this title](/usc/42/1395w–104.md). - (4) **Medically accepted indication defined—** - (A) **In general—** For purposes of [paragraph (1)](#e-1), the term “medically accepted indication” has the meaning given that term— - (i) in the case of a [covered part D drug](#e-1) used in an anticancer chemotherapeutic regimen, in [section 1395x(t)(2)(B) of this title](/usc/42/1395x.md?p=t-2-B), except that in applying such section— - (I) “[prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)” shall be substituted for “carrier” each place it appears; and - (II) subject to [subparagraph (B)](#e-4-B), the compendia described in [section 1396r–8(g)(1)(B)(i)(III) of this title](/usc/42/1396r–8.md?p=g-1-B-i-III) shall be included in the list of compendia described in clause (ii)(I) [section 1395x(t)(2)(B) of this title](/usc/42/1395x.md?p=t-2-B); and - (ii) in the case of any other [covered part D drug](#e-1), in [section 1396r–8(k)(6) of this title](/usc/42/1396r–8.md?p=k-6). - (B) **Conflict of interest—** On and after January 1, 2010, [subparagraph (A)(i)(II)](#e-4-A-i-II) shall not apply unless the compendia described in [section 1396r–8(g)(1)(B)(i)(III) of this title](/usc/42/1396r–8.md?p=g-1-B-i-III) meets[^3] the requirement in the third sentence of [section 1395x(t)(2)(B) of this title](/usc/42/1395x.md?p=t-2-B). - (C) **Update—** For purposes of applying [subparagraph (A)(ii)](#e-4-A-ii), the [Secretary](/usc/42/1301.md?p=a-6) shall revise the list of compendia described in [section 1396r–8(g)(1)(B)(i) of this title](/usc/42/1396r–8.md?p=g-1-B-i) as is appropriate for identifying [medically accepted indications](#e-4-A) for [drugs](/usc/42/1395x.md?p=t-2-A). Any such revision shall be done in a manner consistent with the process for revising compendia under [section 1395x(t)(2)(B) of this title](/usc/42/1395x.md?p=t-2-B). # §1395w–103. Access to a choice of qualified prescription drug coverage - (a) **Assuring access to a choice of coverage—** - (1) **Choice of at least two plans in each area—** The [Secretary](/usc/42/1301.md?p=a-6) shall ensure that each [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) has available, consistent with [paragraph (2)](#a-2), a choice of enrollment in at least 2 [qualifying plans](#a-3) (as defined in [paragraph (3)](#a-3)) in the area in which the individual resides, at least one of which is a [prescription drug plan](/usc/42/1395w–151.md?p=a-14). In any such case in which such plans are not available, the [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) shall be given the opportunity to enroll in a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4). - (2) **Requirement for different plan sponsors—** The requirement in [paragraph (1)](#a-1) is not satisfied with respect to an area if only one entity offers all the [qualifying plans](#a-3) in the area. - (3) **Qualifying plan defined—** For purposes of this section, the term “qualifying plan” means— - (A) a [prescription drug plan](/usc/42/1395w–151.md?p=a-14); or - (B) an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) described in [section 1395w–21(a)(2)(A)(i) of this title](/usc/42/1395w–21.md?p=a-2-A-i) that provides— - (i) [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3); or - (ii) [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) that provides supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage so long as there is no MA monthly supplemental beneficiary premium applied under the plan, due to the application of a credit against such premium of a rebate under [section 1395w–24(b)(1)(C) of this title](/usc/42/1395w–24.md?p=b-1-C). - (b) **Flexibility in risk assumed and application of fallback plan—** In order to ensure access pursuant to [subsection (a)](#a) in an area— - (1) the [Secretary](/usc/42/1301.md?p=a-6) may approve limited risk plans under [section 1395w–111(f) of this title](/usc/42/1395w–111.md?p=f) for the area; and - (2) only if such access is still not provided in the area after applying [paragraph (1)](#b-1), the [Secretary](/usc/42/1301.md?p=a-6) shall provide for the offering of a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4) for that area under [section 1395w–111(g) of this title](/usc/42/1395w–111.md?p=g). # §1395w–104. Beneficiary protections for qualified prescription drug coverage - (a) **Dissemination of information—** - (1) **General information—** - (A) **Application of MA information—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall disclose, in a clear, accurate, and standardized form to each enrollee with a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by the sponsor under this part at the time of enrollment and at least annually thereafter, the information described in [section 1395w–22(c)(1) of this title](/usc/42/1395w–22.md?p=c-1) relating to such plan, insofar as the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate with respect to benefits provided under this part, and, subject to [subparagraph (C)](#a-1-C), [including](/usc/42/1301.md?p=b) the information described in [subparagraph (B)](#a-1-B). - (B) **Drug specific information—** The information described in this subparagraph is information concerning the following: - (i) Access to specific [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), [including](/usc/42/1301.md?p=b) access through pharmacy networks. - (ii) How any formulary ([including](/usc/42/1301.md?p=b) any tiered formulary structure) used by the sponsor functions, [including](/usc/42/1301.md?p=b) a description of how a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) may obtain information on the formulary consistent with [paragraph (3)](#a-3). - (iii) Beneficiary [cost-sharing](/usc/42/18022.md?p=c-3-A) requirements and how a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) may obtain information on such requirements, [including](/usc/42/1301.md?p=b) tiered or other copayment level applicable to each [drug](/usc/42/282.md?p=j-1-A-vii) (or class of [drugs](/usc/42/1395x.md?p=t-2-A)), consistent with [paragraph (3)](#a-3). - (iv) The medication therapy management [program](/usc/42/274l–1.md?p=4) required under [subsection (c)](#c). - (v) The [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries under [subsection (c)(5)](#c-5). - (vi) For plan year 2021 and each subsequent plan year, subject to [subparagraph (C)](#a-1-C), with respect to the [treatment](/usc/42/11851.md?p=11) of pain— - (I) the risks associated with prolonged opioid use; and - (II) coverage of nonpharmacological therapies, devices, and nonopioid medications— - (aa) in the case of an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) under part C, under such plan; and - (bb) in the case of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14), under such plan and under parts A and B. - (C) **Targeted provision of information—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) may, in lieu of disclosing the information described in [subparagraph (B)(vi)](#a-1-B-vi) to each enrollee under the plan, disclose such information through mail or electronic communications to a subset of enrollees under the plan, such as enrollees who have been prescribed an opioid in the previous 2-year period. - (2) **Disclosure upon request of general coverage, utilization, and grievance information—** Upon request of a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is eligible to enroll in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering such plan shall provide information similar (as determined by the [Secretary](/usc/42/1301.md?p=a-6)) to the information described in subparagraphs (A), (B), and (C) of [section 1395w–22(c)(2) of this title](/usc/42/1395w–22.md?p=c-2) to such individual. - (3) **Provision of specific information—** - (A) **Response to beneficiary questions—** Each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall have a mechanism for providing specific information on a timely basis to enrollees upon request. Such mechanism shall include access to information through the use of a toll-free telephone number and, upon request, the provision of such information in writing. - (B) **Availability of information on changes in formulary through the Internet—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall make available on a timely basis through an Internet website information on specific changes in the formulary under the plan ([including](/usc/42/1301.md?p=b) changes to tiered or preferred status of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A)). - (4) **Claims information—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) must furnish to each enrollee in a form easily understandable to such enrollees— - (A) an explanation of benefits (in accordance with [section 1395b–7(a) of this title](/usc/42/1395b–7.md?p=a) or in a comparable manner); and - (B) when prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits are provided under this part, a notice of the benefits in relation to— - (i) for a year preceding 2025, the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) for the current year; and - (ii) the annual out-of-pocket threshold for the current year. Notices under [subparagraph (B)](#a-4-B) need not be provided more often than as specified by the [Secretary](/usc/42/1301.md?p=a-6) and notices under [subparagraph (B)(ii)](#a-4-B-ii) shall take into account the application of [section 1395w–102(b)(4)(C) of this title](/usc/42/1395w–102.md?p=b-4-C) to the extent practicable, as specified by the [Secretary](/usc/42/1301.md?p=a-6). - (b) **Access to covered part D drugs—** - (1) **Assuring pharmacy access—** - (A) **In general—** - (i) **Participation of any willing pharmacy—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall permit any pharmacy that meets the [standard](/usc/42/1320d.md?p=7) contract terms and conditions under such plan to participate as a network pharmacy of such plan. - (ii) **Contract terms and conditions—** - (I) **In general—** Notwithstanding any other provision of law, for plan years beginning on or after January 1, 2029, in accordance with [clause (i)](#b-1-A-i), contract terms and conditions offered by such [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall be reasonable and relevant according to [standards](/usc/42/1320d.md?p=7) established by the [Secretary](/usc/42/1301.md?p=a-6) under [subclause (II)](#b-1-A-ii-II). - (II) **Standards—** Not later than the first Monday in April of 2028, the [Secretary](/usc/42/1301.md?p=a-6) shall establish [standards](/usc/42/1320d.md?p=7) for reasonable and relevant contract terms and conditions for purposes of this clause. - (III) **Request for information—** Not later than April 1, 2027, for purposes of establishing the [standards](/usc/42/1320d.md?p=7) under [subclause (II)](#b-1-A-ii-II), the [Secretary](/usc/42/1301.md?p=a-6) shall issue a request for information to seek input on trends in [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and network pharmacy contract terms and conditions, current [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and network pharmacy contracting [practices](/usc/42/17061.md?p=19), whether pharmacy reimbursement and dispensing fees paid by [PDP sponsors](/usc/42/1395w–151.md?p=a-13) to network pharmacies sufficiently cover the ingredient and operational costs of such pharmacies, the use and application of pharmacy quality measures by [PDP sponsors](/usc/42/1395w–151.md?p=a-13) for network pharmacies, [PDP sponsor](/usc/42/1395w–151.md?p=a-13) restrictions or limitations on the dispensing of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) by network pharmacies (or any subsets of such pharmacies), [PDP sponsor](/usc/42/1395w–151.md?p=a-13) auditing [practices](/usc/42/17061.md?p=19) for network pharmacies, areas in current [regulations](/usc/42/1395hh.md?p=a-1) or [program](/usc/42/274l–1.md?p=4) guidance related to contracting between [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and network pharmacies requiring clarification or additional specificity, factors for consideration in determining the reasonableness and relevance of contract terms and conditions between [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and network pharmacies, and other issues as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6). - (B) **Discounts allowed for network pharmacies—** For [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) dispensed through in-network pharmacies, a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) may, notwithstanding [subparagraph (A)](#b-1-A), reduce coinsurance or copayments for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in the plan below the level otherwise required. In no case shall such a reduction result in an increase in payments made by the [Secretary](/usc/42/1301.md?p=a-6) under [section 1395w–115 of this title](/usc/42/1395w–115.md) to a plan. - (C) **Convenient access for network pharmacies—** - (i) **In general—** The [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall secure the participation in its network of a sufficient number of pharmacies that dispense (other than by mail order) [drugs](/usc/42/1395x.md?p=t-2-A) directly to patients to ensure convenient access (consistent with rules established by the [Secretary](/usc/42/1301.md?p=a-6)). - (ii) **Application of TRICARE standards—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish rules for convenient access to in-network pharmacies under this subparagraph that are no less favorable to enrollees than the rules for convenient access to pharmacies included in the statement of work of solicitation (#MDA906–03–R–0002) of the Department of Defense under the TRICARE Retail Pharmacy (TRRx) as of March 13, 2003. - (iii) **Adequate emergency access—** Such rules shall include adequate emergency access for enrollees. - (iv) **Convenient access in long-term care facilities—** Such rules may include [standards](/usc/42/1320d.md?p=7) with respect to access for enrollees who are residing in [long-term care facilities](/usc/42/1397j.md?p=15) and for pharmacies operated by the [Indian](/usc/42/6862.md?p=6) Health Service, [Indian tribes](/usc/42/1397j.md?p=12-A) and [tribal organizations](/usc/42/629a.md?p=a-6), and urban [Indian](/usc/42/6862.md?p=6) organizations (as defined in [section 1603 of title 25](/usc/25/1603.md)). - (D) **Level playing field—** Such a sponsor shall permit enrollees to receive benefits (which may include a 90-day supply of [drugs](/usc/42/1395x.md?p=t-2-A) or biologicals) through a pharmacy (other than a mail order pharmacy), with any differential in charge paid by such enrollees. - (E) **Not required to accept insurance risk—** The terms and conditions under [subparagraph (A)](#b-1-A) may not require participating pharmacies to accept [insurance risk](/usc/42/1395w–151.md?p=a-7) as a condition of participation. - (F) **Enforcement of standards for reasonable and relevant contract terms and conditions—** - (i) **Allegation submission process—** - (I) **In general—** Not later than January 1, 2029, the [Secretary](/usc/42/1301.md?p=a-6) shall establish a process through which a pharmacy may submit to the [Secretary](/usc/42/1301.md?p=a-6) an allegation of a [violation](/usc/42/2000e–16a.md?p=c) by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) of the [standards](/usc/42/1320d.md?p=7) for reasonable and relevant contract terms and conditions under [subparagraph (A)(ii)](#b-1-A-ii), or of subclause (VIII) of this clause. - (II) **Frequency of submission—** - (aa) **In general—** Except as provided in [item (bb)](#b-1-F-i-II-bb), the allegation submission process under this clause shall allow pharmacies to submit any allegations of [violations](/usc/42/2000e–16a.md?p=c) described in [subclause (I)](#b-1-F-i-I) not more frequently than once per plan year per contract between a pharmacy and a [PDP sponsor](/usc/42/1395w–151.md?p=a-13). - (bb) **Allegations relating to contract modifications—** In the case where a contract between a pharmacy and a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) is [modified](/usc/42/7501.md?p=4) following the submission of allegations by a pharmacy with respect to such contract and plan year, the allegation submission process under this clause shall allow such pharmacy to submit an additional allegation related to those [modifications](/usc/42/7501.md?p=4) with respect to such contract and plan year. - (III) **Access to relevant documents and materials—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) subject to an allegation under this clause— - (aa) shall provide documents or materials, as specified by the [Secretary](/usc/42/1301.md?p=a-6), [including](/usc/42/1301.md?p=b) contract offers made by such sponsor to such pharmacy or correspondence related to such offers, to the [Secretary](/usc/42/1301.md?p=a-6) at a time, and in a form and manner, specified by the [Secretary](/usc/42/1301.md?p=a-6); and - (bb) shall not prohibit or otherwise limit the ability of a pharmacy to submit such documents or materials to the [Secretary](/usc/42/1301.md?p=a-6) for the purpose of submitting an allegation or providing evidence for such an allegation under this clause. - (IV) **Standardized template—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a standardized template for pharmacies to use for the submission of allegations described in [subclause (I)](#b-1-F-i-I). Such template shall require that the submission include a certification by the pharmacy that the information included is accurate, complete, and true to the best of the knowledge, information, and belief of such pharmacy. - (V) **Preventing frivolous allegations—** In the case where the [Secretary](/usc/42/1301.md?p=a-6) determines that a pharmacy has submitted frivolous allegations under this clause on a routine basis, the [Secretary](/usc/42/1301.md?p=a-6) may temporarily prohibit such pharmacy from using the allegation submission process under this clause, as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6). - (VI) **Exemption from Freedom of Information Act—** Allegations submitted under this clause shall be exempt from disclosure under [section 552 of title 5](/usc/5/552.md). - (VII) **Rule of construction—** Nothing in this clause shall be construed as limiting the ability of a pharmacy to pursue other legal actions or remedies, consistent with applicable Federal or [State](/usc/42/1397n–12.md?p=6) law, with respect to a potential [violation](/usc/42/2000e–16a.md?p=c) of a requirement described in this subparagraph. - (VIII) **Anti-retaliation and anti-coercion—** Consistent with applicable Federal or [State](/usc/42/1397n–12.md?p=6) law, a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall not— - (aa) retaliate against a pharmacy for submitting any allegations under this clause; or - (bb) coerce, intimidate, threaten, or interfere with the ability of a pharmacy to submit any such allegations. - (ii) **Investigation—** The [Secretary](/usc/42/1301.md?p=a-6) shall investigate, as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6), allegations submitted pursuant to [clause (i)](#b-1-F-i). - (iii) **Enforcement—** - (I) **In general—** In the case where the [Secretary](/usc/42/1301.md?p=a-6) determines that a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) has violated the [standards](/usc/42/1320d.md?p=7) for reasonable and relevant contract terms and conditions under [subparagraph (A)(ii)](#b-1-A-ii) or the provisions of clause (i)(VIII) of this subparagraph, the [Secretary](/usc/42/1301.md?p=a-6) may use authorities under sections [1395w–27(g)](/usc/42/1395w–27.md?p=g) and [1395w–112(b)(3)(E)](/usc/42/1395w–112.md?p=b-3-E) of this title to impose civil monetary penalties or other intermediate sanctions. - (II) **Application of civil monetary penalties—** The provisions of [section 1320a–7a of this title](/usc/42/1320a–7a.md) (other than subsections [(a)](#a) and [(b)](#b)) shall apply to a civil monetary penalty under this clause in the same manner as such provisions apply to a penalty or proceeding under [section 1320a–7a(a) of this title](/usc/42/1320a–7a.md?p=a). - (2) **Use of standardized technology—** - (A) **In general—** The [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall issue (and reissue, as appropriate) such a card (or other technology) that may be used by an enrollee to assure access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6) under [section 1395w–102(d) of this title](/usc/42/1395w–102.md?p=d). - (B) **Standards—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide for the development, adoption, or recognition of [standards](/usc/42/1320d.md?p=7) relating to a standardized format for the card or other technology required under [subparagraph (A)](#b-2-A). Such [standards](/usc/42/1320d.md?p=7) shall be compatible with part C of subchapter XI and may be based on [standards](/usc/42/1320d.md?p=7) developed by an appropriate [standard](/usc/42/1320d.md?p=7) setting organization. - (ii) **Consultation—** In developing the [standards](/usc/42/1320d.md?p=7) under [clause (i)](#b-2-B-i), the [Secretary](/usc/42/1301.md?p=a-6) shall consult with the National [Council](/usc/42/300f.md?p=9) for Prescription [Drug](/usc/42/282.md?p=j-1-A-vii) [Programs](/usc/42/274l–1.md?p=4) and other [standard](/usc/42/1320d.md?p=7) setting organizations determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6). - (iii) **Implementation—** The [Secretary](/usc/42/1301.md?p=a-6) shall develop, adopt, or recognize the [standards](/usc/42/1320d.md?p=7) under [clause (i)](#b-2-B-i) by such date as the [Secretary](/usc/42/1301.md?p=a-6) determines shall be sufficient to ensure that [PDP sponsors](/usc/42/1395w–151.md?p=a-13) utilize such [standards](/usc/42/1320d.md?p=7) beginning January 1, 2006. - (3) **Requirements on development and application of formularies—** If a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) uses a formulary ([including](/usc/42/1301.md?p=b) the use of tiered [cost-sharing](/usc/42/18022.md?p=c-3-A)), the following requirements must be met: - (A) **Development and revision by a pharmacy and therapeutic (P&T) committee—** - (i) **In general—** The formulary must be developed and reviewed by a pharmacy and therapeutic committee. A majority of the members of such committee shall consist of individuals who are practicing [physicians](/usc/42/1395cc–4.md?p=a-2-E) or practicing pharmacists (or both). - (ii) **Inclusion of independent experts—** Such committee shall include at least one practicing [physician](/usc/42/1395cc–1.md?p=a-3-A) and at least one practicing pharmacist, each of whom— - (I) is independent and free of conflict with respect to the sponsor and plan; and - (II) has expertise in the care of elderly or disabled [persons](/usc/42/1301.md?p=a-3). - (B) **Formulary development—** In developing and reviewing the formulary, the committee shall— - (i) base clinical decisions on the strength of scientific evidence and [standards](/usc/42/1320d.md?p=7) of practice, [including](/usc/42/1301.md?p=b) assessing peer-reviewed medical literature, such as randomized clinical trials, pharmacoeconomic studies, outcomes research data, and on such other information as the committee determines to be appropriate; and - (ii) take into account whether [including](/usc/42/1301.md?p=b) in the formulary (or in a tier in such formulary) particular [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) has therapeutic advantages in terms of safety and efficacy. - (C) **Inclusion of drugs in all therapeutic categories and classes—** - (i) **In general—** Subject to [subparagraph (G)](#b-3-G), the formulary must include [drugs](/usc/42/1395x.md?p=t-2-A) within each therapeutic [category](/usc/42/1395w–4.md?p=j-1) and class of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), although not necessarily all [drugs](/usc/42/1395x.md?p=t-2-A) within such [categories](/usc/42/1395w–4.md?p=j-1) and classes. - (ii) **Model guidelines—** The [Secretary](/usc/42/1301.md?p=a-6) shall request the [United States](/usc/42/1301.md?p=a-2) Pharmacopeia to develop, in consultation with pharmaceutical benefit managers and other interested parties, a list of [categories](/usc/42/1395w–4.md?p=j-1) and classes that may be used by [prescription drug plans](/usc/42/1395w–151.md?p=a-14) under this paragraph and to revise such classification from time to time to reflect changes in therapeutic uses of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) and the additions of new [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A). - (iii) **Limitation on changes in therapeutic classification—** The [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) may not change the therapeutic [categories](/usc/42/1395w–4.md?p=j-1) and classes in a formulary other than at the beginning of each plan year except as the [Secretary](/usc/42/1301.md?p=a-6) may permit to take into account new therapeutic uses and newly approved [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A). - (D) **Provider and patient education—** The [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall establish policies and procedures to educate and inform [health care providers](/usc/42/300jj.md?p=3) and enrollees concerning the formulary. - (E) **Notice before removing drug from formulary or changing preferred or tier status of drug—** Any [removal](/usc/42/9601.md?p=23) of a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) from a formulary and any change in the preferred or tiered [cost-sharing](/usc/42/18022.md?p=c-3-A) status of such a [drug](/usc/42/282.md?p=j-1-A-vii) shall take effect only after appropriate notice is made available (such as under [subsection (a)(3)](#a-3)) to the [Secretary](/usc/42/1301.md?p=a-6), affected enrollees, [physicians](/usc/42/1395cc–4.md?p=a-2-E), pharmacies, and pharmacists. - (F) **Periodic evaluation of protocols—** In connection with the formulary, the sponsor of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall provide for the periodic evaluation and analysis of [treatment](/usc/42/11851.md?p=11) protocols and procedures. - (G) **Required inclusion of drugs in certain categories and classes—** - (i) **Formulary requirements—** - (I) **In general—** Subject to [subclause (II)](#b-3-G-i-II), a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall be required to include all [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the [categories](/usc/42/1395w–4.md?p=j-1) and classes identified by the [Secretary](/usc/42/1301.md?p=a-6) under [clause (ii)(I)](#b-3-G-ii-I). - (II) **Exceptions—** The [Secretary](/usc/42/1301.md?p=a-6) may establish exceptions that permit a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) to exclude from its formulary a particular [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) in a [category](/usc/42/1395w–4.md?p=j-1) or class that is otherwise required to be included in the formulary under [subclause (I)](#b-3-G-i-I) (or to otherwise limit access to such a [drug](/usc/42/282.md?p=j-1-A-vii), [including](/usc/42/1301.md?p=b) through prior [authorization](/usc/42/4370m.md?p=3) or utilization management). - (ii) **Identification of drugs in certain categories and classes—** - (I) **In general—** Subject to [clause (iv)](#b-3-G-iv), the [Secretary](/usc/42/1301.md?p=a-6) shall identify, as appropriate, [categories](/usc/42/1395w–4.md?p=j-1) and classes of [drugs](/usc/42/1395x.md?p=t-2-A) for which the [Secretary](/usc/42/1301.md?p=a-6) determines are of clinical concern. - (II) **Criteria—** The [Secretary](/usc/42/1301.md?p=a-6) shall use criteria established by the [Secretary](/usc/42/1301.md?p=a-6) in making any determination under [subclause (I)](#b-3-G-ii-I). - (iii) **Implementation—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish the criteria under [clause (ii)(II)](#b-3-G-ii-II) and any exceptions under [clause (i)(II)](#b-3-G-i-II) through the promulgation of a regulation which [includes](/usc/42/1301.md?p=b) a public notice and comment period. - (iv) **Requirement for certain categories and classes until criteria established—** Until such time as the [Secretary](/usc/42/1301.md?p=a-6) establishes the criteria under [clause (ii)(II)](#b-3-G-ii-II) the following [categories](/usc/42/1395w–4.md?p=j-1) and classes of [drugs](/usc/42/1395x.md?p=t-2-A) shall be identified under [clause (ii)(I)](#b-3-G-ii-I): - (I) Anticonvulsants. - (II) Antidepressants. - (III) Antineoplastics. - (IV) Antipsychotics. - (V) Antiretrovirals. - (VI) Immunosuppressants for the [treatment](/usc/42/11851.md?p=11) of transplant rejection. - (H) **Use of single, uniform exceptions and appeals process—** Notwithstanding any other provision of this part, each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall— - (i) use a [single](/usc/42/2304.md?p=m), uniform exceptions and appeals process ([including](/usc/42/1301.md?p=b), to the extent the [Secretary](/usc/42/1301.md?p=a-6) determines feasible, a [single](/usc/42/2304.md?p=m), uniform model form for use under such process) with respect to the determination of prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage for an enrollee under the plan; and - (ii) provide instant access to such process by enrollees through a toll-free telephone number and an Internet website. - (I) **Required inclusion of selected drugs—** - (i) **In general—** For 2026 and each subsequent year, the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall include each [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) that is a selected [drug](/usc/42/282.md?p=j-1-A-vii) under [section 1320f–1 of this title](/usc/42/1320f–1.md) for which a [maximum fair price](/usc/42/1320f.md?p=c-3) (as defined in [section 1320f(c)(3) of this title](/usc/42/1320f.md?p=c-3)) is in effect with respect to the year. - (ii) **Clarification—** Nothing in [clause (i)](#b-3-I-i) shall be construed as prohibiting a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) from removing such a selected [drug](/usc/42/282.md?p=j-1-A-vii) from a formulary if such [removal](/usc/42/9601.md?p=23) would be permitted under [section 423.120(b)(5)(iv) of title 42, Code of Federal Regulations](/cfr/42/423.120.md?p=b-5-iv) (or any successor regulation). - (4) **Ensuring access during COVID–19 public health emergency period—** - (A) **In general—** During the emergency period described in [section 1320b–5(g)(1)(B) of this title](/usc/42/1320b–5.md?p=g-1-B), subject to [subparagraph (B)](#b-4-B), a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) shall, notwithstanding any cost and utilization management, medication therapy management, or other such [programs](/usc/42/274l–1.md?p=4) under this part, permit a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) enrolled in such plan to obtain in a [single](/usc/42/2304.md?p=m) fill or refill, at the option of such individual, the total day supply (not to exceed a 90-day supply) prescribed for such individual for a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A). - (B) **Safety edit exception—** A [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) may not permit a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) to obtain a [single](/usc/42/2304.md?p=m) fill or refill inconsistent with an applicable safety edit. - (c) **Cost and utilization management; quality assurance; medication therapy management program—** - (1) **In general—** The [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall have in place, directly or through appropriate [arrangements](/usc/42/1395x.md?p=w-1), with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), the following: - (A) A [cost-effective](/usc/42/1396e.md?p=e-2) [drug](/usc/42/282.md?p=j-1-A-vii) utilization management [program](/usc/42/274l–1.md?p=4), [including](/usc/42/1301.md?p=b) incentives to reduce costs when medically appropriate, such as through the use of multiple source [drugs](/usc/42/1395x.md?p=t-2-A) (as defined in [section 1396r–8(k)(7)(A)(i) of this title](/usc/42/1396r–8.md?p=k-7-A-i)). - (B) Quality assurance measures and systems to reduce medication errors and adverse [drug](/usc/42/282.md?p=j-1-A-vii) interactions and improve medication use. - (C) A medication therapy management [program](/usc/42/274l–1.md?p=4) described in [paragraph (2)](#c-2). - (D) A [program](/usc/42/274l–1.md?p=4) to control fraud, [abuse](/usc/42/1397j.md?p=1), and waste. - (E) A utilization management tool to prevent [drug](/usc/42/282.md?p=j-1-A-vii) [abuse](/usc/42/1397j.md?p=1) (as described in [paragraph (6)(A)](#c-6-A)).[^1] - (F) With respect to plan years beginning on or after January 1, 2022, a [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries described in [paragraph (5)](#c-5). Nothing in this section shall be construed as impairing a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) from utilizing cost management tools ([including](/usc/42/1301.md?p=b) differential payments) under all methods of operation. - (2) **Medication therapy management program—** - (A) **Description—** - (i) **In general—** A medication therapy management [program](/usc/42/274l–1.md?p=4) described in this paragraph is a [program](/usc/42/274l–1.md?p=4) of [drug](/usc/42/282.md?p=j-1-A-vii) therapy management that may be furnished by a pharmacist and that is designed to assure, with respect to targeted beneficiaries described in [clause (ii)](#c-2-A-ii), that [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) are appropriately used to optimize therapeutic outcomes through improved medication use, and to reduce the risk of adverse events, [including](/usc/42/1301.md?p=b) adverse [drug](/usc/42/282.md?p=j-1-A-vii) interactions. Such a [program](/usc/42/274l–1.md?p=4) may distinguish between services in ambulatory and institutional settings. - (ii) **Targeted beneficiaries described—** Targeted beneficiaries described in this clause are the following: - (I) [Part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) who— - (aa) have multiple chronic diseases (such as diabetes, asthma, hypertension, hyperlipidemia, and congestive heart failure); - (bb) are taking multiple [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A); and - (cc) are identified as likely to incur annual costs for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that exceed a level specified by the [Secretary](/usc/42/1301.md?p=a-6). - (II) Beginning January 1, 2021, at-risk beneficiaries for prescription [drug](/usc/42/282.md?p=j-1-A-vii) [abuse](/usc/42/1397j.md?p=1) (as defined in [paragraph (5)(C)](#c-5-C)). - (B) **Elements—** Such [program](/usc/42/274l–1.md?p=4)— - (i) may include elements that promote— - (I) enhanced enrollee understanding to promote the appropriate use of medications by enrollees and to reduce the risk of potential adverse events associated with medications, through beneficiary education, counseling, and other appropriate means; - (II) increased enrollee adherence with prescription medication regimens through medication refill reminders, special packaging, and other compliance [programs](/usc/42/274l–1.md?p=4) and other appropriate means; and - (III) detection of adverse [drug](/usc/42/282.md?p=j-1-A-vii) events and patterns of overuse and underuse of prescription [drugs](/usc/42/1395x.md?p=t-2-A); and - (ii) with respect to plan years beginning on or after January 1, 2021, shall provide for— - (I) the provision of information to the enrollee on the safe [disposal](/usc/42/2021b.md?p=7) of prescription [drugs](/usc/42/1395x.md?p=t-2-A) that are [controlled substances](/usc/42/11851.md?p=2) that meets the criteria established under [section 1395w–22(n)(2) of this title](/usc/42/1395w–22.md?p=n-2), [including](/usc/42/1301.md?p=b) information on [drug](/usc/42/282.md?p=j-1-A-vii) takeback [programs](/usc/42/274l–1.md?p=4) that meet such requirements determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6) and information on in-home [disposal](/usc/42/2021b.md?p=7); and - (II) [cost-effective](/usc/42/1396e.md?p=e-2) means by which an enrollee may so safely dispose of such [drugs](/usc/42/1395x.md?p=t-2-A). - (C) **Required interventions—** For plan years beginning on or after the date that is 2 years after March 23, 2010, [prescription drug plan](/usc/42/1395w–151.md?p=a-14) sponsors shall offer medication therapy management services to targeted beneficiaries described in [subparagraph (A)(ii)](#c-2-A-ii) that include, at a minimum, the following to increase adherence to prescription medications or other goals deemed necessary by the [Secretary](/usc/42/1301.md?p=a-6): - (i) An annual comprehensive medication review furnished [person](/usc/42/1301.md?p=a-3)-to-[person](/usc/42/1301.md?p=a-3) or using telehealth technologies (as defined by the [Secretary](/usc/42/1301.md?p=a-6)) by a licensed pharmacist or other qualified provider. The comprehensive medication review— - (I) shall include a review of the individual’s medications and may result in the creation of a recommended medication action plan or other actions in consultation with the individual and with input from the prescriber to the extent necessary and practicable; and - (II) shall include providing the individual with a written or printed summary of the results of the review. The [Secretary](/usc/42/1301.md?p=a-6), in consultation with relevant stakeholders, shall develop a standardized format for the action plan under subclause (I) and the summary under subclause (II). - (ii) Follow-up [interventions](/usc/42/1397n–12.md?p=2) as warranted based on the findings of the annual medication review or the targeted medication enrollment and which may be provided [person](/usc/42/1301.md?p=a-3)-to-[person](/usc/42/1301.md?p=a-3) or using telehealth technologies (as defined by the [Secretary](/usc/42/1301.md?p=a-6)). - (D) **Assessment—** The [prescription drug plan](/usc/42/1395w–151.md?p=a-14) sponsor shall have in place a process to assess, at least on a quarterly basis, the medication use of individuals who are at risk but not enrolled in the medication therapy management [program](/usc/42/274l–1.md?p=4), [including](/usc/42/1301.md?p=b) individuals who have experienced a transition in care, if the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) sponsor has access to that information. - (E) **[^2] Automatic enrollment with ability to opt-out—** The [prescription drug plan](/usc/42/1395w–151.md?p=a-14) sponsor shall have in place a process to— - (i) subject to [clause (ii)](#c-2-E-ii), automatically enroll targeted beneficiaries described in [subparagraph (A)(ii)](#c-2-A-ii), [including](/usc/42/1301.md?p=b) beneficiaries identified under [subparagraph (D)](#c-2-D), in the medication therapy management [program](/usc/42/274l–1.md?p=4) required under this subsection; and - (ii) permit such beneficiaries to opt-out of enrollment in such [program](/usc/42/274l–1.md?p=4). - (E) **[^2] Development of program in cooperation with licensed pharmacists—** Such [program](/usc/42/274l–1.md?p=4) shall be developed in cooperation with licensed and practicing pharmacists and [physicians](/usc/42/1395cc–4.md?p=a-2-E). - (F) **Coordination with care management plans—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish guidelines for the coordination of any medication therapy management [program](/usc/42/274l–1.md?p=4) under this paragraph with respect to a targeted beneficiary with any care management plan established with respect to such beneficiary under a chronic care improvement [program](/usc/42/274l–1.md?p=4) under [section 1395b–8 of this title](/usc/42/1395b–8.md). - (G) **Considerations in pharmacy fees—** The [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall take into account, in establishing fees for pharmacists and others providing services under such plan, the resources used, and time required to, implement the medication therapy management [program](/usc/42/274l–1.md?p=4) under this paragraph. Each such sponsor shall disclose to the [Secretary](/usc/42/1301.md?p=a-6) upon request the amount of any such management or dispensing fees. The provisions of [section 1396r–8(b)(3)(D) of this title](/usc/42/1396r–8.md?p=b-3-D) apply to information disclosed under this subparagraph. - (3) **Reducing wasteful dispensing of outpatient prescription drugs in long-term care facilities—** The [Secretary](/usc/42/1301.md?p=a-6) shall require [PDP sponsors](/usc/42/1395w–151.md?p=a-13) of [prescription drug plans](/usc/42/1395w–151.md?p=a-14) to utilize specific, uniform dispensing techniques, as determined by the [Secretary](/usc/42/1301.md?p=a-6), in consultation with relevant stakeholders ([including](/usc/42/1301.md?p=b) [representatives](/usc/42/3058f.md?p=5) of [nursing facilities](/usc/42/1396d.md?p=c), residents of [nursing facilities](/usc/42/1396d.md?p=c), pharmacists, the pharmacy industry ([including](/usc/42/1301.md?p=b) retail and [long-term care](/usc/42/1397j.md?p=14-A) pharmacy), [prescription drug plans](/usc/42/1395w–151.md?p=a-14), [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C), and any other stakeholders the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate), such as weekly, daily, or automated dose dispensing, when dispensing [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) to enrollees who reside in a [long-term care facility](/usc/42/1397j.md?p=15) in order to reduce waste associated with 30-day fills. - (4) **Requiring valid prescriber National Provider Identifiers on pharmacy claims—** - (A) **In general—** For plan year 2016 and subsequent plan years, the [Secretary](/usc/42/1301.md?p=a-6) shall require a [claim](/usc/42/1320a–7a.md?p=i-2) for a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) for a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) under this part or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) under part C to include a prescriber National Provider Identifier that is determined to be valid under the procedures established under [subparagraph (B)(i)](#c-4-B-i). - (B) **Procedures—** - (i) **Validity of prescriber National Provider Identifiers—** The [Secretary](/usc/42/1301.md?p=a-6), in consultation with appropriate stakeholders, shall establish procedures for determining the validity of prescriber National Provider Identifiers under [subparagraph (A)](#c-4-A). - (ii) **Informing beneficiaries of reason for denial—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish procedures to ensure that, in the case that a [claim](/usc/42/1320a–7a.md?p=i-2) for a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) of an individual described in [subparagraph (A)](#c-4-A) is denied because the [claim](/usc/42/1320a–7a.md?p=i-2) does not meet the requirements of this paragraph, the individual is properly informed at the point of service of the reason for the denial. - (C) **Report—** Not later than January 1, 2018, the Inspector General of the Department of Health and Human Services shall submit to Congress a report on the effectiveness of the procedures established under [subparagraph (B)(i)](#c-4-B-i). - (D) **Notification and additional requirements with respect to outlier prescribers of opioids—** - (i) **Notification—** Not later than January 1, 2021, the [Secretary](/usc/42/1301.md?p=a-6) shall, in the case of a prescriber identified by the [Secretary](/usc/42/1301.md?p=a-6) under [clause (ii)](#c-4-D-ii) to be an outlier prescriber of [opioids](#c-4-D-vii), provide, subject to [clause (iv)](#c-4-D-iv), an annual notification to such prescriber that such prescriber has been so identified and that [includes](/usc/42/1301.md?p=b) resources on proper prescribing methods and other information as specified in accordance with [clause (iii)](#c-4-D-iii). - (ii) **Identification of outlier prescribers of opioids—** - (I) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall, subject to [subclause (III)](#c-4-D-ii-III), using the valid prescriber National Provider Identifiers included pursuant to [subparagraph (A)](#c-4-A) on [claims](/usc/42/1320a–7a.md?p=i-2) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in [prescription drug plans](/usc/42/1395w–151.md?p=a-14) under this part or [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) under part C and based on the thresholds established under [subclause (II)](#c-4-D-ii-II), identify prescribers that are outlier [opioids](#c-4-D-vii) prescribers for a period of time specified by the [Secretary](/usc/42/1301.md?p=a-6). - (II) **Establishment of thresholds—** For purposes of [subclause (I)](#c-4-D-ii-I) and subject to [subclause (III)](#c-4-D-ii-III), the [Secretary](/usc/42/1301.md?p=a-6) shall, after consultation with stakeholders, establish thresholds, based on prescriber specialty and [geographic area](/usc/42/11360.md?p=9), for identifying whether a prescriber in a specialty and [geographic area](/usc/42/11360.md?p=9) is an outlier prescriber of [opioids](#c-4-D-vii) as compared to other prescribers of [opioids](#c-4-D-vii) within such specialty and area. - (III) **Exclusions—** The following shall not be included in the analysis for identifying outlier prescribers of [opioids](#c-4-D-vii) under this clause: - (aa) [Claims](/usc/42/1320a–7a.md?p=i-2) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) who are receiving [hospice care](/usc/42/1395x.md?p=dd-1) under this subchapter. - (bb) [Claims](/usc/42/1320a–7a.md?p=i-2) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) who are receiving oncology services under this subchapter. - (cc) Prescribers who are the subject of an investigation by the Centers for Medicare & Medicaid Services or the Inspector General of the Department of Health and Human Services. - (iii) **Contents of notification—** The [Secretary](/usc/42/1301.md?p=a-6) shall include the following information in the notifications provided under [clause (i)](#c-4-D-i): - (I) Information on how such prescriber compares to other prescribers within the same specialty and [geographic area](/usc/42/11360.md?p=9). - (II) Information on opioid prescribing guidelines, based on input from stakeholders, that may include the Centers for Disease Control and Prevention guidelines for prescribing [opioids](#c-4-D-vii) for chronic pain and guidelines developed by [physician](/usc/42/1395cc–1.md?p=a-3-A) organizations. - (III) Other information determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6). - (iv) **Modifications and expansions—** - (I) **Frequency—** Beginning 5 years after October 24, 2018, the [Secretary](/usc/42/1301.md?p=a-6) may change the frequency of the notifications described in [clause (i)](#c-4-D-i) based on stakeholder input and changes in opioid prescribing utilization and trends. - (II) **Expansion to other prescriptions—** The [Secretary](/usc/42/1301.md?p=a-6) may expand notifications under this subparagraph to include identifications and notifications with respect to concurrent prescriptions of [covered Part D drugs](/usc/42/1395w–141.md?p=a-4-A) used in combination with [opioids](#c-4-D-vii) that are considered to have adverse side effects when so used in such combination, as determined by the [Secretary](/usc/42/1301.md?p=a-6). - (v) **Additional requirements for persistent outlier prescribers—** In the case of a prescriber who the [Secretary](/usc/42/1301.md?p=a-6) determines is persistently identified under [clause (ii)](#c-4-D-ii) as an outlier prescriber of [opioids](#c-4-D-vii), the following shall apply: - (I) Such prescriber may be required to enroll in the [program](/usc/42/274l–1.md?p=4) under this subchapter under [section 1395cc(j) of this title](/usc/42/1395cc.md?p=j) if such prescriber is not otherwise required to enroll, but only after other appropriate remedies have been provided, such as the provision of education funded through section 6052 of the SUPPORT for Patients and Communities Act, for a period determined by the [Secretary](/usc/42/1301.md?p=a-6) as sufficient to correct the prescribing patterns that lead to identification of such prescriber as a persistent outlier prescriber of [opioids](#c-4-D-vii). The [Secretary](/usc/42/1301.md?p=a-6) shall determine the length of the period for which such prescriber is required to maintain such enrollment, which shall be the minimum period necessary to correct such prescribing patterns. - (II) Not less frequently than annually (and in a form and manner determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6)), the [Secretary](/usc/42/1301.md?p=a-6), consistent with [clause(iv)(I)](#c-4-D-iv-I), shall communicate information on such prescribers to sponsors of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and Medicare Advantage organizations offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (vi) **Public availability of information—** The [Secretary](/usc/42/1301.md?p=a-6) shall make aggregate information under this subparagraph available on the internet website of the Centers for Medicare & Medicaid Services. Such information shall be in a form and manner determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6) and shall not identify any specific prescriber. In carrying out this clause, the [Secretary](/usc/42/1301.md?p=a-6) shall consult with interested stakeholders. - (vii) **Opioids defined—** For purposes of this subparagraph, the term “opioids” has such meaning as specified by the [Secretary](/usc/42/1301.md?p=a-6). - (viii) **Other activities—** Nothing in this subparagraph shall preclude the [Secretary](/usc/42/1301.md?p=a-6) from conducting activities that provide prescribers with information as to how they compare to other prescribers that are in addition to the activities under this subparagraph, [including](/usc/42/1301.md?p=b) activities that were being conducted as October 24, 2018. - (5) **Drug management program for at-risk beneficiaries—** - (A) **Authority to establish—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may (and for plan years beginning on or after January 1, 2022, a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall) establish a [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries under which, subject to [subparagraph (B)](#c-5-B), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may, in the case of an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) who is an enrollee in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) of such [PDP sponsor](/usc/42/1395w–151.md?p=a-13), limit such beneficiary’s access to coverage for [frequently abused drugs](#c-5-G) under such plan to [frequently abused drugs](#c-5-G) that are prescribed for such beneficiary by one or more prescribers selected under [subparagraph (D)](#c-5-D), and dispensed for such beneficiary by one or more pharmacies selected under such subparagraph. - (B) **Requirement for notices—** - (i) **In general—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may not limit the access of an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) to coverage for [frequently abused drugs](#c-5-G) under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) until such sponsor— - (I) provides to the beneficiary an initial notice described in [clause (ii)](#c-5-B-ii) and a second notice described in [clause (iii)](#c-5-B-iii); and - (II) verifies with the providers of the beneficiary that the beneficiary is an [at-risk beneficiary for prescription drug abuse](#c-5-C-i). - (ii) **Initial notice—** An initial notice described in this clause is a notice that provides to the beneficiary— - (I) notice that the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) has identified the beneficiary as potentially being an [at-risk beneficiary for prescription drug abuse](#c-5-C-i); - (II) information describing all [State](/usc/42/1397n–12.md?p=6) and Federal public health resources that are designed to address prescription [drug](/usc/42/282.md?p=j-1-A-vii) [abuse](/usc/42/1397j.md?p=1) to which the beneficiary has access, [including](/usc/42/1301.md?p=b) mental health services and other counseling services; - (III) notice of, and information about, the right of the beneficiary to appeal such identification under [subsection (h)](#h), [including](/usc/42/1301.md?p=b) notice that if on reconsideration a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the [Secretary](/usc/42/1301.md?p=a-6) for review and resolution; - (IV) a request for the beneficiary to submit to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) preferences for which prescribers and pharmacies the beneficiary would prefer the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) to select under [subparagraph (D)](#c-5-D) in the case that the beneficiary is identified as an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) as described in [clause (iii)(I)](#c-5-B-iii-I); - (V) an explanation of the meaning and consequences of the identification of the beneficiary as potentially being an [at-risk beneficiary for prescription drug abuse](#c-5-C-i), [including](/usc/42/1301.md?p=b) an explanation of the [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) established by the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) pursuant to [subparagraph (A)](#c-5-A); - (VI) clear instructions that explain how the beneficiary can contact the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) in order to submit to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) the preferences described in [subclause (IV)](#c-5-B-ii-IV) and any other communications relating to the [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries established by the [PDP sponsor](/usc/42/1395w–151.md?p=a-13); and - (VII) contact information for other organizations that can provide the beneficiary with assistance regarding such [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) (similar to the information provided by the [Secretary](/usc/42/1301.md?p=a-6) in other standardized notices provided to [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in [prescription drug plans](/usc/42/1395w–151.md?p=a-14) under this part). - (iii) **Second notice—** A second notice described in this clause is a notice that provides to the beneficiary notice— - (I) that the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) has identified the beneficiary as an [at-risk beneficiary for prescription drug abuse](#c-5-C-i); - (II) that such beneficiary is subject to the requirements of the [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries established by such [PDP sponsor](/usc/42/1395w–151.md?p=a-13) for such plan; - (III) of the prescriber (or prescribers) and pharmacy (or pharmacies) selected for such individual under [subparagraph (D)](#c-5-D); - (IV) of, and information about, the beneficiary’s right to appeal such identification under [subsection (h)](#h), [including](/usc/42/1301.md?p=b) notice that if on reconsideration a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the [Secretary](/usc/42/1301.md?p=a-6) for review and resolution; - (V) that the beneficiary can, in the case that the beneficiary has not previously submitted to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) preferences for which prescribers and pharmacies the beneficiary would prefer the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) select under [subparagraph (D)](#c-5-D), submit such preferences to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13); and - (VI) that [includes](/usc/42/1301.md?p=b) clear instructions that explain how the beneficiary can contact the [PDP sponsor](/usc/42/1395w–151.md?p=a-13). - (iv) **Timing of notices—** - (I) **In general—** Subject to [subclause (II)](#c-5-B-iv-II), a second notice described in [clause (iii)](#c-5-B-iii) shall be provided to the beneficiary on a date that is not less than 30 days after an initial notice described in [clause (ii)](#c-5-B-ii) is provided to the beneficiary. - (II) **Exception—** In the case that the [PDP sponsor](/usc/42/1395w–151.md?p=a-13), in conjunction with the [Secretary](/usc/42/1301.md?p=a-6), determines that concerns identified through rulemaking by the [Secretary](/usc/42/1301.md?p=a-6) regarding the health or safety of the beneficiary or regarding significant [drug](/usc/42/282.md?p=j-1-A-vii) diversion activities require the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) to provide a second notice described in [clause (iii)](#c-5-B-iii) to the beneficiary on a date that is earlier than the date described in [subclause (I)](#c-5-B-iv-I), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may provide such second notice on such earlier date. - (C) **At-risk beneficiary for prescription drug abuse—** - (i) **In general—** Except as provided in [clause (v)](#c-5-C-v), for purposes of this paragraph, the term “at-risk beneficiary for prescription drug abuse” means a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is not an exempted individual described in [clause (ii)](#c-5-C-ii) and— - (I) who is identified as such an at-risk beneficiary through the use of clinical guidelines that indicate misuse or [abuse](/usc/42/1397j.md?p=1) of prescription [drugs](/usc/42/1395x.md?p=t-2-A) described in [subparagraph (G)](#c-5-G) and that are developed by the [Secretary](/usc/42/1301.md?p=a-6) in consultation with [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and other stakeholders, [including](/usc/42/1301.md?p=b) individuals entitled to benefits under part A or enrolled under part B, advocacy groups representing such individuals, [physicians](/usc/42/1395cc–4.md?p=a-2-E), pharmacists, and other clinicians, retail pharmacies, plan sponsors, entities delegated by plan sponsors, and biopharmaceutical [manufacturers](/usc/42/300aa–33.md?p=3); or - (II) with respect to whom the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14), upon enrolling such individual in such plan, received notice from the [Secretary](/usc/42/1301.md?p=a-6) that such individual was identified under this paragraph to be an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) in which such individual was most recently previously enrolled and such identification has not been terminated under [subparagraph (F)](#c-5-F). - (ii) **Exempted individual described—** An exempted individual described in this clause is an individual who— - (I) receives [hospice care](/usc/42/1395x.md?p=dd-1) under this subchapter; - (II) is a resident of a [long-term care facility](/usc/42/1397j.md?p=15), of a [facility](/usc/42/11049.md?p=4) described in [section 1396d(d) of this title](/usc/42/1396d.md?p=d), or of another [facility](/usc/42/11049.md?p=4) for which [frequently abused drugs](#c-5-G) are dispensed for residents through a contract with a [single](/usc/42/2304.md?p=m) pharmacy; or - (III) the [Secretary](/usc/42/1301.md?p=a-6) elects to treat as an exempted individual for purposes of [clause (i)](#c-5-C-i). - (iii) **Program size—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish policies, [including](/usc/42/1301.md?p=b) the guidelines developed under [clause (i)(I)](#c-5-C-i-I) and the exemptions under [clause (ii)(III)](#c-5-C-ii-III), to ensure that the population of enrollees in a [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries operated by a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) can be effectively managed by such plans. - (iv) **Clinical contact—** With respect to each [at-risk beneficiary for prescription drug abuse](#c-5-C-i) enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall contact the beneficiary’s providers who have prescribed [frequently abused drugs](#c-5-G) regarding whether prescribed medications are appropriate for such beneficiary’s medical conditions. - (v) **Treatment of enrollees with a history of opioid-related overdose—** - (I) **In general—** For plan years beginning not later than January 1, 2021, a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is not an exempted individual described in [clause (ii)](#c-5-C-ii) and who is identified under this clause as a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) with a history of opioid-related overdose (as defined by the [Secretary](/usc/42/1301.md?p=a-6)) shall be included as a potentially [at-risk beneficiary for prescription drug abuse](#c-5-C-i) under the [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) under this paragraph. - (II) **Identification and notice—** For purposes of this clause, the [Secretary](/usc/42/1301.md?p=a-6) shall— - (aa) identify [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) with a history of opioid-related overdose (as so defined); and - (bb) notify the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) in which such an individual is enrolled of such identification. - (D) **Selection of prescribers and pharmacies—** - (i) **In general—** With respect to each [at-risk beneficiary for prescription drug abuse](#c-5-C-i) enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such sponsor, a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall, based on the preferences submitted to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) by the beneficiary pursuant to clauses [(ii)(IV)](#c-5-B-ii-IV) and [(iii)(V)](#c-5-B-iii-V) of subparagraph (B) (except as otherwise provided in this subparagraph) select— - (I) one, or, if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) reasonably determines it necessary to provide the beneficiary with reasonable access under [clause (ii)](#c-5-D-ii), more than one, individual who is authorized to prescribe [frequently abused drugs](#c-5-G) (referred to in this paragraph as a “prescriber”) who may write prescriptions for such [drugs](/usc/42/1395x.md?p=t-2-A) for such beneficiary; and - (II) one, or, if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) reasonably determines it necessary to provide the beneficiary with reasonable access under [clause (ii)](#c-5-D-ii), more than one, pharmacy that may dispense such [drugs](/usc/42/1395x.md?p=t-2-A) to such beneficiary. For purposes of subclause (II), in the case of a pharmacy that has multiple locations that share real-time electronic data, all such locations of the pharmacy shall collectively be treated as one pharmacy. - (ii) **Reasonable access—** In making the selections under this subparagraph— - (I) a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall ensure that the beneficiary continues to have reasonable access to [frequently abused drugs](#c-5-G) (as defined in [subparagraph (G)](#c-5-G)), taking into account geographic location, beneficiary preference, impact on costsharing, and reasonable travel time; and - (II) a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall ensure such access ([including](/usc/42/1301.md?p=b) access to prescribers and pharmacies with respect to [frequently abused drugs](#c-5-G)) in the case of individuals with multiple residences, in the case of [natural disasters](/usc/42/18711.md?p=a-3) and similar situations, and in the case of the provision of emergency services. - (iii) **Beneficiary preferences—** If an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) submits preferences for which in-network prescribers and pharmacies the beneficiary would prefer the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) select in response to a notice under [subparagraph (B)](#c-5-B), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall— - (I) review such preferences; - (II) select or change the selection of prescribers and pharmacies for the beneficiary based on such preferences; and - (III) inform the beneficiary of such selection or change of selection. - (iv) **Exception regarding beneficiary preferences—** In the case that the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) determines that a change to the selection of prescriber or pharmacy under [clause (iii)(II)](#c-5-D-iii-II) by the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) is contributing or would contribute to prescription [drug](/usc/42/282.md?p=j-1-A-vii) [abuse](/usc/42/1397j.md?p=1) or [drug](/usc/42/282.md?p=j-1-A-vii) diversion by the beneficiary, the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may change the selection of prescriber or pharmacy for the beneficiary without regard to the preferences of the beneficiary described in [clause (iii)](#c-5-D-iii). If the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) changes the selection pursuant to the preceding sentence, the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall provide the beneficiary with— - (I) at least 30 days written notice of the change of selection; and - (II) a rationale for the change. - (v) **Confirmation—** Before selecting a prescriber or pharmacy under this subparagraph, a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) must notify the prescriber and pharmacy that the beneficiary involved has been identified for inclusion in the [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries and that the prescriber and pharmacy has been selected as the beneficiary’s designated prescriber and pharmacy. - (E) **Terminations and appeals—** The identification of an individual as an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) under this paragraph, a coverage determination made under a [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries, the selection of prescriber or pharmacy under [subparagraph (D)](#c-5-D), and information to be shared under [subparagraph (I)](#c-5-I), with respect to such individual, shall be subject to reconsideration and appeal under [subsection (h)](#h) and if on reconsideration a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) affirms its denial, in whole or in part, the case shall be automatically forwarded to the independent, outside entity contracted with the [Secretary](/usc/42/1301.md?p=a-6) for review and resolution. - (F) **Termination of identification—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall develop [standards](/usc/42/1320d.md?p=7) for the termination of identification of an individual as an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) under this paragraph. Under such [standards](/usc/42/1320d.md?p=7) such identification shall terminate as of the earlier of— - (I) the date the individual demonstrates that the individual is no longer likely, in the absence of the restrictions under this paragraph, to be an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) described in [subparagraph (C)(i)](#c-5-C-i); and - (II) the end of such maximum period of identification as the [Secretary](/usc/42/1301.md?p=a-6) may specify. - (ii) **Rule of construction—** Nothing in [clause (i)](#c-5-F-i) shall be construed as preventing a plan from identifying an individual as an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) under [subparagraph (C)(i)](#c-5-C-i) after such termination on the basis of additional information on [drug](/usc/42/282.md?p=j-1-A-vii) use occurring after the date of notice of such termination. - (G) **Frequently abused drug—** For purposes of this subsection, the term “frequently abused drug” means a [drug](/usc/42/282.md?p=j-1-A-vii) that is a [controlled substance](/usc/42/11851.md?p=2) that the [Secretary](/usc/42/1301.md?p=a-6) determines to be frequently abused or diverted. - (H) **Data disclosure—** - (i) **Data on decision to impose limitation—** In the case of an [at-risk beneficiary for prescription drug abuse](#c-5-C-i) (or an individual who is a potentially [at-risk beneficiary for prescription drug abuse](#c-5-C-i)) whose access to coverage for [frequently abused drugs](#c-5-G) under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) has been limited by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this paragraph, the [Secretary](/usc/42/1301.md?p=a-6) shall establish rules and procedures to require the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) to disclose data, [including](/usc/42/1301.md?p=b) any necessary [individually identifiable health information](/usc/42/247d–11.md?p=g-1), in a form and manner specified by the [Secretary](/usc/42/1301.md?p=a-6), about the decision to impose such limitations and the limitations imposed by the sponsor under this part. - (ii) **Data to reduce fraud, abuse, and waste—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish rules and procedures to require [PDP sponsors](/usc/42/1395w–151.md?p=a-13) operating a [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries under this paragraph to provide the [Secretary](/usc/42/1301.md?p=a-6) with such data as the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate for purposes of identifying patterns of prescription [drug](/usc/42/282.md?p=j-1-A-vii) utilization for plan enrollees that are outside normal patterns and that may indicate fraudulent, medically unnecessary, or unsafe use. - (I) **Sharing of information for subsequent plan enrollments—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish procedures under which [PDP sponsors](/usc/42/1395w–151.md?p=a-13) who offer [prescription drug plans](/usc/42/1395w–151.md?p=a-14) shall share information with respect to individuals who are at-risk beneficiaries for prescription [drug](/usc/42/282.md?p=j-1-A-vii) [abuse](/usc/42/1397j.md?p=1) (or individuals who are potentially at-risk beneficiaries for prescription [drug](/usc/42/282.md?p=j-1-A-vii) [abuse](/usc/42/1397j.md?p=1)) and enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and who subsequently disenroll from such plan and enroll in another [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by another [PDP sponsor](/usc/42/1395w–151.md?p=a-13). - (J) **Privacy issues—** Prior to the implementation of the rules and procedures under this paragraph, the [Secretary](/usc/42/1301.md?p=a-6) shall clarify privacy requirements, [including](/usc/42/1301.md?p=b) requirements under the [regulations](/usc/42/1395hh.md?p=a-1) promulgated pursuant to [section 264(c)](/usc/42/264.md?p=c) of the Health Insurance Portability and Accountability Act of 1996 ([42 U.S.C. 1320d–2](/usc/42/1320d–2.md) note), related to the sharing of data under subparagraphs [(H)](#c-5-H) and [(I)](#c-5-I) by [PDP sponsors](/usc/42/1395w–151.md?p=a-13). Such clarification shall provide that the sharing of such data shall be considered to be protected [health information](/usc/42/300jj.md?p=4) in accordance with the requirements of the [regulations](/usc/42/1395hh.md?p=a-1) promulgated pursuant to such [section 264(c)](/usc/42/264.md?p=c). - (K) **Education—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide education to enrollees in [prescription drug plans](/usc/42/1395w–151.md?p=a-14) of [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and providers regarding the [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries described in this paragraph, [including](/usc/42/1301.md?p=b) education— - (i) provided by Medicare administrative contractors through the improper payment outreach and education [program](/usc/42/274l–1.md?p=4) described in [section 1395kk–1(h) of this title](/usc/42/1395kk–1.md?p=h); and - (ii) through current education efforts (such as [State](/usc/42/1397n–12.md?p=6) health insurance assistance [programs](/usc/42/274l–1.md?p=4) described in subsection (a)(1)(A) of section 119 of the Medicare Improvements for Patients and Providers Act of 2008 ([42 U.S.C. 1395b–3](/usc/42/1395b–3.md) note)) and materials directed toward such enrollees. - (L) **Application under MA–PD plans—** Pursuant to [section 1395w–131(c)(1) of this title](/usc/42/1395w–131.md?p=c-1), the provisions of this paragraph apply under part D to MA organizations offering [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) to MA [eligible individuals](/usc/42/239.md?p=a-6) in the same manner as such provisions apply under this part to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) to a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A). - (M) **CMS compliance review—** The [Secretary](/usc/42/1301.md?p=a-6) shall ensure that existing plan sponsor compliance reviews and audit processes include the [drug](/usc/42/282.md?p=j-1-A-vii) management [programs](/usc/42/274l–1.md?p=4) for at-risk beneficiaries under this paragraph, [including](/usc/42/1301.md?p=b) appeals processes under such [programs](/usc/42/274l–1.md?p=4). - (6) **[^3] Utilization management tool to prevent drug abuse—** - (A) **In general—** A tool described in this paragraph is any of the following: - (i) A utilization tool designed to prevent the [abuse](/usc/42/1397j.md?p=1) of [frequently abused drugs](#c-5-G) by individuals and to prevent the diversion of such [drugs](/usc/42/1395x.md?p=t-2-A) at pharmacies. - (ii) Retrospective utilization review to identify— - (I) individuals that receive [frequently abused drugs](#c-5-G) at a frequency or in amounts that are not clinically appropriate; and - (II) providers of services or [suppliers](/usc/42/1395x.md?p=d) that may facilitate the [abuse](/usc/42/1397j.md?p=1) or diversion of [frequently abused drugs](#c-5-G) by beneficiaries. - (iii) Consultation with the contractor described in [subparagraph (B)](#c-6-B) to verify if an individual enrolling in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) has been previously identified by another [PDP sponsor](/usc/42/1395w–151.md?p=a-13) as an individual described in [clause (ii)(I)](#c-6-A-ii-I). - (B) **Reporting—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) (and an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)) in a [State](/usc/42/1397n–12.md?p=6) shall submit to the [Secretary](/usc/42/1301.md?p=a-6) and the Medicare [drug](/usc/42/282.md?p=j-1-A-vii) integrity contractor with which the [Secretary](/usc/42/1301.md?p=a-6) has entered into a contract under [section 1395ddd of this title](/usc/42/1395ddd.md) with respect to such [State](/usc/42/1397n–12.md?p=6) a report, on a monthly basis, containing information on— - (i) any [provider of services](/usc/42/1395n.md?p=a-2) or [supplier](/usc/42/1395x.md?p=d) described in [subparagraph (A)(ii)(II)](#c-6-A-ii-II) that is identified by such plan sponsor (or organization) during the 30-day period before such report is submitted; and - (ii) the name and prescription records of individuals described in [paragraph (5)(C)](#c-5-C). - (C) **CMS compliance review—** The [Secretary](/usc/42/1301.md?p=a-6) shall ensure that plan sponsor compliance reviews and [program](/usc/42/274l–1.md?p=4) audits biennially include a certification that utilization management tools under this paragraph are in compliance with the requirements for such tools. - (6) **[^3] Providing prescription drug plans with parts A and B claims data to promote the appropriate use of medications and improve health outcomes—** - (A) **Process—** Subject to [subparagraph (B)](#c-6-B), the [Secretary](/usc/42/1301.md?p=a-6) shall establish a process under which a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) may submit a request for the [Secretary](/usc/42/1301.md?p=a-6) to provide the sponsor, on a periodic basis and in an electronic format, beginning in plan year 2020, data described in [subparagraph (D)](#c-6-D) with respect to enrollees in such plan. Such data shall be provided without regard to whether such enrollees are described in [clause (ii)](#c-2-A-ii) of paragraph (2)(A). - (B) **Purposes—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may use the data provided to the sponsor pursuant to [subparagraph (A)](#c-6-A) for any of the following purposes: - (i) To optimize therapeutic outcomes through improved medication use, as such phrase is used in [clause (i)](#c-2-A-i) of paragraph (2)(A). - (ii) To improving care coordination so as to prevent adverse health outcomes, such as preventable emergency department visits and [hospital](/usc/42/1395dd.md?p=e-5) [readmissions](/usc/42/1395cc–4.md?p=a-2-H). - (iii) For any other purpose determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6). - (C) **Limitations on data use—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall not use data provided to the sponsor pursuant to [subparagraph (A)](#c-6-A) for any of the following purposes: - (i) To inform coverage determinations under this part. - (ii) To conduct retroactive reviews of [medically accepted indications](/usc/42/1395x.md?p=t-2-B) determinations. - (iii) To facilitate enrollment changes to a different [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) offered by the same [parent](/usc/42/1396a.md?p=k-3) organization. - (iv) To inform marketing of benefits. - (v) For any other purpose that the [Secretary](/usc/42/1301.md?p=a-6) determines is necessary to include in order to protect the identity of individuals entitled to, or enrolled for, benefits under this subchapter and to protect the security of personal [health information](/usc/42/300jj.md?p=4). - (D) **Data described—** The data described in this clause are standardized extracts (as determined by the [Secretary](/usc/42/1301.md?p=a-6)) of [claims](/usc/42/1320a–7a.md?p=i-2) data under parts A and B for items and services furnished under such parts for time periods specified by the [Secretary](/usc/42/1301.md?p=a-6). Such data shall include data as current as practicable. - (d) **Consumer satisfaction surveys—** In order to provide for comparative information under [section 1395w–101(c)(3)(A)(v) of this title](/usc/42/1395w–101.md?p=c-3-A-v), the [Secretary](/usc/42/1301.md?p=a-6) shall conduct consumer satisfaction surveys with respect to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and [prescription drug plans](/usc/42/1395w–151.md?p=a-14) in a manner similar to the manner such surveys are conducted for MA organizations and [MA plans](/usc/42/1395w–101.md?p=a-3-B) under part C. - (e) **Electronic prescription program—** - (1) **Application of standards—** As of such date as the [Secretary](/usc/42/1301.md?p=a-6) may specify, but not later than 1 year after the date of promulgation of final [standards](/usc/42/1320d.md?p=7) under [paragraph (4)(D)](#e-4-D), prescriptions and other information described in [paragraph (2)(A)](#e-2-A) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) prescribed for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) that are transmitted electronically shall be transmitted only in accordance with such [standards](/usc/42/1320d.md?p=7) under an electronic prescription [drug](/usc/42/282.md?p=j-1-A-vii) [program](/usc/42/274l–1.md?p=4) that meets the requirements of [paragraph (2)](#e-2). - (2) **Program requirements—** Consistent with uniform [standards](/usc/42/1320d.md?p=7) established under [paragraph (3)](#e-3)— - (A) **Provision of information to prescribing health care professional and dispensing pharmacies and pharmacists—** An electronic prescription [drug](/usc/42/282.md?p=j-1-A-vii) [program](/usc/42/274l–1.md?p=4) shall provide for the electronic transmittal to the prescribing health care professional and to the dispensing pharmacy and pharmacist of the prescription and information on eligibility and benefits ([including](/usc/42/1301.md?p=b) the [drugs](/usc/42/1395x.md?p=t-2-A) included in the applicable formulary, any tiered formulary structure, and any requirements for prior [authorization](/usc/42/4370m.md?p=3)) and of the following information with respect to the prescribing and dispensing of a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A): - (i) Information on the [drug](/usc/42/282.md?p=j-1-A-vii) being prescribed or dispensed and other [drugs](/usc/42/1395x.md?p=t-2-A) listed on the medication history, [including](/usc/42/1301.md?p=b) information on [drug](/usc/42/282.md?p=j-1-A-vii)-[drug](/usc/42/282.md?p=j-1-A-vii) interactions, warnings or cautions, and, when indicated, dosage adjustments. - (ii) Information on the availability of lower cost, therapeutically appropriate alternatives (if any) for the [drug](/usc/42/282.md?p=j-1-A-vii) prescribed. - (B) **Application to medical history information—** Effective on and after such date as the [Secretary](/usc/42/1301.md?p=a-6) specifies and after the establishment of appropriate [standards](/usc/42/1320d.md?p=7) to carry out this subparagraph, the [program](/usc/42/274l–1.md?p=4) shall provide for the electronic transmittal in a manner similar to the manner under [subparagraph (A)](#e-2-A) of information that relates to the medical history concerning the individual and related to a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) being prescribed or dispensed, upon request of the professional or pharmacist involved. - (C) **Limitations—** Information shall only be disclosed under subparagraph [(A)](#e-2-A) or [(B)](#e-2-B) if the disclosure of such information is permitted under the Federal regulations (concerning the privacy of [individually identifiable health information](/usc/42/247d–11.md?p=g-1)) promulgated under [section 264(c)](/usc/42/264.md?p=c) of the Health Insurance Portability and Accountability Act of 1996. - (D) **Timing—** To the extent feasible, the information exchanged under this paragraph shall be on an interactive, real-time basis. - (E) **Electronic prior authorization—** - (i) **In general—** Not later than January 1, 2021, the [program](/usc/42/274l–1.md?p=4) shall provide for the secure electronic transmission of— - (I) a prior [authorization](/usc/42/4370m.md?p=3) request from the prescribing health care professional for coverage of a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) for a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) enrolled in a part D plan (as defined in [section 1395w–133(a)(5) of this title](/usc/42/1395w–133.md?p=a-5)) to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or Medicare Advantage organization offering such plan; and - (II) a response, in accordance with this subparagraph, from such [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or Medicare Advantage organization, respectively, to such professional. - (ii) **Electronic transmission—** - (I) **Exclusions—** For purposes of this subparagraph, a facsimile, a proprietary payer portal that does not meet [standards](/usc/42/1320d.md?p=7) specified by the [Secretary](/usc/42/1301.md?p=a-6), or an electronic form shall not be treated as an electronic transmission described in [clause (i)](#e-2-E-i). - (II) **Standards—** In order to be treated, for purposes of this subparagraph, as an electronic transmission described in [clause (i)](#e-2-E-i), such transmission shall comply with technical [standards](/usc/42/1320d.md?p=7) adopted by the [Secretary](/usc/42/1301.md?p=a-6) in consultation with the National [Council](/usc/42/300f.md?p=9) for Prescription [Drug](/usc/42/282.md?p=j-1-A-vii) [Programs](/usc/42/274l–1.md?p=4), other [standard](/usc/42/1320d.md?p=7) setting organizations determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6), and stakeholders [including](/usc/42/1301.md?p=b) [PDP sponsors](/usc/42/1395w–151.md?p=a-13), Medicare Advantage organizations, health care professionals, and [health information](/usc/42/300jj.md?p=4) technology software vendors. - (III) **Application—** Notwithstanding any other provision of law, for purposes of this subparagraph, the [Secretary](/usc/42/1301.md?p=a-6) may require the use of such [standards](/usc/42/1320d.md?p=7) adopted under [subclause (II)](#e-2-E-ii-II) in lieu of any other applicable [standards](/usc/42/1320d.md?p=7) for an electronic transmission described in [clause (i)](#e-2-E-i) for a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) for a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A). - (3) **Standards—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide consistent with this subsection for the promulgation of uniform [standards](/usc/42/1320d.md?p=7) relating to the requirements for electronic prescription [drug](/usc/42/282.md?p=j-1-A-vii) [programs](/usc/42/274l–1.md?p=4) under [paragraph (2)](#e-2). - (B) **Objectives—** Such [standards](/usc/42/1320d.md?p=7) shall be consistent with the objectives of improving— - (i) patient safety; - (ii) the quality of care provided to patients; and - (iii) efficiencies, [including](/usc/42/1301.md?p=b) cost savings, in the delivery of care. - (C) **Design criteria—** Such [standards](/usc/42/1320d.md?p=7) shall— - (i) be designed so that, to the extent practicable, the [standards](/usc/42/1320d.md?p=7) do not impose an undue administrative burden on prescribing health care professionals and dispensing pharmacies and pharmacists; - (ii) be compatible with [standards](/usc/42/1320d.md?p=7) established under part C of subchapter XI, [standards](/usc/42/1320d.md?p=7) established under [subsection (b)(2)(B)(i)](#b-2-B-i), and with general [health information](/usc/42/300jj.md?p=4) technology [standards](/usc/42/1320d.md?p=7); and - (iii) be designed so that they permit electronic [exchange](/usc/42/300gg–91.md?p=d-21) of [drug](/usc/42/282.md?p=j-1-A-vii) labeling and [drug](/usc/42/282.md?p=j-1-A-vii) listing information maintained by the Food and [Drug](/usc/42/282.md?p=j-1-A-vii) [Administration](/usc/42/1301.md?p=a-10) and the National Library of Medicine. - (D) **Permitting use of appropriate messaging—** Such [standards](/usc/42/1320d.md?p=7) shall allow for the messaging of information only if it relates to the appropriate prescribing of [drugs](/usc/42/1395x.md?p=t-2-A), [including](/usc/42/1301.md?p=b) quality assurance measures and systems referred to in [subsection (c)(1)(B)](#c-1-B). - (E) **Permitting patient designation of dispensing pharmacy—** - (i) **In general—** Consistent with [clause (ii)](#e-3-E-ii), such [standards](/usc/42/1320d.md?p=7) shall permit a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) to designate a particular pharmacy to dispense a prescribed [drug](/usc/42/282.md?p=j-1-A-vii). - (ii) **No change in benefits—** [Clause (i)](#e-3-E-i) shall not be construed as affecting— - (I) the access required to be provided to pharmacies by a [prescription drug plan](/usc/42/1395w–151.md?p=a-14); or - (II) the application of any differences in benefits or payments under such a plan based on the pharmacy dispensing a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A). - (4) **Development, promulgation, and modification of standards—** - (A) **Initial standards—** Not later than September 1, 2005, the [Secretary](/usc/42/1301.md?p=a-6) shall develop, adopt, recognize, or modify initial uniform [standards](/usc/42/1320d.md?p=7) relating to the requirements for electronic prescription [drug](/usc/42/282.md?p=j-1-A-vii) [programs](/usc/42/274l–1.md?p=4) described in [paragraph (2)](#e-2) taking into consideration the recommendations (if any) from the National Committee on Vital and Health Statistics (as established under [section 242k(k) of this title](/usc/42/242k.md?p=k)) under [subparagraph (B)](#e-4-B). - (B) **Role of NCVHS—** The National Committee on Vital and Health Statistics shall develop recommendations for uniform [standards](/usc/42/1320d.md?p=7) relating to such requirements in consultation with the following: - (i) [Standard](/usc/42/1320d.md?p=7) setting organizations (as defined in [section 1320d(8) of this title](/usc/42/1320d.md?p=8))[^4] - (ii) Practicing [physicians](/usc/42/1395cc–4.md?p=a-2-E). - (iii) [Hospitals](/usc/42/1395dd.md?p=e-5). - (iv) Pharmacies. - (v) Practicing pharmacists. - (vi) Pharmacy benefit managers. - (vii) [State](/usc/42/1397n–12.md?p=6) [boards](/usc/42/10261.md?p=2) of pharmacy. - (viii) [State](/usc/42/1397n–12.md?p=6) [boards](/usc/42/10261.md?p=2) of medicine. - (ix) Experts on electronic prescribing. - (x) Other appropriate Federal [agencies](/usc/42/1397n–12.md?p=1). - (C) **Pilot project to test initial standards—** - (i) **In general—** During the 1-year period that begins on January 1, 2006, the [Secretary](/usc/42/1301.md?p=a-6) shall conduct a pilot [project](/usc/42/11360.md?p=20) to test the initial [standards](/usc/42/1320d.md?p=7) developed under [subparagraph (A)](#e-4-A) prior to the promulgation of the final uniform [standards](/usc/42/1320d.md?p=7) under [subparagraph (D)](#e-4-D) in order to provide for the efficient implementation of the requirements described in [paragraph (2)](#e-2). - (ii) **Exception—** Pilot testing of [standards](/usc/42/1320d.md?p=7) is not required under [clause (i)](#e-4-C-i) where there already is adequate industry experience with such [standards](/usc/42/1320d.md?p=7), as determined by the [Secretary](/usc/42/1301.md?p=a-6) after consultation with effected [standard](/usc/42/1320d.md?p=7) setting organizations and industry users. - (iii) **Voluntary participation of physicians and pharmacies—** In order to conduct the pilot [project](/usc/42/11360.md?p=20) under [clause (i)](#e-4-C-i), the [Secretary](/usc/42/1301.md?p=a-6) shall enter into [agreements](/usc/42/1320b–8.md?p=a-3-A) with [physicians](/usc/42/1395cc–4.md?p=a-2-E), [physician](/usc/42/1395cc–1.md?p=a-3-A) groups, pharmacies, [hospitals](/usc/42/1395dd.md?p=e-5), [PDP sponsors](/usc/42/1395w–151.md?p=a-13), MA organizations, and other appropriate entities under which health care professionals electronically transmit prescriptions to dispensing pharmacies and pharmacists in accordance with such [standards](/usc/42/1320d.md?p=7). - (iv) **Evaluation and report—** - (I) **Evaluation—** The [Secretary](/usc/42/1301.md?p=a-6) shall conduct an evaluation of the pilot [project](/usc/42/11360.md?p=20) conducted under [clause (i)](#e-4-C-i). - (II) **Report to Congress—** Not later than April 1, 2007, the [Secretary](/usc/42/1301.md?p=a-6) shall submit to Congress a report on the evaluation conducted under [subclause (I)](#e-4-C-iv-I). - (D) **Final standards—** Based upon the evaluation of the pilot [project](/usc/42/11360.md?p=20) under [subparagraph (C)(iv)(I)](#e-4-C-iv-I) and not later than April 1, 2008, the [Secretary](/usc/42/1301.md?p=a-6) shall promulgate uniform [standards](/usc/42/1320d.md?p=7) relating to the requirements described in [paragraph (2)](#e-2). - (5) **Relation to State laws—** The [standards](/usc/42/1320d.md?p=7) promulgated under this subsection shall supersede any [State](/usc/42/1397n–12.md?p=6) law or regulation that— - (A) is contrary to the [standards](/usc/42/1320d.md?p=7) or restricts the ability to carry out this part; and - (B) pertains to the electronic transmission of medication history and of information on eligibility, benefits, and prescriptions with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) under this part. - (6) **Establishment of safe harbor—** The [Secretary](/usc/42/1301.md?p=a-6), in consultation with the [Attorney General](/usc/42/14902.md?p=6), shall promulgate [regulations](/usc/42/1395hh.md?p=a-1) that provide for a safe harbor from sanctions under paragraphs (1) and (2) of [section 1320a–7b(b) of this title](/usc/42/1320a–7b.md?p=b) and an exception to the prohibition under subsection (a)(1) of [section 1395nn of this title](/usc/42/1395nn.md) with respect to the provision of nonmonetary remuneration (in the form of hardware, software, or information technology and [training](/usc/42/285e–2.md?p=b-2) services) necessary and used solely to receive and transmit electronic prescription information in accordance with the [standards](/usc/42/1320d.md?p=7) promulgated under this subsection— - (A) in the case of a [hospital](/usc/42/1395dd.md?p=e-5), by the [hospital](/usc/42/1395dd.md?p=e-5) to members of its medical staff; - (B) in the case of a group practice (as defined in [section 1395nn(h)(4) of this title](/usc/42/1395nn.md?p=h-4)), by the practice to prescribing health care professionals who are members of such practice; and - (C) in the case of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization, by the sponsor or organization to pharmacists and pharmacies participating in the network of such sponsor or organization, and to prescribing health care professionals. - (7) **Requirement of e-prescribing for controlled substances—** - (A) **In general—** Subject to [subparagraph (B)](#e-7-B), a prescription for a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) (or under an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)) for a schedule II, III, IV, or V [controlled substance](/usc/42/11851.md?p=2) shall be transmitted by a health care [practitioner](/usc/42/1395a.md?p=b-6-C) electronically in accordance with an electronic prescription [drug](/usc/42/282.md?p=j-1-A-vii) [program](/usc/42/274l–1.md?p=4) that meets the requirements of [paragraph (2)](#e-2). - (B) **Exception for certain circumstances—** The [Secretary](/usc/42/1301.md?p=a-6) shall, through rulemaking, specify circumstances and processes by which the [Secretary](/usc/42/1301.md?p=a-6) may waive the requirement under [subparagraph (A)](#e-7-A), with respect to a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A), [including](/usc/42/1301.md?p=b) in the case of— - (i) a prescription issued when the [practitioner](/usc/42/1395a.md?p=b-6-C) and dispensing pharmacy are the same entity; - (ii) a prescription issued that cannot be transmitted electronically under the most recently implemented version of the National [Council](/usc/42/300f.md?p=9) for Prescription [Drug](/usc/42/282.md?p=j-1-A-vii) [Programs](/usc/42/274l–1.md?p=4) SCRIPT [Standard](/usc/42/1320d.md?p=7); - (iii) a prescription issued by a [practitioner](/usc/42/1395a.md?p=b-6-C) who received a waiver or a renewal thereof for a period of time as determined by the [Secretary](/usc/42/1301.md?p=a-6), not to exceed one year, from the requirement to use electronic prescribing due to demonstrated economic hardship, technological limitations that are not reasonably within the control of the [practitioner](/usc/42/1395a.md?p=b-6-C), or other exceptional circumstance demonstrated by the [practitioner](/usc/42/1395a.md?p=b-6-C); - (iv) a prescription issued by a [practitioner](/usc/42/1395a.md?p=b-6-C) under circumstances in which, notwithstanding the [practitioner](/usc/42/1395a.md?p=b-6-C)’s ability to submit a prescription electronically as required by this subsection, such [practitioner](/usc/42/1395a.md?p=b-6-C) reasonably determines that it would be impractical for the individual involved to obtain substances prescribed by electronic prescription in a timely manner, and such delay would adversely impact the individual’s medical condition involved; - (v) a prescription issued by a [practitioner](/usc/42/1395a.md?p=b-6-C) prescribing a [drug](/usc/42/282.md?p=j-1-A-vii) under a research protocol; - (vi) a prescription issued by a [practitioner](/usc/42/1395a.md?p=b-6-C) for a [drug](/usc/42/282.md?p=j-1-A-vii) for which the Food and [Drug](/usc/42/282.md?p=j-1-A-vii) [Administration](/usc/42/1301.md?p=a-10) requires a prescription to contain elements that are not able to be included in electronic prescribing, such as a [drug](/usc/42/282.md?p=j-1-A-vii) with risk evaluation and mitigation strategies that include elements to assure safe use; - (vii) a prescription issued by a [practitioner](/usc/42/1395a.md?p=b-6-C)— - (I) for an individual who receives [hospice care](/usc/42/1395x.md?p=dd-1) under this subchapter; and - (II) that is not covered under the hospice benefit under this subchapter; and - (viii) a prescription issued by a [practitioner](/usc/42/1395a.md?p=b-6-C) for an individual who is— - (I) a resident of a [nursing facility](/usc/42/1396d.md?p=c) (as defined in [section 1396r(a) of this title](/usc/42/1396r.md?p=a)); and - (II) dually eligible for benefits under this subchapter and subchapter XIX. - (C) **Dispensing—** - (i) Nothing in this paragraph shall be construed as requiring a sponsor of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) under this part, MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) under part C, or a pharmacist to verify that a [practitioner](/usc/42/1395a.md?p=b-6-C), with respect to a prescription for a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A), has a waiver (or is otherwise exempt) under [subparagraph (B)](#e-7-B) from the requirement under [subparagraph (A)](#e-7-A). - (ii) Nothing in this paragraph shall be construed as affecting the ability of the plan to cover or the pharmacists’ ability to continue to dispense [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) from otherwise valid written, oral, or fax prescriptions that are consistent with laws and [regulations](/usc/42/1395hh.md?p=a-1). - (iii) Nothing in this paragraph shall be construed as affecting the ability of an individual who is being prescribed a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) to designate a particular pharmacy to dispense the [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) to the extent consistent with the requirements under [subsection (b)(1)](#b-1) and under this paragraph. - (D) **Enforcement—** The [Secretary](/usc/42/1301.md?p=a-6) shall, through rulemaking, have authority to enforce and specify appropriate penalties for non-compliance with the requirement under [subparagraph (A)](#e-7-A). - (f) **Grievance mechanism—** Each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall provide meaningful procedures for hearing and resolving grievances between the sponsor ([including](/usc/42/1301.md?p=b) any entity or individual through which the sponsor provides covered benefits) and enrollees with [prescription drug plans](/usc/42/1395w–151.md?p=a-14) of the sponsor under this part in accordance with [section 1395w–22(f) of this title](/usc/42/1395w–22.md?p=f). - (g) **Coverage determinations and reconsiderations—** - (1) **Application of coverage determination and reconsideration provisions—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall meet the requirements of paragraphs (1) through (3) of [section 1395w–22(g) of this title](/usc/42/1395w–22.md?p=g) with respect to covered benefits under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) it offers under this part in the same manner as such requirements apply to an MA organization with respect to benefits it offers under an [MA plan](/usc/42/1395w–101.md?p=a-3-B) under part C. - (2) **Request for a determination for the treatment of tiered formulary drug—** In the case of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that provides for tiered [cost-sharing](/usc/42/18022.md?p=c-3-A) for [drugs](/usc/42/1395x.md?p=t-2-A) included within a formulary and provides lower [cost-sharing](/usc/42/18022.md?p=c-3-A) for preferred [drugs](/usc/42/1395x.md?p=t-2-A) included within the formulary, a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is enrolled in the plan may request an exception to the tiered [cost-sharing](/usc/42/18022.md?p=c-3-A) structure. Under such an exception, a nonpreferred [drug](/usc/42/282.md?p=j-1-A-vii) could be covered under the terms applicable for preferred [drugs](/usc/42/1395x.md?p=t-2-A) if the prescribing [physician](/usc/42/1395cc–1.md?p=a-3-A) determines that the preferred [drug](/usc/42/282.md?p=j-1-A-vii) for [treatment](/usc/42/11851.md?p=11) of the same condition either would not be as effective for the individual or would have adverse effects for the individual or both. A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall have an exceptions process under this paragraph consistent with guidelines established by the [Secretary](/usc/42/1301.md?p=a-6) for making a determination with respect to such a request. Denial of such an exception shall be treated as a coverage denial for purposes of applying [subsection (h)](#h). - (h) **Appeals—** - (1) **In general—** Subject to [paragraph (2)](#h-2), a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall meet the requirements of paragraphs (4) and (5) of [section 1395w–22(g) of this title](/usc/42/1395w–22.md?p=g) with respect to benefits ([including](/usc/42/1301.md?p=b) a determination related to the application of tiered [cost-sharing](/usc/42/18022.md?p=c-3-A) described in [subsection (g)(2)](#g-2)) in a manner similar (as determined by the [Secretary](/usc/42/1301.md?p=a-6)) to the manner such requirements apply to an MA organization with respect to benefits under the original medicare fee-for-service [program](/usc/42/274l–1.md?p=4) option it offers under an [MA plan](/usc/42/1395w–101.md?p=a-3-B) under part C. In applying this paragraph only the [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) shall be entitled to bring such an appeal. - (2) **Limitation in cases on nonformulary determinations—** A [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may appeal under [paragraph (1)](#h-1) a determination not to provide for coverage of a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) that is not on the formulary under the plan only if the prescribing [physician](/usc/42/1395cc–1.md?p=a-3-A) determines that all [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) on any tier of the formulary for [treatment](/usc/42/11851.md?p=11) of the same condition would not be as effective for the individual as the nonformulary [drug](/usc/42/282.md?p=j-1-A-vii), would have adverse effects for the individual, or both. - (3) **Treatment of nonformulary determinations—** If a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) determines that a plan provides coverage for a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) that is not on the formulary of the plan, the [drug](/usc/42/282.md?p=j-1-A-vii) shall be treated as being included on the formulary for purposes of [section 1395w–102(b)(4)(C)(i) of this title](/usc/42/1395w–102.md?p=b-4-C-i). - (i) **Privacy, confidentiality, and accuracy of enrollee records—** The provisions of [section 1395w–22(h) of this title](/usc/42/1395w–22.md?p=h) shall apply to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) and [prescription drug plan](/usc/42/1395w–151.md?p=a-14) in the same manner as it applies to an MA organization and an [MA plan](/usc/42/1395w–101.md?p=a-3-B). - (j) **Treatment of accreditation—** Subparagraph (A) of [section 1395w–22(e)(4) of this title](/usc/42/1395w–22.md?p=e-4) (relating to [treatment](/usc/42/11851.md?p=11) of accreditation) shall apply to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this part with respect to the following requirements, in the same manner as it applies to an MA organization with respect to the requirements in subparagraph (B) (other than clause (vii) thereof) of such section: - (1) [Subsection (b)](#b) of this section (relating to access to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A)). - (2) [Subsection (c)](#c) of this section ([including](/usc/42/1301.md?p=b) quality assurance and medication therapy management). - (3) [Subsection (i)](#i) of this section (relating to confidentiality and accuracy of enrollee records). - (k) **Public disclosure of pharmaceutical prices for equivalent drugs—** - (1) **In general—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall provide that each pharmacy that dispenses a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) shall inform an enrollee of any differential between the price of the [drug](/usc/42/282.md?p=j-1-A-vii) to the enrollee and the price of the lowest priced generic [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) under the plan that is therapeutically equivalent and bioequivalent and available at such pharmacy. - (2) **Timing of notice—** - (A) **In general—** Subject to [subparagraph (B)](#k-2-B), the information under [paragraph (1)](#k-1) shall be provided at the time of purchase of the [drug](/usc/42/282.md?p=j-1-A-vii) involved, or, in the case of dispensing by mail order, at the time of delivery of such [drug](/usc/42/282.md?p=j-1-A-vii). - (B) **Waiver—** The [Secretary](/usc/42/1301.md?p=a-6) may waive [subparagraph (A)](#k-2-A) in such circumstances as the [Secretary](/usc/42/1301.md?p=a-6) may specify. - (l) **Requirements with respect to sales and marketing activities—** The following provisions shall apply to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) (and the agents, brokers, and other third parties representing such sponsor) in the same manner as such provisions apply to a Medicare Advantage organization (and the agents, brokers, and other third parties representing such organization): - (1) The prohibition under [section 1395w–21(h)(4)(C) of this title](/usc/42/1395w–21.md?p=h-4-C) on conducting activities described in [section 1395w–21(j)(1) of this title](/usc/42/1395w–21.md?p=j-1). - (2) The requirement under [section 1395w–21(h)(4)(D) of this title](/usc/42/1395w–21.md?p=h-4-D) to conduct activities described in [section 1395w–21(j)(2) of this title](/usc/42/1395w–21.md?p=j-2) in accordance with the limitations established under such subsection. - (3) The inclusion of the plan type in the plan name under [section 1395w–21(h)(6) of this title](/usc/42/1395w–21.md?p=h-6). - (4) The requirements regarding the appointment of agents and brokers and compliance with [State](/usc/42/1397n–12.md?p=6) information requests under subparagraphs (A) and (B), respectively, of [section 1395w–21(h)(7) of this title](/usc/42/1395w–21.md?p=h-7). - (m) **Prohibition on limiting certain information on drug prices—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) and a Medicare Advantage organization shall ensure that each [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) offered by the sponsor or organization does not restrict a pharmacy that dispenses a prescription [drug](/usc/42/282.md?p=j-1-A-vii) or biological from informing, nor penalize such pharmacy for informing, an enrollee in such plan of any differential between the [negotiated price](/usc/42/1395w–114c.md?p=g-6) of, or copayment or coinsurance for, the [drug](/usc/42/282.md?p=j-1-A-vii) or biological to the enrollee under the plan and a lower price the individual would pay for the [drug](/usc/42/282.md?p=j-1-A-vii) or biological if the enrollee obtained the [drug](/usc/42/282.md?p=j-1-A-vii) without using any [health insurance coverage](/usc/42/1320d–9.md?p=b-2). - (n) **Program integrity transparency measures—** For [program](/usc/42/274l–1.md?p=4) integrity transparency measures applied with respect to [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and [MA plans](/usc/42/1395w–101.md?p=a-3-B), see [section 1395w–28(i) of this title](/usc/42/1395w–28.md?p=i). - (o) **Real-time benefit information—** - (1) **In general—** After the [Secretary](/usc/42/1301.md?p=a-6) has adopted a [standard](/usc/42/1320d.md?p=7) under [paragraph (3)](#o-3) for electronic real-time benefit tools, and at a time determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6), a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall implement one or more of such tools that meet the requirements described in [paragraph (2)](#o-2). - (2) **Requirements—** For purposes of [paragraph (1)](#o-1), the requirements described in this paragraph, with respect to an electronic real-time benefit tool, are that the tool is capable of— - (A) integrating with electronic prescribing and electronic health record systems of prescribing health care professionals for the transmission of formulary and benefit information in real time to such professionals; and - (B) with respect to a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A), transmitting such information specific to an individual enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14), [including](/usc/42/1301.md?p=b) the following: - (i) A list of any clinically-appropriate alternatives to such [drug](/usc/42/282.md?p=j-1-A-vii) included in the formulary of such plan. - (ii) [Cost-sharing](/usc/42/18022.md?p=c-3-A) information and the [negotiated price](/usc/42/1395w–114c.md?p=g-6) for such [drug](/usc/42/282.md?p=j-1-A-vii) and such alternatives at multiple pharmacy options, [including](/usc/42/1301.md?p=b) the individual’s preferred pharmacy and, as applicable, other retail pharmacies and a mail order pharmacy. - (iii) The formulary status of such [drug](/usc/42/282.md?p=j-1-A-vii) and such alternatives and any prior [authorization](/usc/42/4370m.md?p=3) or other utilization management requirements applicable to such [drug](/usc/42/282.md?p=j-1-A-vii) and such alternatives included in the formulary of such plan. - (3) **Standards—** In order to be treated (for purposes of this subsection) as an electronic real-time benefit tool described in [paragraph (1)](#o-1), such tool shall comply with technical [standards](/usc/42/1320d.md?p=7) adopted by the [Secretary](/usc/42/1301.md?p=a-6) in consultation with the [National Coordinator](/usc/42/300jj.md?p=11) for [Health Information](/usc/42/300jj.md?p=4) Technology through notice and comment rulemaking. Such technical [standards](/usc/42/1320d.md?p=7) adopted by the [Secretary](/usc/42/1301.md?p=a-6) shall be developed by a [standards](/usc/42/1320d.md?p=7) development organization, such as the National [Council](/usc/42/300f.md?p=9) for Prescription [Drug](/usc/42/282.md?p=j-1-A-vii) [Programs](/usc/42/274l–1.md?p=4), that consults with stakeholders such as [PDP sponsors](/usc/42/1395w–151.md?p=a-13), Medicare Advantage organizations, beneficiary advocates, health care professionals, and [health information](/usc/42/300jj.md?p=4) technology software vendors. - (4) **Rules of construction—** Nothing in this subsection shall be construed— - (A) to prohibit the application of paragraph (b)(7) of section 423.160 of title 42, Code of Federal Regulations, as is to be added to such section pursuant to the final rule published in the Federal Register on May 23, 2019, and titled “Modernizing Part D and Medicare Advantage To Lower [Drug](/usc/42/282.md?p=j-1-A-vii) Prices and Reduce Out-of-Pocket Expenses” (84 Fed. Reg. 23832 through 23884); or - (B) to allow a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) to use a real-time benefit tool to steer an individual, without the consent of the individual, to a particular pharmacy or pharmacy type over their preferred pharmacy or pharmacy type nor prohibit the designation of an individual’s preferred pharmacy under such tool. # §1395w–111. PDP regions; submission of bids; plan approval - (a) **Establishment of PDP regions; service areas—** - (1) **Coverage of entire PDP region—** The service area for a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall consist of an entire [PDP region](/usc/42/1395w–151.md?p=a-12) established under [paragraph (2)](#a-2). - (2) **Establishment of PDP regions—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish, and may revise, [PDP regions](/usc/42/1395w–151.md?p=a-12) in a manner that is consistent with the requirements for the establishment and revision of MA [regions](/usc/42/1395ww.md?p=d-2-D) under subparagraphs (B) and (C) of [section 1395w–27a(a)(2) of this title](/usc/42/1395w–27a.md?p=a-2). - (B) **Relation to MA regions—** To the extent practicable, [PDP regions](/usc/42/1395w–151.md?p=a-12) shall be the same as MA [regions](/usc/42/1395ww.md?p=d-2-D) under [section 1395w–27a(a)(2) of this title](/usc/42/1395w–27a.md?p=a-2). The [Secretary](/usc/42/1301.md?p=a-6) may establish [PDP regions](/usc/42/1395w–151.md?p=a-12) which are not the same as MA [regions](/usc/42/1395ww.md?p=d-2-D) if the [Secretary](/usc/42/1301.md?p=a-6) determines that the establishment of different [regions](/usc/42/1395ww.md?p=d-2-D) under this part would improve access to benefits under this part. - (C) **Authority for territories—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish, and may revise, [PDP regions](/usc/42/1395w–151.md?p=a-12) for areas in [States](/usc/42/1397n–12.md?p=6) that are not within the 50 [States](/usc/42/1397n–12.md?p=6) or the District of Columbia. - (3) **National plan—** Nothing in this subsection shall be construed as preventing a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) from being offered in more than one [PDP region](/usc/42/1395w–151.md?p=a-12) ([including](/usc/42/1301.md?p=b) all [PDP regions](/usc/42/1395w–151.md?p=a-12)). - (b) **Submission of bids, premiums, and related information—** - (1) **In general—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall submit to the [Secretary](/usc/42/1301.md?p=a-6) information described in [paragraph (2)](#b-2) with respect to each [prescription drug plan](/usc/42/1395w–151.md?p=a-14) it offers. Such information shall be submitted at the same time and in a similar manner to the manner in which information described in paragraph (6) of [section 1395w–24(a) of this title](/usc/42/1395w–24.md?p=a) is submitted by an MA organization under [paragraph (1)](/usc/42/1395w–24.md?p=a-1) of such section. - (2) **Information described—** The information described in this paragraph is information on the following: - (A) **Coverage provided—** The prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage provided under the plan, [including](/usc/42/1301.md?p=b) the deductible and other [cost-sharing](/usc/42/18022.md?p=c-3-A). - (B) **Actuarial value—** The actuarial value of the [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) in the [region](/usc/42/1395ww.md?p=d-2-D) for a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) with a national average risk profile for the factors described in [section 1395w–115(c)(1)(A) of this title](/usc/42/1395w–115.md?p=c-1-A) (as specified by the [Secretary](/usc/42/1301.md?p=a-6)). - (C) **Bid—** Information on the bid, [including](/usc/42/1301.md?p=b) an actuarial certification of— - (i) the basis for the actuarial value described in [subparagraph (B)](#b-2-B) assumed in such bid; - (ii) the portion of such bid attributable to [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3) and, if applicable, the portion of such bid attributable to supplemental benefits; - (iii) assumptions regarding the reinsurance subsidy payments provided under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b) subtracted from the actuarial value to produce such bid; and - (iv) administrative expenses assumed in the bid. - (D) **Service area—** The service area for the plan. - (E) **Level of risk assumed—** - (i) **In general—** Whether the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) requires a [modification](/usc/42/7501.md?p=4) of risk level under [clause (ii)](#b-2-E-ii) and, if so, the extent of such [modification](/usc/42/7501.md?p=4). Any such [modification](/usc/42/7501.md?p=4) shall apply with respect to all [prescription drug plans](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) in a [PDP region](/usc/42/1395w–151.md?p=a-12). This subparagraph shall not apply to an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (ii) **Risk levels described—** A [modification](/usc/42/7501.md?p=4) of risk level under this clause may consist of one or more of the following: - (I) **Increase in Federal percentage assumed in initial risk corridor—** An equal percentage point increase in the percents applied under subparagraphs (B)(i), (B)(ii)(I), (C)(i), and (C)(ii)(I) of [section 1395w–115(e)(2) of this title](/usc/42/1395w–115.md?p=e-2). In no case shall the application of previous sentence prevent the application of a higher percentage under [section 1395w–115(e)(2)(B)(iii)](/usc/42/1395w–115.md?p=e-2-B-iii)[^1] of this title. - (II) **Increase in Federal percentage assumed in second risk corridor—** An equal percentage point increase in the percents applied under subparagraphs (B)(ii)(II) and (C)(ii)(II) of [section 1395w–115(e)(2) of this title](/usc/42/1395w–115.md?p=e-2). - (III) **Decrease in size of risk corridors—** A decrease in the threshold risk percentages specified in [section 1395w–115(e)(3)(C) of this title](/usc/42/1395w–115.md?p=e-3-C). - (F) **Additional information—** Such other information as the [Secretary](/usc/42/1301.md?p=a-6) may require to carry out this part. - (3) **Paperwork reduction for offering of prescription drug plans nationally or in multi-region areas—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish requirements for information submission under this subsection in a manner that promotes the offering of such plans in more than one [PDP region](/usc/42/1395w–151.md?p=a-12) ([including](/usc/42/1301.md?p=b) all [regions](/usc/42/1395ww.md?p=d-2-D)) through the filing of consolidated information. - (c) **Actuarial valuation—** - (1) **Processes—** For purposes of this part, the [Secretary](/usc/42/1301.md?p=a-6) shall establish processes and methods for determining the actuarial valuation of prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage, [including](/usc/42/1301.md?p=b)— - (A) an actuarial valuation of [standard prescription drug coverage](/usc/42/1395w–102.md?p=b) under [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b); - (B) actuarial valuations relating to alternative prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage under [section 1395w–102(c)(1) of this title](/usc/42/1395w–102.md?p=c-1); - (C) an actuarial valuation of the reinsurance subsidy payments under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b); - (D) the use of generally accepted actuarial principles and methodologies; and - (E) applying the same methodology for determinations of actuarial valuations under subparagraphs [(A)](#c-1-A) and [(B)](#c-1-B). - (2) **Accounting for drug utilization—** Such processes and methods for determining actuarial valuation shall take into account the effect that providing alternative prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage (rather than [standard prescription drug coverage](/usc/42/1395w–102.md?p=b)) has on [drug](/usc/42/282.md?p=j-1-A-vii) utilization. - (3) **Responsibilities—** - (A) **Plan responsibilities—** [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and MA organizations are responsible for the preparation and submission of actuarial valuations required under this part for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) they offer. - (B) **Use of outside actuaries—** Under the processes and methods established under [paragraph (1)](#c-1), [PDP sponsors](/usc/42/1395w–151.md?p=a-13) offering [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and MA organizations offering [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) may use actuarial opinions certified by independent, qualified actuaries to establish actuarial values. - (d) **Review of information and negotiation—** - (1) **Review of information—** The [Secretary](/usc/42/1301.md?p=a-6) shall review the information filed under [subsection (b)](#b) for the purpose of conducting negotiations under [paragraph (2)](#d-2). - (2) **Negotiation regarding terms and conditions—** Subject to [subsection (i)](#i), in exercising the authority under [paragraph (1)](#d-1), the [Secretary](/usc/42/1301.md?p=a-6)— - (A) has the authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed plan; and - (B) has authority similar to the authority of the [Director](/usc/42/5061.md?p=1) of the [Office](/usc/42/3058f.md?p=1) of Personnel Management with respect to health benefits plans under [chapter 89](/usc/5/chptIII-sptG-ch89.md) of title 5. - (3) **Rejection of bids—** Paragraph (5)(C) of [section 1395w–24(a) of this title](/usc/42/1395w–24.md?p=a) shall apply with respect to bids submitted by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under [subsection (b)](#b) in the same manner as such paragraph applies to bids submitted by an MA organization under such [section 1395w–24(a) of this title](/usc/42/1395w–24.md?p=a). - (e) **Approval of proposed plans—** - (1) **In general—** After review and negotiation under [subsection (d)](#d), the [Secretary](/usc/42/1301.md?p=a-6) shall approve or disapprove the [prescription drug plan](/usc/42/1395w–151.md?p=a-14). - (2) **Requirements for approval—** The [Secretary](/usc/42/1301.md?p=a-6) may approve a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) only if the following requirements are met: - (A) **Compliance with requirements—** The plan and the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering the plan comply with the requirements under this part, [including](/usc/42/1301.md?p=b) the provision of [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1). - (B) **Actuarial determinations—** The [Secretary](/usc/42/1301.md?p=a-6) determines that the plan and [PDP sponsor](/usc/42/1395w–151.md?p=a-13) meet the requirements under this part relating to actuarial determinations, [including](/usc/42/1301.md?p=b) such requirements under [section 1395w–102(c) of this title](/usc/42/1395w–102.md?p=c). - (C) **Application of FEHBP standard—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) determines that the portion of the bid submitted under [subsection (b)](#b) that is attributable to [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3) is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of [section 300e–1(8)(C) of this title](/usc/42/300e–1.md?p=8-C)) for benefits provided under that plan, less the sum (determined on a monthly per capita basis) of the actuarial value of the reinsurance payments under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b). - (ii) **Supplemental coverage—** The [Secretary](/usc/42/1301.md?p=a-6) determines that the portion of the bid submitted under [subsection (b)](#b) that is attributable to supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage pursuant to [section 1395w–102(a)(2) of this title](/usc/42/1395w–102.md?p=a-2) is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of [section 300e–1(8)(C) of this title](/usc/42/300e–1.md?p=8-C)) for such coverage under the plan. - (D) **Plan design—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) does not find that the design of the plan and its benefits ([including](/usc/42/1301.md?p=b) any formulary and tiered formulary structure) are likely to substantially discourage enrollment by certain [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) under the plan. - (ii) **Use of categories and classes in formularies—** The [Secretary](/usc/42/1301.md?p=a-6) may not find that the design of [categories](/usc/42/1395w–4.md?p=j-1) and classes within a formulary violates [clause (i)](#e-2-D-i) if such [categories](/usc/42/1395w–4.md?p=j-1) and classes are consistent with guidelines (if any) for such [categories](/usc/42/1395w–4.md?p=j-1) and classes established by the [United States](/usc/42/1301.md?p=a-2) Pharmacopeia. - (f) **Application of limited risk plans—** - (1) **Conditions for approval of limited risk plans—** The [Secretary](/usc/42/1301.md?p=a-6) may only approve a [limited risk plan](#f-4-A) (as defined in [paragraph (4)(A)](#f-4-A)) for a [PDP region](/usc/42/1395w–151.md?p=a-12) if the access requirements under [section 1395w–103(a) of this title](/usc/42/1395w–103.md?p=a) would not be met for the [region](/usc/42/1395ww.md?p=d-2-D) but for the approval of such a plan (or a [fallback prescription drug plan](#g-4) under [subsection (g)](#g)). - (2) **Rules—** The following rules shall apply with respect to the approval of a [limited risk plan](#f-4-A) in a [PDP region](/usc/42/1395w–151.md?p=a-12): - (A) **Limited exercise of authority—** Only the minimum number of such plans may be approved in order to meet the access requirements under [section 1395w–103(a) of this title](/usc/42/1395w–103.md?p=a). - (B) **Maximizing assumption of risk—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide priority in approval for those plans bearing the highest level of risk (as computed by the [Secretary](/usc/42/1301.md?p=a-6)), but the [Secretary](/usc/42/1301.md?p=a-6) may take into account the level of the bids submitted by such plans. - (C) **No full underwriting for limited risk plans—** In no case may the [Secretary](/usc/42/1301.md?p=a-6) approve a [limited risk plan](#f-4-A) under which the [modification](/usc/42/7501.md?p=4) of risk level provides for no (or a de minimis) level of financial risk. - (3) **Acceptance of all full risk contracts—** There shall be no limit on the number of [full risk plans](#f-4-B) that are approved under [subsection (e)](#e). - (4) **Risk-plans defined—** For purposes of this subsection: - (A) **Limited risk plan—** The term “limited risk plan” means a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that provides [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3) and for which the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) [includes](/usc/42/1301.md?p=b) a [modification](/usc/42/7501.md?p=4) of risk level described in [subparagraph (E)](#b-2-E) of subsection (b)(2) in its bid submitted for the plan under such subsection. Such term does not include a [fallback prescription drug plan](#g-4). - (B) **Full risk plan—** The term “full risk plan” means a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that is not a [limited risk plan](#f-4-A) or a [fallback prescription drug plan](#g-4). - (g) **Guaranteeing access to coverage—** - (1) **Solicitation of bids—** - (A) **In general—** Separate from the bidding process under [subsection (b)](#b), the [Secretary](/usc/42/1301.md?p=a-6) shall provide for a process for the solicitation of bids from [eligible fallback entities](#g-2) (as defined in [paragraph (2)](#g-2)) for the offering in all [fallback service areas](#g-3) (as defined in [paragraph (3)](#g-3)) in one or more [PDP regions](/usc/42/1395w–151.md?p=a-12) of a [fallback prescription drug plan](#g-4) (as defined in [paragraph (4)](#g-4)) during the contract period specified in [paragraph (5)](#g-5). - (B) **Acceptance of bids—** - (i) **In general—** Except as provided in this subparagraph, the provisions of [subsection (e)](#e) shall apply with respect to the approval or disapproval of [fallback prescription drug plans](#g-4). The [Secretary](/usc/42/1301.md?p=a-6) shall enter into contracts under this subsection with [eligible fallback entities](#g-2) for the offering of [fallback prescription drug plans](#g-4) so approved in [fallback service areas](#g-3). - (ii) **Limitation of 1 plan for all fallback service areas in a PDP region—** With respect to all [fallback service areas](#g-3) in any [PDP region](/usc/42/1395w–151.md?p=a-12) for a contract period, the [Secretary](/usc/42/1301.md?p=a-6) shall approve the offering of only 1 [fallback prescription drug plan](#g-4). - (iii) **Competitive procedures—** Competitive procedures (as defined in [section 132 of title 41](/usc/41/132.md)) shall be used to enter into a contract under this subsection. The provisions of subsection (d) of [section 1395kk–1 of this title](/usc/42/1395kk–1.md) shall apply to a contract under this section in the same manner as they apply to a contract under such section. - (iv) **Timing—** The [Secretary](/usc/42/1301.md?p=a-6) shall approve a [fallback prescription drug plan](#g-4) for a [PDP region](/usc/42/1395w–151.md?p=a-12) in a manner so that, if there are any [fallback service areas](#g-3) in the [region](/usc/42/1395ww.md?p=d-2-D) for a year, the [fallback prescription drug plan](#g-4) is offered at the same time as [prescription drug plans](/usc/42/1395w–151.md?p=a-14) would otherwise be offered. - (V) **[^2] No national fallback plan—** The [Secretary](/usc/42/1301.md?p=a-6) shall not enter into a contract with a [single](/usc/42/2304.md?p=m) fallback entity for the offering of fallback plans throughout the [United States](/usc/42/1301.md?p=a-2). - (2) **Eligible fallback entity—** For purposes of this section, the term “eligible fallback entity” means, with respect to all [fallback service areas](#g-3) in a [PDP region](/usc/42/1395w–151.md?p=a-12) for a contract period, an entity that— - (A) meets the requirements to be a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) (or would meet such requirements but for the fact that the entity is not a risk-bearing entity); and - (B) does not submit a bid under [subsection (b)](#b) for any [prescription drug plan](/usc/42/1395w–151.md?p=a-14) for any [PDP region](/usc/42/1395w–151.md?p=a-12) for the first year of such contract period. For purposes of [subparagraph (B)](#g-2-B), an entity shall be treated as submitting a bid with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) if the entity is acting as a subcontractor of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14). - (3) **Fallback service area—** For purposes of this subsection, the term “fallback service area” means, for a [PDP region](/usc/42/1395w–151.md?p=a-12) with respect to a year, any area within such [region](/usc/42/1395ww.md?p=d-2-D) for which the [Secretary](/usc/42/1301.md?p=a-6) determines before the beginning of the year that the access requirements of the first sentence of [section 1395w–103(a) of this title](/usc/42/1395w–103.md?p=a) will not be met for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) residing in the area for the year. - (4) **Fallback prescription drug plan—** For purposes of this part, the term “fallback prescription drug plan” means a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that— - (A) only offers the [standard prescription drug coverage](/usc/42/1395w–102.md?p=b) and access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6) described in [section 1395w–102(a)(1)(A) of this title](/usc/42/1395w–102.md?p=a-1-A) and does not include any supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage; and - (B) meets such other requirements as the [Secretary](/usc/42/1301.md?p=a-6) may specify. - (5) **Payments under the contract—** - (A) **In general—** A contract entered into under this subsection shall provide for— - (i) payment for the actual costs (taking into account [negotiated price](/usc/42/1395w–114c.md?p=g-6) concessions described in [section 1395w–102(d)(1)(B) of this title](/usc/42/1395w–102.md?p=d-1-B)) of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) provided to [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in a [fallback prescription drug plan](#g-4) offered by the entity; and - (ii) payment of management fees that are tied to performance measures established by the [Secretary](/usc/42/1301.md?p=a-6) for the management, [administration](/usc/42/1301.md?p=a-10), and delivery of the benefits under the contract. - (B) **Performance measures—** The performance measures established by the [Secretary](/usc/42/1301.md?p=a-6) pursuant to [subparagraph (A)(ii)](#g-5-A-ii) shall include at least measures for each of the following: - (i) **Costs—** The entity contains costs to the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10) and to [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in a [fallback prescription drug plan](#g-4) offered by the entity through mechanisms such as generic substitution and price discounts. - (ii) **Quality programs—** The entity provides such enrollees with quality [programs](/usc/42/274l–1.md?p=4) that avoid adverse [drug](/usc/42/282.md?p=j-1-A-vii) reactions and overutilization and reduce medical errors. - (iii) **Customer service—** The entity provides timely and accurate delivery of services and pharmacy and beneficiary support services. - (iv) **Benefit administration and claims adjudication—** The entity provides efficient and effective benefit [administration](/usc/42/1301.md?p=a-10) and [claims](/usc/42/1320a–7a.md?p=i-2) adjudication. - (6) **Monthly beneficiary premium—** Except as provided in [section 1395w–113(b) of this title](/usc/42/1395w–113.md?p=b) (relating to late enrollment penalty) and subject to [section 1395w–114 of this title](/usc/42/1395w–114.md) (relating to low-[income](/usc/42/292s.md?p=c-4) assistance), the monthly beneficiary premium to be charged under a [fallback prescription drug plan](#g-4) offered in all [fallback service areas](#g-3) in a [PDP region](/usc/42/1395w–151.md?p=a-12) shall be uniform and shall be equal to 25.5 percent (or, for 2030 and each subsequent year, the percent specified under [section 1395w–113(a)(9) of this title](/usc/42/1395w–113.md?p=a-9)) of an amount equal to the [Secretary](/usc/42/1301.md?p=a-6)’s estimate of the average monthly per capita actuarial cost, [including](/usc/42/1301.md?p=b) administrative expenses, under the [fallback prescription drug plan](#g-4) of providing coverage in the [region](/usc/42/1395ww.md?p=d-2-D), as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services. In calculating such administrative expenses, the Chief Actuary shall use a factor that is based on similar expenses of [prescription drug plans](/usc/42/1395w–151.md?p=a-14) that are not [fallback prescription drug plans](#g-4). - (7) **General contract terms and conditions—** - (A) **In general—** Except as may be appropriate to carry out this section, the terms and conditions of contracts with [eligible fallback entities](#g-2) offering [fallback prescription drug plans](#g-4) under this subsection shall be the same as the terms and conditions of contracts under this part for [prescription drug plans](/usc/42/1395w–151.md?p=a-14). - (B) **Period of contract—** - (i) **In general—** Subject to [clause (ii)](#g-7-B-ii), a contract approved for a [fallback prescription drug plan](#g-4) for [fallback service areas](#g-3) for a [PDP region](/usc/42/1395w–151.md?p=a-12) under this section shall be for a period of 3 years (except as may be renewed after a subsequent bidding process). - (ii) **Limitation—** A [fallback prescription drug plan](#g-4) may be offered under a contract in an area for a year only if that area is a [fallback service area](#g-3) for that year. - (C) **Entity not permitted to market or brand fallback prescription drug plans—** An [eligible fallback entity](#g-2) with a contract under this subsection may not engage in any marketing or branding of a [fallback prescription drug plan](#g-4). - (h) **Annual report on use of limited risk plans and fallback plans—** The [Secretary](/usc/42/1301.md?p=a-6) shall submit to Congress an annual report that describes instances in which limited risk plans and [fallback prescription drug plans](#g-4) were offered under subsections [(f)](#f) and [(g)](#g). The [Secretary](/usc/42/1301.md?p=a-6) shall include in such report such recommendations as may be appropriate to limit the need for the provision of such plans and to maximize the assumption of financial risk under section subsection[^3] (f). - (i) **Noninterference—** In order to promote competition under this part and in carrying out this part, the [Secretary](/usc/42/1301.md?p=a-6)— - (1) may not interfere with the negotiations between [drug](/usc/42/282.md?p=j-1-A-vii) [manufacturers](/usc/42/300aa–33.md?p=3) and pharmacies and [PDP sponsors](/usc/42/1395w–151.md?p=a-13); - (2) may not require a particular formulary, except as provided under [section 1395w–104(b)(3)(l)](/usc/42/1395w–104.md)[^4] of this title; and - (3) may not institute a price structure for the reimbursement of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), except as provided under part E of subchapter XI. - (j) **Coordination of benefits—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall permit [State Pharmaceutical Assistance Programs](/usc/42/1395w–133.md?p=b) and Rx plans under sections [1395w–133](/usc/42/1395w–133.md) and [1395w–134](/usc/42/1395w–134.md) of this title to coordinate benefits with the plan and, in connection with such coordination with such a [Program](/usc/42/274l–1.md?p=4), not to impose fees that are unrelated to the cost of coordination. # §1395w–112. Requirements for and contracts with prescription drug plan (PDP) sponsors - (a) **General requirements—** Each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) shall meet the following requirements: - (1) **Licensure—** Subject to [subsection (c)](#c), the sponsor is organized and licensed under [State](/usc/42/1397n–12.md?p=6) law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each [State](/usc/42/1397n–12.md?p=6) in which it offers a [prescription drug plan](/usc/42/1395w–151.md?p=a-14). - (2) **Assumption of financial risk for unsubsidized coverage—** - (A) **In general—** Subject to [subparagraph (B)](#a-2-B), to the extent that the entity is at risk the entity assumes financial risk on a prospective basis for benefits that it offers under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and that is not covered under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b). - (B) **Reinsurance permitted—** The plan sponsor may obtain insurance or make other [arrangements](/usc/42/1395x.md?p=w-1) for the cost of coverage provided to any enrollee to the extent that the sponsor is at risk for providing such coverage. - (3) **Solvency for unlicensed sponsors—** In the case of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that is not described in [paragraph (1)](#a-1) and for which a waiver has been approved under [subsection (c)](#c), such sponsor shall meet solvency [standards](/usc/42/1320d.md?p=7) established by the [Secretary](/usc/42/1301.md?p=a-6) under [subsection (d)](#d). - (b) **Contract requirements—** - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall not permit the enrollment under [section 1395w–101 of this title](/usc/42/1395w–101.md) in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this part, and the sponsor shall not be eligible for payments under section [1395w–114](/usc/42/1395w–114.md) or [1395w–115](/usc/42/1395w–115.md) of this title, unless the [Secretary](/usc/42/1301.md?p=a-6) has entered into a contract under this subsection with the sponsor with respect to the offering of such plan. Such a contract with a sponsor may cover more than one [prescription drug plan](/usc/42/1395w–151.md?p=a-14). Such contract shall provide that the sponsor agrees to comply with the applicable requirements and [standards](/usc/42/1320d.md?p=7) of this part and the terms and conditions of payment as provided for in this part. - (2) **Limitation on entities offering fallback prescription drug plans—** The [Secretary](/usc/42/1301.md?p=a-6) shall not enter into a contract with a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) for the offering of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) (other than a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4)) in a [PDP region](/usc/42/1395w–151.md?p=a-12) for a year if the sponsor— - (A) submitted a bid under [section 1395w–111(g) of this title](/usc/42/1395w–111.md?p=g) for such year (as the first year of a contract period under such section) to offer a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4) in any [PDP region](/usc/42/1395w–151.md?p=a-12); - (B) offers a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4) in any [PDP region](/usc/42/1395w–151.md?p=a-12) during the year; or - (C) offered a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4) in that [PDP region](/usc/42/1395w–151.md?p=a-12) during the previous year. For purposes of this paragraph, an entity shall be treated as submitting a bid with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or offering a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4) if the entity is acting as a subcontractor of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14). - (3) **Incorporation of certain medicare advantage contract requirements—** Except as otherwise provided, the following provisions of [section 1395w–27 of this title](/usc/42/1395w–27.md) shall apply to contracts under this section in the same manner as they apply to contracts under [section 1395w–27(a) of this title](/usc/42/1395w–27.md?p=a): - (A) **Minimum enrollment—** Paragraphs (1) and (3) of [section 1395w–27(b) of this title](/usc/42/1395w–27.md?p=b), except that— - (i) the [Secretary](/usc/42/1301.md?p=a-6) may increase the minimum number of enrollees required under such [paragraph (1)](#b-1) as the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate; and - (ii) the requirement of such [paragraph (1)](#b-1) shall be waived during the first contract year with respect to an organization in a [region](/usc/42/1395ww.md?p=d-2-D). - (B) **Contract period and effectiveness—** [Section 1395w–27(c) of this title](/usc/42/1395w–27.md?p=c), except that in applying [paragraph (4)(B)](/usc/42/1395w–27.md?p=c-4-B) of such section any reference to payment amounts under [section 1395w–23 of this title](/usc/42/1395w–23.md) shall be deemed payment amounts under [section 1395w–115 of this title](/usc/42/1395w–115.md). - (C) **Protections against fraud and beneficiary protections—** [Section 1395w–27(d) of this title](/usc/42/1395w–27.md?p=d). - (D) **Additional contract terms—** [Section 1395w–27(e) of this title](/usc/42/1395w–27.md?p=e); except that [section 1395w–27(e)(2) of this title](/usc/42/1395w–27.md?p=e-2) shall apply as specified to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and payments under this part to an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) shall be treated as expenditures made under part D. Notwithstanding any other provision of law, information provided to the [Secretary](/usc/42/1301.md?p=a-6) under the application of [section 1395w–27(e)(1) of this title](/usc/42/1395w–27.md?p=e-1) to contracts under this section under the preceding sentence— - (i) may be used for the purposes of carrying out this part, improving public health through research on the utilization, safety, effectiveness, quality, and efficiency of health care services (as the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate), or carrying out part E of subchapter XI; and - (ii) shall be made available to Congressional[^1] support [agencies](/usc/42/1397n–12.md?p=1) (in accordance with their obligations to support Congress as set out in their authorizing statutes) for the purposes of conducting Congressional[^1] oversight, monitoring, making recommendations, and analysis of the [program](/usc/42/274l–1.md?p=4) under this subchapter. - (E) **Intermediate sanctions—** [Section 1395w–27(g) of this title](/usc/42/1395w–27.md?p=g) (other than [paragraph (1)(F)](/usc/42/1395w–27.md?p=g-1-F) of such section), except that in applying such section the reference in [section 1395w–27(g)(1)(B) of this title](/usc/42/1395w–27.md?p=g-1-B) to [section 1395w–24 of this title](/usc/42/1395w–24.md) is deemed a reference to this part. - (F) **Procedures for termination—** [Section 1395w–27(h) of this title](/usc/42/1395w–27.md?p=h). - (4) **Prompt payment of clean claims—** - (A) **Prompt payment—** - (i) **In general—** Each contract entered into with a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this part with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such sponsor shall provide that payment shall be issued, mailed, or otherwise transmitted with respect to all [clean claims](#b-4-A-ii) submitted by pharmacies (other than pharmacies that dispense [drugs](/usc/42/1395x.md?p=t-2-A) by mail order only or are located in, or contract with, a [long-term care facility](/usc/42/1397j.md?p=15)) under this part within the [applicable number of calendar days](#b-4-B) after the date on which the [claim](/usc/42/1320a–7a.md?p=i-2) is received. - (ii) **Clean claim defined—** In this paragraph, the term “clean claim” means a [claim](/usc/42/1320a–7a.md?p=i-2) that has no defect or impropriety ([including](/usc/42/1301.md?p=b) any lack of any required substantiating documentation) or particular circumstance requiring special [treatment](/usc/42/11851.md?p=11) that prevents timely payment from being made on the [claim](/usc/42/1320a–7a.md?p=i-2) under this part. - (iii) **Date of receipt of claim—** In this paragraph, a [claim](/usc/42/1320a–7a.md?p=i-2) is considered to have been received— - (I) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) submitted electronically, on the date on which the [claim](/usc/42/1320a–7a.md?p=i-2) is transferred; and - (II) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) submitted otherwise, on the 5th day after the postmark date of the [claim](/usc/42/1320a–7a.md?p=i-2) or the date specified in the time stamp of the transmission. - (B) **Applicable number of calendar days defined—** In this paragraph, the term “applicable number of calendar days” means— - (i) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) submitted electronically, 14 days; and - (ii) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) submitted otherwise, 30 days. - (C) **Interest payment—** - (i) **In general—** Subject to [clause (ii)](#b-4-C-ii), if payment is not issued, mailed, or otherwise transmitted within the [applicable number of calendar days](#b-4-B) (as defined in [subparagraph (B)](#b-4-B)) after a [clean claim](#b-4-A-ii) is received, the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall pay interest to the pharmacy that submitted the [claim](/usc/42/1320a–7a.md?p=i-2) at a rate equal to the weighted average of interest on 3-month marketable Treasury securities determined for such period, increased by 0.1 percentage point for the period beginning on the day after the required payment date and ending on the date on which payment is made (as determined under [subparagraph (D)(iv)](#b-4-D-iv)). Interest amounts paid under this subparagraph shall not be counted against the administrative costs of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or treated as allowable risk corridor costs under [section 1395w–115(e) of this title](/usc/42/1395w–115.md?p=e). - (ii) **Authority not to charge interest—** The [Secretary](/usc/42/1301.md?p=a-6) may provide that a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) is not charged interest under [clause (i)](#b-4-C-i) in the case where there are exigent circumstances, [including](/usc/42/1301.md?p=b) [natural disasters](/usc/42/18711.md?p=a-3) and other unique and unexpected events, that prevent the timely processing of [claims](/usc/42/1320a–7a.md?p=i-2). - (D) **Procedures involving claims—** - (i) **Claim deemed to be clean—** A [claim](/usc/42/1320a–7a.md?p=i-2) is deemed to be a [clean claim](#b-4-A-ii) if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) involved does not provide notice to the claimant of any deficiency in the [claim](/usc/42/1320a–7a.md?p=i-2)— - (I) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) submitted electronically, within 10 days after the date on which the [claim](/usc/42/1320a–7a.md?p=i-2) is received; and - (II) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) submitted otherwise, within 15 days after the date on which the [claim](/usc/42/1320a–7a.md?p=i-2) is received. - (ii) **Claim determined to not be a clean claim—** - (I) **In general—** If a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) determines that a submitted [claim](/usc/42/1320a–7a.md?p=i-2) is not a [clean claim](#b-4-A-ii), the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall, not later than the end of the period described in [clause (i)](#b-4-D-i), notify the claimant of such determination. Such notification shall specify all defects or improprieties in the [claim](/usc/42/1320a–7a.md?p=i-2) and shall list all additional information or documents necessary for the proper processing and payment of the [claim](/usc/42/1320a–7a.md?p=i-2). - (II) **Determination after submission of additional information—** A [claim](/usc/42/1320a–7a.md?p=i-2) is deemed to be a [clean claim](#b-4-A-ii) under this paragraph if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) involved does not provide notice to the claimant of any defect or impropriety in the [claim](/usc/42/1320a–7a.md?p=i-2) within 10 days of the date on which additional information is received under [subclause (I)](#b-4-D-ii-I). - (iii) **Obligation to pay—** A [claim](/usc/42/1320a–7a.md?p=i-2) submitted to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that is not paid or contested by the sponsor within the applicable number of days (as defined in [subparagraph (B)](#b-4-B)) after the date on which the [claim](/usc/42/1320a–7a.md?p=i-2) is received shall be deemed to be a [clean claim](#b-4-A-ii) and shall be paid by the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) in accordance with [subparagraph (A)](#b-4-A). - (iv) **Date of payment of claim—** Payment of a [clean claim](#b-4-A-ii) under such subparagraph is considered to have been made on the date on which— - (I) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) paid electronically, the payment is transferred; and - (II) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) paid otherwise, the payment is submitted to the [United States](/usc/42/1301.md?p=a-2) Postal Service or common carrier for delivery. - (E) **Electronic transfer of funds—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall pay all [clean claims](#b-4-A-ii) submitted electronically by electronic transfer of [funds](/usc/42/12854.md?p=3) if the pharmacy so requests or has so requested previously. In the case where such payment is made electronically, remittance may be made by the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) electronically as well. - (F) **Protecting the rights of claimants—** - (i) **In general—** Nothing in this paragraph shall be construed to prohibit or limit a [claim](/usc/42/1320a–7a.md?p=i-2) or action not covered by the subject matter of this section that any individual or organization has against a provider or a [PDP sponsor](/usc/42/1395w–151.md?p=a-13). - (ii) **Anti-retaliation—** Consistent with applicable Federal or [State](/usc/42/1397n–12.md?p=6) law, a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall not retaliate against an individual or provider for exercising a right of action under this subparagraph. - (G) **Rule of construction—** A determination under this paragraph that a [claim](/usc/42/1320a–7a.md?p=i-2) submitted by a pharmacy is a [clean claim](#b-4-A-ii) shall not be construed as a positive determination regarding eligibility for payment under this subchapter, nor is it an indication of government approval of, or acquiescence regarding, the [claim](/usc/42/1320a–7a.md?p=i-2) submitted. The determination shall not relieve any party of civil or criminal liability with respect to the [claim](/usc/42/1320a–7a.md?p=i-2), nor does it offer a defense to any administrative, civil, or criminal action with respect to the [claim](/usc/42/1320a–7a.md?p=i-2). - (5) **Submission of claims by pharmacies located in or contracting with long-term care facilities—** Each contract entered into with a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this part with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such sponsor shall provide that a pharmacy located in, or having a contract with, a [long-term care facility](/usc/42/1397j.md?p=15) shall have not less than 30 days (but not more than 90 days) to submit [claims](/usc/42/1320a–7a.md?p=i-2) to the sponsor for reimbursement under the plan. - (6) **Regular update of prescription drug pricing standard—** If the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) uses a [standard](/usc/42/1320d.md?p=7) for reimbursement of pharmacies based on the cost of a [drug](/usc/42/282.md?p=j-1-A-vii), each contract entered into with such sponsor under this part with respect to the plan shall provide that the sponsor shall update such [standard](/usc/42/1320d.md?p=7) 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](/usc/42/282.md?p=j-1-A-vii). - (7) **Suspension of payments pending investigation of credible allegations of fraud by pharmacies—** - (A) **In general—** [Section 1395y(o)(1)](/usc/42/1395y.md?p=o-1) of this title shall apply with respect to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) with a contract under this part, a pharmacy, and payments to such pharmacy under this part in the same manner as such section applies with respect to the [Secretary](/usc/42/1301.md?p=a-6), a [provider of services](/usc/42/1395n.md?p=a-2) or [supplier](/usc/42/1395x.md?p=d), and payments to such [provider of services](/usc/42/1395n.md?p=a-2) or [supplier](/usc/42/1395x.md?p=d) under this subchapter. A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall notify the [Secretary](/usc/42/1301.md?p=a-6) regarding the imposition of any payment suspension pursuant to the previous sentence, such as through the secure internet website portal (or other successor technology) established under [section 1395w–28(i) of this title](/usc/42/1395w–28.md?p=i). - (B) **Rule of construction—** Nothing in this paragraph shall be construed as limiting the authority of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) to conduct postpayment review. - (8) **Provision of information related to maximum fair prices—** Each contract entered into with a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this part with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such sponsor shall require the sponsor to provide information to the [Secretary](/usc/42/1301.md?p=a-6) as requested by the [Secretary](/usc/42/1301.md?p=a-6) for purposes of carrying out [section 1320f–3 of this title](/usc/42/1320f–3.md). - (9) **Accountability of pharmacy benefit managers for violations of reasonable and relevant contract terms and conditions—** For plan years beginning on or after January 1, 2029, each contract entered into with a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this part with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such sponsor shall provide that any pharmacy benefit manager acting on behalf of such sponsor has a written [agreement](/usc/42/1320b–8.md?p=a-3-A) with the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under which the pharmacy benefit manager agrees to reimburse the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) for any amounts paid by such sponsor under [section 1395w–104(b)(1)(F)(iii)(I) of this title](/usc/42/1395w–104.md?p=b-1-F-iii-I) to the [Secretary](/usc/42/1301.md?p=a-6) as a result of a [violation](/usc/42/2000e–16a.md?p=c) described in such section if such [violation](/usc/42/2000e–16a.md?p=c) is related to a responsibility delegated to the pharmacy benefit manager by such [PDP sponsor](/usc/42/1395w–151.md?p=a-13). - (c) **Waiver of certain requirements to expand choice—** - (1) **Authorizing waiver—** - (A) **In general—** In the case of an entity that seeks to offer a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) in a [State](/usc/42/1397n–12.md?p=6), the [Secretary](/usc/42/1301.md?p=a-6) shall waive the requirement of [subsection (a)(1)](#a-1) that the entity be licensed in that [State](/usc/42/1397n–12.md?p=6) if the [Secretary](/usc/42/1301.md?p=a-6) determines, based on the application and other evidence presented to the [Secretary](/usc/42/1301.md?p=a-6), that any of the grounds for approval of the application described in [paragraph (2)](#c-2) have been met. - (B) **Application of regional plan waiver rule—** In addition to the waiver available under [subparagraph (A)](#c-1-A), the provisions of [section 1395w–27a(d) of this title](/usc/42/1395w–27a.md?p=d) shall apply to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) under this part in a manner similar to the manner in which such provisions apply to MA organizations under part C, except that no application shall be required under [paragraph (1)(B)](/usc/42/1395w–27a.md?p=d-1-B) of such section in the case of a [State](/usc/42/1397n–12.md?p=6) that does not provide a licensing process for such a sponsor. - (2) **Grounds for approval—** - (A) **In general—** The grounds for approval under this paragraph are— - (i) subject to [subparagraph (B)](#c-2-B), the grounds for approval described in subparagraphs (B), (C), and (D) of [section 1395w–25(a)(2) of this title](/usc/42/1395w–25.md?p=a-2); and - (ii) the application by a [State](/usc/42/1397n–12.md?p=6) of any grounds other than those required under Federal law. - (B) **Special rules—** In applying [subparagraph (A)(i)](#c-2-A-i)— - (i) the ground of approval described in [section 1395w–25(a)(2)(B) of this title](/usc/42/1395w–25.md?p=a-2-B) is deemed to have been met if the [State](/usc/42/1397n–12.md?p=6) does not have a licensing process in effect with respect to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13); and - (ii) for plan years beginning before January 1, 2008, if the [State](/usc/42/1397n–12.md?p=6) does have such a licensing process in effect, such ground for approval described in such section is deemed to have been met upon submission of an application described in such section. - (3) **Application of waiver procedures—** With respect to an application for a waiver (or a waiver granted) under paragraph (1)(A) of this subsection, the provisions of subparagraphs (E), (F), and (G) of [section 1395w–25(a)(2) of this title](/usc/42/1395w–25.md?p=a-2) shall apply, except that clauses (i) and (ii) of such subparagraph (E) shall not apply in the case of a [State](/usc/42/1397n–12.md?p=6) that does not have a licensing process described in [paragraph (2)(B)(i)](#c-2-B-i) in effect. - (4) **References to certain provisions—** In applying provisions of [section 1395w–25(a)(2) of this title](/usc/42/1395w–25.md?p=a-2) under paragraphs (2) and (3) of this subsection to [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [PDP sponsors](/usc/42/1395w–151.md?p=a-13)— - (A) any reference to a waiver application under [section 1395w–25 of this title](/usc/42/1395w–25.md) shall be treated as a reference to a waiver application under paragraph (1)(A) of this subsection; and - (B) any reference to solvency [standards](/usc/42/1320d.md?p=7) shall be treated as a reference to solvency [standards](/usc/42/1320d.md?p=7) established under [subsection (d)](#d) of this section. - (d) **Solvency standards for non-licensed entities—** - (1) **Establishment and publication—** The [Secretary](/usc/42/1301.md?p=a-6), in consultation with the National Association of Insurance [Commissioners](/usc/42/12302.md?p=1), shall establish and publish, by not later than January 1, 2005, financial solvency and capital adequacy [standards](/usc/42/1320d.md?p=7) for entities described in [paragraph (2)](#d-2). - (2) **Compliance with standards—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that is not licensed by a [State](/usc/42/1397n–12.md?p=6) under [subsection (a)(1)](#a-1) and for which a waiver application has been approved under [subsection (c)](#c) shall meet solvency and capital adequacy [standards](/usc/42/1320d.md?p=7) established under [paragraph (1)](#d-1). The [Secretary](/usc/42/1301.md?p=a-6) shall establish certification procedures for such sponsors with respect to such solvency [standards](/usc/42/1320d.md?p=7) in the manner described in [section 1395w–25(c)(2) of this title](/usc/42/1395w–25.md?p=c-2). - (e) **Licensure does not substitute for or constitute certification—** The fact that a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) is licensed in accordance with [subsection (a)(1)](#a-1) or has a waiver application approved under [subsection (c)](#c) does not deem the sponsor to meet other requirements imposed under this part for a sponsor. - (f) **Periodic review and revision of standards—** - (1) **In general—** Subject to [paragraph (2)](#f-2), the [Secretary](/usc/42/1301.md?p=a-6) may periodically review the [standards](/usc/42/1320d.md?p=7) established under this section and, based on such review, may revise such [standards](/usc/42/1320d.md?p=7) if the [Secretary](/usc/42/1301.md?p=a-6) determines such revision to be appropriate. - (2) **Prohibition of midyear implementation of significant new regulatory requirements—** The [Secretary](/usc/42/1301.md?p=a-6) may not implement, other than at the beginning of a calendar year, [regulations](/usc/42/1395hh.md?p=a-1) under this section that impose new, significant regulatory requirements on a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or a [prescription drug plan](/usc/42/1395w–151.md?p=a-14). - (g) **Prohibition of State imposition of premium taxes; relation to State laws—** The provisions of sections [1395w–24(g)](/usc/42/1395w–24.md?p=g) and [1395w–26(b)(3)](/usc/42/1395w–26.md?p=b-3) of this title shall apply with respect to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and [prescription drug plans](/usc/42/1395w–151.md?p=a-14) under this part in the same manner as such sections apply to MA organizations and [MA plans](/usc/42/1395w–101.md?p=a-3-B) under part C. - (h) **Requirements relating to pharmacy benefit managers—** For plan years beginning on or after January 1, 2028: - (1) **Agreements with pharmacy benefit managers—** Each contract entered into with a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under this part with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such sponsor shall provide that any [pharmacy benefit manager](#h-7-C) acting on behalf of such sponsor has a written [agreement](/usc/42/1320b–8.md?p=a-3-A) with the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under which the [pharmacy benefit manager](#h-7-C), and any [affiliates](#h-7-A) of such [pharmacy benefit manager](#h-7-C), as applicable, agree to meet the following requirements: - (A) **No income other than bona fide service fees—** - (i) **In general—** The [pharmacy benefit manager](#h-7-C) and any [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C) shall not derive any remuneration with respect to any services provided on behalf of any entity or individual, in connection with the utilization of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), from any such entity or individual other than [bona fide service fees](#h-7-B), subject to clauses [(ii)](#h-1-A-ii) and [(iii)](#h-1-A-iii). - (ii) **Incentive payments—** For the purposes of this subsection, an incentive payment (as determined by the [Secretary](/usc/42/1301.md?p=a-6)) paid by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) to a [pharmacy benefit manager](#h-7-C) or an [affiliate](#h-7-A) of a [pharmacy benefit manager](#h-7-C) that is performing services on behalf of such sponsor shall be deemed a “[bona fide service fee](#h-7-B)” (even if such payment does not otherwise meet the definition of such term under [paragraph (7)(B)](#h-7-B)) if such payment is a flat dollar amount, is consistent with fair market value (as specified by the [Secretary](/usc/42/1301.md?p=a-6)), is related to services actually performed by the [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C), on behalf of the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) making such payment, in connection with the utilization of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), and meets additional requirements, if any, as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6). - (iii) **Clarification on rebates and discounts used to lower costs for covered part D drugs—** Rebates, discounts, and other price concessions received by a [pharmacy benefit manager](#h-7-C) or an [affiliate](#h-7-A) of a [pharmacy benefit manager](#h-7-C) from [manufacturers](/usc/42/300aa–33.md?p=3), even if such price concessions are calculated as a percentage of a [drug](/usc/42/282.md?p=j-1-A-vii)’s price, shall not be considered a [violation](/usc/42/2000e–16a.md?p=c) of the requirements of [clause (i)](#h-1-A-i) if they are fully passed through to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) and are compliant with all regulatory and subregulatory requirements related to direct and indirect remuneration for [manufacturer](/usc/42/300aa–33.md?p=3) rebates, discounts, and other price concessions under this part, [including](/usc/42/1301.md?p=b) in cases where a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) is acting as a [pharmacy benefit manager](#h-7-C) on behalf of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such [PDP sponsor](/usc/42/1395w–151.md?p=a-13). - (iv) **Evaluation of remuneration arrangements—** Components of subsets of remuneration [arrangements](/usc/42/1395x.md?p=w-1) (such as fees or other forms of compensation paid to or retained by the [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C)), as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6), between [pharmacy benefit managers](#h-7-C) or [affiliates](#h-7-A) of such [pharmacy benefit managers](#h-7-C), as applicable, and other entities involved in the dispensing or utilization of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) ([including](/usc/42/1301.md?p=b) [PDP sponsors](/usc/42/1395w–151.md?p=a-13), [manufacturers](/usc/42/300aa–33.md?p=3), pharmacies, and other entities as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6)) shall be subject to review by the [Secretary](/usc/42/1301.md?p=a-6), in consultation with the [Office](/usc/42/3058f.md?p=1) of the Inspector General of the Department of Health and Human Services, as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6). The [Secretary](/usc/42/1301.md?p=a-6), in consultation with the [Office](/usc/42/3058f.md?p=1) of the Inspector General, shall review whether remuneration under such [arrangements](/usc/42/1395x.md?p=w-1) is consistent with fair market value (as specified by the [Secretary](/usc/42/1301.md?p=a-6)) through reviews and assessments of such remuneration, as determined appropriate. - (v) **Disgorgement—** The [pharmacy benefit manager](#h-7-C) shall disgorge any remuneration paid to such [pharmacy benefit manager](#h-7-C) or an [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C) in [violation](/usc/42/2000e–16a.md?p=c) of this subparagraph to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13). - (vi) **Additional requirements—** The [pharmacy benefit manager](#h-7-C) shall— - (I) enter into a written [agreement](/usc/42/1320b–8.md?p=a-3-A) with any [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C), under which the [affiliate](#h-7-A) shall identify and disgorge any remuneration described in [clause (v)](#h-1-A-v) to the [pharmacy benefit manager](#h-7-C); and - (II) attest, subject to any requirements determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6), that the [pharmacy benefit manager](#h-7-C) has entered into a written [agreement](/usc/42/1320b–8.md?p=a-3-A) described in [subclause (I)](#h-1-A-vi-I) with any [affiliate](#h-7-A) of the [pharmacy benefit manager](#h-7-C). - (B) **Transparency regarding guarantees and cost performance evaluations—** The [pharmacy benefit manager](#h-7-C) shall— - (i) define, interpret, and apply, in a fully transparent and consistent manner for purposes of calculating or otherwise evaluating [pharmacy benefit manager](#h-7-C) performance against pricing guarantees or similar cost performance measurements related to rebates, discounts, price concessions, or net costs, terms such as— - (I) “generic [drug](/usc/42/282.md?p=j-1-A-vii)”, in a manner consistent with the definition of the term under [section 423.4 of title 42, Code of Federal Regulations](/cfr/42/423.4.md), or a successor regulation; - (II) “brand name [drug](/usc/42/282.md?p=j-1-A-vii)”, in a manner consistent with the definition of the term under [section 423.4 of title 42, Code of Federal Regulations](/cfr/42/423.4.md), or a successor regulation; - (III) “specialty [drug](/usc/42/282.md?p=j-1-A-vii)”; - (IV) “rebate”; and - (V) “discount”; - (ii) identify any [drugs](/usc/42/1395x.md?p=t-2-A), [claims](/usc/42/1320a–7a.md?p=i-2), or price concessions excluded from any pricing guarantee or other cost performance measure in a clear and consistent manner; and - (iii) where a pricing guarantee or other cost performance measure is based on a pricing benchmark other than the [wholesale acquisition cost](/usc/42/300gg–121.md?p=f-10) (as defined in [section 1395w–3a(c)(6)(B) of this title](/usc/42/1395w–3a.md?p=c-6-B)) of a [drug](/usc/42/282.md?p=j-1-A-vii), calculate and provide a [wholesale acquisition cost](/usc/42/300gg–121.md?p=f-10)-based equivalent to the pricing guarantee or other cost performance measure. - (C) **Provision of information—** - (i) **In general—** Not later than July 1 of each year, beginning in 2028, the [pharmacy benefit manager](#h-7-C) shall submit to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13), and to the [Secretary](/usc/42/1301.md?p=a-6), a report, in accordance with this subparagraph, and shall make such report available to such sponsor at no cost to such sponsor in a format specified by the [Secretary](/usc/42/1301.md?p=a-6) under [paragraph (5)](#h-5). Each such report shall include, with respect to such [PDP sponsor](/usc/42/1395w–151.md?p=a-13) and each plan offered by such sponsor, the following information with respect to the previous plan year: - (I) A list of all [drugs](/usc/42/1395x.md?p=t-2-A) covered by the plan that were dispensed [including](/usc/42/1301.md?p=b), with respect to each such [drug](/usc/42/282.md?p=j-1-A-vii)— - (aa) the brand name, generic or non-proprietary name, and National Drug Code; - (bb) the number of plan enrollees for whom the [drug](/usc/42/282.md?p=j-1-A-vii) was dispensed, the total number of prescription [claims](/usc/42/1320a–7a.md?p=i-2) for the [drug](/usc/42/282.md?p=j-1-A-vii) ([including](/usc/42/1301.md?p=b) original prescriptions and refills, counted as separate [claims](/usc/42/1320a–7a.md?p=i-2)), and the total number of dosage [units](/usc/42/1395w–114b.md?p=g-2) of the [drug](/usc/42/282.md?p=j-1-A-vii) dispensed; - (cc) the number of prescription [claims](/usc/42/1320a–7a.md?p=i-2) described in [item (bb)](#h-1-C-i-I-bb) by each type of dispensing channel through which the [drug](/usc/42/282.md?p=j-1-A-vii) was dispensed, [including](/usc/42/1301.md?p=b) retail, mail order, specialty pharmacy, long term care pharmacy, home infusion pharmacy, or other types of pharmacies or dispensers; - (dd) the average [wholesale acquisition cost](/usc/42/300gg–121.md?p=f-10), listed as cost per day’s supply, cost per dosage [unit](/usc/42/1395w–114b.md?p=g-2), and cost per typical course of [treatment](/usc/42/11851.md?p=11) (as applicable); - (ee) the average wholesale price for the [drug](/usc/42/282.md?p=j-1-A-vii), listed as price per day’s supply, price per dosage [unit](/usc/42/1395w–114b.md?p=g-2), and price per typical course of [treatment](/usc/42/11851.md?p=11) (as applicable); - (ff) the total out-of-pocket spending by plan enrollees on such [drug](/usc/42/282.md?p=j-1-A-vii) after application of any benefits under the plan, [including](/usc/42/1301.md?p=b) plan enrollee spending through copayments, coinsurance, and deductibles; - (gg) total rebates paid by the [manufacturer](/usc/42/300aa–33.md?p=3) on the [drug](/usc/42/282.md?p=j-1-A-vii) as reported under the Detailed DIR Report (or any successor report) submitted by such sponsor to the Centers for Medicare & Medicaid Services; - (hh) all other direct or indirect remuneration on the [drug](/usc/42/282.md?p=j-1-A-vii) as reported under the Detailed DIR Report (or any successor report) submitted by such sponsor to the Centers for Medicare & Medicaid Services; - (ii) the average pharmacy reimbursement amount paid by the plan for the [drug](/usc/42/282.md?p=j-1-A-vii) in the aggregate and disaggregated by dispensing channel identified in item (cc); - (jj) the average National Average [Drug](/usc/42/282.md?p=j-1-A-vii) Acquisition Cost (NADAC); and - (kk) total [manufacturer](/usc/42/300aa–33.md?p=3)-derived revenue, inclusive of [bona fide service fees](#h-7-B), attributable to the [drug](/usc/42/282.md?p=j-1-A-vii) and retained by the [pharmacy benefit manager](#h-7-C) and any [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C). - (II) In the case of a [pharmacy benefit manager](#h-7-C) that has an [affiliate](#h-7-A) that is a retail, mail order, or specialty pharmacy, with respect to [drugs](/usc/42/1395x.md?p=t-2-A) covered by such plan that were dispensed, the following information: - (aa) The percentage of total prescriptions that were dispensed by pharmacies that are an [affiliate](#h-7-A) of the [pharmacy benefit manager](#h-7-C) for each [drug](/usc/42/282.md?p=j-1-A-vii). - (bb) The interquartile range of the total combined costs paid by the plan and plan enrollees, per dosage [unit](/usc/42/1395w–114b.md?p=g-2), per course of [treatment](/usc/42/11851.md?p=11), per 30-day supply, and per 90-day supply for each [drug](/usc/42/282.md?p=j-1-A-vii) dispensed by pharmacies that are not an [affiliate](#h-7-A) of the [pharmacy benefit manager](#h-7-C) and that are included in the pharmacy network of such plan. - (cc) The interquartile range of the total combined costs paid by the plan and plan enrollees, per dosage [unit](/usc/42/1395w–114b.md?p=g-2), per course of [treatment](/usc/42/11851.md?p=11), per 30-day supply, and per 90-day supply for each [drug](/usc/42/282.md?p=j-1-A-vii) dispensed by pharmacies that are an [affiliate](#h-7-A) of the [pharmacy benefit manager](#h-7-C) and that are included in the pharmacy network of such plan. - (dd) The lowest total combined cost paid by the plan and plan enrollees, per dosage [unit](/usc/42/1395w–114b.md?p=g-2), per course of [treatment](/usc/42/11851.md?p=11), per 30-day supply, and per 90-day supply, for each [drug](/usc/42/282.md?p=j-1-A-vii) that is available from any pharmacy included in the pharmacy network of such plan. - (ee) The difference between the average acquisition cost of the [affiliate](#h-7-A), such as a pharmacy or other entity that acquires prescription [drugs](/usc/42/1395x.md?p=t-2-A), that initially acquires the [drug](/usc/42/282.md?p=j-1-A-vii) and the amount reported under [subclause (I)(jj)](#h-1-C-i-I-jj) for each [drug](/usc/42/282.md?p=j-1-A-vii). - (ff) A list inclusive of the brand name, generic or non-proprietary name, and National Drug Code of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) subject to an [agreement](/usc/42/1320b–8.md?p=a-3-A) with a covered entity under [section 256b of this title](/usc/42/256b.md) for which the [pharmacy benefit manager](#h-7-C) or an [affiliate](#h-7-A) of the [pharmacy benefit manager](#h-7-C) had a contract or other arrangement with such a covered entity in the service area of such plan. - (III) Where a [drug](/usc/42/282.md?p=j-1-A-vii) approved under [section 355(c) of title 21](/usc/21/355.md?p=c) (referred to in this subclause as the “listed [drug](/usc/42/282.md?p=j-1-A-vii)”) is covered by the plan, the following information: - (aa) A list of currently marketed generic [drugs](/usc/42/1395x.md?p=t-2-A) approved under [section 355(j) of title 21](/usc/21/355.md?p=j) pursuant to an application that references such listed [drug](/usc/42/282.md?p=j-1-A-vii) that are not covered by the plan, are covered on the same formulary tier or a formulary tier typically associated with higher [cost-sharing](/usc/42/18022.md?p=c-3-A) than the listed [drug](/usc/42/282.md?p=j-1-A-vii), or are subject to utilization management that the listed [drug](/usc/42/282.md?p=j-1-A-vii) is not subject to. - (bb) The estimated average beneficiary [cost-sharing](/usc/42/18022.md?p=c-3-A) under the plan for a 30-day supply of the listed [drug](/usc/42/282.md?p=j-1-A-vii). - (cc) Where a generic [drug](/usc/42/282.md?p=j-1-A-vii) listed under [item (aa)](#h-1-C-i-III-aa) is on a formulary tier typically associated with higher [cost-sharing](/usc/42/18022.md?p=c-3-A) than the listed [drug](/usc/42/282.md?p=j-1-A-vii), the estimated average [cost-sharing](/usc/42/18022.md?p=c-3-A) that a beneficiary would have paid for a 30-day supply of each of the generic [drugs](/usc/42/1395x.md?p=t-2-A) described in [item (aa)](#h-1-C-i-III-aa), had the plan provided coverage for such [drugs](/usc/42/1395x.md?p=t-2-A) on the same formulary tier as the listed [drug](/usc/42/282.md?p=j-1-A-vii). - (dd) A written justification for providing more favorable coverage of the listed [drug](/usc/42/282.md?p=j-1-A-vii) than the generic [drugs](/usc/42/1395x.md?p=t-2-A) described in [item (aa)](#h-1-C-i-III-aa). - (ee) The number of currently marketed generic [drugs](/usc/42/1395x.md?p=t-2-A) approved under [section 355(j) of title 21](/usc/21/355.md?p=j) pursuant to an application that references such listed [drug](/usc/42/282.md?p=j-1-A-vii). - (IV) Where a [reference product](/usc/42/1320f.md?p=c-4) (as defined in [section 262(i) of this title](/usc/42/262.md?p=i)) is covered by the plan, the following information: - (aa) A list of currently marketed [biosimilar biological products](/usc/42/1395w–3a.md?p=c-6-H) licensed under [section 262(k) of this title](/usc/42/262.md?p=k) pursuant to an application that refers to such [reference product](/usc/42/1320f.md?p=c-4) that are not covered by the plan, are covered on the same formulary tier or a formulary tier typically associated with higher [cost-sharing](/usc/42/18022.md?p=c-3-A) than the [reference product](/usc/42/1320f.md?p=c-4), or are subject to utilization management that the [reference product](/usc/42/1320f.md?p=c-4) is not subject to. - (bb) The estimated average beneficiary [cost-sharing](/usc/42/18022.md?p=c-3-A) under the plan for a 30-day supply of the [reference product](/usc/42/1320f.md?p=c-4). - (cc) Where a [biosimilar biological product](/usc/42/1395w–3a.md?p=c-6-H) listed under [item (aa)](#h-1-C-i-IV-aa) is on a formulary tier typically associated with higher [cost-sharing](/usc/42/18022.md?p=c-3-A) than the [reference product](/usc/42/1320f.md?p=c-4), the estimated average [cost-sharing](/usc/42/18022.md?p=c-3-A) that a beneficiary would have paid for a 30-day supply of each of the [biosimilar biological products](/usc/42/1395w–3a.md?p=c-6-H) described in [item (aa)](#h-1-C-i-IV-aa), had the plan provided coverage for such products on the same formulary tier as the [reference product](/usc/42/1320f.md?p=c-4). - (dd) A written justification for providing more favorable coverage of the [reference product](/usc/42/1320f.md?p=c-4) than the [biosimilar biological products](/usc/42/1395w–3a.md?p=c-6-H) described in [item (aa)](#h-1-C-i-IV-aa). - (ee) The number of currently marketed [biosimilar biological products](/usc/42/1395w–3a.md?p=c-6-H) licensed under [section 262(k) of this title](/usc/42/262.md?p=k), pursuant to an application that refers to such [reference product](/usc/42/1320f.md?p=c-4). - (V) Total gross spending on [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) by the plan, not net of rebates, fees, discounts, or other direct or indirect remuneration. - (VI) The total amount retained by the [pharmacy benefit manager](#h-7-C) or an [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C) in revenue related to utilization of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) under that plan, inclusive of [bona fide service fees](#h-7-B). - (VII) The total spending on [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) net of rebates, fees, discounts, or other direct and indirect remuneration by the plan. - (VIII) An explanation of any benefit design parameters under such plan that encourage plan enrollees to fill prescriptions at pharmacies that are an [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C), such as mail and specialty home delivery [programs](/usc/42/274l–1.md?p=4), and retail and mail auto-refill [programs](/usc/42/274l–1.md?p=4). - (IX) The following information: - (aa) A list of all brokers, consultants, advisors, and auditors that receive compensation from the [pharmacy benefit manager](#h-7-C) or an [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C) for referrals, consulting, auditing, or other services offered to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) related to pharmacy benefit management services. - (bb) The amount of compensation provided by such [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A) to each such broker, consultant, advisor, and auditor. - (cc) The methodology for calculating the amount of compensation provided by such [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A), for each such broker, consultant, advisor, and auditor. - (X) A list of all [affiliates](#h-7-A) of the [pharmacy benefit manager](#h-7-C). - (XI) A summary document submitted in a standardized template developed by the [Secretary](/usc/42/1301.md?p=a-6) that [includes](/usc/42/1301.md?p=b) such information described in [subclauses (I) through (X)](#h-1-C-i-I..h-1-C-i-X). - (ii) **Written explanation of contracts or agreements with manufacturers—** - (I) **In general—** The [pharmacy benefit manager](#h-7-C) shall, not later than 30 days after the finalization of any contract or [agreement](/usc/42/1320b–8.md?p=a-3-A) between such [pharmacy benefit manager](#h-7-C) or an [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C) and a [manufacturer](/usc/42/300aa–33.md?p=3) (or subsidiary, agent, or entity affiliated with such [manufacturer](/usc/42/300aa–33.md?p=3)) that makes rebates, discounts, payments, or other financial incentives related to one or more [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) or [other prescription drugs](#h-1-C-ii-III), as applicable, of the [manufacturer](/usc/42/300aa–33.md?p=3) directly or indirectly contingent upon coverage, formulary placement, or utilization management conditions on any other [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) or [other prescription drugs](#h-1-C-ii-III), as applicable, submit to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) a written explanation of such contract or [agreement](/usc/42/1320b–8.md?p=a-3-A). - (II) **Requirements—** A written explanation under [subclause (I)](#h-1-C-ii-I) shall— - (aa) include the [manufacturer](/usc/42/300aa–33.md?p=3) subject to the contract or [agreement](/usc/42/1320b–8.md?p=a-3-A), all [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) and [other prescription drugs](#h-1-C-ii-III), as applicable, subject to the contract or [agreement](/usc/42/1320b–8.md?p=a-3-A) and the [manufacturers](/usc/42/300aa–33.md?p=3) of such [drugs](/usc/42/1395x.md?p=t-2-A), and a high-level description of the terms of such contract or [agreement](/usc/42/1320b–8.md?p=a-3-A) and how such terms apply to such [drugs](/usc/42/1395x.md?p=t-2-A); and - (bb) be certified by the [Chief Executive Officer](/usc/42/12511.md?p=9), Chief Financial Officer, or General Counsel of such [pharmacy benefit manager](#h-7-C), or [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C), as applicable, or an individual delegated with the authority to sign on behalf of one of these officers, who reports directly to the officer. - (III) **Definition of other prescription drugs—** For purposes of this clause, the term “other prescription drugs” means prescription [drugs](/usc/42/1395x.md?p=t-2-A) covered as supplemental benefits under this part or prescription [drugs](/usc/42/1395x.md?p=t-2-A) paid outside of this part. - (D) **Audit rights—** - (i) **In general—** Not less than once a year, at the request of the [PDP sponsor](/usc/42/1395w–151.md?p=a-13), the [pharmacy benefit manager](#h-7-C) shall allow for an audit of the [pharmacy benefit manager](#h-7-C) to ensure compliance with all terms and conditions under the written [agreement](/usc/42/1320b–8.md?p=a-3-A) described in this paragraph and the accuracy of information reported under [subparagraph (C)](#h-1-C). - (ii) **Auditor—** The [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall have the right to select an auditor. The [pharmacy benefit manager](#h-7-C) shall not impose any limitations on the selection of such auditor. - (iii) **Provision of information—** The [pharmacy benefit manager](#h-7-C) shall make available to such auditor all records, data, contracts, and other information necessary to confirm the accuracy of information reported under [subparagraph (C)](#h-1-C), subject to reasonable restrictions on how such information must be reported to prevent redisclosure of such information. - (iv) **Timing—** The [pharmacy benefit manager](#h-7-C) must provide information under [clause (iii)](#h-1-D-iii) and other information, data, and records relevant to the audit to such auditor within 6 months of the initiation of the audit and respond to requests for additional information from such auditor within 30 days after the request for additional information. - (v) **Information from affiliates—** The [pharmacy benefit manager](#h-7-C) shall be responsible for providing to such auditor information required to be reported under [subparagraph (C)](#h-1-C) or under clause (iii) of this subparagraph that is owned or held by an [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C). - (2) **Enforcement—** - (A) **In general—** Each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall— - (i) disgorge to the [Secretary](/usc/42/1301.md?p=a-6) any amounts disgorged to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) by a [pharmacy benefit manager](#h-7-C) under [paragraph (1)(A)(v)](#h-1-A-v); - (ii) require, in a written [agreement](/usc/42/1320b–8.md?p=a-3-A) with any [pharmacy benefit manager](#h-7-C) acting on behalf of such sponsor or [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C), that such [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A) reimburse the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) for any civil money penalty imposed on the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) as a result of the failure of the [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A) to meet the requirements of [paragraph (1)](#h-1) that are applicable to the [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A) under the [agreement](/usc/42/1320b–8.md?p=a-3-A); and - (iii) require, in a written [agreement](/usc/42/1320b–8.md?p=a-3-A) with any such [pharmacy benefit manager](#h-7-C) acting on behalf of such sponsor or [affiliate](#h-7-A) of such [pharmacy benefit manager](#h-7-C), that such [pharmacy benefit manager](#h-7-C) or [affiliate](#h-7-A) be subject to punitive remedies for breach of contract for failure to comply with the requirements applicable under [paragraph (1)](#h-1). - (B) **Reporting of alleged violations—** The [Secretary](/usc/42/1301.md?p=a-6) shall make available and maintain a mechanism for [manufacturers](/usc/42/300aa–33.md?p=3), [PDP sponsors](/usc/42/1395w–151.md?p=a-13), pharmacies, and other entities that have [contractual relationships](/usc/42/9601.md?p=35-A) with [pharmacy benefit managers](#h-7-C) or [affiliates](#h-7-A) of such [pharmacy benefit managers](#h-7-C) to report, on a confidential basis, alleged [violations](/usc/42/2000e–16a.md?p=c) of [paragraph (1)(A)](#h-1-A) or [subparagraph (C)](#h-2-C). - (C) **Anti-retaliation and anti-coercion—** Consistent with applicable Federal or [State](/usc/42/1397n–12.md?p=6) law, a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall not— - (i) retaliate against an individual or entity for reporting an alleged [violation](/usc/42/2000e–16a.md?p=c) under [subparagraph (B)](#h-2-B); or - (ii) coerce, intimidate, threaten, or interfere with the ability of an individual or entity to report any such alleged [violations](/usc/42/2000e–16a.md?p=c). - (3) **Certification of compliance—** - (A) **In general—** Each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) shall furnish to the [Secretary](/usc/42/1301.md?p=a-6) (at a time and in a manner specified by the [Secretary](/usc/42/1301.md?p=a-6)) an annual certification of compliance with this subsection, as well as such information as the [Secretary](/usc/42/1301.md?p=a-6) determines necessary to carry out this subsection. - (B) **Implementation—** Notwithstanding any other provision of law, the [Secretary](/usc/42/1301.md?p=a-6) may implement this paragraph by [program](/usc/42/274l–1.md?p=4) instruction or otherwise. - (4) **Rule of construction—** Nothing in this subsection shall be construed as— - (A) prohibiting flat dispensing fees or reimbursement or payment for ingredient costs ([including](/usc/42/1301.md?p=b) customary, industry-[standard](/usc/42/1320d.md?p=7) discounts directly related to [drug](/usc/42/282.md?p=j-1-A-vii) acquisition that are retained by pharmacies or wholesalers) to entities that acquire or dispense prescription [drugs](/usc/42/1395x.md?p=t-2-A); or - (B) modifying regulatory requirements or sub-regulatory [program](/usc/42/274l–1.md?p=4) instruction or guidance related to pharmacy payment, reimbursement, or dispensing fees. - (5) **Standard formats—** - (A) **In general—** Not later than June 1, 2027, the [Secretary](/usc/42/1301.md?p=a-6) shall specify [standard](/usc/42/1320d.md?p=7), machine-readable formats for [pharmacy benefit managers](#h-7-C) to submit annual reports required under [paragraph (1)(C)(i)](#h-1-C-i). - (B) **Implementation—** Notwithstanding any other provision of law, the [Secretary](/usc/42/1301.md?p=a-6) may implement this paragraph by [program](/usc/42/274l–1.md?p=4) instruction or otherwise. - (6) **Confidentiality—** - (A) **In general—** Information disclosed by a [pharmacy benefit manager](#h-7-C), an [affiliate](#h-7-A) of a [pharmacy benefit manager](#h-7-C), a [PDP sponsor](/usc/42/1395w–151.md?p=a-13), or a pharmacy under this subsection that is not otherwise publicly available or available for purchase shall not be disclosed by the [Secretary](/usc/42/1301.md?p=a-6) or a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) receiving the information, except that the [Secretary](/usc/42/1301.md?p=a-6) may disclose the information for the following purposes: - (i) As the [Secretary](/usc/42/1301.md?p=a-6) determines necessary to carry out this part. - (ii) To permit the Comptroller General to review the information provided. - (iii) To permit the [Director](/usc/42/5061.md?p=1) of the Congressional Budget [Office](/usc/42/3058f.md?p=1) to review the information provided. - (iv) To permit the [Executive Director](/usc/42/4370m.md?p=12) of the Medicare Payment Advisory [Commission](/usc/42/2000ff.md?p=1) to review the information provided. - (v) To the [Attorney General](/usc/42/14902.md?p=6) for the purposes of conducting oversight and enforcement under this subchapter. - (vi) To the Inspector General of the Department of Health and Human Services in accordance with its authorities under the Inspector General Act of 1978 ([section 406 of title 5](/usc/5/406.md)), and other applicable statutes. - (B) **Restriction on use of information—** The [Secretary](/usc/42/1301.md?p=a-6), the Comptroller General, the [Director](/usc/42/5061.md?p=1) of the Congressional Budget [Office](/usc/42/3058f.md?p=1), and the [Executive Director](/usc/42/4370m.md?p=12) of the Medicare Payment Advisory [Commission](/usc/42/2000ff.md?p=1) shall not report on or disclose information disclosed pursuant to [subparagraph (A)](#h-6-A) to the public in a manner that would identify— - (i) a specific [pharmacy benefit manager](#h-7-C), [affiliate](#h-7-A), pharmacy, [manufacturer](/usc/42/300aa–33.md?p=3), wholesaler, [PDP sponsor](/usc/42/1395w–151.md?p=a-13), or plan; or - (ii) contract prices, rebates, discounts, or other remuneration for specific [drugs](/usc/42/1395x.md?p=t-2-A) in a manner that may allow the identification of specific contracting parties or of such specific [drugs](/usc/42/1395x.md?p=t-2-A). - (7) **Definitions—** For purposes of this subsection: - (A) **Affiliate—** The term “affiliate” means, with respect to any [pharmacy benefit manager](#h-7-C) or [PDP sponsor](/usc/42/1395w–151.md?p=a-13), any entity that, directly or indirectly— - (i) owns or is owned by, controls or is controlled by, or is otherwise related in any ownership structure to such [pharmacy benefit manager](#h-7-C) or [PDP sponsor](/usc/42/1395w–151.md?p=a-13); or - (ii) acts as a contractor, principal, or agent to such [pharmacy benefit manager](#h-7-C) or [PDP sponsor](/usc/42/1395w–151.md?p=a-13), insofar as such contractor, principal, or agent performs any of the functions described under [subparagraph (C)](#h-7-C). - (B) **Bona fide service fee—** The term “bona fide service fee” means a fee that is reflective of the fair market value (as specified by the [Secretary](/usc/42/1301.md?p=a-6), through notice and comment rulemaking) for a bona fide, itemized service actually performed on behalf of an entity, that the entity would otherwise perform (or contract for) in the absence of the service arrangement and that is not passed on in whole or in part to a client or [customer](/usc/42/7275.md?p=5), whether or not the entity takes title to the [drug](/usc/42/282.md?p=j-1-A-vii). Such fee must be a flat dollar amount and shall not be directly or indirectly based on, or contingent upon— - (i) [drug](/usc/42/282.md?p=j-1-A-vii) price, such as [wholesale acquisition cost](/usc/42/300gg–121.md?p=f-10) or [drug](/usc/42/282.md?p=j-1-A-vii) benchmark price (such as average wholesale price); - (ii) the amount of discounts, rebates, fees, or other direct or indirect remuneration with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) dispensed to enrollees in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14), except as permitted pursuant to [paragraph (1)(A)(ii)](#h-1-A-ii); - (iii) coverage or formulary placement decisions or the volume or value of any referrals or business generated between the parties to the arrangement; or - (iv) any other amounts or methodologies prohibited by the [Secretary](/usc/42/1301.md?p=a-6). - (C) **Pharmacy benefit manager—** The term “pharmacy benefit manager” means any [person](/usc/42/1301.md?p=a-3) or entity that, either directly or through an intermediary, acts as a price negotiator or group purchaser on behalf of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or [prescription drug plan](/usc/42/1395w–151.md?p=a-14), or manages the prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits provided by such sponsor or plan, [including](/usc/42/1301.md?p=b) the processing and payment of [claims](/usc/42/1320a–7a.md?p=i-2) for prescription [drugs](/usc/42/1395x.md?p=t-2-A), the performance of [drug](/usc/42/282.md?p=j-1-A-vii) utilization review, the processing of [drug](/usc/42/282.md?p=j-1-A-vii) prior [authorization](/usc/42/4370m.md?p=3) requests, the adjudication of appeals or grievances related to the prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefit, contracting with network pharmacies, controlling the cost of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), or the provision of related services. Such term [includes](/usc/42/1301.md?p=b) any [person](/usc/42/1301.md?p=a-3) or entity that carries out one or more of the activities described in the preceding sentence, irrespective of whether such [person](/usc/42/1301.md?p=a-3) or entity calls itself a “pharmacy benefit manager”. # §1395w–113. Premiums; late enrollment penalty - (a) **Monthly beneficiary premium—** - (1) **Computation—** - (A) **In general—** The monthly beneficiary premium for a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) is the base beneficiary premium computed under paragraph [(2)](#a-2) or [(8)](#a-8) (as applicable) as adjusted under this paragraph. - (B) **Adjustment to reflect difference between bid and national average bid—** - (i) **Above average bid—** If for a month the amount of the [standardized bid amount](#a-5) (as defined in [paragraph (5)](#a-5)) exceeds the amount of the [adjusted national average monthly bid amount](#a-1-B-iii) (as defined in [clause (iii)](#a-1-B-iii)), the base beneficiary premium for the month shall be increased by the amount of such excess. - (ii) **Below average bid—** If for a month the amount of the [adjusted national average monthly bid amount](#a-1-B-iii) for the month exceeds the [standardized bid amount](#a-5), the base beneficiary premium for the month shall be decreased by the amount of such excess. - (iii) **Adjusted national average monthly bid amount defined—** For purposes of this subparagraph, the term “adjusted national average monthly bid amount” means the national average monthly bid amount computed under [paragraph (4)](#a-4), as adjusted under [section 1395w–115(c)(2) of this title](/usc/42/1395w–115.md?p=c-2). - (C) **Increase for supplemental prescription drug benefits—** The base beneficiary premium shall be increased by the portion of the [PDP approved bid](#a-6) that is attributable to supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits. - (D) **Increase for late enrollment penalty—** The base beneficiary premium shall be increased by the amount of any late enrollment penalty under [subsection (b)](#b). - (E) **Decrease for low-income assistance—** The monthly beneficiary premium is subject to decrease in the case of a [subsidy eligible individual](/usc/42/1395w–114.md?p=a-3-A) under [section 1395w–114 of this title](/usc/42/1395w–114.md). - (F) **Increase based on income—** The monthly beneficiary premium shall be increased pursuant to [paragraph (7)](#a-7). - (G) **Uniform premium—** Except as provided in subparagraphs [(D)](#a-1-D), [(E)](#a-1-E), and [(F)](#a-1-F), the monthly beneficiary premium for a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) in a [PDP region](/usc/42/1395w–151.md?p=a-12) is the same for all [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in the plan. - (2) **Base beneficiary premium—** Subject to [paragraph (8)](#a-8), the base beneficiary premium under this paragraph for a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) for a month is equal to the product[^1] — - (A) the beneficiary premium percentage (as specified in [paragraph (3)](#a-3)); and - (B) the national average monthly bid amount (computed under [paragraph (4)](#a-4)) for the month. - (3) **Beneficiary premium percentage—** For purposes of this subsection, the beneficiary premium percentage for any year is the percentage equal to a fraction— - (A) the numerator of which is 25.5 percent (or, for 2030 and each subsequent year, the percent specified under [paragraph (9)](#a-9)); and - (B) the denominator of which is 100 percent minus a percentage equal to— - (i) the total reinsurance payments which the [Secretary](/usc/42/1301.md?p=a-6) estimates are payable under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b) with respect to the [coverage year](/usc/42/1395w–132.md?p=a-3-C-iii); divided by - (ii) the sum of— - (I) the amount estimated under [clause (i)](#a-3-B-i) for the year; and - (II) the total payments which the [Secretary](/usc/42/1301.md?p=a-6) estimates will be paid to [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) that are attributable to the [standardized bid amount](#a-5) during the year, taking into account amounts paid by the [Secretary](/usc/42/1301.md?p=a-6) and enrollees. - (4) **Computation of national average monthly bid amount—** - (A) **In general—** For each year (beginning with 2006) the [Secretary](/usc/42/1301.md?p=a-6) shall compute a national average monthly bid amount equal to the average of the [standardized bid amounts](#a-5) (as defined in [paragraph (5)](#a-5)) for each [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and for each [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) described in [section 1395w–21(a)(2)(A)(i) of this title](/usc/42/1395w–21.md?p=a-2-A-i). Such average does not take into account the bids submitted for [MSA plans](/usc/42/1395w–28.md?p=b-3-A), MA private fee-for-service plan, and specialized [MA plans](/usc/42/1395w–101.md?p=a-3-B) for [special needs individuals](/usc/42/1395w–28.md?p=b-6-B), PACE [programs](/usc/42/274l–1.md?p=4) under [section 1395eee of this title](/usc/42/1395eee.md) (pursuant to [section 1395w–131(f) of this title](/usc/42/1395w–131.md?p=f)), and under reasonable cost reimbursement contracts under [section 1395mm(h) of this title](/usc/42/1395mm.md?p=h) (pursuant to [section 1395w–131(e) of this title](/usc/42/1395w–131.md?p=e)). - (B) **Weighted average—** - (i) **In general—** The monthly national average monthly bid amount computed under [subparagraph (A)](#a-4-A) for a year shall be a weighted average, with the weight for each plan being equal to the average number of [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in such plan in the reference month (as defined in [section 1395w–27a(f)(4) of this title](/usc/42/1395w–27a.md?p=f-4)). - (ii) **Special rule for 2006—** For purposes of applying this paragraph for 2006, the [Secretary](/usc/42/1301.md?p=a-6) shall establish procedures for determining the weighted average under [clause (i)](#a-4-B-i) for 2005. - (5) **Standardized bid amount defined—** For purposes of this subsection, the term “standardized bid amount” means the following: - (A) **Prescription drug plans—** - (i) **Basic coverage—** In the case of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that provides [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3), the [PDP approved bid](#a-6) (as defined in [paragraph (6)](#a-6)). - (ii) **Supplemental coverage—** In the case of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that provides supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage, the portion of the [PDP approved bid](#a-6) that is attributable to [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3). - (B) **MA–PD plans—** In the case of an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), the portion of the accepted bid amount that is attributable to [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3). - (6) **PDP approved bid defined—** For purposes of this part, the term “PDP approved bid” means, with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14), the bid amount approved for the plan under this part. - (7) **Increase in base beneficiary premium based on income—** - (A) **In general—** In the case of an individual whose [modified adjusted gross income](#a-7-C) exceeds the threshold amount applicable under paragraph (2) of [section 1395r(i) of this title](/usc/42/1395r.md?p=i) ([including](/usc/42/1301.md?p=b) application of [paragraph (5)](/usc/42/1395r.md?p=i-5) of such section) for the calendar year, the monthly amount of the beneficiary premium applicable under this section for a month after December 2010 shall be increased by the monthly adjustment amount specified in [subparagraph (B)](#a-7-B). - (B) **Monthly adjustment amount—** The monthly adjustment amount specified in this subparagraph for an individual for a month in a year is equal to the product of— - (i) the quotient obtained by dividing— - (I) the [applicable percentage](/usc/42/609.md?p=a-7-B-ii) determined under paragraph (3)(C) of [section 1395r(i) of this title](/usc/42/1395r.md?p=i) ([including](/usc/42/1301.md?p=b) application of [paragraph (5)](/usc/42/1395r.md?p=i-5) of such section) for the individual for the calendar year reduced by 25.5 percent (or, for 2030 and each subsequent year, the percent specified under [paragraph (9)](#a-9)); by - (II) 25.5 percent (or, for 2030 and each subsequent year, the percent specified under [paragraph (9)](#a-9)); and - (ii) the base beneficiary premium (as computed under paragraph [(2)](#a-2) or [(8)](#a-8) (as applicable)). - (C) **Modified adjusted gross income—** For purposes of this paragraph, the term “modified adjusted gross income” has the meaning given such term in subparagraph (A) of [section 1395r(i)(4) of this title](/usc/42/1395r.md?p=i-4), determined for the taxable year applicable under subparagraphs [(B)](/usc/42/1395r.md?p=i-4-B) and [(C)](/usc/42/1395r.md?p=i-4-C) of such section. - (D) **Determination by Commissioner of Social Security—** The [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security shall make any determination necessary to carry out the [income](/usc/42/292s.md?p=c-4)-related increase in the base beneficiary premium under this paragraph. - (E) **Procedures to assure correct income-related increase in base beneficiary premium—** - (i) **Disclosure of base beneficiary premium—** Not later than September 15 of each year beginning with 2010, the [Secretary](/usc/42/1301.md?p=a-6) shall disclose to the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security the amount of the base beneficiary premium (as computed under paragraph [(2)](#a-2) or [(8)](#a-8) (as applicable)) for the purpose of carrying out the [income](/usc/42/292s.md?p=c-4)-related increase in the base beneficiary premium under this paragraph with respect to the following year. - (ii) **Additional disclosure—** Not later than October 15 of each year beginning with 2010, the [Secretary](/usc/42/1301.md?p=a-6) shall disclose to the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security the following information for the purpose of carrying out the [income](/usc/42/292s.md?p=c-4)-related increase in the base beneficiary premium under this paragraph with respect to the following year: - (I) The [modified adjusted gross income](#a-7-C) threshold applicable under paragraph (2) of [section 1395r(i) of this title](/usc/42/1395r.md?p=i) ([including](/usc/42/1301.md?p=b) application of [paragraph (5)](/usc/42/1395r.md?p=i-5) of such section). - (II) The [applicable percentage](/usc/42/609.md?p=a-7-B-ii) determined under paragraph (3)(C) of [section 1395r(i) of this title](/usc/42/1395r.md?p=i) ([including](/usc/42/1301.md?p=b) application of [paragraph (5)](/usc/42/1395r.md?p=i-5) of such section). - (III) The monthly adjustment amount specified in [subparagraph (B)](#a-7-B). - (IV) Any other information the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security determines necessary to carry out the [income](/usc/42/292s.md?p=c-4)-related increase in the base beneficiary premium under this paragraph. - (F) **Rule of construction—** The formula used to determine the monthly adjustment amount specified under [subparagraph (B)](#a-7-B) shall only be used for the purpose of determining such monthly adjustment amount under such subparagraph. - (8) **Premium stabilization—** - (A) **In general—** The base beneficiary premium under this paragraph for a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) for a month in 2024 through 2029 shall be computed as follows: - (i) **2024—** The base beneficiary premium for a month in 2024 shall be equal to the lesser of— - (I) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2023 increased by 6 percent; or - (II) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2024 that would have applied if this paragraph had not been enacted. - (ii) **2025—** The base beneficiary premium for a month in 2025 shall be equal to the lesser of— - (I) the base beneficiary premium computed under [clause (i)](#a-8-A-i) for a month in 2024 increased by 6 percent; or - (II) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2025 that would have applied if this paragraph had not been enacted. - (iii) **2026—** The base beneficiary premium for a month in 2026 shall be equal to the lesser of— - (I) the base beneficiary premium computed under [clause (ii)](#a-8-A-ii) for a month in 2025 increased by 6 percent; or - (II) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2026 that would have applied if this paragraph had not been enacted. - (iv) **2027—** The base beneficiary premium for a month in 2027 shall be equal to the lesser of— - (I) the base beneficiary premium computed under [clause (iii)](#a-8-A-iii) for a month in 2026 increased by 6 percent; or - (II) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2027 that would have applied if this paragraph had not been enacted. - (v) **2028—** The base beneficiary premium for a month in 2028 shall be equal to the lesser of— - (I) the base beneficiary premium computed under [clause (iv)](#a-8-A-iv) for a month in 2027 increased by 6 percent; or - (II) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2028 that would have applied if this paragraph had not been enacted. - (vi) **2029—** The base beneficiary premium for a month in 2029 shall be equal to the lesser of— - (I) the base beneficiary premium computed under [clause (v)](#a-8-A-v) for a month in 2028 increased by 6 percent; or - (II) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2029 that would have applied if this paragraph had not been enacted. - (B) **Clarification regarding 2030 and subsequent years—** The base beneficiary premium for a month in 2030 or a subsequent year shall be computed under [paragraph (2)](#a-2) without regard to this paragraph. - (9) **Percent specified—** - (A) **In general—** Subject to [subparagraph (B)](#a-9-B), for purposes of [paragraph (3)(A)](#a-3-A), the percent specified under this paragraph for 2030 and each subsequent year is the percent that the [Secretary](/usc/42/1301.md?p=a-6) determines is necessary to ensure that the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2030 is equal to the lesser of— - (i) the base beneficiary premium computed under [paragraph (8)(A)(vi)](#a-8-A-vi) for a month in 2029 increased by 6 percent; or - (ii) the base beneficiary premium computed under [paragraph (2)](#a-2) for a month in 2030 that would have applied if this paragraph had not been enacted. - (B) **Floor—** The percent specified under [subparagraph (A)](#a-9-A) may not be less than 20 percent. - (b) **Late enrollment penalty—** - (1) **In general—** Subject to the succeeding provisions of this subsection, in the case of a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) described in [paragraph (2)](#b-2) with respect to a [continuous period of eligibility](#b-7-A), there shall be an increase in the monthly beneficiary premium established under [subsection (a)](#a) in an amount determined under [paragraph (3)](#b-3). - (2) **Individuals subject to penalty—** A [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) described in this paragraph is, with respect to a [continuous period of eligibility](#b-7-A), an individual for whom there is a continuous period of 63 days or longer (all of which in such [continuous period of eligibility](#b-7-A)) beginning on the day after the last date of the individual’s initial enrollment period under [section 1395w–101(b)(2) of this title](/usc/42/1395w–101.md?p=b-2) and ending on the date of enrollment under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) during all of which the individual was not covered under any [creditable prescription drug coverage](#b-4). - (3) **Amount of penalty—** - (A) **In general—** The amount determined under this paragraph for a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) for a [continuous period of eligibility](#b-7-A) is the greater of— - (i) an amount that the [Secretary](/usc/42/1301.md?p=a-6) determines is actuarially sound for each [uncovered month](#b-3-B) (as defined in [subparagraph (B)](#b-3-B)) in the same [continuous period of eligibility](#b-7-A); or - (ii) 1 percent of the base beneficiary premium (computed under paragraph [(2)](#a-2) or [(8)](#a-8) of subsection (a) (as applicable)) for each such [uncovered month](#b-3-B) in such period. - (B) **Uncovered month defined—** For purposes of this subsection, the term “uncovered month” means, with respect to a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A), any month beginning after the end of the initial enrollment period under [section 1395w–101(b)(2) of this title](/usc/42/1395w–101.md?p=b-2) unless the individual can demonstrate that the individual had [creditable prescription drug coverage](#b-4) (as defined in [paragraph (4)](#b-4)) for any portion of such month. - (4) **Creditable prescription drug coverage defined—** For purposes of this part, the term “creditable prescription drug coverage” means any of the following coverage, but only if the coverage meets the requirement of [paragraph (5)](#b-5): - (A) **Coverage under prescription drug plan or MA–PD plan—** Coverage under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or under an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (B) **Medicaid—** Coverage under a medicaid plan under subchapter XIX or under a waiver under [section 1315 of this title](/usc/42/1315.md). - (C) **Group health plan—** Coverage under a [group health plan](/usc/42/1320d–9.md?p=b-2), [including](/usc/42/1301.md?p=b) a health benefits plan under [chapter 89](/usc/5/chptIII-sptG-ch89.md) of title 5 (commonly known as the Federal [employees](/usc/42/1320a–7h.md?p=e-7) health benefits [program](/usc/42/274l–1.md?p=4)), and a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7) (as defined in [section 1395w–132(a)(2) of this title](/usc/42/1395w–132.md?p=a-2)). - (D) **State pharmaceutical assistance program—** Coverage under a [State pharmaceutical assistance program](/usc/42/1395w–133.md?p=b) described in [section 1395w–133(b)(1) of this title](/usc/42/1395w–133.md?p=b-1). - (E) **Veterans’ coverage of prescription drugs—** Coverage for veterans, and survivors and dependents of veterans, under [chapter 17](/usc/38/chptII-ch17.md) of title 38. - (F) **Prescription drug coverage under medigap policies—** Coverage under a [medicare supplemental policy](/usc/42/1320d–9.md?p=b-2) under [section 1395ss of this title](/usc/42/1395ss.md) that provides benefits for prescription [drugs](/usc/42/1395x.md?p=t-2-A) (whether or not such coverage conforms to the [standards](/usc/42/1320d.md?p=7) for packages of benefits under [section 1395ss(p)(1) of this title](/usc/42/1395ss.md?p=p-1)). - (G) **Military coverage (including TRICARE)—** Coverage under [chapter 55](/usc/10/chstA-ptII-ch55.md) of title 10. - (H) **Other coverage—** Such other coverage as the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate. - (5) **Actuarial equivalence requirement—** Coverage meets the requirement of this paragraph only if the coverage is determined (in a manner specified by the [Secretary](/usc/42/1301.md?p=a-6)) to provide coverage of the cost of prescription [drugs](/usc/42/1395x.md?p=t-2-A) the actuarial value of which (as defined by the [Secretary](/usc/42/1301.md?p=a-6)) to the individual equals or exceeds the actuarial value of [standard prescription drug coverage](/usc/42/1395w–102.md?p=b) (as determined under [section 1395w–111(c) of this title](/usc/42/1395w–111.md?p=c)). - (6) **Procedures to document creditable prescription drug coverage—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish procedures ([including](/usc/42/1301.md?p=b) the form, manner, and time) for the documentation of [creditable prescription drug coverage](#b-4), [including](/usc/42/1301.md?p=b) procedures to assist in determining whether coverage meets the requirement of [paragraph (5)](#b-5). - (B) **Disclosure by entities offering creditable prescription drug coverage—** - (i) **In general—** Each entity that offers prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage of the type described in [subparagraphs (B) through (H)](#b-4-B..b-4-H) of paragraph (4) shall provide for disclosure, in a form, manner, and time consistent with [standards](/usc/42/1320d.md?p=7) established by the [Secretary](/usc/42/1301.md?p=a-6), to the [Secretary](/usc/42/1301.md?p=a-6) and [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) of whether the coverage meets the requirement of [paragraph (5)](#b-5) or whether such coverage is changed so it no longer meets such requirement. - (ii) **Disclosure of non-creditable coverage—** In the case of such coverage that does not meet such requirement, the disclosure to [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) under this subparagraph shall include information regarding the fact that because such coverage does not meet such requirement there are limitations on the periods in a year in which the individuals may enroll under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) and that any such enrollment is subject to a late enrollment penalty under this subsection. - (C) **Waiver of requirement—** In the case of a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who was enrolled in prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage of the type described in [subparagraphs (B) through (H)](#b-4-B..b-4-H) of paragraph (4) which is not [creditable prescription drug coverage](#b-4) because it does not meet the requirement of [paragraph (5)](#b-5), the individual may apply to the [Secretary](/usc/42/1301.md?p=a-6) to have such coverage treated as [creditable prescription drug coverage](#b-4) if the individual establishes that the individual was not adequately informed that such coverage did not meet such requirement. - (7) **Continuous period of eligibility—** - (A) **In general—** Subject to [subparagraph (B)](#b-7-B), for purposes of this subsection, the term “continuous period of eligibility” means, with respect to a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A), the period that begins with the first day on which the individual is eligible to enroll in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) under this part and ends with the individual’s death. - (B) **Separate period—** Any period during all of which a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) is entitled to [hospital](/usc/42/1395dd.md?p=e-5) insurance benefits under part A and— - (i) which terminated in or before the month preceding the month in which the individual attained age 65; or - (ii) for which the basis for eligibility for such entitlement changed between [section 426(b) of this title](/usc/42/426.md?p=b) and [section 426(a) of this title](/usc/42/426.md?p=a), between 426(b)[^2] of this title and [section 426–1 of this title](/usc/42/426–1.md), or between [section 426–1 of this title](/usc/42/426–1.md) and [section 426(a) of this title](/usc/42/426.md?p=a), shall be a separate [continuous period of eligibility](#b-7-A) with respect to the individual (and each such period which terminates shall be deemed not to have existed for purposes of subsequently applying this paragraph). - (8) **Waiver of penalty for subsidy-eligible individuals—** In no case shall a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is determined to be a [subsidy eligible individual](/usc/42/1395w–114.md?p=a-3-A) (as defined in [section 1395w–114(a)(3) of this title](/usc/42/1395w–114.md?p=a-3)) be subject to an increase in the monthly beneficiary premium established under [subsection (a)](#a). - (c) **Collection of monthly beneficiary premiums—** - (1) **In general—** Subject to paragraphs [(2)](#c-2), [(3)](#c-3), and [(4)](#c-4), the provisions of [section 1395w–24(d) of this title](/usc/42/1395w–24.md?p=d) shall apply to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and premiums (and any late enrollment penalty) under this part in the same manner as they apply to MA organizations and beneficiary premiums under part C, except that any reference to a [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3) is deemed for this purpose a reference to the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10). - (2) **Crediting of late enrollment penalty—** - (A) **Portion attributable to increased actuarial costs—** With respect to late enrollment penalties imposed under [subsection (b)](#b), the [Secretary](/usc/42/1301.md?p=a-6) shall specify the portion of such a penalty that the [Secretary](/usc/42/1301.md?p=a-6) estimates is attributable to increased actuarial costs assumed by the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization (and not taken into account through risk adjustment provided under [section 1395w–115(c)(1) of this title](/usc/42/1395w–115.md?p=c-1) or through reinsurance payments under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b)) as a result of such late enrollment. - (B) **Collection through withholding—** In the case of a late enrollment penalty that is collected from a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) in the manner described in [section 1395w–24(d)(2)(A) of this title](/usc/42/1395w–24.md?p=d-2-A), the [Secretary](/usc/42/1301.md?p=a-6) shall provide that only the portion of such penalty estimated under [subparagraph (A)](#c-2-A) shall be paid to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization offering the part D plan in which the individual is enrolled. - (C) **Collection by plan—** In the case of a late enrollment penalty that is collected from a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) in a manner other than the manner described in [section 1395w–24(d)(2)(A) of this title](/usc/42/1395w–24.md?p=d-2-A), the [Secretary](/usc/42/1301.md?p=a-6) shall establish procedures for reducing payments otherwise made to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization by an amount equal to the amount of such penalty less the portion of such penalty estimated under [subparagraph (A)](#c-2-A). - (3) **Fallback plans—** In applying this subsection in the case of a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4), [paragraph (2)](#c-2) shall not apply and the monthly beneficiary premium shall be collected in the manner specified in [section 1395w–24(d)(2)(A) of this title](/usc/42/1395w–24.md?p=d-2-A) (or such other manner as may be provided under [section 1395s of this title](/usc/42/1395s.md) in the case of monthly premiums under [section 1395r of this title](/usc/42/1395r.md)). - (4) **Collection of monthly adjustment amount—** - (A) **In general—** Notwithstanding any provision of this subsection or [section 1395w–24(d)(2) of this title](/usc/42/1395w–24.md?p=d-2), subject to [subparagraph (B)](#c-4-B), the amount of the [income](/usc/42/292s.md?p=c-4)-related increase in the base beneficiary premium for an individual for a month (as determined under [subsection (a)(7)](#a-7)) shall be paid through withholding from benefit payments in the manner provided under [section 1395s of this title](/usc/42/1395s.md). - (B) **Agreements—** In the case where the monthly benefit payments of an individual that are withheld under [subparagraph (A)](#c-4-A) are insufficient to pay the amount described in such subparagraph, the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security shall enter into [agreements](/usc/42/1320b–8.md?p=a-3-A) with the [Secretary](/usc/42/1301.md?p=a-6), the [Director](/usc/42/5061.md?p=1) of the [Office](/usc/42/3058f.md?p=1) of Personnel Management, and the Railroad Retirement [Board](/usc/42/10261.md?p=2) as necessary in order to allow other [agencies](/usc/42/1397n–12.md?p=1) to collect the amount described in [subparagraph (A)](#c-4-A) that was not withheld under such subparagraph. # §1395w–114. Premium and cost-sharing subsidies for low-income individuals - (a) **Income-related subsidies for certain individuals—** - (1) **Individuals with certain low incomes—** In the case of a [subsidy eligible individual](#a-3-A) (as defined in [paragraph (3)](#a-3)) who is determined to have [income](/usc/42/292s.md?p=c-4) that is below 135 percent (or, with respect to a plan year beginning on or after January 1, 2024, 150 percent) of the [poverty line](#a-3-C-ii) applicable to a [family](/usc/42/290ff–4.md?p=d-2) of the size involved and who meets the resources requirement described in [paragraph (3)(D)](#a-3-D) (or, with respect to a plan year beginning on or after January 1, 2024, [paragraph (3)(E)](#a-3-E)) or who is covered under this paragraph under [paragraph (3)(B)(i)](#a-3-B-i), the individual is entitled under this section to the following: - (A) **Full premium subsidy—** An [income](/usc/42/292s.md?p=c-4)-related premium subsidy equal to 100 percent of the amount described in [subsection (b)(1)](#b-1), but not to exceed the premium amount specified in [subsection (b)(2)(B)](#b-2-B). - (B) **Elimination of deductible—** A reduction in the annual deductible applicable under [section 1395w–102(b)(1) of this title](/usc/42/1395w–102.md?p=b-1) to $0. - (C) **Continuation of coverage above the initial coverage limit—** For a year preceding 2025, the continuation of coverage from the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) (under paragraph (3) of [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b)) for expenditures incurred through the total amount of expenditures at which benefits are available under [paragraph (4)](/usc/42/1395w–102.md?p=b-4) of such section, subject to the reduced [cost-sharing](/usc/42/18022.md?p=c-3-A) described in [subparagraph (D)](#a-1-D). - (D) **Reduction in cost-sharing below out-of-pocket threshold—** - (i) **Institutionalized individuals—** In the case of an individual who is a full-benefit dual [eligible individual](/usc/42/239.md?p=a-6) and who is an [institutionalized individual](/usc/42/1382b.md?p=c-1-F-ii) or couple (as defined in [section 1396a(q)(1)(B) of this title](/usc/42/1396a.md?p=q-1-B)) or, effective on a date specified by the [Secretary](/usc/42/1301.md?p=a-6) (but in no case earlier than January 1, 2012), who would be such an [institutionalized individual](/usc/42/1382b.md?p=c-1-F-ii) or couple, if the full-benefit dual [eligible individual](/usc/42/239.md?p=a-6) were not receiving services under a home and community-based waiver authorized for a [State](/usc/42/1397n–12.md?p=6) under [section 1315 of this title](/usc/42/1315.md) or subsection (c) or (d) of [section 1396n of this title](/usc/42/1396n.md) or under a [State](/usc/42/1397n–12.md?p=6) plan amendment under [subsection (i)](/usc/42/1396n.md?p=i) of such section or services provided through enrollment in a [medicaid managed care organization](/usc/42/1396b.md?p=m-1-A) with a contract under [section 1396b(m) of this title](/usc/42/1396b.md?p=m) or under [section 1396u–2 of this title](/usc/42/1396u–2.md), the elimination of any beneficiary coinsurance described in [section 1395w–102(b)(2) of this title](/usc/42/1395w–102.md?p=b-2) (for all amounts through the total amount of expenditures at which benefits are available under [section 1395w–102(b)(4) of this title](/usc/42/1395w–102.md?p=b-4)). - (ii) **Lowest income dual eligible individuals—** Subject to [paragraph (6)](#a-6), in the case of an individual not described in [clause (i)](#a-1-D-i) who is a full-benefit dual [eligible individual](/usc/42/239.md?p=a-6) and whose [income](/usc/42/292s.md?p=c-4) does not exceed 100 percent of the [poverty line](#a-3-C-ii) applicable to a [family](/usc/42/290ff–4.md?p=d-2) of the size involved, the substitution for the beneficiary coinsurance described in [section 1395w–102(b)(2) of this title](/usc/42/1395w–102.md?p=b-2) (for all amounts through the total amount of expenditures at which benefits are available under [section 1395w–102(b)(4) of this title](/usc/42/1395w–102.md?p=b-4)) of a copayment amount that does not exceed— - (I) for a plan year before 2028— - (aa) for a generic [drug](/usc/42/282.md?p=j-1-A-vii) or a preferred [drug](/usc/42/282.md?p=j-1-A-vii) that is a multiple source [drug](/usc/42/282.md?p=j-1-A-vii) (as defined in [section 1396r–8(k)(7)(A)(i) of this title](/usc/42/1396r–8.md?p=k-7-A-i)), $1 or, if less, the copayment amount applicable to an individual under [clause (iii)](#a-1-D-iii); and - (bb) for any other [drug](/usc/42/282.md?p=j-1-A-vii), $3 or, if less, the copayment amount applicable to an individual under [clause (iii)](#a-1-D-iii); and - (II) for plan year 2028 and each subsequent plan year— - (aa) for a generic [drug](/usc/42/282.md?p=j-1-A-vii), $0; - (bb) for a preferred [drug](/usc/42/282.md?p=j-1-A-vii) that is a multiple source [drug](/usc/42/282.md?p=j-1-A-vii) (as defined in [section 1396r–8(k)(7)(A)(i) of this title](/usc/42/1396r–8.md?p=k-7-A-i)), the dollar amount applied under this clause for such a [drug](/usc/42/282.md?p=j-1-A-vii) for the preceding plan year, increased by the annual percentage increase in the consumer price index (all items; U.S. [city](/usc/42/12902.md?p=11) average) as of September of such preceding year, or, if less, the copayment amount applicable to an individual under [clause (iii)](#a-1-D-iii); and - (cc) for a [drug](/usc/42/282.md?p=j-1-A-vii) not described in either item [(aa)](#a-1-D-ii-II-aa) or [(bb)](#a-1-D-ii-II-bb), the dollar amount applied under this clause for such a [drug](/usc/42/282.md?p=j-1-A-vii) for the preceding plan year, increased in the manner specified in [item (bb)](#a-1-D-ii-II-bb), or, if less, the copayment amount applicable to an individual under [clause (iii)](#a-1-D-iii). Any amount established under item (bb) or (cc) of subclause (II), that is based on an increase of $1 or $3, that is not a multiple of 5 cents or 10 cents, respectively, shall be rounded to the nearest multiple of 5 cents or 10 cents, respectively. - (iii) **Other individuals—** Subject to [paragraph (6)](#a-6), in the case of an individual not described in clause [(i)](#a-1-D-i) or [(ii)](#a-1-D-ii), the substitution for the beneficiary coinsurance described in [section 1395w–102(b)(2) of this title](/usc/42/1395w–102.md?p=b-2) (for all amounts through the total amount of expenditures at which benefits are available under [section 1395w–102(b)(4) of this title](/usc/42/1395w–102.md?p=b-4)) of a copayment amount that does not exceed the copayment amount specified under [section 1395w–102(b)(4)(A)(i)(I)(aa) of this title](/usc/42/1395w–102.md?p=b-4-A-i-I-aa) for the [drug](/usc/42/282.md?p=j-1-A-vii) and year involved. For plan year 2023 and subsequent plan years, the copayment amount applicable under the preceding sentence to a month’s supply of a covered insulin product (as defined in [section 1395w–102(b)(9)(C) of this title](/usc/42/1395w–102.md?p=b-9-C)) dispensed to the individual may not exceed the applicable copayment amount for the product under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) in which the individual is enrolled. - (E) **Elimination of cost-sharing above annual out-of-pocket threshold—** For a year preceding 2024, the elimination of any [cost-sharing](/usc/42/18022.md?p=c-3-A) imposed under [section 1395w–102(b)(4)(A) of this title](/usc/42/1395w–102.md?p=b-4-A) or under [section 1395w–102(b)(9) of this title](/usc/42/1395w–102.md?p=b-9) in the case of a covered insulin product (as defined in [subparagraph (C)](/usc/42/1395w–102.md?p=b-9-C) of such section). - (2) **Other low-income individuals—** With respect to a plan year beginning before January 1, 2024, in the case of a [subsidy eligible individual](#a-3-A) who is not described in [paragraph (1)](#a-1), the individual is entitled under this section to the following: - (A) **Sliding scale premium subsidy—** An [income](/usc/42/292s.md?p=c-4)-related premium subsidy determined on a linear sliding scale ranging from 100 percent of the amount described in [paragraph (1)(A)](#a-1-A) for individuals with [incomes](/usc/42/292s.md?p=c-4) at or below 135 percent of such level to 0 percent of such amount for individuals with [incomes](/usc/42/292s.md?p=c-4) at 150 percent of such level. - (B) **Reduction of deductible—** Subject to paragraphs (8) and (9) of [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b), a reduction in the annual deductible applicable under [section 1395w–102(b)(1) of this title](/usc/42/1395w–102.md?p=b-1) to $50. - (C) **Continuation of coverage above the initial coverage limit—** The continuation of coverage from the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) (under paragraph (3) of [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b)) for expenditures incurred through the total amount of expenditures at which benefits are available under [paragraph (4)](/usc/42/1395w–102.md?p=b-4) of such section, subject to the reduced coinsurance described in [subparagraph (D)](#a-2-D). - (D) **Reduction in cost-sharing below out-of-pocket threshold—** Subject to [paragraph (6)](#a-6), the substitution for the beneficiary coinsurance described in [section 1395w–102(b)(2) of this title](/usc/42/1395w–102.md?p=b-2) (for all amounts above the deductible under [subparagraph (B)](#a-2-B) through the total amount of expenditures at which benefits are available under [section 1395w–102(b)(4) of this title](/usc/42/1395w–102.md?p=b-4)) of coinsurance of “15 percent” instead of coinsurance of “25 percent” in [section 1395w–102(b)(2) of this title](/usc/42/1395w–102.md?p=b-2). For plan year 2023, the amount of the coinsurance applicable under the preceding sentence to a month’s supply of a covered insulin product (as defined in [section 1395w–102(b)(9)(C) of this title](/usc/42/1395w–102.md?p=b-9-C)) dispensed to the individual may not exceed the applicable copayment amount for the product under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) in which the individual is enrolled. - (E) **Reduction of cost-sharing above annual out-of-pocket threshold—** Subject to paragraph (6) of this subsection and [subsection (c)](#c), the substitution for the [cost-sharing](/usc/42/18022.md?p=c-3-A) imposed under [section 1395w–102(b)(4)(A) of this title](/usc/42/1395w–102.md?p=b-4-A) of a copayment or coinsurance not to exceed the copayment or coinsurance amount specified under [section 1395w–102(b)(4)(A)(i)(I)(aa) of this title](/usc/42/1395w–102.md?p=b-4-A-i-I-aa) for the [drug](/usc/42/282.md?p=j-1-A-vii) and year involved. For plan year 2023, the amount of the copayment or coinsurance applicable under the preceding sentence to a month’s supply of a covered insulin product (as defined in [section 1395w–102(b)(9)(C) of this title](/usc/42/1395w–102.md?p=b-9-C)) dispensed to the individual may not exceed the applicable copayment amount for the product under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) in which the individual is enrolled. - (3) **Determination of eligibility—** - (A) **Subsidy eligible individual defined—** For purposes of this part, subject to [subparagraph (F)](#a-3-F), the term “subsidy eligible individual” means a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who— - (i) is enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C); - (ii) has [income](/usc/42/292s.md?p=c-4) below 150 percent of the [poverty line](#a-3-C-ii) applicable to a [family](/usc/42/290ff–4.md?p=d-2) of the size involved; and - (iii) meets the resources requirement described in subparagraph [(D)](#a-3-D) or [(E)](#a-3-E). - (B) **Determinations—** - (i) **In general—** The determination of whether a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) residing in a [State](/usc/42/1397n–12.md?p=6) is a [subsidy eligible individual](#a-3-A) and whether the individual is described in [paragraph (1)](#a-1) shall be determined under the [State](/usc/42/1397n–12.md?p=6) plan under subchapter XIX for the [State](/usc/42/1397n–12.md?p=6) under [section 1396u–5(a) of this title](/usc/42/1396u–5.md?p=a) or by the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security. There are authorized to be appropriated to the [Social](/usc/42/1397j.md?p=20) Security [Administration](/usc/42/1301.md?p=a-10) such sums as may be necessary for the determination of eligibility under this subparagraph. - (ii) **Effective period—** Determinations under this subparagraph shall be effective beginning with the month in which the individual applies for a determination that the individual is a [subsidy eligible individual](#a-3-A) and shall remain in effect for a period specified by the [Secretary](/usc/42/1301.md?p=a-6), but not to exceed 1 year. - (iii) **Redeterminations and appeals through medicaid—** Redeterminations and appeals, with respect to eligibility determinations under [clause (i)](#a-3-B-i) made under a [State](/usc/42/1397n–12.md?p=6) plan under subchapter XIX, shall be made in accordance with the frequency of, and manner in which, redeterminations and appeals of eligibility are made under such plan for purposes of medical assistance under such subchapter. - (iv) **Redeterminations and appeals through Commissioner—** With respect to eligibility determinations under [clause (i)](#a-3-B-i) made by the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security— - (I) redeterminations shall be made at such time or times as may be provided by the [Commissioner](/usc/42/12302.md?p=1); - (II) the [Commissioner](/usc/42/12302.md?p=1) shall establish procedures for appeals of such determinations that are similar to the procedures described in the third sentence of [section 1383(c)(1)(A) of this title](/usc/42/1383.md?p=c-1-A); and - (III) judicial review of the final decision of the [Commissioner](/usc/42/12302.md?p=1) made after a hearing shall be available to the same extent, and with the same limitations, as provided in subsections (g) and (h) of [section 405 of this title](/usc/42/405.md). - (v) **Treatment of medicaid beneficiaries—** Subject to [subparagraph (F)](#a-3-F), the [Secretary](/usc/42/1301.md?p=a-6)— - (I) shall provide that [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) who are full-benefit dual [eligible individuals](/usc/42/239.md?p=a-6) (as defined in [section 1396u–5(c)(6) of this title](/usc/42/1396u–5.md?p=c-6)) or who are [recipients](/usc/42/2996a.md?p=6) of [supplemental security income benefits](/usc/42/1382i.md?p=b-2) under subchapter XVI shall be treated as [subsidy eligible individuals](#a-3-A) described in [paragraph (1)](#a-1); and - (II) may provide that [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) not described in [subclause (I)](#a-3-B-v-I) who are determined for purposes of the [State](/usc/42/1397n–12.md?p=6) plan under subchapter XIX to be eligible for medical assistance under clause (i), (iii), or (iv) of [section 1396a(a)(10)(E) of this title](/usc/42/1396a.md?p=a-10-E) are treated as being determined to be [subsidy eligible individuals](#a-3-A) described in [paragraph (1)](#a-1). Insofar as the [Secretary](/usc/42/1301.md?p=a-6) determines that the eligibility requirements under the [State](/usc/42/1397n–12.md?p=6) plan for medical assistance referred to in subclause (II) are substantially the same as the requirements for being treated as a [subsidy eligible individual](#a-3-A) described in [paragraph (1)](#a-1), the [Secretary](/usc/42/1301.md?p=a-6) shall provide for the [treatment](/usc/42/11851.md?p=11) described in such subclause. - (vi) **Special rule for widows and widowers—** Notwithstanding the preceding provisions of this subparagraph, in the case of an individual whose spouse dies during the effective period for a determination or redetermination that has been made under this subparagraph, such effective period shall be extended through the date that is 1 year after the date on which the determination or redetermination would (but for the application of this clause) otherwise cease to be effective. - (C) **Income determinations—** For purposes of applying this section— - (i) in the case of a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is not treated as a [subsidy eligible individual](#a-3-A) under [subparagraph (B)(v)](#a-3-B-v), [income](/usc/42/292s.md?p=c-4) shall be determined in the manner described in [section 1396d(p)(1)(B) of this title](/usc/42/1396d.md?p=p-1-B), without regard to the application of [section 1396a(r)(2) of this title](/usc/42/1396a.md?p=r-2) and except that support and maintenance furnished in kind shall not be counted as [income](/usc/42/292s.md?p=c-4); and - (ii) the term “poverty line” has the meaning given such term in [section 9902(2) of this title](/usc/42/9902.md?p=2), [including](/usc/42/1301.md?p=b) any revision required by such section. Nothing in [clause (i)](#a-3-C-i) shall be construed to affect the application of [section 1396a(r)(2) of this title](/usc/42/1396a.md?p=r-2) for the determination of eligibility for medical assistance under subchapter XIX. - (D) **Resource standard applied to full low-income subsidy to be based on three times SSI resource standard—** The resources requirement of this subparagraph is that an individual’s resources (as determined under [section 1382b of this title](/usc/42/1382b.md) for purposes of the supplemental security [income](/usc/42/292s.md?p=c-4) [program](/usc/42/274l–1.md?p=4) subject to the life insurance policy exclusion provided under [subparagraph (G)](#a-3-G)) do not exceed— - (i) for 2006 three times the maximum amount of resources that an individual may have and obtain benefits under that [program](/usc/42/274l–1.md?p=4); and - (ii) for a subsequent year the resource limitation established under this clause for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. [city](/usc/42/12902.md?p=11) average) as of September of such previous year. Any resource limitation established under [clause (ii)](#a-3-D-ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10. - (E) **Alternative resource standard—** - (i) **In general—** The resources requirement of this subparagraph is that an individual’s resources (as determined under [section 1382b of this title](/usc/42/1382b.md) for purposes of the supplemental security [income](/usc/42/292s.md?p=c-4) [program](/usc/42/274l–1.md?p=4) subject to the life insurance policy exclusion provided under [subparagraph (G)](#a-3-G)) do not exceed— - (I) for 2006, $10,000 (or $20,000 in the case of the combined value of the individual’s assets or resources and the assets or resources of the individual’s spouse); and - (II) for a subsequent year the dollar amounts specified in this subclause (or [subclause (I)](#a-3-E-i-I)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. [city](/usc/42/12902.md?p=11) average) as of September of such previous year. Any dollar amount established under subclause (II) that is not a multiple of $10 shall be rounded to the nearest multiple of $10. - (ii) **Use of simplified application form and process—** The [Secretary](/usc/42/1301.md?p=a-6), jointly with the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security, shall— - (I) develop a model, simplified application form and process consistent with [clause (iii)](#a-3-E-iii) for the determination and verification of a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A)’s assets or resources under this subparagraph; and - (II) provide such form to [States](/usc/42/1397n–12.md?p=6). - (iii) **Documentation and safeguards—** Under such process— - (I) the application form shall consist of an attestation under penalty of perjury regarding the level of assets or resources (or combined assets and resources in the case of a married [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A)) and valuations of general classes of assets or resources; - (II) such form shall be accompanied by copies of recent statements (if any) from [financial institutions](/usc/42/666.md?p=a-17-D-i) in support of the application; and - (III) matters attested to in the application shall be subject to appropriate methods of verification. - (iv) **Methodology flexibility—** The [Secretary](/usc/42/1301.md?p=a-6) may permit a [State](/usc/42/1397n–12.md?p=6) in making eligibility determinations for premium and [cost-sharing](/usc/42/18022.md?p=c-3-A) subsidies under this section to use the same asset or resource methodologies that are used with respect to eligibility for medical assistance for [medicare cost-sharing](/usc/42/1396d.md?p=p-3) described in [section 1396d(p) of this title](/usc/42/1396d.md?p=p) so long as the [Secretary](/usc/42/1301.md?p=a-6) determines that the use of such methodologies will not result in any significant differences in the number of individuals determined to be [subsidy eligible individuals](#a-3-A). - (F) **Treatment of territorial residents—** In the case of a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is not a resident of the 50 [States](/usc/42/1397n–12.md?p=6) or the District of Columbia, the individual is not eligible to be a [subsidy eligible individual](#a-3-A) under this section but may be eligible for financial assistance with prescription [drug](/usc/42/282.md?p=j-1-A-vii) expenses under [section 1396u–5(e) of this title](/usc/42/1396u–5.md?p=e). - (G) **Life insurance policy exclusion—** In determining the resources of an individual (and the eligible spouse of the individual, if any) under [section 1382b of this title](/usc/42/1382b.md) for purposes of subparagraphs [(D)](#a-3-D) and [(E)](#a-3-E) no part of the value of any life insurance policy shall be taken into account. - (4) **Indexing dollar amounts—** - (A) **Copayment for lowest income dual eligible individuals—** The dollar amounts applied under [paragraph (1)(D)(ii)](#a-1-D-ii)— - (i) for 2007 shall be the dollar amounts specified in such paragraph increased by the annual percentage increase in the consumer price index (all items; U.S. [city](/usc/42/12902.md?p=11) average) as of September of such previous year; or - (ii) for a subsequent year (before 2028) shall be the dollar amounts specified in this clause (or [clause (i)](#a-4-A-i)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. [city](/usc/42/12902.md?p=11) average) as of September of such previous year. Any amount established under clause [(i)](#a-4-A-i) or [(ii)](#a-4-A-ii), that is based on an increase of $1 or $3, that is not a multiple of 5 cents or 10 cents, respectively, shall be rounded to the nearest multiple of 5 cents or 10 cents, respectively. - (B) **Reduced deductible—** The dollar amount applied under [paragraph (2)(B)](#a-2-B)— - (i) for 2007 shall be the dollar amount specified in such paragraph increased by the annual percentage increase described in [section 1395w–102(b)(6) of this title](/usc/42/1395w–102.md?p=b-6) for 2007; or - (ii) for a subsequent year shall be the dollar amount specified in this clause (or [clause (i)](#a-4-B-i)) for the previous year increased by the annual percentage increase described in [section 1395w–102(b)(6) of this title](/usc/42/1395w–102.md?p=b-6) for the year involved. Any amount established under clause [(i)](#a-4-B-i) or [(ii)](#a-4-B-ii) that is not a multiple of $1 shall be rounded to the nearest multiple of $1. - (5) **Waiver of de minimis premiums—** The [Secretary](/usc/42/1301.md?p=a-6) shall, under procedures established by the [Secretary](/usc/42/1301.md?p=a-6), permit a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) to waive the monthly beneficiary premium for a [subsidy eligible individual](#a-3-A) if the amount of such premium is de minimis. If such premium is waived under the plan, the [Secretary](/usc/42/1301.md?p=a-6) shall not reassign [subsidy eligible individuals](#a-3-A) enrolled in the plan to other plans based on the fact that the monthly beneficiary premium under the plan was greater than the low-income benchmark premium amount. - (6) **No application of cost-sharing or deductible for adult vaccines recommended by the Advisory Committee on Immunization Practices—** For plan years beginning on or after January 1, 2023, with respect to an adult vaccine recommended by the [Advisory Committee](/usc/42/7703.md?p=9) on Immunization [Practices](/usc/42/17061.md?p=19) (as defined in [section 1395w–102(b)(8)(B) of this title](/usc/42/1395w–102.md?p=b-8-B))— - (A) the deductible under [section 1395w–102(b)(1) of this title](/usc/42/1395w–102.md?p=b-1) shall not apply; and - (B) there shall be no [cost-sharing](/usc/42/18022.md?p=c-3-A) under this section with respect to such vaccine. - (b) **Premium subsidy amount—** - (1) **In general—** The premium subsidy amount described in this subsection for a [subsidy eligible individual](#a-3-A) residing in a [PDP region](/usc/42/1395w–151.md?p=a-12) and enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) is the [low-income benchmark premium amount](#b-2-A) (as defined in [paragraph (2)](#b-2)) for the [PDP region](/usc/42/1395w–151.md?p=a-12) in which the individual resides or, if greater, the amount specified in [paragraph (3)](#b-3). - (2) **Low-income benchmark premium amount defined—** - (A) **In general—** For purposes of this subsection, the term “low-income benchmark premium amount” means, with respect to a [PDP region](/usc/42/1395w–151.md?p=a-12) in which— - (i) all [prescription drug plans](/usc/42/1395w–151.md?p=a-14) are offered by the same [PDP sponsor](/usc/42/1395w–151.md?p=a-13), the weighted average of the amounts described in [subparagraph (B)(i)](#b-2-B-i) for such plans; or - (ii) there are [prescription drug plans](/usc/42/1395w–151.md?p=a-14) offered by more than one [PDP sponsor](/usc/42/1395w–151.md?p=a-13), the weighted average of amounts described in [subparagraph (B)](#b-2-B) for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) described in [section 1395w–21(a)(2)(A)(i) of this title](/usc/42/1395w–21.md?p=a-2-A-i) offered in such [region](/usc/42/1395ww.md?p=d-2-D). - (B) **Premium amounts described—** The premium amounts described in this subparagraph are, in the case of— - (i) a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that is a basic [prescription drug plan](/usc/42/1395w–151.md?p=a-14), the monthly beneficiary premium for such plan; - (ii) a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that provides alternative prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage the actuarial value of which is greater than that of [standard prescription drug coverage](/usc/42/1395w–102.md?p=b), the portion of the monthly beneficiary premium that is attributable to [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3); and - (iii) an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), the portion of the [MA monthly prescription drug beneficiary premium](/usc/42/1395w–24.md?p=b-2-B) that is attributable to basic prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits (described in [section 1395w–22(a)(6)(B)(ii)](/usc/42/1395w–22.md)[^1] of this title) and determined before the application of the monthly rebate computed under [section 1395w–24(b)(1)(C)(i) of this title](/usc/42/1395w–24.md?p=b-1-C-i) for that plan and year involved and, in the case of a qualifying plan, before the application of the increase under [section 1395w–23(o)](/usc/42/1395w–23.md?p=o) of this title for that plan and year involved. The premium amounts described in this subparagraph do not include any amounts attributable to late enrollment penalties under [section 1395w–113(b) of this title](/usc/42/1395w–113.md?p=b). - (3) **Access to 0 premium plan—** In no case shall the premium subsidy amount under this subsection for a [PDP region](/usc/42/1395w–151.md?p=a-12) be less than the lowest monthly beneficiary premium for a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) that offers [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3) in the [region](/usc/42/1395ww.md?p=d-2-D). - (c) **Administration of subsidy program—** - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide a process whereby, in the case of a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is determined to be a [subsidy eligible individual](#a-3-A) and who is enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or is enrolled in an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)— - (A) the [Secretary](/usc/42/1301.md?p=a-6) provides for a notification of the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or the MA organization offering the plan involved that the individual is eligible for a subsidy and the amount of the subsidy under [subsection (a)](#a); - (B) the sponsor or organization involved reduces the premiums or [cost-sharing](/usc/42/18022.md?p=c-3-A) otherwise imposed by the amount of the applicable subsidy and submits to the [Secretary](/usc/42/1301.md?p=a-6) information on the amount of such reduction; - (C) the [Secretary](/usc/42/1301.md?p=a-6) periodically and on a timely basis reimburses the sponsor or organization for the amount of such reductions; and - (D) the [Secretary](/usc/42/1301.md?p=a-6) ensures the confidentiality of individually identifiable information. In applying [subparagraph (C)](#c-1-C), the [Secretary](/usc/42/1301.md?p=a-6) shall compute reductions based upon imposition under subsections [(a)(1)(D)](#a-1-D) and [(a)(2)(E)](#a-2-E) of unreduced copayment amounts applied under such subsections. - (2) **Use of capitated form of payment—** The reimbursement under this section with respect to [cost-sharing](/usc/42/18022.md?p=c-3-A) subsidies may be computed on a capitated basis, taking into account the actuarial value of the subsidies and with appropriate adjustments to reflect differences in the risks actually involved. - (d) **Facilitation of reassignments—** Beginning not later than January 1, 2011, the [Secretary](/usc/42/1301.md?p=a-6) shall, in the case of a [subsidy eligible individual](#a-3-A) who is enrolled in one [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and is subsequently reassigned by the [Secretary](/usc/42/1301.md?p=a-6) to a new [prescription drug plan](/usc/42/1395w–151.md?p=a-14), provide the individual, within 30 days of such reassignment, with— - (1) information on formulary differences between the individual’s former plan and the plan to which the individual is reassigned with respect to the individual’s [drug](/usc/42/282.md?p=j-1-A-vii) regimens; and - (2) a description of the individual’s right to request a coverage determination, exception, or reconsideration under [section 1395w–104(g) of this title](/usc/42/1395w–104.md?p=g), bring an appeal under [section 1395w–104(h) of this title](/usc/42/1395w–104.md?p=h), or resolve a grievance under [section 1395w–104(f) of this title](/usc/42/1395w–104.md?p=f). - (e) **Limited income newly eligible transition program—** - (1) **In general—** Beginning not later than January 1, 2024, the [Secretary](/usc/42/1301.md?p=a-6) shall carry out a [program](/usc/42/274l–1.md?p=4) to provide [transitional coverage](#e-3) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) for [LI NET eligible individuals](#e-2) in accordance with this subsection. - (2) **LI NET eligible individual defined—** For purposes of this subsection, the term “LI NET eligible individual” means a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who— - (A) meets the requirements of clauses [(ii)](#a-3-A-ii) and [(iii)](#a-3-A-iii) of subsection (a)(3)(A); and - (B) has not yet enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), or, who has so enrolled, but with respect to whom coverage under such plan has not yet taken effect. - (3) **Transitional coverage—** For purposes of this subsection, the term “transitional coverage” means with respect to an [LI NET eligible individual](#e-2)— - (A) immediate access to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) at the point of sale during the period that begins on the first day of the month such individual is determined to meet the requirements of clauses [(ii)](#a-3-A-ii) and [(iii)](#a-3-A-iii) of subsection (a)(3)(A) and ends on the date that coverage under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) takes effect with respect to such individual; and - (B) in the case of an [LI NET eligible individual](#e-2) who is a full-benefit dual [eligible individual](/usc/42/239.md?p=a-6) (as defined in [section 1396u–5(c)(6) of this title](/usc/42/1396u–5.md?p=c-6)) or a [recipient](/usc/42/2996a.md?p=6) of [supplemental security income benefits](/usc/42/1382i.md?p=b-2) under subchapter XVI, retroactive coverage (in the form of reimbursement of the amounts that would have been paid under this part had such individual been enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)) of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) purchased by such individual during the period that begins on the date that is the later of— - (i) the date that such individual was first eligible for a low-[income](/usc/42/292s.md?p=c-4) subsidy under this part; or - (ii) the date that is 36 months prior to the date such individual enrolls in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), and ends on the date that coverage under such plan takes effect. - (4) **Program administration—** - (A) **Point of contact—** The [Secretary](/usc/42/1301.md?p=a-6) shall, as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6), administer the [program](/usc/42/274l–1.md?p=4) under this subsection through a contract with a [single](/usc/42/2304.md?p=m) [program](/usc/42/274l–1.md?p=4) [administrator](/usc/42/4005.md?p=1). - (B) **Benefit design—** The [Secretary](/usc/42/1301.md?p=a-6) shall ensure that the [transitional coverage](#e-3) provided to [LI NET eligible individuals](#e-2) under this subsection— - (i) provides access to all [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) under an open formulary; - (ii) permits all pharmacies determined by the [Secretary](/usc/42/1301.md?p=a-6) to be in good standing to process [claims](/usc/42/1320a–7a.md?p=i-2) under the [program](/usc/42/274l–1.md?p=4); - (iii) is consistent with such requirements as the [Secretary](/usc/42/1301.md?p=a-6) considers necessary to improve patient safety and ensure appropriate dispensing of medication; and - (iv) meets such other requirements as the [Secretary](/usc/42/1301.md?p=a-6) may establish. - (5) **Relationship to other provisions of this subchapter; waiver authority—** - (A) **In general—** The following provisions shall not apply with respect to the [program](/usc/42/274l–1.md?p=4) under this subsection: - (i) Paragraphs (1) and (3)(B) of [section 1395w–104(a) of this title](/usc/42/1395w–104.md?p=a) (relating to dissemination of general information; availability of information on changes in formulary through the internet). - (ii) Subparagraphs (A) and (B) of [section 1395w–104(b)(3) of this title](/usc/42/1395w–104.md?p=b-3) (relating to requirements on development and application of formularies; formulary development). - (iii) Paragraphs (1)(C) and (2) of [section 1395w–104(c) of this title](/usc/42/1395w–104.md?p=c) (relating to medication therapy management [program](/usc/42/274l–1.md?p=4)). - (B) **Waiver authority—** The [Secretary](/usc/42/1301.md?p=a-6) may waive such other requirements of subchapter XI and this subchapter as may be necessary to carry out the purposes of the [program](/usc/42/274l–1.md?p=4) established under this subsection. - (6) **Contracting authority—** The authority vested in the [Secretary](/usc/42/1301.md?p=a-6) by this subsection may be performed without regard to such provisions of law or [regulations](/usc/42/1395hh.md?p=a-1) relating to the making, performance, amendment, or [modification](/usc/42/7501.md?p=4) of contracts of the [United States](/usc/42/1301.md?p=a-2) as the [Secretary](/usc/42/1301.md?p=a-6) may determine to be inconsistent with the furtherance of the purpose of this subchapter. - (f) **Relation to medicaid program—** For special provisions under the medicaid [program](/usc/42/274l–1.md?p=4) relating to medicare prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits, see [section 1396u–5 of this title](/usc/42/1396u–5.md). # §1395w–114a. Medicare coverage gap discount program - (a) **Establishment—** Subject to [subsection (h)](#h), the [Secretary](/usc/42/1301.md?p=a-6) shall establish a Medicare coverage gap discount [program](/usc/42/274l–1.md?p=4) (in this section referred to as the “[program](/usc/42/274l–1.md?p=4)”) by not later than January 1, 2011. Under the [program](/usc/42/274l–1.md?p=4), the [Secretary](/usc/42/1301.md?p=a-6) shall enter into [agreements](/usc/42/1320b–8.md?p=a-3-A) described in [subsection (b)](#b) with [manufacturers](#g-5) and provide for the performance of the duties described in [subsection (c)(1)](#c-1). The [Secretary](/usc/42/1301.md?p=a-6) shall establish a model [agreement](/usc/42/1320b–8.md?p=a-3-A) for use under the [program](/usc/42/274l–1.md?p=4) by not later than 180 days after March 23, 2010, in consultation with [manufacturers](#g-5), and allow for comment on such model [agreement](/usc/42/1320b–8.md?p=a-3-A). - (b) **Terms of agreement—** - (1) **In general—** - (A) **Agreement—** An [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section shall require the [manufacturer](#g-5) to provide [applicable beneficiaries](#g-1) access to [discounted prices](#g-4-A) for [applicable drugs](#g-2) of the [manufacturer](#g-5). - (B) **Provision of discounted prices at the point-of-sale—** Except as provided in [subsection (c)(1)(A)(iii)](#c-1-A-iii), such [discounted prices](#g-4-A) shall be provided to the [applicable beneficiary](#g-1) at the pharmacy or by the mail order service at the point-of-sale of an [applicable drug](#g-2). - (C) **Timing of agreement—** - (i) **Special rule for 2011—** In order for an [agreement](/usc/42/1320b–8.md?p=a-3-A) with a [manufacturer](#g-5) to be in effect under this section with respect to the period beginning on January 1, 2011, and ending on December 31, 2011, the [manufacturer](#g-5) shall enter into such [agreement](/usc/42/1320b–8.md?p=a-3-A) not later than not later than[^1] 30 days after the date of the establishment of a model [agreement](/usc/42/1320b–8.md?p=a-3-A) under [subsection (a)](#a). - (ii) **2012 and subsequent years—** In order for an [agreement](/usc/42/1320b–8.md?p=a-3-A) with a [manufacturer](#g-5) to be in effect under this section with respect to plan year 2012 or a subsequent plan year, the [manufacturer](#g-5) shall enter into such [agreement](/usc/42/1320b–8.md?p=a-3-A) (or such [agreement](/usc/42/1320b–8.md?p=a-3-A) shall be renewed under [paragraph (4)(A)](#b-4-A)) not later than January 30 of the preceding year. - (2) **Provision of appropriate data—** Each [manufacturer](#g-5) with an [agreement](/usc/42/1320b–8.md?p=a-3-A) in effect under this section shall collect and have available appropriate data, as determined by the [Secretary](/usc/42/1301.md?p=a-6), to ensure that it can demonstrate to the [Secretary](/usc/42/1301.md?p=a-6) compliance with the requirements under the [program](/usc/42/274l–1.md?p=4). - (3) **Compliance with requirements for administration of program—** Each [manufacturer](#g-5) with an [agreement](/usc/42/1320b–8.md?p=a-3-A) in effect under this section shall comply with requirements imposed by the [Secretary](/usc/42/1301.md?p=a-6) or a third party with a contract under [subsection (d)(3)](#d-3), as applicable, for purposes of administering the [program](/usc/42/274l–1.md?p=4), [including](/usc/42/1301.md?p=b) any determination under [clause (i)](#c-1-A-i) of subsection (c)(1)(A) or procedures established under such [subsection (c)(1)(A)](#c-1-A). - (4) **Length of agreement—** - (A) **In general—** An [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section shall be effective for an initial period of not less than 18 months and shall be automatically renewed for a period of not less than 1 year unless terminated under [subparagraph (B)](#b-4-B). - (B) **Termination—** - (i) **By the Secretary—** The [Secretary](/usc/42/1301.md?p=a-6) may provide for termination of an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section for a knowing and willful [violation](/usc/42/2000e–16a.md?p=c) of the requirements of the [agreement](/usc/42/1320b–8.md?p=a-3-A) or other good [cause](/usc/42/9908.md?p=c-2) shown. Such termination shall not be effective earlier than 30 days after the date of notice to the [manufacturer](#g-5) of such termination. The [Secretary](/usc/42/1301.md?p=a-6) shall provide, upon request, a [manufacturer](#g-5) with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate. - (ii) **By a manufacturer—** A [manufacturer](#g-5) may terminate an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section for any reason. Any such termination shall be effective, with respect to a plan year— - (I) if the termination occurs before January 30 of a plan year, as of the day after the end of the plan year; and - (II) if the termination occurs on or after January 30 of a plan year, as of the day after the end of the succeeding plan year. - (iii) **Effectiveness of termination—** Any termination under this subparagraph shall not affect discounts for [applicable drugs](#g-2) of the [manufacturer](#g-5) that are due under the [agreement](/usc/42/1320b–8.md?p=a-3-A) before the effective date of its termination. - (iv) **Notice to third party—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide notice of such termination to a third party with a contract under [subsection (d)(3)](#d-3) within not less than 30 days before the effective date of such termination. - (c) **Duties described and special rule for supplemental benefits—** - (1) **Duties described—** The duties described in this subsection are the following: - (A) **Administration of program—** Administering the [program](/usc/42/274l–1.md?p=4), [including](/usc/42/1301.md?p=b)— - (i) the determination of the amount of the [discounted price](#g-4-A) of an [applicable drug](#g-2) of a [manufacturer](#g-5); - (ii) except as provided in [clause (iii)](#c-1-A-iii), the establishment of procedures under which [discounted prices](#g-4-A) are provided to [applicable beneficiaries](#g-1) at pharmacies or by mail order service at the point-of-sale of an [applicable drug](#g-2); - (iii) in the case where, during the period beginning on January 1, 2011, and ending on December 31, 2011, it is not practicable to provide such [discounted prices](#g-4-A) at the point-of-sale (as described in [clause (ii)](#c-1-A-ii)), the establishment of procedures to provide such [discounted prices](#g-4-A) as soon as practicable after the point-of-sale; - (iv) the establishment of procedures to ensure that, not later than the [applicable number of calendar days](#g-3) after the dispensing of an [applicable drug](#g-2) by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between— - (I) the [negotiated price](#g-6) of the [applicable drug](#g-2); and - (II) the [discounted price](#g-4-A) of the [applicable drug](#g-2); - (v) the establishment of procedures to ensure that the [discounted price](#g-4-A) for an [applicable drug](#g-2) under this section is applied before any coverage or financial assistance under other health benefit plans or [programs](/usc/42/274l–1.md?p=4) that provide coverage or financial assistance for the purchase or provision of prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage on behalf of [applicable beneficiaries](#g-1) as the [Secretary](/usc/42/1301.md?p=a-6) may specify; - (vi) the establishment of procedures to implement the special rule for supplemental benefits under [paragraph (2)](#c-2); and - (vii) providing a reasonable dispute resolution mechanism to resolve disagreements between [manufacturers](#g-5), [applicable beneficiaries](#g-1), and the third party with a contract under [subsection (d)(3)](#d-3). - (B) **Monitoring compliance—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall monitor compliance by a [manufacturer](#g-5) with the terms of an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section. - (ii) **Notification—** If a third party with a contract under [subsection (d)(3)](#d-3) determines that the [manufacturer](#g-5) is not in compliance with such [agreement](/usc/42/1320b–8.md?p=a-3-A), the third party shall notify the [Secretary](/usc/42/1301.md?p=a-6) of such noncompliance for appropriate enforcement under [subsection (e)](#e). - (C) **Collection of data from prescription drug plans and MA–PD plans—** The [Secretary](/usc/42/1301.md?p=a-6) may collect appropriate data from [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) in a timeframe that allows for [discounted prices](#g-4-A) to be provided for [applicable drugs](#g-2) under this section. - (2) **Special rule for supplemental benefits—** For plan year 2011 and each subsequent plan year, in the case where an [applicable beneficiary](#g-1) has supplemental benefits with respect to [applicable drugs](#g-2) under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that the [applicable beneficiary](#g-1) is enrolled in, the [applicable beneficiary](#g-1) shall not be provided a [discounted price](#g-4-A) for an [applicable drug](#g-2) under this section until after such supplemental benefits have been applied with respect to the [applicable drug](#g-2). - (d) **Administration—** - (1) **In general—** Subject to [paragraph (2)](#d-2), the [Secretary](/usc/42/1301.md?p=a-6) shall provide for the implementation of this section, [including](/usc/42/1301.md?p=b) the performance of the duties described in [subsection (c)(1)](#c-1). - (2) **Limitation—** - (A) **In general—** Subject to [subparagraph (B)](#d-2-B), in providing for such implementation, the [Secretary](/usc/42/1301.md?p=a-6) shall not receive or distribute any [funds](/usc/42/12854.md?p=3) of a [manufacturer](#g-5) under the [program](/usc/42/274l–1.md?p=4). - (B) **Exception—** The limitation under [subparagraph (A)](#d-2-A) shall not apply to the [Secretary](/usc/42/1301.md?p=a-6) with respect to [drugs](/usc/42/1395x.md?p=t-2-A) dispensed during the period beginning on January 1, 2011, and ending on December 31, 2011, but only if the [Secretary](/usc/42/1301.md?p=a-6) determines that the exception to such limitation under this subparagraph is necessary in order for the [Secretary](/usc/42/1301.md?p=a-6) to begin implementation of this section and provide [applicable beneficiaries](#g-1) timely access to [discounted prices](#g-4-A) during such period. - (3) **Contract with third parties—** The [Secretary](/usc/42/1301.md?p=a-6) shall enter into a contract with 1 or more third parties to administer the requirements established by the [Secretary](/usc/42/1301.md?p=a-6) in order to carry out this section. At a minimum, the contract with a third party under the preceding sentence shall require that the third party— - (A) receive and transmit information between the [Secretary](/usc/42/1301.md?p=a-6), [manufacturers](#g-5), and other individuals or entities the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate; - (B) receive, distribute, or facilitate the distribution of [funds](/usc/42/12854.md?p=3) of [manufacturers](#g-5) to appropriate individuals or entities in order to meet the obligations of [manufacturers](#g-5) under [agreements](/usc/42/1320b–8.md?p=a-3-A) under this section; - (C) provide adequate and timely information to [manufacturers](#g-5), consistent with the [agreement](/usc/42/1320b–8.md?p=a-3-A) with the [manufacturer](#g-5) under this section, as necessary for the [manufacturer](#g-5) to fulfill its obligations under this section; and - (D) permit [manufacturers](#g-5) to conduct periodic audits, directly or through contracts, of the data and information used by the third party to determine discounts for [applicable drugs](#g-2) of the [manufacturer](#g-5) under the [program](/usc/42/274l–1.md?p=4). - (4) **Performance requirements—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish performance requirements for a third party with a contract under [paragraph (3)](#d-3) and safeguards to protect the [independence](/usc/42/242q–4.md?p=1-B) and integrity of the activities carried out by the third party under the [program](/usc/42/274l–1.md?p=4) under this section. - (5) **Implementation—** The [Secretary](/usc/42/1301.md?p=a-6) may implement the [program](/usc/42/274l–1.md?p=4) under this section by [program](/usc/42/274l–1.md?p=4) instruction or otherwise. - (6) **Administration—** [Chapter 35](/usc/44/ch35.md) of title 44 shall not apply to the [program](/usc/42/274l–1.md?p=4) under this section. - (e) **Enforcement—** - (1) **Audits—** Each [manufacturer](#g-5) with an [agreement](/usc/42/1320b–8.md?p=a-3-A) in effect under this section shall be subject to periodic audit by the [Secretary](/usc/42/1301.md?p=a-6). - (2) **Civil money penalty—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall impose a civil money penalty on a [manufacturer](#g-5) that fails to provide [applicable beneficiaries](#g-1) discounts for [applicable drugs](#g-2) of the [manufacturer](#g-5) in accordance with such [agreement](/usc/42/1320b–8.md?p=a-3-A) for each such failure in an amount the [Secretary](/usc/42/1301.md?p=a-6) determines is commensurate with the sum of— - (i) the amount that the [manufacturer](#g-5) would have paid with respect to such discounts under the [agreement](/usc/42/1320b–8.md?p=a-3-A), which will then be used to pay the discounts which the [manufacturer](#g-5) had failed to provide; and - (ii) 25 percent of such amount. - (B) **Application—** The provisions of [section 1320a–7a of this title](/usc/42/1320a–7a.md) (other than subsections [(a)](#a) and [(b)](#b)) shall apply to a civil money penalty under this paragraph in the same manner as such provisions apply to a penalty or proceeding under [section 1320a–7a(a) of this title](/usc/42/1320a–7a.md?p=a). - (f) **Clarification regarding availability of other covered part D drugs—** Nothing in this section shall prevent an [applicable beneficiary](#g-1) from purchasing a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) that is not an [applicable drug](#g-2) ([including](/usc/42/1301.md?p=b) a generic [drug](/usc/42/282.md?p=j-1-A-vii) or a [drug](/usc/42/282.md?p=j-1-A-vii) that is not on the formulary of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that the [applicable beneficiary](#g-1) is enrolled in). - (g) **Definitions—** In this section: - (1) **Applicable beneficiary—** The term “applicable beneficiary” means an individual who, on the date of dispensing a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A)— - (A) is enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C); - (B) is not enrolled in a [qualified retiree prescription drug plan](#g-7); - (C) is not entitled to an [income](/usc/42/292s.md?p=c-4)-related subsidy under [section 1395w–114(a) of this title](/usc/42/1395w–114.md?p=a); and - (D) who— - (i) has reached or exceeded the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [section 1395w–102(b)(3) of this title](/usc/42/1395w–102.md?p=b-3) during the year; and - (ii) has not incurred costs for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the year equal to the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B) of this title](/usc/42/1395w–102.md?p=b-4-B). - (2) **Applicable drug—** The term “applicable drug” means, with respect to an [applicable beneficiary](#g-1), a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A)— - (A) approved under a new [drug](/usc/42/282.md?p=j-1-A-vii) application under [section 355(b) of title 21](/usc/21/355.md?p=b) or, in the case of a biologic product, licensed under [section 262 of this title](/usc/42/262.md) (other than, with respect to a plan year before 2019, a product licensed under [subsection (k)](/usc/42/262.md?p=k) of such section 262); and - (B) - (i) if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or the MA organization offering the [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) uses a formulary, which is on the formulary of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that the [applicable beneficiary](#g-1) is enrolled in; - (ii) if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or the MA organization offering the [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) does not use a formulary, for which benefits are available under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that the [applicable beneficiary](#g-1) is enrolled in; or - (iii) is provided through an exception or appeal. - (3) **Applicable number of calendar days—** The term “applicable number of calendar days” means— - (A) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) for reimbursement submitted electronically, 14 days; and - (B) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) for reimbursement submitted otherwise, 30 days. - (4) **Discounted price—** - (A) **In general—** The term “discounted price” means 50 percent (or, with respect to a plan year after plan year 2018, 30 percent) of the [negotiated price](#g-6) of the [applicable drug](#g-2) of a [manufacturer](#g-5). - (B) **Clarification—** Nothing in this section shall be construed as affecting the responsibility of an [applicable beneficiary](#g-1) for payment of a dispensing fee for an [applicable drug](#g-2). - (C) **Special case for certain claims—** In the case where the entire amount of the [negotiated price](#g-6) of an individual [claim](/usc/42/1320a–7a.md?p=i-2) for an [applicable drug](#g-2) with respect to an [applicable beneficiary](#g-1) does not fall at or above the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [section 1395w–102(b)(3) of this title](/usc/42/1395w–102.md?p=b-3) and below the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B) of this title](/usc/42/1395w–102.md?p=b-4-B) for the year, the [manufacturer](#g-5) of the [applicable drug](#g-2) shall provide the [discounted price](#g-4-A) under this section on only the portion of the [negotiated price](#g-6) of the [applicable drug](#g-2) that falls at or above such [initial coverage limit](/usc/42/1395w–151.md?p=a-6) and below such annual out-of-pocket threshold. - (5) **Manufacturer—** The term “manufacturer” means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription [drug](/usc/42/282.md?p=j-1-A-vii) products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of [drugs](/usc/42/1395x.md?p=t-2-A) or a retail pharmacy licensed under [State](/usc/42/1397n–12.md?p=6) law. - (6) **Negotiated price—** The term “negotiated price” has the meaning given such term in [section 423.100 of title 42, Code of Federal Regulations](/cfr/42/423.100.md) (as in effect on March 23, 2010), except that such negotiated price shall not include any dispensing fee for the [applicable drug](#g-2). - (7) **Qualified retiree prescription drug plan—** The term “qualified retiree prescription drug plan” has the meaning given such term in [section 1395w–132(a)(2) of this title](/usc/42/1395w–132.md?p=a-2). - (h) **Sunset of program—** - (1) **In general—** The [program](/usc/42/274l–1.md?p=4) shall not apply with respect to [applicable drugs](#g-2) dispensed on or after January 1, 2025, and, subject to [paragraph (2)](#h-2), [agreements](/usc/42/1320b–8.md?p=a-3-A) under this section shall be terminated as of such date. - (2) **Continued application for applicable drugs dispensed prior to sunset—** The provisions of this section ([including](/usc/42/1301.md?p=b) all responsibilities and duties) shall continue to apply on and after January 1, 2025, with respect to [applicable drugs](#g-2) dispensed prior to such date. # §1395w–114b. Manufacturer rebate for certain drugs with prices increasing faster than inflation - (a) **Requirements—** - (1) **Secretarial provision of information—** Not later than 9 months after the end of each [applicable period](#g-7) (as defined in [subsection (g)(7)](#g-7)), subject to [paragraph (3)](#a-3), the [Secretary](/usc/42/1301.md?p=a-6) shall, for each [part D rebatable drug](#g-1-A), report to each [manufacturer](/usc/42/300aa–33.md?p=3) of such [part D rebatable drug](#g-1-A) the following for such period: - (A) The amount (if any) of the excess annual [manufacturer](/usc/42/300aa–33.md?p=3) price increase described in [subsection (b)(1)(A)(ii)](#b-1-A-ii) for each dosage form and strength with respect to such [drug](/usc/42/282.md?p=j-1-A-vii) and period. - (B) The rebate amount specified under [subsection (b)](#b) for each dosage form and strength with respect to such [drug](/usc/42/282.md?p=j-1-A-vii) and period. - (2) **Manufacturer requirements—** For each [applicable period](#g-7), the [manufacturer](/usc/42/300aa–33.md?p=3) of a [part D rebatable drug](#g-1-A), for each dosage form and strength with respect to such [drug](/usc/42/282.md?p=j-1-A-vii), not later than 30 days after the date of receipt from the [Secretary](/usc/42/1301.md?p=a-6) of the information described in [paragraph (1)](#a-1) for such period, shall provide to the [Secretary](/usc/42/1301.md?p=a-6) a rebate that is equal to the amount specified in [subsection (b)](#b) for such dosage form and strength with respect to such [drug](/usc/42/282.md?p=j-1-A-vii) for such period. - (3) **Transition rule for reporting—** The [Secretary](/usc/42/1301.md?p=a-6) may, for each rebatable [covered part D drug](/usc/42/1395w–141.md?p=a-4-A), delay the timeframe for reporting the information and rebate amount described in subparagraphs (A) and (B) of such paragraph for the [applicable periods](#g-7) beginning October 1, 2022, and October 1, 2023, until not later than December 31, 2025. - (b) **Rebate amount—** - (1) **In general—** - (A) **Calculation—** For purposes of this section, the amount specified in this subsection for a dosage form and strength with respect to a [part D rebatable drug](#g-1-A) and [applicable period](#g-7) is, subject to [subparagraph (C)](#b-1-C), [paragraph (5)(B)](#b-5-B), and [paragraph (6)](#b-6), the estimated amount equal to the product of— - (i) subject to subparagraph (B) of this paragraph, the total number of [units](#g-2) of such dosage form and strength for each rebatable [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) dispensed under this part during the [applicable period](#g-7); and - (ii) the amount (if any) by which— - (I) the annual [manufacturer](/usc/42/300aa–33.md?p=3) price (as determined in [paragraph (2)](#b-2)) paid for such dosage form and strength with respect to such [part D rebatable drug](#g-1-A) for the period; exceeds - (II) the inflation-adjusted payment amount determined under [paragraph (3)](#b-3) for such dosage form and strength with respect to such [part D rebatable drug](#g-1-A) for the period. - (B) **Excluded units—** For purposes of [subparagraph (A)(i)](#b-1-A-i), beginning with plan year 2026, the [Secretary](/usc/42/1301.md?p=a-6) shall exclude from the total number of [units](#g-2) for a dosage form and strength with respect to a [part D rebatable drug](#g-1-A), with respect to an [applicable period](#g-7), [units](#g-2) of each dosage form and strength of such [part D rebatable drug](#g-1-A) for which the [manufacturer](/usc/42/300aa–33.md?p=3) provides a discount under the [program](/usc/42/274l–1.md?p=4) under [section 256b of this title](/usc/42/256b.md). - (C) **Reduction or waiver for shortages and severe supply chain disruptions—** The [Secretary](/usc/42/1301.md?p=a-6) shall reduce or waive the amount under [subparagraph (A)](#b-1-A) with respect to a [part D rebatable drug](#g-1-A) and an [applicable period](#g-7)— - (i) in the case of a [part D rebatable drug](#g-1-A) that is described as currently in shortage on the shortage list in effect under [section 356e of title 21](/usc/21/356e.md) at any point during the [applicable period](#g-7); - (ii) in the case of a generic [part D rebatable drug](#g-1-A) (described in [subsection (g)(1)(C)(ii)](#g-1-C-ii)) or a biosimilar (defined as a [biological product](/usc/42/287a.md?p=a-1) licensed under [section 262(k) of this title](/usc/42/262.md?p=k)), when the [Secretary](/usc/42/1301.md?p=a-6) determines there is a severe supply chain disruption during the [applicable period](#g-7), such as that caused by a [natural disaster](/usc/42/18711.md?p=a-3) or other unique or unexpected event; and - (iii) in the case of a generic Part[^1] D rebatable [drug](/usc/42/282.md?p=j-1-A-vii) (as so described), if the [Secretary](/usc/42/1301.md?p=a-6) determines that without such reduction or waiver, the [drug](/usc/42/282.md?p=j-1-A-vii) is likely to be described as in shortage on such shortage list during a subsequent [applicable period](#g-7). - (2) **Determination of annual manufacturer price—** The annual [manufacturer](/usc/42/300aa–33.md?p=3) price determined under this paragraph for a dosage form and strength, with respect to a [part D rebatable drug](#g-1-A) and an [applicable period](#g-7), is the sum of the products of— - (A) the [average manufacturer price](#g-6) (as defined in [subsection (g)(6)](#g-6)) of such dosage form and strength, as calculated for a [unit](#g-2) of such [drug](/usc/42/282.md?p=j-1-A-vii), with respect to each of the calendar quarters of such period; and - (B) the ratio of— - (i) the total number of [units](#g-2) of such dosage form and strength reported under [section 1396r–8 of this title](/usc/42/1396r–8.md) with respect to each such calendar quarter of such period; to - (ii) the total number of [units](#g-2) of such dosage form and strength reported under [section 1396r–8 of this title](/usc/42/1396r–8.md) with respect to such period, as determined by the [Secretary](/usc/42/1301.md?p=a-6). - (3) **Determination of inflation-adjusted payment amount—** The inflation-adjusted payment amount determined under this paragraph for a dosage form and strength with respect to a [part D rebatable drug](#g-1-A) for an [applicable period](#g-7), subject to [paragraph (5)](#b-5), is— - (A) the benchmark period [manufacturer](/usc/42/300aa–33.md?p=3) price determined under [paragraph (4)](#b-4) for such dosage form and strength with respect to such [drug](/usc/42/282.md?p=j-1-A-vii) and period; increased by - (B) the percentage by which the [applicable period CPI–U](#g-5) (as defined in [subsection (g)(5)](#g-5)) for the period exceeds the [benchmark period CPI–U](#b-5-A) (as defined in [subsection (g)(4)](#g-4)). - (4) **Determination of benchmark period manufacturer price—** The benchmark period [manufacturer](/usc/42/300aa–33.md?p=3) price determined under this paragraph for a dosage form and strength, with respect to a [part D rebatable drug](#g-1-A) and an [applicable period](#g-7), is the sum of the products of— - (A) the [average manufacturer price](#g-6) (as defined in [subsection (g)(6)](#g-6)) of such dosage form and strength, as calculated for a [unit](#g-2) of such [drug](/usc/42/282.md?p=j-1-A-vii), with respect to each of the calendar quarters of the [payment amount benchmark period](#b-5-A) (as defined in [subsection (g)(3)](#g-3)); and - (B) the ratio of— - (i) the total number of [units](#g-2) reported under [section 1396r–8 of this title](/usc/42/1396r–8.md) of such dosage form and strength with respect to each such calendar quarter of such [payment amount benchmark period](#b-5-A); to - (ii) the total number of [units](#g-2) reported under [section 1396r–8 of this title](/usc/42/1396r–8.md) of such dosage form and strength with respect to such [payment amount benchmark period](#b-5-A). - (5) **Special treatment of certain drugs and exemption—** - (A) **Subsequently approved drugs—** In the case of a [part D rebatable drug](#g-1-A) first approved or licensed by the Food and [Drug](/usc/42/282.md?p=j-1-A-vii) [Administration](/usc/42/1301.md?p=a-10) after October 1, 2021, subparagraphs [(A)](#b-4-A) and [(B)](#b-4-B) of paragraph (4) shall be applied as if the term “payment amount benchmark period” were defined under [subsection (g)(3)](#g-3) as the first calendar year beginning after the day on which the [drug](/usc/42/282.md?p=j-1-A-vii) was first marketed and [subparagraph (B)](#b-3-B) of paragraph (3) shall be applied as if the term “benchmark period CPI–U” were defined under [subsection (g)(4)](#g-4) as if the reference to “January 2021” under such subsection were a reference to “January of the first year beginning after the date on which the [drug](/usc/42/282.md?p=j-1-A-vii) was first marketed”. - (B) **Treatment of new formulations—** - (i) **In general—** In the case of a [part D rebatable drug](#g-1-A) that is a [line extension](#b-5-B-ii) of a [part D rebatable drug](#g-1-A) that is an oral solid dosage form, the [Secretary](/usc/42/1301.md?p=a-6) shall establish a formula for determining the rebate amount under [paragraph (1)](#b-1) and the inflation adjusted payment amount under [paragraph (3)](#b-3) with respect to such [part D rebatable drug](#g-1-A) and an [applicable period](#g-7), consistent with the formula applied under subsection (c)(2)(C) of [section 1396r–8 of this title](/usc/42/1396r–8.md) for determining a rebate obligation for a rebate period under such section. - (ii) **Line extension defined—** In this subparagraph, the term “line extension” means, with respect to a [part D rebatable drug](#g-1-A), a new formulation of the [drug](/usc/42/282.md?p=j-1-A-vii), such as an extended [release](/usc/42/9601.md?p=22) formulation, but does not include an [abuse](/usc/42/1397j.md?p=1)-deterrent formulation of the [drug](/usc/42/282.md?p=j-1-A-vii) (as determined by the [Secretary](/usc/42/1301.md?p=a-6)), regardless of whether such [abuse](/usc/42/1397j.md?p=1)-deterrent formulation is an extended [release](/usc/42/9601.md?p=22) formulation. - (C) **Selected drugs—** In the case of a [part D rebatable drug](#g-1-A) that is a selected [drug](/usc/42/282.md?p=j-1-A-vii) (as defined in [section 1320f–1(c) of this title](/usc/42/1320f–1.md?p=c)) with respect to a price applicability period (as defined in [section 1320f(b)(2) of this title](/usc/42/1320f.md?p=b-2)), in the case such [drug](/usc/42/282.md?p=j-1-A-vii) is no longer considered to be a selected [drug](/usc/42/282.md?p=j-1-A-vii) under [section 1320f–1(c) of this title](/usc/42/1320f–1.md?p=c), for each [applicable period](#g-7) (as defined under [subsection (g)(7)](#g-7)) beginning after the price applicability period with respect to such [drug](/usc/42/282.md?p=j-1-A-vii), subparagraphs [(A)](#b-4-A) and [(B)](#b-4-B) of paragraph (4) shall be applied as if the term “[payment amount benchmark period](#b-5-A)” were defined under [subsection (g)(3)](#g-3) as the last year beginning during such price applicability period with respect to such selected [drug](/usc/42/282.md?p=j-1-A-vii) and [subparagraph (B)](#b-3-B) of paragraph (3) shall be applied as if the term “[benchmark period CPI–U](#b-5-A)” were defined under [subsection (g)(4)](#g-4) as if the reference to “January 2021” under such subsection were a reference to “January of the last year beginning during such price applicability period with respect to such [drug](/usc/42/282.md?p=j-1-A-vii)”. - (6) **Reconciliation in case of revised information—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide for a method and process under which, in the case where a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) submits revisions to the number of [units](#g-2) of a rebatable [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) dispensed, the [Secretary](/usc/42/1301.md?p=a-6) determines, pursuant to such revisions, adjustments, if any, to the calculation of the amount specified in this subsection for a dosage form and strength with respect to such [part D rebatable drug](#g-1-A) and an [applicable period](#g-7) and reconciles any overpayments or underpayments in amounts paid as rebates under this subsection. Any identified underpayment shall be rectified by the [manufacturer](/usc/42/300aa–33.md?p=3) not later than 30 days after the date of receipt from the [Secretary](/usc/42/1301.md?p=a-6) of information on such underpayment. - (c) **Rebate deposits—** Amounts paid as rebates under [subsection (b)](#b) shall be deposited into the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10) in the Federal Supplementary Medical Insurance [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3) established under [section 1395t of this title](/usc/42/1395t.md). - (d) **Information—** For purposes of carrying out this section, the [Secretary](/usc/42/1301.md?p=a-6) shall use information submitted by— - (1) [manufacturers](/usc/42/300aa–33.md?p=3) under [section 1396r–8(b)(3) of this title](/usc/42/1396r–8.md?p=b-3); - (2) [States](/usc/42/1397n–12.md?p=6) under [section 1396r–8(b)(2)(A) of this title](/usc/42/1396r–8.md?p=b-2-A); and - (3) [PDP sponsors](/usc/42/1395w–151.md?p=a-13) of [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and MA organization offering [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) under this part. - (e) **Civil money penalty—** If a [manufacturer](/usc/42/300aa–33.md?p=3) of a [part D rebatable drug](#g-1-A) has failed to comply with the requirement under [subsection (a)(2)](#a-2) with respect to such [drug](/usc/42/282.md?p=j-1-A-vii) for an [applicable period](#g-7), the [manufacturer](/usc/42/300aa–33.md?p=3) shall be subject to a civil money penalty in an amount equal to 125 percent of the amount specified in [subsection (b)](#b) for such [drug](/usc/42/282.md?p=j-1-A-vii) for such period. The provisions of [section 1320a–7a of this title](/usc/42/1320a–7a.md) (other than [subsections (a)](#a) (with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under [section 1320a–7a(a) of this title](/usc/42/1320a–7a.md?p=a). - (f) **Limitation on administrative or judicial review—** There shall be no administrative or judicial review of any of the following: - (1) The determination of [units](#g-2) under this section. - (2) The determination of whether a [drug](/usc/42/282.md?p=j-1-A-vii) is a [part D rebatable drug](#g-1-A) under this section. - (3) The calculation of the rebate amount under this section. - (g) **Definitions—** In this section: - (1) **Part D rebatable drug—** - (A) **In general—** Except as provided in [subparagraph (B)](#g-1-B), the term “part D rebatable drug” means, with respect to an [applicable period](#g-7), a [drug](/usc/42/282.md?p=j-1-A-vii) or biological described in [subparagraph (C)](#g-1-C) that is a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) (as such term is defined under [section 1395w–102(e) of this title](/usc/42/1395w–102.md?p=e)). - (B) **Exclusion—** - (i) **In general—** Such term shall, with respect to an [applicable period](#g-7), not include a [drug](/usc/42/282.md?p=j-1-A-vii) or biological if the average annual total cost under this part for such period per individual who uses such a [drug](/usc/42/282.md?p=j-1-A-vii) or biological, as determined by the [Secretary](/usc/42/1301.md?p=a-6), is less than, subject to [clause (ii)](#g-1-B-ii), $100, as determined by the [Secretary](/usc/42/1301.md?p=a-6) using the most recent data available or, if data is not available, as estimated by the [Secretary](/usc/42/1301.md?p=a-6). - (ii) **Increase—** The dollar amount applied under [clause (i)](#g-1-B-i)— - (I) for the [applicable period](#g-7) beginning October 1, 2023, shall be the dollar amount specified under such clause for the [applicable period](#g-7) beginning October 1, 2022, increased by the percentage increase in the consumer price index for all urban consumers ([United States](/usc/42/1301.md?p=a-2) [city](/usc/42/12902.md?p=11) average) for the 12-month period beginning with October of 2023; and - (II) for a subsequent [applicable period](#g-7), shall be the dollar amount specified in this clause for the previous [applicable period](#g-7), increased by the percentage increase in the consumer price index for all urban consumers ([United States](/usc/42/1301.md?p=a-2) [city](/usc/42/12902.md?p=11) average) for the 12-month period beginning with October of the previous period. Any dollar amount specified under this clause that is not a multiple of $10 shall be rounded to the nearest multiple of $10. - (C) **Drug or biological described—** A [drug](/usc/42/282.md?p=j-1-A-vii) or biological described in this subparagraph is a [drug](/usc/42/282.md?p=j-1-A-vii) or biological that, as of the first day of the [applicable period](#g-7) involved, is— - (i) a [drug](/usc/42/282.md?p=j-1-A-vii) approved under a new [drug](/usc/42/282.md?p=j-1-A-vii) application under [section 355(c) of title 21](/usc/21/355.md?p=c); - (ii) a [drug](/usc/42/282.md?p=j-1-A-vii) approved under an abbreviated new [drug](/usc/42/282.md?p=j-1-A-vii) application under [section 355(j) of title 21](/usc/21/355.md?p=j), in the case where— - (I) the reference listed [drug](/usc/42/282.md?p=j-1-A-vii) approved under [section 355(c) of title 21](/usc/21/355.md?p=c), [including](/usc/42/1301.md?p=b) any “authorized generic [drug](/usc/42/282.md?p=j-1-A-vii)” (as that term is defined in [section 355(t)(3) of title 21](/usc/21/355.md?p=t-3)), is not being marketed, as identified in the Food and [Drug](/usc/42/282.md?p=j-1-A-vii) [Administration](/usc/42/1301.md?p=a-10)’s National Drug Code Directory; - (II) there is no other [drug](/usc/42/282.md?p=j-1-A-vii) approved under [section 355(j) of title 21](/usc/21/355.md?p=j) that is rated as therapeutically equivalent (under the Food and [Drug](/usc/42/282.md?p=j-1-A-vii) [Administration](/usc/42/1301.md?p=a-10)’s most recent publication of “Approved [Drug](/usc/42/282.md?p=j-1-A-vii) Products with Therapeutic Equivalence Evaluations”) and that is being marketed, as identified in the Food and [Drug](/usc/42/282.md?p=j-1-A-vii) [Administration](/usc/42/1301.md?p=a-10)’s National Drug Code Directory; - (III) the [manufacturer](/usc/42/300aa–33.md?p=3) is not a “first applicant” during the “180-day exclusivity period”, as those terms are defined in [section 355(j)(5)(B)(iv) of title 21](/usc/21/355.md?p=j-5-B-iv); and - (IV) the [manufacturer](/usc/42/300aa–33.md?p=3) is not a “first approved applicant” for a competitive generic therapy, as that term is defined in [section 355(j)(5)(B)(v) of title 21](/usc/21/355.md?p=j-5-B-v); or - (iii) a biological licensed under [section 262 of this title](/usc/42/262.md). - (2) **Unit—** The term “unit” means, with respect to a [part D rebatable drug](#g-1-A), the lowest dispensable amount (such as a capsule or tablet, milligram of molecules, or grams) of the [part D rebatable drug](#g-1-A), as reported under [section 1396r–8 of this title](/usc/42/1396r–8.md). - (3) **Payment amount benchmark period—** The term “[payment amount benchmark period](#b-5-A)” means the period beginning January 1, 2021, and ending in the month immediately prior to October 1, 2021. - (4) **Benchmark period CPI–U—** The term “[benchmark period CPI–U](#b-5-A)” means the consumer price index for all urban consumers ([United States](/usc/42/1301.md?p=a-2) [city](/usc/42/12902.md?p=11) average) for January 2021. - (5) **Applicable period CPI–U—** The term “applicable period CPI–U” means, with respect to an [applicable period](#g-7), the consumer price index for all urban consumers ([United States](/usc/42/1301.md?p=a-2) [city](/usc/42/12902.md?p=11) average) for the first month of such [applicable period](#g-7). - (6) **Average manufacturer price—** The term “average manufacturer price” has the meaning, with respect to a [part D rebatable drug](#g-1-A) of a [manufacturer](/usc/42/300aa–33.md?p=3), given such term in [section 1396r–8(k)(1) of this title](/usc/42/1396r–8.md?p=k-1), with respect to a covered outpatient [drug](/usc/42/282.md?p=j-1-A-vii) of a [manufacturer](/usc/42/300aa–33.md?p=3) for a rebate period under [section 1396r–8 of this title](/usc/42/1396r–8.md). - (7) **Applicable period—** The term “applicable period” means a 12-month period beginning with October 1 of a year (beginning with October 1, 2022). - (h) **Implementation for 2022, 2023, and 2024—** The [Secretary](/usc/42/1301.md?p=a-6) shall implement this section for 2022, 2023, and 2024 by [program](/usc/42/274l–1.md?p=4) instruction or other forms of [program](/usc/42/274l–1.md?p=4) guidance. # §1395w–114c. Manufacturer discount program - (a) **Establishment—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a [manufacturer](#g-5) discount [program](/usc/42/274l–1.md?p=4) (in this section referred to as the “[program](/usc/42/274l–1.md?p=4)”). Under the [program](/usc/42/274l–1.md?p=4), the [Secretary](/usc/42/1301.md?p=a-6) shall enter into [agreements](/usc/42/1320b–8.md?p=a-3-A) described in [subsection (b)](#b) with [manufacturers](#g-5) and provide for the performance of the duties described in [subsection (c)](#c). - (b) **Terms of agreement—** - (1) **In general—** - (A) **Agreement—** An [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section shall require the [manufacturer](#g-5) to provide, in accordance with this section, [discounted prices](#g-4-A) for [applicable drugs](#g-2) of the [manufacturer](#g-5) that are dispensed to [applicable beneficiaries](#g-1) on or after January 1, 2025. - (B) **Clarification—** Nothing in this section shall be construed as affecting— - (i) the application of a coinsurance of 25 percent of the [negotiated price](#g-6), as applied under paragraph (2)(A) of [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b), for costs described in such paragraph; or - (ii) the application of the copayment amount described in paragraph (4)(A) of such section, with respect to costs described in such paragraph. - (C) **Timing of agreement—** - (i) **Special rule for 2025—** In order for an [agreement](/usc/42/1320b–8.md?p=a-3-A) with a [manufacturer](#g-5) to be in effect under this section with respect to the period beginning on January 1, 2025, and ending on December 31, 2025, the [manufacturer](#g-5) shall enter into such [agreement](/usc/42/1320b–8.md?p=a-3-A) not later than March 1, 2024. - (ii) **2026 and subsequent years—** In order for an [agreement](/usc/42/1320b–8.md?p=a-3-A) with a [manufacturer](#g-5) to be in effect under this section with respect to plan year 2026 or a subsequent plan year, the [manufacturer](#g-5) shall enter into such [agreement](/usc/42/1320b–8.md?p=a-3-A) not later than a calendar quarter or semi-annual deadline established by the [Secretary](/usc/42/1301.md?p=a-6). - (2) **Provision of appropriate data—** Each [manufacturer](#g-5) with an [agreement](/usc/42/1320b–8.md?p=a-3-A) in effect under this section shall collect and have available appropriate data, as determined by the [Secretary](/usc/42/1301.md?p=a-6), to ensure that it can demonstrate to the [Secretary](/usc/42/1301.md?p=a-6) compliance with the requirements under the [program](/usc/42/274l–1.md?p=4). - (3) **Compliance with requirements for administration of program—** Each [manufacturer](#g-5) with an [agreement](/usc/42/1320b–8.md?p=a-3-A) in effect under this section shall comply with requirements imposed by the [Secretary](/usc/42/1301.md?p=a-6), as applicable, for purposes of administering the [program](/usc/42/274l–1.md?p=4), [including](/usc/42/1301.md?p=b) any determination under [subparagraph (A)](#c-1-A) of subsection (c)(1) or procedures established under such [subsection (c)(1)](#c-1). - (4) **Length of agreement—** - (A) **In general—** An [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section shall be effective for an initial period of not less than 12 months and shall be automatically renewed for a period of not less than 1 year unless terminated under [subparagraph (B)](#b-4-B). - (B) **Termination—** - (i) **By the Secretary—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide for termination of an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section for a knowing and willful [violation](/usc/42/2000e–16a.md?p=c) of the requirements of the [agreement](/usc/42/1320b–8.md?p=a-3-A) or other good [cause](/usc/42/9908.md?p=c-2) shown. Such termination shall not be effective earlier than 30 days after the date of notice to the [manufacturer](#g-5) of such termination. The [Secretary](/usc/42/1301.md?p=a-6) shall provide, upon request, a [manufacturer](#g-5) with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate. - (ii) **By a manufacturer—** A [manufacturer](#g-5) may terminate an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section for any reason. Any such termination shall be effective, with respect to a plan year— - (I) if the termination occurs before January 31 of a plan year, as of the day after the end of the plan year; and - (II) if the termination occurs on or after January 31 of a plan year, as of the day after the end of the succeeding plan year. - (iii) **Effectiveness of termination—** Any termination under this subparagraph shall not affect discounts for [applicable drugs](#g-2) of the [manufacturer](#g-5) that are due under the [agreement](/usc/42/1320b–8.md?p=a-3-A) before the effective date of its termination. - (5) **Effective date of agreement—** An [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section shall take effect at the start of a calendar quarter or another date specified by the [Secretary](/usc/42/1301.md?p=a-6). - (c) **Duties described—** The duties described in this subsection are the following: - (1) **Administration of program—** Administering the [program](/usc/42/274l–1.md?p=4), [including](/usc/42/1301.md?p=b)— - (A) the determination of the amount of the [discounted price](#g-4-A) of an [applicable drug](#g-2) of a [manufacturer](#g-5); - (B) the establishment of procedures to ensure that, not later than the [applicable number of calendar days](#g-3) after the dispensing of an [applicable drug](#g-2) by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between— - (i) the [negotiated price](#g-6) of the [applicable drug](#g-2); and - (ii) the [discounted price](#g-4-A) of the [applicable drug](#g-2); - (C) the establishment of procedures to ensure that the [discounted price](#g-4-A) for an [applicable drug](#g-2) under this section is applied before any coverage or financial assistance under other health benefit plans or [programs](/usc/42/274l–1.md?p=4) that provide coverage or financial assistance for the purchase or provision of prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage on behalf of [applicable beneficiaries](#g-1) as specified by the [Secretary](/usc/42/1301.md?p=a-6); and - (D) providing a reasonable dispute resolution mechanism to resolve disagreements between [manufacturers](#g-5), [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C), and the [Secretary](/usc/42/1301.md?p=a-6). - (2) **Monitoring compliance—** The [Secretary](/usc/42/1301.md?p=a-6) shall monitor compliance by a [manufacturer](#g-5) with the terms of an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section. - (3) **Collection of data from prescription drug plans and MA–PD plans—** The [Secretary](/usc/42/1301.md?p=a-6) may collect appropriate data from [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) in a timeframe that allows for [discounted prices](#g-4-A) to be provided for [applicable drugs](#g-2) under this section. - (d) **Administration—** - (1) **In general—** Subject to [paragraph (2)](#d-2), the [Secretary](/usc/42/1301.md?p=a-6) shall provide for the implementation of this section, [including](/usc/42/1301.md?p=b) the performance of the duties described in [subsection (c)](#c). - (2) **Limitation—** In providing for the implementation of this section, the [Secretary](/usc/42/1301.md?p=a-6) shall not receive or distribute any [funds](/usc/42/12854.md?p=3) of a [manufacturer](#g-5) under the [program](/usc/42/274l–1.md?p=4). - (e) **Civil money penalty—** - (1) **In general—** A [manufacturer](#g-5) that fails to provide [discounted prices](#g-4-A) for [applicable drugs](#g-2) of the [manufacturer](#g-5) dispensed to [applicable beneficiaries](#g-1) in accordance with an [agreement](/usc/42/1320b–8.md?p=a-3-A) in effect under this section shall be subject to a civil money penalty for each such failure in an amount the [Secretary](/usc/42/1301.md?p=a-6) determines is equal to the sum of— - (A) the amount that the [manufacturer](#g-5) would have paid with respect to such discounts under the [agreement](/usc/42/1320b–8.md?p=a-3-A), which will then be used to pay the discounts which the [manufacturer](#g-5) had failed to provide; and - (B) 25 percent of such amount. - (2) **Application—** The provisions of [section 1320a–7a of this title](/usc/42/1320a–7a.md) (other than subsections [(a)](#a) and [(b)](#b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under [section 1320a–7a(a) of this title](/usc/42/1320a–7a.md?p=a). - (f) **Clarification regarding availability of other covered part D drugs—** Nothing in this section shall prevent an [applicable beneficiary](#g-1) from purchasing a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A) that is not an [applicable drug](#g-2) ([including](/usc/42/1301.md?p=b) a generic [drug](/usc/42/282.md?p=j-1-A-vii) or a [drug](/usc/42/282.md?p=j-1-A-vii) that is not on the formulary of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that the [applicable beneficiary](#g-1) is enrolled in). - (g) **Definitions—** In this section: - (1) **Applicable beneficiary—** The term “applicable beneficiary” means an individual who, on the date of dispensing a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A)— - (A) is enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C); - (B) is not enrolled in a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7); and - (C) has incurred costs, as determined in accordance with [section 1395w–102(b)(4)(C) of this title](/usc/42/1395w–102.md?p=b-4-C), for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the year that exceed the annual deductible specified in [section 1395w–102(b)(1) of this title](/usc/42/1395w–102.md?p=b-1). - (2) **Applicable drug—** The term “applicable drug”, with respect to an [applicable beneficiary](#g-1)— - (A) means a [covered part D drug](/usc/42/1395w–141.md?p=a-4-A)— - (i) approved under a new [drug](/usc/42/282.md?p=j-1-A-vii) application under [section 355(c) of title 21](/usc/21/355.md?p=c) or, in the case of a biologic product, licensed under [section 262 of this title](/usc/42/262.md); and - (ii) - (I) if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or the MA organization offering the [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) uses a formulary, which is on the formulary of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that the [applicable beneficiary](#g-1) is enrolled in; - (II) if the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or the MA organization offering the [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) does not use a formulary, for which benefits are available under the [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that the [applicable beneficiary](#g-1) is enrolled in; or - (III) is provided through an exception or appeal; and - (B) does not include a selected [drug](/usc/42/282.md?p=j-1-A-vii) (as referred to under [section 1320f–1(c) of this title](/usc/42/1320f–1.md?p=c)) during a price applicability period (as defined in [section 1320f(b)(2) of this title](/usc/42/1320f.md?p=b-2)) with respect to such [drug](/usc/42/282.md?p=j-1-A-vii). - (3) **Applicable number of calendar days—** The term “applicable number of calendar days” means— - (A) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) for reimbursement submitted electronically, 14 days; and - (B) with respect to [claims](/usc/42/1320a–7a.md?p=i-2) for reimbursement submitted otherwise, 30 days. - (4) **Discounted price—** - (A) **In general—** The term “discounted price” means, subject to subparagraphs [(B)](#g-4-B) and [(C)](#g-4-C), with respect to an [applicable drug](#g-2) of a [manufacturer](#g-5) dispensed during a year to an [applicable beneficiary](#g-1)— - (i) who has not incurred costs, as determined in accordance with [section 1395w–102(b)(4)(C) of this title](/usc/42/1395w–102.md?p=b-4-C), for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the year that are equal to or exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B)(i) of this title](/usc/42/1395w–102.md?p=b-4-B-i) for the year, 90 percent of the [negotiated price](#g-6) of such [drug](/usc/42/282.md?p=j-1-A-vii); and - (ii) who has incurred such costs, as so determined, in the year that are equal to or exceed such threshold for the year, 80 percent of the [negotiated price](#g-6) of such [drug](/usc/42/282.md?p=j-1-A-vii). - (B) **Phase-in for certain drugs dispensed to LIS beneficiaries—** - (i) **In general—** In the case of an [applicable drug](#g-2) of a [specified manufacturer](#g-4-B-ii-I) (as defined in [clause (ii)](#g-4-B-ii)) that is marketed as of August 16, 2022, and dispensed for an [applicable beneficiary](#g-1) who is a [subsidy eligible individual](/usc/42/1395w–114.md?p=a-3-A) (as defined in [section 1395w–114(a)(3) of this title](/usc/42/1395w–114.md?p=a-3)), the term “[discounted price](#g-4-A)” means the specified LIS percent (as defined in [clause (iii)](#g-4-B-iii)) of the [negotiated price](#g-6) of the [applicable drug](#g-2) of the [manufacturer](#g-5). - (ii) **Specified manufacturer—** - (I) **In general—** In this subparagraph, subject to [subclause (II)](#g-4-B-ii-II), the term “specified manufacturer” means a [manufacturer](#g-5) of an [applicable drug](#g-2) for which, in 2021— - (aa) the [manufacturer](#g-5) had a coverage gap discount [agreement](/usc/42/1320b–8.md?p=a-3-A) under [section 1395w–114a of this title](/usc/42/1395w–114a.md); - (bb) the [total expenditures](#g-4-D) for all of the [specified drugs](#g-4-B-ii-II-aa) of the [manufacturer](#g-5) covered by such [agreement](/usc/42/1320b–8.md?p=a-3-A) or [agreements](/usc/42/1320b–8.md?p=a-3-A) for such year and covered under this part during such year represented less than 1.0 percent of the [total expenditures](#g-4-D) under this part for all covered Part[^1] D [drugs](/usc/42/1395x.md?p=t-2-A) during such year; and - (cc) the [total expenditures](#g-4-D) for all of the [specified drugs](#g-4-B-ii-II-aa) of the [manufacturer](#g-5) that are [single](/usc/42/2304.md?p=m) source [drugs](/usc/42/1395x.md?p=t-2-A) and [biological products](/usc/42/287a.md?p=a-1) for which payment may be made under part B during such year represented less than 1.0 percent of the [total expenditures](#g-4-D) under part B for all [drugs](/usc/42/1395x.md?p=t-2-A) or [biological products](/usc/42/287a.md?p=a-1) for which payment may be made under such part during such year. - (II) **Specified drugs—** - (aa) **In general—** For purposes of this clause, the term “specified drug” means, with respect to a [specified manufacturer](#g-4-B-ii-I), for 2021, an [applicable drug](#g-2) that is produced, prepared, propagated, compounded, converted, or processed by the [manufacturer](#g-5). - (bb) **Aggregation rule—** All [persons](/usc/42/1301.md?p=a-3) treated as a [single](/usc/42/2304.md?p=m) employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one [manufacturer](#g-5) for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section shall require that a [manufacturer](#g-5) provide and attest to such information as specified by the [Secretary](/usc/42/1301.md?p=a-6) as necessary. - (III) **Limitation—** The term “[specified manufacturer](#g-4-B-ii-I)” shall not include a [manufacturer](#g-5) described in [subclause (I)](#g-4-B-ii-I) if such [manufacturer](#g-5) is acquired after 2021 by another [manufacturer](#g-5) that is not a [specified manufacturer](#g-4-B-ii-I), effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025. - (iii) **Specified LIS percent—** In this subparagraph, the “specified LIS percent” means, with respect to a year— - (I) for an [applicable drug](#g-2) dispensed for an [applicable beneficiary](#g-1) described in [clause (i)](#g-4-B-i) who has not incurred costs, as determined in accordance with [section 1395w–102(b)(4)(C) of this title](/usc/42/1395w–102.md?p=b-4-C), for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the year that are equal to or exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B)(i) of this title](/usc/42/1395w–102.md?p=b-4-B-i) for the year— - (aa) for 2025, 99 percent; - (bb) for 2026, 98 percent; - (cc) for 2027, 95 percent; - (dd) for 2028, 92 percent; and - (ee) for 2029 and each subsequent year, 90 percent; and - (II) for an [applicable drug](#g-2) dispensed for an [applicable beneficiary](#g-1) described in [clause (i)](#g-4-B-i) who has incurred costs, as determined in accordance with [section 1395w–102(b)(4)(C) of this title](/usc/42/1395w–102.md?p=b-4-C), for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the year that are equal to or exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B)(i) of this title](/usc/42/1395w–102.md?p=b-4-B-i) for the year— - (aa) for 2025, 99 percent; - (bb) for 2026, 98 percent; - (cc) for 2027, 95 percent; - (dd) for 2028, 92 percent; - (ee) for 2029, 90 percent; - (ff) for 2030, 85 percent; and - (gg) for 2031 and each subsequent year, 80 percent. - (C) **Phase-in for specified small manufacturers—** - (i) **In general—** In the case of an [applicable drug](#g-2) of a [specified small manufacturer](#g-4-C-ii-I) (as defined in [clause (ii)](#g-4-C-ii)) that is marketed as of August 16, 2022, and dispensed for an [applicable beneficiary](#g-1), the term “[discounted price](#g-4-A)” means the [specified small manufacturer percent](#g-4-C-iii) (as defined in [clause (iii)](#g-4-C-iii)) of the [negotiated price](#g-6) of the [applicable drug](#g-2) of the [manufacturer](#g-5). - (ii) **Specified small manufacturer—** - (I) **In general—** In this subparagraph, subject to [subclause (III)](#g-4-C-ii-III), the term “specified small manufacturer” means a [manufacturer](#g-5) of an [applicable drug](#g-2) for which, in 2021— - (aa) the [manufacturer](#g-5) is a [specified manufacturer](#g-4-B-ii-III) (as defined in [subparagraph (B)(ii)](#g-4-B-ii)); and - (bb) the [total expenditures](#g-4-D) under part D for any one of the [specified small manufacturer drugs](#g-4-C-ii-II-aa) of the [manufacturer](#g-5) that are covered by the [agreement](/usc/42/1320b–8.md?p=a-3-A) or [agreements](/usc/42/1320b–8.md?p=a-3-A) under [section 1395w–114a of this title](/usc/42/1395w–114a.md) of such [manufacturer](#g-5) for such year and covered under this part during such year are equal to or more than 80 percent of the [total expenditures](#g-4-D) under this part for all [specified small manufacturer drugs](#g-4-C-ii-II-aa) of the [manufacturer](#g-5) that are covered by such [agreement](/usc/42/1320b–8.md?p=a-3-A) or [agreements](/usc/42/1320b–8.md?p=a-3-A) for such year and covered under this part during such year. - (II) **Specified small manufacturer drugs—** - (aa) **In general—** For purposes of this clause, the term “specified small manufacturer drugs” means, with respect to a [specified small manufacturer](#g-4-C-ii-I), for 2021, an [applicable drug](#g-2) that is produced, prepared, propagated, compounded, converted, or processed by the [manufacturer](#g-5). - (bb) **Aggregation rule—** All [persons](/usc/42/1301.md?p=a-3) treated as a [single](/usc/42/2304.md?p=m) employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one [manufacturer](#g-5) for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an [agreement](/usc/42/1320b–8.md?p=a-3-A) under this section shall require that a [manufacturer](#g-5) provide and attest to such information as specified by the [Secretary](/usc/42/1301.md?p=a-6) as necessary. - (III) **Limitation—** The term “[specified small manufacturer](#g-4-C-ii-I)” shall not include a [manufacturer](#g-5) described in [subclause (I)](#g-4-C-ii-I) if such [manufacturer](#g-5) is acquired after 2021 by another [manufacturer](#g-5) that is not a [specified small manufacturer](#g-4-C-ii-I), effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025. - (iii) **Specified small manufacturer percent—** In this subparagraph, the term “specified small manufacturer percent” means, with respect to a year— - (I) for an [applicable drug](#g-2) dispensed for an [applicable beneficiary](#g-1) who has not incurred costs, as determined in accordance with [section 1395w–102(b)(4)(C) of this title](/usc/42/1395w–102.md?p=b-4-C), for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the year that are equal to or exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B)(i) of this title](/usc/42/1395w–102.md?p=b-4-B-i) for the year— - (aa) for 2025, 99 percent; - (bb) for 2026, 98 percent; - (cc) for 2027, 95 percent; - (dd) for 2028, 92 percent; and - (ee) for 2029 and each subsequent year, 90 percent; and - (II) for an [applicable drug](#g-2) dispensed for an [applicable beneficiary](#g-1) who has incurred costs, as determined in accordance with [section 1395w–102(b)(4)(C) of this title](/usc/42/1395w–102.md?p=b-4-C), for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) in the year that are equal to or exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B)(i) of this title](/usc/42/1395w–102.md?p=b-4-B-i) for the year— - (aa) for 2025, 99 percent; - (bb) for 2026, 98 percent; - (cc) for 2027, 95 percent; - (dd) for 2028, 92 percent; - (ee) for 2029, 90 percent; - (ff) for 2030, 85 percent; and - (gg) for 2031 and each subsequent year, 80 percent. - (D) **Total expenditures—** For purposes of this paragraph, the term “total expenditures” [includes](/usc/42/1301.md?p=b), in the case of expenditures with respect to part D, the total gross covered prescription [drug](/usc/42/282.md?p=j-1-A-vii) costs as defined in [section 1395w–115(b)(3) of this title](/usc/42/1395w–115.md?p=b-3). The term “total expenditures” excludes, in the case of expenditures with respect to part B, expenditures for a [drug](/usc/42/282.md?p=j-1-A-vii) or biological that are bundled or packaged into the payment for another service. - (E) **Special case for certain claims—** - (i) **Claims spanning deductible—** In the case where the entire amount of the [negotiated price](#g-6) of an individual [claim](/usc/42/1320a–7a.md?p=i-2) for an [applicable drug](#g-2) with respect to an [applicable beneficiary](#g-1) does not fall above the annual deductible specified in [section 1395w–102(b)(1) of this title](/usc/42/1395w–102.md?p=b-1) for the year, the [manufacturer](#g-5) of the [applicable drug](#g-2) shall provide the [discounted price](#g-4-A) under this section on only the portion of the [negotiated price](#g-6) of the [applicable drug](#g-2) that falls above such annual deductible. - (ii) **Claims spanning out-of-pocket threshold—** In the case where the entire amount of the [negotiated price](#g-6) of an individual [claim](/usc/42/1320a–7a.md?p=i-2) for an [applicable drug](#g-2) with respect to an [applicable beneficiary](#g-1) does not fall entirely below or entirely above the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B)(i) of this title](/usc/42/1395w–102.md?p=b-4-B-i) for the year, the [manufacturer](#g-5) of the [applicable drug](#g-2) shall provide the [discounted price](#g-4-A)— - (I) in accordance with [subparagraph (A)(i)](#g-4-A-i) on the portion of the [negotiated price](#g-6) of the [applicable drug](#g-2) that falls below such threshold; and - (II) in accordance with [subparagraph (A)(ii)](#g-4-A-ii) on the portion of such price of such [drug](/usc/42/282.md?p=j-1-A-vii) that falls at or above such threshold. - (5) **Manufacturer—** The term “manufacturer” means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription [drug](/usc/42/282.md?p=j-1-A-vii) products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of [drugs](/usc/42/1395x.md?p=t-2-A) or a retail pharmacy licensed under [State](/usc/42/1397n–12.md?p=6) law. - (6) **Negotiated price—** The term “negotiated price” has the meaning given such term for purposes of [section 1395w–102(d)(1)(B) of this title](/usc/42/1395w–102.md?p=d-1-B), and, with respect to an [applicable drug](#g-2), such negotiated price shall include any dispensing fee and, if applicable, any vaccine [administration](/usc/42/1301.md?p=a-10) fee for the [applicable drug](#g-2). - (7) **Qualified retiree prescription drug plan—** The term “[qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7)” has the meaning given such term in [section 1395w–132(a)(2) of this title](/usc/42/1395w–132.md?p=a-2). # §1395w–114d. Selected drug subsidy program With respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that would be applicable [drugs](/usc/42/1395x.md?p=t-2-A) (as defined in [section 1395w–114c(g)(2) of this title](/usc/42/1395w–114c.md?p=g-2)) but for the application of [subparagraph (B)](/usc/42/1395w–114c.md?p=g-2-B) of such section, the [Secretary](/usc/42/1301.md?p=a-6) shall provide a process whereby, in the case of an applicable beneficiary (as defined in [section 1395w–114c(g)(1) of this title](/usc/42/1395w–114c.md?p=g-1)) who, with respect to a year, is enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or is enrolled in an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), has not incurred costs that are equal to or exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B)(i) of this title](/usc/42/1395w–102.md?p=b-4-B-i), and is dispensed such a [drug](/usc/42/282.md?p=j-1-A-vii), the [Secretary](/usc/42/1301.md?p=a-6) (periodically and on a timely basis) provides the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or the MA organization offering the plan, a subsidy with respect to such [drug](/usc/42/282.md?p=j-1-A-vii) that is equal to 10 percent of the [negotiated price](/usc/42/1395w–114c.md?p=g-6) (as defined in [section 1395w–114c(g)(6) of this title](/usc/42/1395w–114c.md?p=g-6)) of such [drug](/usc/42/282.md?p=j-1-A-vii). # §1395w–115. Subsidies for part D eligible individuals for qualified prescription drug coverage - (a) **Subsidy payment—** In order to reduce premium levels applicable to [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) consistent with an overall subsidy level of 74.5 percent (or, for each of 2024 through 2029, the percent applicable as a result of the application of [section 1395w–113(a)(8) of this title](/usc/42/1395w–113.md?p=a-8), or, for 2030 and each subsequent year, 100 percent minus the percent specified under [section 1395w–113(a)(9) of this title](/usc/42/1395w–113.md?p=a-9)) for [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3), to reduce adverse selection among [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C), and to promote the participation of [PDP sponsors](/usc/42/1395w–151.md?p=a-13) under this part and MA organizations under part C, the [Secretary](/usc/42/1301.md?p=a-6) shall provide for payment to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) that offers a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and an MA organization that offers an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) of the following subsidies in accordance with this section: - (1) **Direct subsidy—** A direct subsidy for each [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) for a month equal to— - (A) the amount of the plan’s standardized bid amount (as defined in [section 1395w–113(a)(5) of this title](/usc/42/1395w–113.md?p=a-5)), adjusted under [subsection (c)(1)](#c-1), reduced by - (B) the base beneficiary premium (as computed under paragraph (2) or (8) of [section 1395w–113(a) of this title](/usc/42/1395w–113.md?p=a) (as applicable) and as adjusted under [paragraph (1)(B)](/usc/42/1395w–113.md?p=a-1-B) of such section). - (2) **Subsidy through reinsurance—** The reinsurance payment amount (as defined in [subsection (b)](#b)). This section constitutes budget authority in advance of appropriations Acts and represents the obligation of the [Secretary](/usc/42/1301.md?p=a-6) to provide for the payment of amounts provided under this section. - (b) **Reinsurance payment amount—** - (1) **In general—** The reinsurance payment amount under this subsection for a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) for a [coverage year](#b-4) is an amount equal to— - (A) for a year preceding 2025, 80 percent of the [allowable reinsurance costs](#b-2-A) (as specified in [paragraph (2)](#b-2)) attributable to that portion of [gross covered prescription drug costs](#b-3) as specified in [paragraph (3)](#b-3) incurred in the [coverage year](#b-4) after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B) of this title](/usc/42/1395w–102.md?p=b-4-B); and - (B) for 2025 and each subsequent year, the sum of— - (i) with respect to applicable [drugs](/usc/42/1395x.md?p=t-2-A) (as defined in [section 1395w–114c(g)(2) of this title](/usc/42/1395w–114c.md?p=g-2)), an amount equal to 20 percent of such [allowable reinsurance costs](#b-2-A) attributable to that portion of [gross covered prescription drug costs](#b-3) as specified in [paragraph (3)](#b-3) incurred in the [coverage year](#b-4) after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B) of this title](/usc/42/1395w–102.md?p=b-4-B); and - (ii) with respect to [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) that are not applicable [drugs](/usc/42/1395x.md?p=t-2-A) (as so defined), an amount equal to 40 percent of such [allowable reinsurance costs](#b-2-A) attributable to that portion of [gross covered prescription drug costs](#b-3) as specified in [paragraph (3)](#b-3) incurred in the [coverage year](#b-4) after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in [section 1395w–102(b)(4)(B) of this title](/usc/42/1395w–102.md?p=b-4-B). - (2) **Allowable reinsurance costs—** - (A) **In general—** Subject to [subparagraph (B)](#b-2-B), for purposes of this section, the term “allowable reinsurance costs” means, with respect to [gross covered prescription drug costs](#b-3) under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) offered by an MA organization, the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization or by (or on behalf of) an enrollee under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage under the plan were [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3), or, in the case of a plan providing supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage, if such coverage were [standard prescription drug coverage](/usc/42/1395w–102.md?p=b). - (B) **Inclusion of manufacturer discounts on applicable drugs—** For purposes of applying [subparagraph (A)](#b-2-A), the term “[allowable reinsurance costs](#b-2-A)” shall include the portion of the [negotiated price](/usc/42/1395w–114c.md?p=g-6) (as defined in [section 1395w–114c(g)(6) of this title](/usc/42/1395w–114c.md?p=g-6)) of an applicable [drug](/usc/42/282.md?p=j-1-A-vii) (as defined in [section 1395w–114c(g)(2) of this title](/usc/42/1395w–114c.md?p=g-2)) that was paid by a [manufacturer](/usc/42/300aa–33.md?p=3) under the [manufacturer](/usc/42/300aa–33.md?p=3) discount [program](/usc/42/274l–1.md?p=4) under [section 1395w–114c of this title](/usc/42/1395w–114c.md). - (3) **Gross covered prescription drug costs—** Subject to [paragraph (2)(B)](#b-2-B), for purposes of this section, the term “gross covered prescription drug costs” means, with respect to a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) during a [coverage year](#b-4), the costs incurred under the plan, not [including](/usc/42/1301.md?p=b) administrative costs, but [including](/usc/42/1301.md?p=b) costs directly related to the dispensing of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) during the year and costs relating to the deductible. Such costs shall be determined whether they are paid by the individual or under the plan (or, with respect to 2025 and subsequent years, in the case of an applicable [drug](/usc/42/282.md?p=j-1-A-vii), as defined in [section 1395w–114c(g)(2) of this title](/usc/42/1395w–114c.md?p=g-2), by a [manufacturer](/usc/42/300aa–33.md?p=3)), regardless of whether the coverage under the plan exceeds [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3). - (4) **Coverage year defined—** For purposes of this section, the term “coverage year” means a calendar year in which [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) are dispensed if the [claim](/usc/42/1320a–7a.md?p=i-2) for such [drugs](/usc/42/1395x.md?p=t-2-A) (and payment on such [claim](/usc/42/1320a–7a.md?p=i-2)) is made not later than such period after the end of such year as the [Secretary](/usc/42/1301.md?p=a-6) specifies. - (c) **Adjustments relating to bids—** - (1) **Health status risk adjustment—** - (A) **Establishment of risk adjustors—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish an appropriate methodology for adjusting the standardized bid amount under [subsection (a)(1)(A)](#a-1-A) to take into account variation in costs for [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3) among [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) based on the differences in actuarial risk of different enrollees being served. Any such risk adjustment shall be designed in a manner so as not to result in a change in the aggregate amounts payable to such plans under [subsection (a)(1)](#a-1) and through that portion of the monthly beneficiary prescription [drug](/usc/42/282.md?p=j-1-A-vii) premiums described in [subsection (a)(1)(B)](#a-1-B) and [MA monthly prescription drug beneficiary premiums](/usc/42/1395w–24.md?p=b-2-B). - (B) **Considerations—** In establishing the methodology under [subparagraph (A)](#c-1-A), the [Secretary](/usc/42/1301.md?p=a-6) may take into account the similar methodologies used under [section 1395w–23(a)(3) of this title](/usc/42/1395w–23.md?p=a-3) to adjust payments to MA organizations for benefits under the original medicare fee-for-service [program](/usc/42/274l–1.md?p=4) option. - (C) **Data collection—** In order to carry out this paragraph, the [Secretary](/usc/42/1301.md?p=a-6) shall require— - (i) [PDP sponsors](/usc/42/1395w–151.md?p=a-13) to submit data regarding [drug](/usc/42/282.md?p=j-1-A-vii) [claims](/usc/42/1320a–7a.md?p=i-2) that can be linked at the individual level to part A and part B data and such other information as the [Secretary](/usc/42/1301.md?p=a-6) determines necessary; and - (ii) MA organizations that offer [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) to submit data regarding [drug](/usc/42/282.md?p=j-1-A-vii) [claims](/usc/42/1320a–7a.md?p=i-2) that can be linked at the individual level to other data that such organizations are required to submit to the [Secretary](/usc/42/1301.md?p=a-6) and such other information as the [Secretary](/usc/42/1301.md?p=a-6) determines necessary. - (D) **Publication—** At the time of publication of risk adjustment factors under [section 1395w–23(b)(1)(B)(i)(II) of this title](/usc/42/1395w–23.md?p=b-1-B-i-II), the [Secretary](/usc/42/1301.md?p=a-6) shall publish the risk adjusters established under this paragraph for the succeeding year. - (2) **Geographic adjustment—** - (A) **In general—** Subject to [subparagraph (B)](#c-2-B), for purposes of [section 1395w–113(a)(1)(B)(iii) of this title](/usc/42/1395w–113.md?p=a-1-B-iii), the [Secretary](/usc/42/1301.md?p=a-6) shall establish an appropriate methodology for adjusting the national average monthly bid amount (computed under [section 1395w–113(a)(4) of this title](/usc/42/1395w–113.md?p=a-4)) to take into account differences in prices for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) among [PDP regions](/usc/42/1395w–151.md?p=a-12). - (B) **De minimis rule—** If the [Secretary](/usc/42/1301.md?p=a-6) determines that the price variations described in [subparagraph (A)](#c-2-A) among [PDP regions](/usc/42/1395w–151.md?p=a-12) are de minimis, the [Secretary](/usc/42/1301.md?p=a-6) shall not provide for adjustment under this paragraph. - (C) **Budget neutral adjustment—** Any adjustment under this paragraph shall be applied in a manner so as to not result in a change in the aggregate payments made under this part that would have been made if the [Secretary](/usc/42/1301.md?p=a-6) had not applied such adjustment. - (d) **Payment methods—** - (1) **In general—** Payments under this section shall be based on such a method as the [Secretary](/usc/42/1301.md?p=a-6) determines. The [Secretary](/usc/42/1301.md?p=a-6) may establish a payment method by which interim payments of amounts under this section are made during a year based on the [Secretary](/usc/42/1301.md?p=a-6)’s best estimate of amounts that will be payable after obtaining all of the information. - (2) **Requirement for provision of information—** - (A) **Requirement—** Payments under this section to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization are conditioned upon the furnishing to the [Secretary](/usc/42/1301.md?p=a-6), in a form and manner specified by the [Secretary](/usc/42/1301.md?p=a-6), of such information as may be required to carry out this section. - (B) **Restriction on use of information—** Information disclosed or obtained pursuant to [subparagraph (A)](#d-2-A) may be used by officers, [employees](/usc/42/1320a–7h.md?p=e-7), and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this section. - (3) **Source of payments—** Payments under this section shall be made from the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10). - (4) **Application of enrollee adjustment—** The provisions of [section 1395w–23(a)(2) of this title](/usc/42/1395w–23.md?p=a-2) shall apply to payments to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) under this section in the same manner as they apply to payments to MA organizations under [section 1395w–23(a) of this title](/usc/42/1395w–23.md?p=a). - (e) **Portion of total payments to a sponsor or organization subject to risk (application of risk corridors)—** - (1) **Computation of adjusted allowable risk corridor costs—** - (A) **In general—** For purposes of this subsection, the term “adjusted allowable risk corridor costs” means, for a plan for a [coverage year](#b-4) (as defined in [subsection (b)(4)](#b-4))— - (i) the [allowable risk corridor costs](#e-1-B) (as defined in [subparagraph (B)](#e-1-B)) for the plan for the year, reduced by - (ii) the sum of (I) the total reinsurance payments made under [subsection (b)](#b) to the sponsor of the plan for the year, and (II) the total subsidy payments made under [section 1395w–114 of this title](/usc/42/1395w–114.md) to the sponsor of the plan for the year. - (B) **Allowable risk corridor costs—** For purposes of this subsection, the term “allowable risk corridor costs” means, with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) offered by an MA organization, the part of costs (not [including](/usc/42/1301.md?p=b) administrative costs, but [including](/usc/42/1301.md?p=b) costs directly related to the dispensing of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) during the year) incurred by the sponsor or organization under the plan that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage under the plan were [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3), or, in the case of a plan providing supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage, if such coverage were [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3) taking into account the adjustment under [section 1395w–111(c)(2) of this title](/usc/42/1395w–111.md?p=c-2). In computing allowable costs under this paragraph, the [Secretary](/usc/42/1301.md?p=a-6) shall compute such costs based upon imposition under paragraphs (1)(D) and (2)(E) of [section 1395w–114(a) of this title](/usc/42/1395w–114.md?p=a) of the maximum amount of copayments permitted under such paragraphs. - (2) **Adjustment of payment—** - (A) **No adjustment if adjusted allowable risk corridor costs within risk corridor—** If the adjusted allowable risk corridor costs (as defined in [paragraph (1)](#e-1)) for the plan for the year are at least equal to the first threshold lower limit of the risk corridor (specified in [paragraph (3)(A)(i)](#e-3-A-i)), but not greater than the first threshold upper limit of the risk corridor (specified in [paragraph (3)(A)(iii)](#e-3-A-iii)) for the plan for the year, then no payment adjustment shall be made under this subsection. - (B) **Increase in payment if adjusted allowable risk corridor costs above upper limit of risk corridor—** - (i) **Costs between first and second threshold upper limits—** If the adjusted allowable risk corridor costs for the plan for the year are greater than the first threshold upper limit, but not greater than the second threshold upper limit, of the risk corridor for the plan for the year, the [Secretary](/usc/42/1301.md?p=a-6) shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to 50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in [clause (iii)](#e-2-B-iii) are met for the year) of the difference between such adjusted allowable risk corridor costs and the first threshold upper limit of the risk corridor. - (ii) **Costs above second threshold upper limits—** If the adjusted allowable risk corridor costs for the plan for the year are greater than the second threshold upper limit of the risk corridor for the plan for the year, the [Secretary](/usc/42/1301.md?p=a-6) shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to the sum of— - (I) 50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in [clause (iii)](#e-2-B-iii) are met for the year) of the difference between the second threshold upper limit and the first threshold upper limit; and - (II) 80 percent of the difference between such adjusted allowable risk corridor costs and the second threshold upper limit of the risk corridor. - (iii) **Conditions for application of higher percentage for 2006 and 2007—** The conditions described in this clause are met for 2006 or 2007 if the [Secretary](/usc/42/1301.md?p=a-6) determines with respect to such year that— - (I) at least 60 percent of [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) to which this subsection applies have adjusted allowable risk corridor costs for the plan for the year that are more than the first threshold upper limit of the risk corridor for the plan for the year; and - (II) such plans represent at least 60 percent of [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in any [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (C) **Reduction in payment if adjusted allowable risk corridor costs below lower limit of risk corridor—** - (i) **Costs between first and second threshold lower limits—** If the adjusted allowable risk corridor costs for the plan for the year are less than the first threshold lower limit, but not less than the second threshold lower limit, of the risk corridor for the plan for the year, the [Secretary](/usc/42/1301.md?p=a-6) shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to 50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit of the risk corridor and such adjusted allowable risk corridor costs. - (ii) **Costs below second threshold lower limit—** If the adjusted allowable risk corridor costs for the plan for the year are less the second threshold lower limit of the risk corridor for the plan for the year, the [Secretary](/usc/42/1301.md?p=a-6) shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to the sum of— - (I) 50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit and the second threshold lower limit; and - (II) 80 percent of the difference between the second threshold upper limit of the risk corridor and such adjusted allowable risk corridor costs. - (3) **Establishment of risk corridors—** - (A) **In general—** For each plan year the [Secretary](/usc/42/1301.md?p=a-6) shall establish a risk corridor for each [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and each [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). The risk corridor for a plan for a year shall be equal to a range as follows: - (i) **First threshold lower limit—** The first threshold lower limit of such corridor shall be equal to— - (I) the target amount described in [subparagraph (B)](#e-3-B) for the plan; minus - (II) an amount equal to the first threshold risk percentage for the plan (as determined under [subparagraph (C)(i)](#e-3-C-i)) of such target amount. - (ii) **Second threshold lower limit—** The second threshold lower limit of such corridor shall be equal to— - (I) the target amount described in [subparagraph (B)](#e-3-B) for the plan; minus - (II) an amount equal to the second threshold risk percentage for the plan (as determined under [subparagraph (C)(ii)](#e-3-C-ii)) of such target amount. - (iii) **First threshold upper limit—** The first threshold upper limit of such corridor shall be equal to the sum of— - (I) such target amount; and - (II) the amount described in [clause (i)(II)](#e-3-A-i-II). - (iv) **Second threshold upper limit—** The second threshold upper limit of such corridor shall be equal to the sum of— - (I) such target amount; and - (II) the amount described in [clause (ii)(II)](#e-3-A-ii-II). - (B) **Target amount described—** The target amount described in this paragraph is, with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) in a year, the total amount of payments paid to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA–PD organization for the plan for the year, taking into account amounts paid by the [Secretary](/usc/42/1301.md?p=a-6) and enrollees, based upon the standardized bid amount (as defined in [section 1395w–113(a)(5) of this title](/usc/42/1395w–113.md?p=a-5) and as risk adjusted under [subsection (c)(1)](#c-1)), reduced by the total amount of administrative expenses for the year assumed in such standardized bid. - (C) **First and second threshold risk percentage defined—** - (i) **First threshold risk percentage—** Subject to [clause (iii)](#e-3-C-iii), for purposes of this section, the first threshold risk percentage is— - (I) for 2006 and 2007, and[^1] 2.5 percent; - (II) for 2008 through 2011, 5 percent; and - (III) for 2012 and subsequent years, a percentage established by the [Secretary](/usc/42/1301.md?p=a-6), but in no case less than 5 percent. - (ii) **Second threshold risk percentage—** Subject to [clause (iii)](#e-3-C-iii), for purposes of this section, the second threshold risk percentage is— - (I) for 2006 and 2007, 5 percent; - (II) for 2008 through 2011, 10 percent; and - (III) for 2012 and subsequent years, a percentage established by the [Secretary](/usc/42/1301.md?p=a-6) that is greater than the percent established for the year under [clause (i)(III)](#e-3-C-i-III), but in no case less than 10 percent. - (iii) **Reduction of risk percentage to ensure 2 plans in an area—** Pursuant to [section 1395w–111(b)(2)(E)(ii) of this title](/usc/42/1395w–111.md?p=b-2-E-ii), a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) may submit a bid that requests a decrease in the applicable first or second threshold risk percentages or an increase in the percents applied under [paragraph (2)](#e-2). - (4) **Plans at risk for entire amount of supplemental prescription drug coverage—** A [PDP sponsor](/usc/42/1395w–151.md?p=a-13) and MA organization that offers a plan that provides supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits shall be at full financial risk for the provision of such supplemental benefits. - (5) **No effect on monthly premium—** No adjustment in payments made by reason of this subsection shall affect the monthly beneficiary premium or the [MA monthly prescription drug beneficiary premium](/usc/42/1395w–24.md?p=b-2-B). - (f) **Disclosure of information—** - (1) **In general—** Each contract under this part and under part C shall provide that— - (A) the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) shall provide the [Secretary](/usc/42/1301.md?p=a-6) with such information as the [Secretary](/usc/42/1301.md?p=a-6) determines is necessary to carry out this section; and - (B) the [Secretary](/usc/42/1301.md?p=a-6) shall have the right in accordance with [section 1395w–27(d)(2)(B) of this title](/usc/42/1395w–27.md?p=d-2-B) (as applied under [section 1395w–112(b)(3)(C) of this title](/usc/42/1395w–112.md?p=b-3-C)) to inspect and audit any books and records of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization that pertain to the information regarding costs provided to the [Secretary](/usc/42/1301.md?p=a-6) under [subparagraph (A)](#f-1-A). - (2) **Restriction on use of information—** Information disclosed or obtained pursuant to the provisions of this section may be used— - (A) by officers, [employees](/usc/42/1320a–7h.md?p=e-7), and contractors of the Department of Health and Human Services for the purposes of, and to the extent necessary in— - (i) carrying out this section or part E of subchapter XI; and - (ii) conducting oversight, evaluation, and enforcement under this subchapter; - (B) by the [Attorney General](/usc/42/14902.md?p=6) and the Comptroller General of the [United States](/usc/42/1301.md?p=a-2) for the purposes of, and to the extent necessary in, carrying out health oversight activities; - (C) by the [Executive Director](/usc/42/4370m.md?p=12) of the Medicare Payment Advisory [Commission](/usc/42/2000ff.md?p=1) for purposes of monitoring, making recommendations for, and analysis of the [program](/usc/42/274l–1.md?p=4) under this subchapter and by the [Executive Director](/usc/42/4370m.md?p=12) of the Medicaid and CHIP Payment and Access [Commission](/usc/42/2000ff.md?p=1) for purposes of monitoring, making recommendations for, and analysis of the Medicaid [program](/usc/42/274l–1.md?p=4) established under subchapter XIX and the [Children](/usc/42/256e.md?p=g-2)’s Health Insurance [Program](/usc/42/274l–1.md?p=4) under subchapter XXI; and - (D) by the [Director](/usc/42/5061.md?p=1) of the Congressional Budget [Office](/usc/42/3058f.md?p=1) for the purposes of analysis of [programs](/usc/42/274l–1.md?p=4) authorized under this chapter, as applicable, and the fulfilment of such [Director](/usc/42/5061.md?p=1)’s duties under the Congressional Budget and Impoundment Control Act of 1974. - (3) **Additional restrictions on disclosure of information—** - (A) **In general—** The [Executive Directors](/usc/42/4370m.md?p=12) described in [paragraph (2)(C)](#f-2-C) shall not disclose any of the following information disclosed to such [Executive Directors](/usc/42/4370m.md?p=12) or obtained by such [Executive Directors](/usc/42/4370m.md?p=12) pursuant to such paragraph, with respect to a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) offered by an MA organization: - (i) The specific amounts or the identity of the source of any rebates, discounts, price concessions, or other forms of direct or indirect remuneration under such [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or such [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (ii) Information submitted with the bid submitted under [section 1395w–111(b) of this title](/usc/42/1395w–111.md?p=b) by such [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or under [section 1395w–24(a) of this title](/usc/42/1395w–24.md?p=a) by such MA organization. - (iii) In the case of such information from prescription [drug](/usc/42/282.md?p=j-1-A-vii) event records, information in a form that would not be permitted under [section 423.505(m) of title 42, Code of Federal Regulations](/cfr/42/423.505.md?p=m), or any successor regulation, if released by the Centers for Medicare & Medicaid Services. - (B) **Clarification—** The restrictions on disclosures described in [subparagraph (A)](#f-3-A) shall also apply to disclosures to individual [Commissioners](/usc/42/12302.md?p=1) of the Medicare Payment Advisory [Commission](/usc/42/2000ff.md?p=1) or of the Medicaid and CHIP Payment and Access [Commission](/usc/42/2000ff.md?p=1). - (g) **Payment for fallback prescription drug plans—** In lieu of the amounts otherwise payable under this section to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4) (as defined in [section 1395w–111(g)(4) of this title](/usc/42/1395w–111.md?p=g-4)[^2]), the amount payable shall be the amounts determined under the contract for such plan pursuant to [section 1395w–111(g)(5) of this title](/usc/42/1395w–111.md?p=g-5). - (h) **Temporary retrospective subsidy for reduction in cost-sharing and deductible for adult vaccines recommended by the Advisory Committee on Immunization Practices and Insulin During 2023—** - (1) **In general—** In addition to amounts otherwise payable under this section to a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), for plan year 2023, the [Secretary](/usc/42/1301.md?p=a-6) shall provide the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization offering the plan subsidies in an amount equal to the aggregate reduction in [cost-sharing](/usc/42/18022.md?p=c-3-A) and deductible by reason of the application of paragraph (8) or (9) of [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b) for individuals under the plan during the year. - (2) **Timing—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide a subsidy under [paragraph (1)](#h-1), as applicable, not later than 18 months following the end of the applicable plan year. # §1395w–116. Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund - (a) **Establishment and operation of Account—** - (1) **Establishment—** There is created within the Federal Supplementary Medical Insurance [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3) established by [section 1395t of this title](/usc/42/1395t.md) an account to be known as the “[Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10)” (in this section referred to as the “Account”). - (2) **Funding—** The Account shall consist of such gifts and bequests as may be made as provided in [section 401(i)(1) of this title](/usc/42/401.md?p=i-1), accrued interest on balances in the Account, and such amounts as may be deposited in, or appropriated to, such Account as provided in this part. - (3) **Separate from rest of Trust Fund—** [Funds](/usc/42/12854.md?p=3) provided under this part to the Account shall be kept separate from all other [funds](/usc/42/12854.md?p=3) within the Federal Supplementary Medical Insurance [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3), but shall be invested, and such investments redeemed, in the same manner as all other [funds](/usc/42/12854.md?p=3) and investments within such [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3). - (b) **Payments from Account—** - (1) **In general—** The Managing Trustee shall pay from time to time from the Account such amounts as the [Secretary](/usc/42/1301.md?p=a-6) certifies are necessary to make payments to operate the [program](/usc/42/274l–1.md?p=4) under this part, [including](/usc/42/1301.md?p=b)— - (A) payments under [section 1395w–114 of this title](/usc/42/1395w–114.md) (relating to low-[income](/usc/42/292s.md?p=c-4) subsidy payments); - (B) payments under [section 1395w–115 of this title](/usc/42/1395w–115.md) (relating to subsidy payments and payments for fallback plans); - (C) payments to sponsors of [qualified retiree prescription drug plans](/usc/42/1395w–114a.md?p=g-7) under [section 1395w–132(a) of this title](/usc/42/1395w–132.md?p=a); - (D) payments with respect to administrative expenses under this part in accordance with [section 401(g) of this title](/usc/42/401.md?p=g); and - (E) payments under [section 1395w–114d of this title](/usc/42/1395w–114d.md) (relating to selected [drug](/usc/42/282.md?p=j-1-A-vii) subsidy payments). - (2) **Transfers to Medicaid account for increased administrative costs—** The Managing Trustee shall transfer from time to time from the Account to the [Grants](/usc/42/1397j.md?p=10) to [States](/usc/42/1397n–12.md?p=6) for Medicaid account amounts the [Secretary](/usc/42/1301.md?p=a-6) certifies are attributable to increases in payment resulting from the application of [section 1396u–5(b) of this title](/usc/42/1396u–5.md?p=b). - (3) **Payments of premiums withheld—** The Managing Trustee shall make payment to the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization involved of the premiums (and the portion of late enrollment penalties) that are collected in the manner described in [section 1395w–24(d)(2)(A) of this title](/usc/42/1395w–24.md?p=d-2-A) and that are payable under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) offered by such sponsor or organization. - (4) **Treatment in relation to part B premium—** Amounts payable from the Account shall not be taken into account in computing actuarial rates or premium amounts under [section 1395r of this title](/usc/42/1395r.md). - (c) **Deposits into Account—** - (1) **Low-income transfer—** Amounts paid under [section 1396u–5(c) of this title](/usc/42/1396u–5.md?p=c) (and any amounts collected or offset under [paragraph (1)(C)](/usc/42/1396u–5.md?p=c-1-C) of such section) are deposited into the Account. - (2) **Amounts withheld—** Pursuant to sections [1395w–113(c)](/usc/42/1395w–113.md?p=c) and [1395w–24(d)](/usc/42/1395w–24.md?p=d) of this title (as applied under this part), amounts that are withheld (and allocated) to the Account are deposited into the Account. - (3) **Appropriations to cover Government contributions—** There are authorized to be appropriated from time to time, out of any moneys in the Treasury not otherwise appropriated, to the Account, an amount equivalent to the amount of payments made from the Account under [subsection (b)](#b) plus such amounts as the Managing Trustee certifies is necessary to maintain an appropriate contingency margin, reduced by the amounts deposited under [paragraph (1)](#c-1) or [subsection (a)(2)](#a-2). - (4) **Initial funding and reserve—** In order to assure prompt payment of benefits provided under this part and the administrative expenses thereunder during the early months of the [program](/usc/42/274l–1.md?p=4) established by this part and to provide an initial contingency reserve, there are authorized to be appropriated to the Account, out of any moneys in the Treasury not otherwise appropriated, such amount as the [Secretary](/usc/42/1301.md?p=a-6) certifies are required, but not to exceed 10 percent of the estimated [total expenditures](/usc/42/1320f.md?p=c-5) from such Account in 2006. - (5) **Transfer of any remaining balance from Transitional Assistance Account—** Any balance in the Transitional Assistance Account that is transferred under [section 1395w–141(k)(5) of this title](/usc/42/1395w–141.md?p=k-5) shall be deposited into the Account. # §1395w–131. Application to Medicare Advantage program and related managed care programs - (a) **Special rules relating to offering of qualified prescription drug coverage—** - (1) **In general—** An MA organization on and after January 1, 2006— - (A) may not offer an [MA plan](/usc/42/1395w–101.md?p=a-3-B) described in [section 1395w–21(a)(2)(A) of this title](/usc/42/1395w–21.md?p=a-2-A) in an area unless either that plan (or another [MA plan](/usc/42/1395w–101.md?p=a-3-B) offered by the organization in that same service area) [includes](/usc/42/1301.md?p=b) required prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage (as defined in [paragraph (2)](#a-2)); and - (B) may not offer prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage (other than that required under parts A and B) to an enrollee— - (i) under an [MSA plan](/usc/42/1395w–28.md?p=b-3-A); or - (ii) under another [MA plan](/usc/42/1395w–101.md?p=a-3-B) unless such [drug](/usc/42/282.md?p=j-1-A-vii) coverage under such other plan provides [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) and unless the requirements of this section with respect to such coverage are met. - (2) **Qualifying coverage—** For purposes of [paragraph (1)(A)](#a-1-A), the term “required coverage” means with respect to an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)— - (A) [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3); or - (B) [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) that provides supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage, so long as there is no MA monthly supplemental beneficiary premium applied under the plan (due to the application of a credit against such premium of a rebate under [section 1395w–24(b)(1)(C) of this title](/usc/42/1395w–24.md?p=b-1-C)). - (b) **Application of default enrollment rules—** - (1) **Seamless continuation—** In applying [section 1395w–21(c)(3)(A)(ii) of this title](/usc/42/1395w–21.md?p=c-3-A-ii), an individual who is enrolled in a health benefits plan shall not be considered to have been deemed to make an election into an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) unless such health benefits plan provides any prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage. - (2) **MA continuation—** In applying [section 1395w–21(c)(3)(B) of this title](/usc/42/1395w–21.md?p=c-3-B), an individual who is enrolled in an [MA plan](/usc/42/1395w–101.md?p=a-3-B) shall not be considered to have been deemed to make an election into an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) unless— - (A) for purposes of the election as of January 1, 2006, the [MA plan](/usc/42/1395w–101.md?p=a-3-B) provided as of December 31, 2005, any prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage; or - (B) for periods after January 1, 2006, such [MA plan](/usc/42/1395w–101.md?p=a-3-B) is an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (3) **Discontinuance of MA–PD election during first year of eligibility—** In applying the second sentence of [section 1395w–21(e)(4) of this title](/usc/42/1395w–21.md?p=e-4) in the case of an individual who is electing to discontinue enrollment in an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), the individual shall be permitted to enroll in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) under part D at the time of the election of coverage under the original medicare fee-for-service [program](/usc/42/274l–1.md?p=4). - (4) **Rules regarding enrollees in MA plans not providing qualified prescription drug coverage—** In the case of an individual who is enrolled in an [MA plan](/usc/42/1395w–101.md?p=a-3-B) (other than an [MSA plan](/usc/42/1395w–28.md?p=b-3-A)) that does not provide [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1), if the organization offering such coverage discontinues the offering with respect to the individual of all [MA plans](/usc/42/1395w–101.md?p=a-3-B) that do not provide such coverage— - (i) the individual is deemed to have elected the original medicare fee-for-service [program](/usc/42/274l–1.md?p=4) option, unless the individual affirmatively elects to enroll in an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C); and - (ii) in the case of such a deemed election, the disenrollment shall be treated as an involuntary termination of the [MA plan](/usc/42/1395w–101.md?p=a-3-B) described in subparagraph (B)(ii) of [section 1395ss(s)(3) of this title](/usc/42/1395ss.md?p=s-3) for purposes of applying such section. The information disclosed under [section 1395w–22(c)(1) of this title](/usc/42/1395w–22.md?p=c-1) for individuals who are enrolled in such an [MA plan](/usc/42/1395w–101.md?p=a-3-B) shall include information regarding such rules. - (c) **Application of part D rules for prescription drug coverage—** With respect to the offering of [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) by an MA organization under this part on and after January 1, 2006— - (1) **In general—** Except as otherwise provided, the provisions of this part shall apply under part C with respect to prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage provided under [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) in lieu of the other provisions of part C that would apply to such coverage under such plans. - (2) **Waiver—** The [Secretary](/usc/42/1301.md?p=a-6) shall waive the provisions referred to in [paragraph (1)](#c-1) to the extent the [Secretary](/usc/42/1301.md?p=a-6) determines that such provisions duplicate, or are in conflict with, provisions otherwise applicable to the organization or plan under part C or as may be necessary in order to improve coordination of this part with the benefits under this part. - (3) **Treatment of MA owned and operated pharmacies—** The [Secretary](/usc/42/1301.md?p=a-6) may waive the requirement of [section 1395w–104(b)(1)(C) of this title](/usc/42/1395w–104.md?p=b-1-C) in the case of an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) that provides access (other than mail order) to [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) through pharmacies owned and operated by the MA organization, if the [Secretary](/usc/42/1301.md?p=a-6) determines that the organization’s pharmacy network is sufficient to provide comparable access for enrollees under the plan. - (d) **Special rules for private fee-for-service plans that offer prescription drug coverage—** With respect to an [MA plan](/usc/42/1395w–101.md?p=a-3-B) described in [section 1395w–21(a)(2)(C) of this title](/usc/42/1395w–21.md?p=a-2-C) that offers [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1), on and after January 1, 2006, the following rules apply: - (1) **Requirements regarding negotiated prices—** Subsections (a)(1) and (d)(1) of [section 1395w–102 of this title](/usc/42/1395w–102.md) and [section 1395w–104(b)(2)(A) of this title](/usc/42/1395w–104.md?p=b-2-A) shall not be construed to require the plan to provide [negotiated prices](/usc/42/1395w–114c.md?p=g-6) (described in [subsection (d)(1)(B)](/usc/42/1395w–104.md) of such section), but shall apply to the extent the plan does so. - (2) **Modification of pharmacy access standard and disclosure requirement—** If the plan provides coverage for [drugs](/usc/42/1395x.md?p=t-2-A) purchased from all pharmacies, without charging additional [cost-sharing](/usc/42/18022.md?p=c-3-A), and without regard to whether they are participating pharmacies in a network or have entered into contracts or [agreements](/usc/42/1320b–8.md?p=a-3-A) with pharmacies to provide [drugs](/usc/42/1395x.md?p=t-2-A) to enrollees covered by the plan, subsections (b)(1)(C) and (k) of [section 1395w–104 of this title](/usc/42/1395w–104.md) shall not apply to the plan. - (3) **Drug utilization management program and medication therapy management program not required—** The requirements of subparagraphs (A) and (C) of [section 1395w–104(c)(1) of this title](/usc/42/1395w–104.md?p=c-1) shall not apply to the plan. - (4) **Application of reinsurance—** The [Secretary](/usc/42/1301.md?p=a-6) shall determine the amount of reinsurance payments under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b) using a methodology that— - (A) bases such amount on the [Secretary](/usc/42/1301.md?p=a-6)’s estimate of the amount of such payments that would be payable if the plan were an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) described in [section 1395w–21(a)(2)(A)(i) of this title](/usc/42/1395w–21.md?p=a-2-A-i) and the previous provisions of this subsection did not apply; and - (B) takes into account the average reinsurance payments made under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b) for populations of similar risk under [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) described in such section. - (5) **Exemption from risk corridor provisions—** The provisions of [section 1395w–115(e) of this title](/usc/42/1395w–115.md?p=e) shall not apply. - (6) **Exemption from negotiations—** Subsections (d) and (e)(2)(C) of [section 1395w–111 of this title](/usc/42/1395w–111.md) shall not apply and the provisions of [section 1395w–24(a)(5)(B) of this title](/usc/42/1395w–24.md?p=a-5-B) prohibiting the review, approval, or disapproval of amounts described in such section shall apply to the proposed bid and terms and conditions described in [section 1395w–111(d) of this title](/usc/42/1395w–111.md?p=d). - (7) **Treatment of incurred costs without regard to formulary—** The exclusion of costs incurred for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) which are not included (or treated as being included) in a plan’s formulary under [section 1395w–102(b)(4)(C)(i) of this title](/usc/42/1395w–102.md?p=b-4-C-i) shall not apply insofar as the plan does not utilize a formulary. - (e) **Application to reasonable cost reimbursement contractors—** - (1) **In general—** Subject to paragraphs [(2)](#e-2) and [(3)](#e-3) and rules established by the [Secretary](/usc/42/1301.md?p=a-6), in the case of an organization that is providing benefits under a reasonable cost reimbursement contract under [section 1395mm(h) of this title](/usc/42/1395mm.md?p=h) and that elects to provide [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) to a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is enrolled under such a contract, the provisions of this part (and related provisions of part C) shall apply to the provision of such coverage to such enrollee in the same manner as such provisions apply to the provision of such coverage under an MA–PD local plan described in [section 1395–21(a)(2)(A)(i) of this title](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1395–21/a/2/A/i)) and coverage under such a contract that so provides [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) shall be deemed to be an MA–PD local plan. - (2) **Limitation on enrollment—** In applying [paragraph (1)](#e-1), the organization may not enroll [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) who are not enrolled under the reasonable cost reimbursement contract involved. - (3) **Bids not included in determining national average monthly bid amount—** The bid of an organization offering prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage under this subsection shall not be taken into account in computing the national average monthly bid amount and low-[income](/usc/42/292s.md?p=c-4) benchmark premium amount under this part. - (f) **Application to PACE—** - (1) **In general—** Subject to paragraphs [(2)](#f-2) and [(3)](#f-3) and rules established by the [Secretary](/usc/42/1301.md?p=a-6), in the case of a PACE [program](/usc/42/274l–1.md?p=4) under [section 1395eee of this title](/usc/42/1395eee.md) that elects to provide [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) to a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is enrolled under such [program](/usc/42/274l–1.md?p=4), the provisions of this part (and related provisions of part C) shall apply to the provision of such coverage to such enrollee in a manner that is similar to the manner in which such provisions apply to the provision of such coverage under an MA–PD local plan described in [section 1395w–21(a)(2)(A)(ii) of this title](/usc/42/1395w–21.md?p=a-2-A-ii) and a PACE [program](/usc/42/274l–1.md?p=4) that so provides such coverage may be deemed to be an MA–PD local plan. - (2) **Limitation on enrollment—** In applying [paragraph (1)](#f-1), the organization may not enroll [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) who are not enrolled under the PACE [program involved](/usc/42/300x–64.md?p=a-1). - (3) **Bids not included in determining standardized bid amount—** The bid of an organization offering prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage under this subsection is not be taken into account in computing any average benchmark bid amount and low-[income](/usc/42/292s.md?p=c-4) benchmark premium amount under this part. # §1395w–132. Special rules for employer-sponsored programs - (a) **Subsidy payment—** - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide in accordance with this subsection for payment to the [sponsor](#c-2) of a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7) (as defined in [paragraph (2)](#a-2)) of a special subsidy payment equal to the amount specified in [paragraph (3)](#a-3) for each qualified covered retiree under the plan (as defined in [paragraph (4)](#a-4)). This subsection constitutes budget authority in advance of appropriations Acts and represents the obligation of the [Secretary](/usc/42/1301.md?p=a-6) to provide for the payment of amounts provided under this section. - (2) **Qualified retiree prescription drug plan defined—** For purposes of this subsection, the term “[qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7)” means [employment-based retiree health coverage](#c-1) (as defined in [subsection (c)(1)](#c-1)) if, with respect to a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is a participant or beneficiary under such coverage, the following requirements are met: - (A) **Attestation of actuarial equivalence to standard coverage—** The [sponsor](#c-2) of the plan provides the [Secretary](/usc/42/1301.md?p=a-6), annually or at such other time as the [Secretary](/usc/42/1301.md?p=a-6) may require, with an attestation that the actuarial value of prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage under the plan (as determined using the processes and methods described in [section 1395w–111(c) of this title](/usc/42/1395w–111.md?p=c)) is at least equal to the actuarial value of [standard prescription drug coverage](/usc/42/1395w–102.md?p=b), not taking into account the value of— - (i) for years prior to 2025, any discount or coverage provided during the gap in prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage that occurs between the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [section 1395w–102(b)(3) of this title](/usc/42/1395w–102.md?p=b-3) during the year and the out-of-pocket threshold specified in [section 1395w–102(b)(4)(B) of this title](/usc/42/1395w–102.md?p=b-4-B); and - (ii) for 2025 and each subsequent year, any discount provided pursuant to [section 1395w–114c of this title](/usc/42/1395w–114c.md). - (B) **Audits—** The [sponsor](#c-2) of the plan, or an [administrator](/usc/42/4005.md?p=1) of the plan designated by the [sponsor](#c-2), shall maintain (and afford the [Secretary](/usc/42/1301.md?p=a-6) access to) such records as the [Secretary](/usc/42/1301.md?p=a-6) may require for purposes of audits and other oversight activities necessary to ensure the adequacy of prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage and the accuracy of payments made under this section. The provisions of [section 1395w–102(d)(3) of this title](/usc/42/1395w–102.md?p=d-3) shall apply to such information under this section ([including](/usc/42/1301.md?p=b) such actuarial value and attestation) in a manner similar to the manner in which they apply to financial records of [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and MA organizations. - (C) **Provision of disclosure regarding prescription drug coverage—** The [sponsor](#c-2) of the plan shall provide for disclosure of information regarding prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage in accordance with [section 1395w–113(b)(6)(B) of this title](/usc/42/1395w–113.md?p=b-6-B). - (3) **Employer and union special subsidy amounts—** - (A) **In general—** For purposes of this subsection, the special subsidy payment amount under this paragraph for a [qualifying covered retiree](#a-4) for a [coverage year](#a-3-C-iii) enrolled with the [sponsor](#c-2) of a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7) is, for the portion of the retiree’s [gross covered retiree plan-related prescription drug costs](#a-3-C-ii) (as defined in [subparagraph (C)(ii)](#a-3-C-ii)) for such year that exceeds the cost threshold amount specified in [subparagraph (B)](#a-3-B) and does not exceed the cost limit under such subparagraph, an amount equal to 28 percent of the [allowable retiree costs](#a-3-C-i) (as defined in [subparagraph (C)(i)](#a-3-C-i)) attributable to such gross covered prescription [drug](/usc/42/282.md?p=j-1-A-vii) costs. - (B) **Cost threshold and cost limit applicable—** - (i) **In general—** Subject to [clause (ii)](#a-3-B-ii)— - (I) the cost threshold under this subparagraph is equal to $250 for plan years that end in 2006; and - (II) the cost limit under this subparagraph is equal to $5,000 for plan years that end in 2006. - (ii) **Indexing—** The cost threshold and cost limit amounts specified in subclauses [(I)](#a-3-B-i-I) and [(II)](#a-3-B-i-II) of clause (i) for a plan year that ends after 2006 shall be adjusted in the same manner as the annual deductible and the annual out-of-pocket threshold, respectively, are annually adjusted under paragraphs (1) and (4)(B) of [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b). - (C) **Definitions—** For purposes of this paragraph: - (i) **Allowable retiree costs—** The term “allowable retiree costs” means, with respect to gross covered prescription [drug](/usc/42/282.md?p=j-1-A-vii) costs under a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7) by a plan [sponsor](#c-2), the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the [sponsor](#c-2) or by or on behalf of a [qualifying covered retiree](#a-4) under the plan. - (ii) **Gross covered retiree plan-related prescription drug costs—** For purposes of this section, the term “gross covered retiree plan-related prescription drug costs” means, with respect to a [qualifying covered retiree](#a-4) enrolled in a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7) during a [coverage year](#a-3-C-iii), the costs incurred under the plan, not [including](/usc/42/1301.md?p=b) administrative costs, but [including](/usc/42/1301.md?p=b) costs directly related to the dispensing of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) during the year. Such costs shall be determined whether they are paid by the retiree or under the plan. - (iii) **Coverage year—** The term “coverage year” has the meaning given such term in [section 1395w–115(b)(4) of this title](/usc/42/1395w–115.md?p=b-4). - (4) **Qualifying covered retiree defined—** For purposes of this subsection, the term “qualifying covered retiree” means a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is not enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) but is covered under a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7). - (5) **Payment methods, including provision of necessary information—** The provisions of [section 1395w–115(d) of this title](/usc/42/1395w–115.md?p=d) ([including](/usc/42/1301.md?p=b) [paragraph (2)](#a-2), relating to requirement for provision of information) shall apply to payments under this subsection in a manner similar to the manner in which they apply to payment under [section 1395w–115(b) of this title](/usc/42/1395w–115.md?p=b). - (6) **Construction—** Nothing in this subsection shall be construed as— - (A) precluding a [part D eligible individual](/usc/42/1395w–101.md?p=a-3-A) who is covered under [employment-based retiree health coverage](#c-1) from enrolling in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or in an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C); - (B) precluding such [employment-based retiree health coverage](#c-1) or an employer or other [person](/usc/42/1301.md?p=a-3) from paying all or any portion of any premium required for coverage under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) on behalf of such an individual; - (C) preventing such [employment-based retiree health coverage](#c-1) from providing coverage— - (i) that is better than [standard prescription drug coverage](/usc/42/1395w–102.md?p=b) to retirees who are covered under a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7); or - (ii) that is supplemental to the benefits provided under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C), [including](/usc/42/1301.md?p=b) benefits to retirees who are not covered under a [qualified retiree prescription drug plan](/usc/42/1395w–114a.md?p=g-7) but who are enrolled in such a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C); or - (D) preventing employers to provide for flexibility in benefit design and pharmacy access provisions, without regard to the requirements for [basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3), so long as the actuarial equivalence requirement of [paragraph (2)(A)](#a-2-A) is met. - (b) **Application of MA waiver authority—** The provisions of [section 1395w–27(i) of this title](/usc/42/1395w–27.md?p=i) shall apply with respect to [prescription drug plans](/usc/42/1395w–151.md?p=a-14) in relation to [employment-based retiree health coverage](#c-1) in a manner similar to the manner in which they apply to an [MA plan](/usc/42/1395w–101.md?p=a-3-B) in relation to employers, [including](/usc/42/1301.md?p=b) authorizing the establishment of separate premium amounts for enrollees in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) by reason of such coverage and limitations on enrollment to [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled under such coverage, and shall be applied in a manner to facilitate the offering of prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits under a [Program](/usc/42/274l–1.md?p=4) plan under [section 8903c of title 5](/usc/5/8903c.md), as required under [subsection (h)(2)](/usc/5/8903c.md?p=h-2) of such section, through [employment-based retiree health coverage](#c-1) through— - (1) a [prescription drug plan](/usc/42/1395w–151.md?p=a-14); or - (2) contracts between such a [Program](/usc/42/274l–1.md?p=4) plan and the [PDP sponsor](/usc/42/1395w–151.md?p=a-13) of such a [prescription drug plan](/usc/42/1395w–151.md?p=a-14)..[^1] - (c) **Definitions—** For purposes of this section: - (1) **Employment-based retiree health coverage—** The term “employment-based retiree health coverage” means health insurance or other coverage of health care costs (whether provided by voluntary insurance coverage or pursuant to statutory or contractual obligation) for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) (or for such individuals and their spouses and dependents) under a [group health plan](#c-3) based on their status as retired participants in such plan. - (2) **Sponsor—** The term “sponsor” means a plan sponsor, as defined in [section 1002(16)(B) of title 29](/usc/29/1002.md?p=16-B), in relation to a [group health plan](#c-3), except that, in the case of a plan maintained jointly by one employer and an [employee](/usc/42/1320a–7h.md?p=e-7) organization and with respect to which the employer is the primary source of financing, such term means such employer. - (3) **Group health plan—** The term “group health plan” [includes](/usc/42/1301.md?p=b) such a plan as defined in [section 1167(1) of title 29](/usc/29/1167.md?p=1) and also [includes](/usc/42/1301.md?p=b) the following: - (A) **Federal and State governmental plans—** Such a plan established or maintained for its [employees](/usc/42/1320a–7h.md?p=e-7) by the Government of the [United States](/usc/42/1301.md?p=a-2), by the government of any [State](/usc/42/1397n–12.md?p=6) or political subdivision thereof, or by any [agency](/usc/42/1397n–12.md?p=1) or instrumentality of any of the foregoing, [including](/usc/42/1301.md?p=b) a health benefits plan offered under [chapter 89](/usc/5/chptIII-sptG-ch89.md) of title 5. - (B) **Collectively bargained plans—** Such a plan established or maintained under or pursuant to one or more collective bargaining [agreements](/usc/42/1320b–8.md?p=a-3-A). - (C) **Church plans—** Such a plan established and maintained for its [employees](/usc/42/1320a–7h.md?p=e-7) (or their beneficiaries) by a church or by a convention or association of churches which is exempt from tax under section 501 of the Internal Revenue Code of 1986. # §1395w–133. State Pharmaceutical Assistance Programs - (a) **Requirements for benefit coordination—** - (1) **In general—** Before July 1, 2005, the [Secretary](/usc/42/1301.md?p=a-6) shall establish consistent with this section requirements for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) to ensure the effective coordination between a [part D plan](#a-5) (as defined in [paragraph (5)](#a-5)) and a [State Pharmaceutical Assistance Program](#b) (as defined in [subsection (b)](#b)) with respect to— - (A) payment of premiums and coverage; and - (B) payment for supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits, for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled under both types of plans. - (2) **Coordination elements—** The requirements under [paragraph (1)](#a-1) shall include requirements relating to coordination of each of the following: - (A) Enrollment file sharing. - (B) The processing of [claims](/usc/42/1320a–7a.md?p=i-2), [including](/usc/42/1301.md?p=b) electronic processing. - (C) [Claims](/usc/42/1320a–7a.md?p=i-2) payment. - (D) [Claims](/usc/42/1320a–7a.md?p=i-2) reconciliation reports. - (E) Application of the protection against high out-of-pocket expenditures under [section 1395w–102(b)(4) of this title](/usc/42/1395w–102.md?p=b-4). - (F) Other administrative processes specified by the [Secretary](/usc/42/1301.md?p=a-6). Such requirements shall be consistent with applicable law to safeguard the privacy of any individually identifiable beneficiary information. - (3) **Use of lump sum per capita method—** Such requirements shall include a method for the application by a [part D plan](#a-5) of specified funding amounts from a [State Pharmaceutical Assistance Program](#b) for enrolled individuals for supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) benefits. - (4) **Consultation—** In establishing requirements under this subsection, the [Secretary](/usc/42/1301.md?p=a-6) shall consult with [State Pharmaceutical Assistance Programs](#b), MA organizations, [States](/usc/42/1397n–12.md?p=6), pharmaceutical benefit managers, employers, [representatives](/usc/42/3058f.md?p=5) of [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A), the data processing experts, pharmacists, pharmaceutical [manufacturers](/usc/42/300aa–33.md?p=3), and other experts. - (5) **Part D plan defined—** For purposes of this section and [section 1395w–134 of this title](/usc/42/1395w–134.md), the term “part D plan” means a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C). - (b) **State Pharmaceutical Assistance Program—** For purposes of this part, the term “State Pharmaceutical Assistance Program” means a [State](/usc/42/1397n–12.md?p=6) [program](/usc/42/274l–1.md?p=4)— - (1) which provides financial assistance for the purchase or provision of supplemental prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage or benefits on behalf of [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A); - (2) which, in determining eligibility and the amount of assistance to [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) under the [Program](/usc/42/274l–1.md?p=4), provides assistance to such individuals in all [part D plans](#a-5) and does not discriminate based upon the [part D plan](#a-5) in which the individual is enrolled; and - (3) which satisfies the requirements of subsections [(a)](#a) and [(c)](#c). - (c) **Relation to other provisions—** - (1) **Medicare as primary payor—** The requirements of this section shall not change or affect the primary payor status of a [part D plan](#a-5). - (2) **Use of a single card—** A card that is issued under [section 1395w–104(b)(2)(A) of this title](/usc/42/1395w–104.md?p=b-2-A) for use under a [part D plan](#a-5) may also be used in connection with coverage of benefits provided under a [State Pharmaceutical Assistance Program](#b) and, in such case, may contain an emblem or symbol indicating such connection. - (3) **Other provisions—** The provisions of [section 1395w–134(c) of this title](/usc/42/1395w–134.md?p=c) shall apply to the requirements under this section. - (4) **Special treatment under out-of-pocket rule—** In applying [section 1395w–102(b)(4)(C)(ii) of this title](/usc/42/1395w–102.md?p=b-4-C-ii), expenses incurred under a [State Pharmaceutical Assistance Program](#b) may be counted toward the annual out-of-pocket threshold. - (5) **Construction—** Nothing in this section shall be construed as requiring a [State Pharmaceutical Assistance Program](#b) to coordinate or provide financial assistance with respect to any [part D plan](#a-5). - (d) **Facilitation of transition and coordination with State Pharmaceutical Assistance Programs—** - (1) **Transitional grant program—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide payments to [State Pharmaceutical Assistance Programs](#b) with an application approved under this subsection. - (2) **Use of funds—** Payments under this section may be used by a [Program](/usc/42/274l–1.md?p=4) for any of the following: - (A) Educating [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) enrolled in the [Program](/usc/42/274l–1.md?p=4) about the prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage available through [part D plans](#a-5) under this part. - (B) Providing technical assistance, phone support, and counseling for such enrollees to facilitate selection and enrollment in such plans. - (C) Other activities designed to promote the effective coordination of enrollment, coverage, and payment between such [Program](/usc/42/274l–1.md?p=4) and such plans. - (3) **Allocation of funds—** Of the amount appropriated to carry out this subsection for a fiscal year, the [Secretary](/usc/42/1301.md?p=a-6) shall allocate payments among [Programs](/usc/42/274l–1.md?p=4) that have applications approved under [paragraph (4)](#d-4) for such fiscal year in proportion to the number of enrollees enrolled in each such [Program](/usc/42/274l–1.md?p=4) as of October 1, 2003. - (4) **Application—** No payments may be made under this subsection except pursuant to an application that is submitted and approved in a time, manner, and form specified by the [Secretary](/usc/42/1301.md?p=a-6). - (5) **Funding—** Out of any [funds](/usc/42/12854.md?p=3) in the Treasury not otherwise appropriated, there are appropriated for each of fiscal years 2005 and 2006, $62,500,000 to carry out this subsection. # §1395w–134. Coordination requirements for plans providing prescription drug coverage - (a) **Application of benefit coordination requirements to additional plans—** - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall apply the coordination requirements established under [section 1395w–133(a) of this title](/usc/42/1395w–133.md?p=a) to Rx plans described in [subsection (b)](#b) in the same manner as such requirements apply to a [State Pharmaceutical Assistance Program](/usc/42/1395w–133.md?p=b). - (2) **Application to treatment of certain out-of-pocket expenditures—** To the extent specified by the [Secretary](/usc/42/1301.md?p=a-6), the requirements referred to in [paragraph (1)](#a-1) shall apply to procedures established under [section 1395w–102(b)(4)(D) of this title](/usc/42/1395w–102.md?p=b-4-D). - (3) **User fees—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) may impose user fees for the transmittal of information necessary for benefit coordination under [section 1395w–102(b)(4)(D) of this title](/usc/42/1395w–102.md?p=b-4-D) in a manner similar to the manner in which user fees are imposed under [section 1395u(h)(3)(B) of this title](/usc/42/1395u.md?p=h-3-B), except that the [Secretary](/usc/42/1301.md?p=a-6) may retain a portion of such fees to defray the [Secretary](/usc/42/1301.md?p=a-6)’s costs in carrying out procedures under [section 1395w–102(b)(4)(D) of this title](/usc/42/1395w–102.md?p=b-4-D). - (B) **Application—** A user fee may not be imposed under [subparagraph (A)](#a-3-A) with respect to a [State Pharmaceutical Assistance Program](/usc/42/1395w–133.md?p=b). - (b) **Rx Plan—** An Rx plan described in this subsection is any of the following: - (1) **Medicaid programs—** A [State](/usc/42/1397n–12.md?p=6) plan under subchapter XIX, [including](/usc/42/1301.md?p=b) such a plan operating under a waiver under [section 1315 of this title](/usc/42/1315.md), if it meets the requirements of [section 1395w–133(b)(2) of this title](/usc/42/1395w–133.md?p=b-2). - (2) **Group health plans—** An employer [group health plan](/usc/42/1320d–9.md?p=b-2). - (3) **FEHBP—** The Federal [employees](/usc/42/1320a–7h.md?p=e-7) health benefits plan under [chapter 89](/usc/5/chptIII-sptG-ch89.md) of title 5. - (4) **Military coverage (including TRICARE)—** Coverage under [chapter 55](/usc/10/chstA-ptII-ch55.md) of title 10. - (5) **Other prescription drug coverage—** Such other health benefit plans or [programs](/usc/42/274l–1.md?p=4) that provide coverage or financial assistance for the purchase or provision of prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage on behalf of [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) as the [Secretary](/usc/42/1301.md?p=a-6) may specify. - (c) **Relation to other provisions—** - (1) **Use of cost management tools—** The requirements of this section shall not impair or prevent a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) or MA organization from applying cost management tools ([including](/usc/42/1301.md?p=b) differential payments) under all methods of operation. - (2) **No affect[^1] on treatment of certain out-of-pocket expenditures—** The requirements of this section shall not affect the application of the procedures established under [section 1395w–102(b)(4)(D) of this title](/usc/42/1395w–102.md?p=b-4-D). # §1395w–141. Medicare prescription drug discount card and transitional assistance program - (a) **Establishment of program—** - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a [program](/usc/42/274l–1.md?p=4) under this section— - (A) to endorse prescription [drug](/usc/42/282.md?p=j-1-A-vii) discount card [programs](/usc/42/274l–1.md?p=4) that meet the requirements of this section in order to provide access to prescription [drug](/usc/42/282.md?p=j-1-A-vii) discounts through [prescription drug card sponsors](#h-1-A) for [discount card eligible individuals](#b-1-A) throughout the [United States](/usc/42/1301.md?p=a-2); and - (B) to provide for transitional assistance for [transitional assistance eligible individuals](#b-2-A) enrolled in such [endorsed programs](#a-4-C). - (2) **Period of operation—** - (A) **Implementation deadline—** The [Secretary](/usc/42/1301.md?p=a-6) shall implement the [program](/usc/42/274l–1.md?p=4) under this section so that discount cards and transitional assistance are first available by not later than 6 months after December 8, 2003. - (B) **Expediting implementation—** The [Secretary](/usc/42/1301.md?p=a-6) shall promulgate [regulations](/usc/42/1395hh.md?p=a-1) to carry out the [program](/usc/42/274l–1.md?p=4) under this section which may be effective and final immediately on an interim basis as of the date of publication of the interim final regulation. If the [Secretary](/usc/42/1301.md?p=a-6) provides for an interim final regulation, the [Secretary](/usc/42/1301.md?p=a-6) shall provide for a period of public comments on such regulation after the date of publication. The [Secretary](/usc/42/1301.md?p=a-6) may change or revise such regulation after completion of the period of public comment. - (C) **Termination and transition—** - (i) **In general—** Subject to [clause (ii)](#a-2-C-ii)— - (I) the [program](/usc/42/274l–1.md?p=4) under this section shall not apply to [covered discount card drugs](#a-4-A) dispensed after December 31, 2005; and - (II) transitional assistance shall be available after such date to the extent the assistance relates to [drugs](/usc/42/1395x.md?p=t-2-A) dispensed on or before such date. - (ii) **Transition—** In the case of an individual who is enrolled in an [endorsed discount card program](#a-4-C) as of December 31, 2005, during the individual’s transition period (if any) under [clause (iii)](#a-2-C-iii), in accordance with transition rules specified by the [Secretary](/usc/42/1301.md?p=a-6)— - (I) such [endorsed program](#a-4-C) may continue to apply to [covered discount card drugs](#a-4-A) dispensed to the individual under the [program](/usc/42/274l–1.md?p=4) during such transition period; - (II) no annual enrollment fee shall be applicable during the transition period; - (III) during such period the individual may not change the [endorsed program](#a-4-C) plan in which the individual is enrolled; and - (IV) the balance of any transitional assistance remaining on January 1, 2006, shall remain available for [drugs](/usc/42/1395x.md?p=t-2-A) dispensed during the individual’s transition period. - (iii) **Transition period—** The transition period under this clause for an individual is the period beginning on January 1, 2006, and ending in the case of an individual who— - (I) is enrolled in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) before the last date of the initial enrollment period under [section 1395w–101(b)(2)(A) of this title](/usc/42/1395w–101.md?p=b-2-A), on the effective date of the individual’s coverage under such part; or - (II) is not so enrolled, on the last day of such initial period. - (3) **Voluntary nature of program—** Nothing in this section shall be construed as requiring a [discount card eligible individual](#b-1-A) to enroll in an [endorsed discount card program](#a-4-C) under this section. - (4) **Glossary and definitions of terms—** For purposes of this section: - (A) **Covered discount card drug—** The term “covered discount card drug” has the meaning given the term “covered part D drug” in [section 1395w–102(e) of this title](/usc/42/1395w–102.md?p=e). - (B) **Discount card eligible individual—** The term “[discount card eligible individual](#b-1-A)” is defined in [subsection (b)(1)(A)](#b-1-A). - (C) **Endorsed discount card program; endorsed program—** The terms “endorsed discount card program” and “endorsed program” mean a prescription [drug](/usc/42/282.md?p=j-1-A-vii) discount card [program](/usc/42/274l–1.md?p=4) that is endorsed (and for which the [sponsor](#h-1-A) has a contract with the [Secretary](/usc/42/1301.md?p=a-6)) under this section. - (D) **Negotiated price—** [Negotiated prices](/usc/42/1395w–114c.md?p=g-6) are described in [subsection (e)(1)(A)(ii)](#e-1-A-ii). - (E) **Prescription drug card sponsor; sponsor—** The terms “[prescription drug card sponsor](#h-1-A)” and “[sponsor](#h-1-A)” are defined in [subsection (h)(1)(A)](#h-1-A). - (F) **State—** The term “State” has the meaning given such term for purposes of subchapter XIX. - (G) **Transitional assistance eligible individual—** The term “[transitional assistance eligible individual](#b-2-A)” is defined in [subsection (b)(2)](#b-2). - (b) **Eligibility for discount card and for transitional assistance—** For purposes of this section: - (1) **Discount card eligible individual—** - (A) **In general—** The term “[discount card eligible individual](#a-4-B)” means an individual who— - (i) is entitled to benefits, or enrolled, under part A or enrolled under part B; and - (ii) subject to [paragraph (4)](#b-4), is not an individual described in [subparagraph (B)](#b-1-B). - (B) **Individual described—** An individual described in this subparagraph is an individual described in [subparagraph (A)(i)](#b-1-A-i) who is enrolled under subchapter XIX (or under a waiver under [section 1315 of this title](/usc/42/1315.md) of the requirements of such subchapter) and is entitled to any medical assistance for outpatient prescribed [drugs](/usc/42/1395x.md?p=t-2-A) described in [section 1396d(a)(12) of this title](/usc/42/1396d.md?p=a-12). - (2) **Transitional assistance eligible individual—** - (A) **In general—** Subject to [subparagraph (B)](#b-2-B), the term “[transitional assistance eligible individual](#a-4-G)” means a [discount card eligible individual](#a-4-B) who resides in one of the 50 [States](#a-4-F) or the District of Columbia and whose [income](#f-1-B) (as determined under [subsection (f)(1)(B)](#f-1-B)) is not more than 135 percent of the [poverty line](/usc/42/1395w–114.md?p=a-3-C-ii) (as defined in [section 9902(2) of this title](/usc/42/9902.md?p=2), [including](/usc/42/1301.md?p=b) any revision required by such section) applicable to the [family size](#f-1-B) involved (as determined under [subsection (f)(1)(B)](#f-1-B)). - (B) **Exclusion of individuals with certain prescription drug coverage—** Such term does not include an individual who has coverage of, or assistance for, [covered discount card drugs](#a-4-A) under any of the following: - (i) A [group health plan](/usc/42/1320d–9.md?p=b-2) or [health insurance coverage](/usc/42/1320d–9.md?p=b-2) (as such terms are defined in [section 300gg–91 of this title](/usc/42/300gg–91.md)), other than coverage under a plan under part C and other than coverage consisting only of excepted benefits (as defined in such section). - (ii) [Chapter 55](/usc/10/chstA-ptII-ch55.md) of title 10 (relating to medical and dental care for members of the uniformed services). - (iii) A plan under [chapter 89](/usc/5/chptIII-sptG-ch89.md) of title 5 (relating to the Federal [employees](/usc/42/1320a–7h.md?p=e-7)’ health benefits [program](/usc/42/274l–1.md?p=4)). - (3) **Special transitional assistance eligible individual—** The term “special transitional assistance eligible individual” means a [transitional assistance eligible individual](#a-4-G) whose [income](#f-1-B) (as determined under [subsection (f)(1)(B)](#f-1-B)) is not more than 100 percent of the [poverty line](/usc/42/1395w–114.md?p=a-3-C-ii) (as defined in [section 9902(2) of this title](/usc/42/9902.md?p=2), [including](/usc/42/1301.md?p=b) any revision required by such section) applicable to the [family size](#f-1-B) involved (as determined under [subsection (f)(1)(B)](#f-1-B)). - (4) **Treatment of medicaid medically needy—** For purposes of this section, the [Secretary](/usc/42/1301.md?p=a-6) shall provide for appropriate rules for the [treatment](/usc/42/11851.md?p=11) of medically needy individuals described in [section 1396a(a)(10)(C) of this title](/usc/42/1396a.md?p=a-10-C) as [discount card eligible individuals](#a-4-B) and as [transitional assistance eligible individuals](#a-4-G). - (c) **Enrollment and enrollment fees—** - (1) **Enrollment process—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a process through which a [discount card eligible individual](#b-1-A) is enrolled and disenrolled in an [endorsed discount card program](#a-4-C) under this section consistent with the following: - (A) **Continuous open enrollment—** Subject to the succeeding provisions of this paragraph and [subsection (h)(9)](#h-9), a [discount card eligible individual](#b-1-A) who is not enrolled in an [endorsed discount card program](#a-4-C) and is residing in a [State](#a-4-F) may enroll in any such [endorsed program](#a-4-C)— - (i) that serves residents of the [State](#a-4-F); and - (ii) at any time beginning on the initial enrollment date, specified by the [Secretary](/usc/42/1301.md?p=a-6), and before January 1, 2006. - (B) **Use of standard enrollment form—** An enrollment in an [endorsed program](#a-4-C) shall only be effected through completion of a [standard](/usc/42/1320d.md?p=7) enrollment form specified by the [Secretary](/usc/42/1301.md?p=a-6). Each [sponsor](#h-1-A) of an [endorsed program](#a-4-C) shall transmit to the [Secretary](/usc/42/1301.md?p=a-6) (in a form and manner specified by the [Secretary](/usc/42/1301.md?p=a-6)) information on individuals who complete such enrollment forms and, to the extent provided under [subsection (f)](#f), information regarding certification as a [transitional assistance eligible individual](#b-2-A). - (C) **Enrollment only in one program—** - (i) **In general—** Subject to clauses [(ii)](#c-1-C-ii) and [(iii)](#c-1-C-iii), a [discount card eligible individual](#b-1-A) may be enrolled in only one [endorsed discount card program](#a-4-C) under this section. - (ii) **Change in endorsed program permitted for 2005—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a process, similar to (and coordinated with) the process for annual, coordinated elections under [section 1395w–21(e)(3) of this title](/usc/42/1395w–21.md?p=e-3) during 2004, under which an individual enrolled in an [endorsed discount card program](#a-4-C) may change the [endorsed program](#a-4-C) in which the individual is enrolled for 2005. - (iii) **Additional exceptions—** The [Secretary](/usc/42/1301.md?p=a-6) shall permit an individual to change the [endorsed discount card program](#a-4-C) in which the individual is enrolled in the case of an individual who changes residence to be outside the service area of such [program](/usc/42/274l–1.md?p=4) and in such other exceptional cases as the [Secretary](/usc/42/1301.md?p=a-6) may provide (taking into account the circumstances for special election periods under [section 1395w–21(e)(4) of this title](/usc/42/1395w–21.md?p=e-4)). Under the previous sentence, the [Secretary](/usc/42/1301.md?p=a-6) may consider a change in residential setting (such as placement in a [nursing facility](/usc/42/1396d.md?p=c)) or enrollment in or disenrollment from a plan under part C through which the individual was enrolled in an [endorsed program](#a-4-C) to be an exceptional circumstance. - (D) **Disenrollment—** - (i) **Voluntary—** An individual may voluntarily disenroll from an [endorsed discount card program](#a-4-C) at any time. In the case of such a voluntary disenrollment, the individual may not enroll in another [endorsed program](#a-4-C), except under such exceptional circumstances as the [Secretary](/usc/42/1301.md?p=a-6) may recognize under [subparagraph (C)(iii)](#c-1-C-iii) or during the annual coordinated enrollment period provided under [subparagraph (C)(ii)](#c-1-C-ii). - (ii) **Involuntary—** An individual who is enrolled in an [endorsed discount card program](#a-4-C) and not a [transitional assistance eligible individual](#b-2-A) may be disenrolled by the [sponsor](#h-1-A) of the [program](/usc/42/274l–1.md?p=4) if the individual fails to pay any annual enrollment fee required under the [program](/usc/42/274l–1.md?p=4). - (E) **Application to certain enrollees—** In the case of a [discount card eligible individual](#b-1-A) who is enrolled in a plan described in [section 1395w–21(a)(2)(A) of this title](/usc/42/1395w–21.md?p=a-2-A) or under a reasonable cost reimbursement contract under [section 1395mm(h) of this title](/usc/42/1395mm.md?p=h) that is offered by an organization that also is a prescription discount card [sponsor](#h-1-A) that offers an [endorsed discount card program](#a-4-C) under which the individual may be enrolled and that has made an election to apply the special rules under [subsection (h)(9)(B)](#h-9-B) for such an [endorsed program](#a-4-C), the individual may only enroll in such an [endorsed discount card program](#a-4-C) offered by that [sponsor](#h-1-A). - (2) **Enrollment fees—** - (A) **In general—** Subject to the succeeding provisions of this paragraph, a [prescription drug card sponsor](#h-1-A) may charge an annual enrollment fee for each [discount card eligible individual](#b-1-A) enrolled in an [endorsed discount card program](#a-4-C) offered by such [sponsor](#h-1-A). The annual enrollment fee for either 2004 or 2005 shall not be prorated for portions of a year. There shall be no annual enrollment fee for a year after 2005. - (B) **Amount—** No annual enrollment fee charged under [subparagraph (A)](#c-2-A) may exceed $30. - (C) **Uniform enrollment fee—** A [prescription drug card sponsor](#h-1-A) shall ensure that the annual enrollment fee (if any) for an [endorsed discount card program](#a-4-C) is the same for all [discount card eligible individuals](#b-1-A) enrolled in the [program](/usc/42/274l–1.md?p=4) and residing in the [State](#a-4-F). - (D) **Collection—** The annual enrollment fee (if any) charged for enrollment in an [endorsed program](#a-4-C) shall be collected by the [sponsor](#h-1-A) of the [program](/usc/42/274l–1.md?p=4). - (E) **Payment of fee for transitional assistance eligible individuals—** Under [subsection (g)(1)(A)](#g-1-A), the annual enrollment fee (if any) otherwise charged under this paragraph with respect to a [transitional assistance eligible individual](#b-2-A) shall be paid by the [Secretary](/usc/42/1301.md?p=a-6) on behalf of such individual. - (F) **Optional payment of fee by State—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish an arrangement under which a [State](#a-4-F) may provide for payment of some or all of the enrollment fee for some or all enrollees who are not [transitional assistance eligible individuals](#b-2-A) in the [State](#a-4-F), as specified by the [State](#a-4-F) under the arrangement. Insofar as such a payment arrangement is made with respect to an enrollee, the amount of the enrollment fee shall be paid directly by the [State](#a-4-F) to the [sponsor](#h-1-A). - (ii) **No Federal matching available under medicaid or SCHIP—** Expenditures made by a [State](#a-4-F) for enrollment fees described in [clause (i)](#c-2-F-i) shall not be treated as [State](#a-4-F) expenditures for purposes of Federal matching payments under subchapter XIX or XXI. - (G) **Rules in case of changes in program enrollment during a year—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide special rules in the case of payment of an annual enrollment fee for a [discount card eligible individual](#b-1-A) who changes the [endorsed program](#a-4-C) in which the individual is enrolled during a year. - (3) **Issuance of discount card—** Each [prescription drug card sponsor](#h-1-A) of an [endorsed discount card program](#a-4-C) shall issue, in a [standard](/usc/42/1320d.md?p=7) format specified by the [Secretary](/usc/42/1301.md?p=a-6), to each [discount card eligible individual](#b-1-A) enrolled in such [program](/usc/42/274l–1.md?p=4) a card that establishes proof of enrollment and that can be used in a coordinated manner to identify the [sponsor](#h-1-A), [program](/usc/42/274l–1.md?p=4), and individual for purposes of the [program](/usc/42/274l–1.md?p=4) under this section. - (4) **Period of access—** In the case of a [discount card eligible individual](#b-1-A) who enrolls in an [endorsed program](#a-4-C), access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6) and transitional assistance, if any, under such [endorsed program](#a-4-C) shall take effect on such date as the [Secretary](/usc/42/1301.md?p=a-6) shall specify. - (d) **Provision of information on enrollment and program features—** - (1) **Secretarial responsibilities—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide for activities under this subsection to broadly disseminate information to [discount card eligible individuals](#b-1-A) (and prospective [eligible individuals](/usc/42/239.md?p=a-6)) regarding— - (i) enrollment in [endorsed discount card programs](#a-4-C); and - (ii) the features of the [program](/usc/42/274l–1.md?p=4) under this section, [including](/usc/42/1301.md?p=b) the availability of transitional assistance. - (B) **Promotion of informed choice—** In order to promote informed choice among endorsed prescription [drug](/usc/42/282.md?p=j-1-A-vii) discount card [programs](/usc/42/274l–1.md?p=4), the [Secretary](/usc/42/1301.md?p=a-6) shall provide for the dissemination of information which— - (i) compares the annual enrollment fee and other features of such [programs](/usc/42/274l–1.md?p=4), which may include comparative prices for [covered discount card drugs](#a-4-A); and - (ii) [includes](/usc/42/1301.md?p=b) educational materials on the variability of discounts on prices of [covered discount card drugs](#a-4-A) under an [endorsed program](#a-4-C). The dissemination of information under [clause (i)](#d-1-B-i) shall, to the extent practicable, be coordinated with the dissemination of educational information on other medicare options. - (C) **Special rule for initial enrollment date under the program—** To the extent practicable, the [Secretary](/usc/42/1301.md?p=a-6) shall ensure, through the activities described in subparagraphs [(A)](#d-1-A) and [(B)](#d-1-B), that [discount card eligible individuals](#b-1-A) are provided with such information at least 30 days prior to the initial enrollment date specified under [subsection (c)(1)(A)(ii)](#c-1-A-ii). - (D) **Use of medicare toll-free number—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide through the toll-free telephone number 1–800–MEDICARE for the receipt and response to inquiries and complaints concerning the [program](/usc/42/274l–1.md?p=4) under this section and [endorsed programs](#a-4-C). - (2) **Prescription drug card sponsor responsibilities—** - (A) **In general—** Each [prescription drug card sponsor](#h-1-A) that offers an [endorsed discount card program](#a-4-C) shall make available to [discount card eligible individuals](#b-1-A) (through the Internet and otherwise) information that the [Secretary](/usc/42/1301.md?p=a-6) identifies as being necessary to promote informed choice among [endorsed discount card programs](#a-4-C) by such individuals, [including](/usc/42/1301.md?p=b) information on enrollment fees and [negotiated prices](/usc/42/1395w–114c.md?p=g-6) for [covered discount card drugs](#a-4-A) charged to such individuals. - (B) **Response to enrollee questions—** Each [sponsor](#h-1-A) offering an [endorsed discount card program](#a-4-C) shall have a mechanism ([including](/usc/42/1301.md?p=b) a toll-free telephone number) for providing upon request specific information (such as [negotiated prices](/usc/42/1395w–114c.md?p=g-6) and the amount of transitional assistance remaining available through the [program](/usc/42/274l–1.md?p=4)) to [discount card eligible individuals](#b-1-A) enrolled in the [program](/usc/42/274l–1.md?p=4). The [sponsor](#h-1-A) shall inform [transitional assistance eligible individuals](#b-2-A) enrolled in the [program](/usc/42/274l–1.md?p=4) of the availability of such toll-free telephone number to provide information on the amount of available transitional assistance. - (C) **Information on balance of transitional assistance available at point-of-sale—** Each [sponsor](#h-1-A) offering an [endorsed discount card program](#a-4-C) shall have a mechanism so that information on the amount of transitional assistance remaining under [subsection (g)(1)(B)](#g-1-B) is available (electronically or by telephone) at the point-of-sale of [covered discount card drugs](#a-4-A). - (3) **Public disclosure of pharmaceutical prices for equivalent drugs—** - (A) **In general—** A [prescription drug card sponsor](#h-1-A) offering an [endorsed discount card program](#a-4-C) shall provide that each pharmacy that dispenses a [covered discount card drug](#a-4-A) shall inform a [discount card eligible individual](#b-1-A) enrolled in the [program](/usc/42/274l–1.md?p=4) of any differential between the price of the [drug](/usc/42/282.md?p=j-1-A-vii) to the enrollee and the price of the lowest priced generic [covered discount card drug](#a-4-A) under the [program](/usc/42/274l–1.md?p=4) that is therapeutically equivalent and bioequivalent and available at such pharmacy. - (B) **Timing of notice—** - (i) **In general—** Subject to [clause (ii)](#d-3-B-ii), the information under [subparagraph (A)](#d-3-A) shall be provided at the time of purchase of the [drug](/usc/42/282.md?p=j-1-A-vii) involved, or, in the case of dispensing by mail order, at the time of delivery of such [drug](/usc/42/282.md?p=j-1-A-vii). - (ii) **Waiver—** The [Secretary](/usc/42/1301.md?p=a-6) may waive [clause (i)](#d-3-B-i) in such circumstances as the [Secretary](/usc/42/1301.md?p=a-6) may specify. - (e) **Discount card features—** - (1) **Savings to enrollees through negotiated prices—** - (A) **Access to negotiated prices—** - (i) **In general—** Each [prescription drug card sponsor](#h-1-A) that offers an [endorsed discount card program](#a-4-C) shall provide each [discount card eligible individual](#b-1-A) enrolled in the [program](/usc/42/274l–1.md?p=4) with access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6). - (ii) **Negotiated prices—** For purposes of this section, [negotiated prices](/usc/42/1395w–114c.md?p=g-6) shall take into account [negotiated price](/usc/42/1395w–114c.md?p=g-6) concessions, such as discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations, for [covered discount card drugs](#a-4-A), and include any dispensing fees for such [drugs](/usc/42/1395x.md?p=t-2-A). - (B) **Ensuring pharmacy access—** Each [prescription drug card sponsor](#h-1-A) offering an [endorsed discount card program](#a-4-C) shall secure the participation in its network of a sufficient number of pharmacies that dispense (other than solely by mail order) [drugs](/usc/42/1395x.md?p=t-2-A) directly to enrollees to ensure convenient access to [covered discount card drugs](#a-4-A) at [negotiated prices](/usc/42/1395w–114c.md?p=g-6) (consistent with rules established by the [Secretary](/usc/42/1301.md?p=a-6)). The [Secretary](/usc/42/1301.md?p=a-6) shall establish convenient access rules under this clause that are no less favorable to enrollees than the [standards](/usc/42/1320d.md?p=7) for convenient access to pharmacies included in the statement of work of solicitation (#MDA906–03–R–0002) of the Department of Defense under the TRICARE Retail Pharmacy (TRRx) as of March 13, 2003. - (C) **Prohibition on charges for required services—** - (i) **In general—** Subject to [clause (ii)](#e-1-C-ii), a [prescription drug card sponsor](#h-1-A) (and any pharmacy contracting with such [sponsor](#h-1-A) for the provision of [covered discount card drugs](#a-4-A) to individuals enrolled in such [sponsor](#h-1-A)’s [endorsed discount card program](#a-4-C)) may not charge an enrollee any amount for any items and services required to be provided by the [sponsor](#h-1-A) under this section. - (ii) **Construction—** Nothing in [clause (i)](#e-1-C-i) shall be construed to prevent— - (I) the [sponsor](#h-1-A) from charging the annual enrollment fee (except in the case of a [transitional assistance eligible individual](#b-2-A)); and - (II) the pharmacy dispensing the [covered discount card drug](#a-4-A), from imposing a charge (consistent with the [negotiated price](/usc/42/1395w–114c.md?p=g-6)) for the [covered discount card drug](#a-4-A) dispensed, reduced by the amount of any transitional assistance made available. - (D) **Inapplicability of medicaid best price rules—** The prices negotiated from [drug](/usc/42/282.md?p=j-1-A-vii) [manufacturers](/usc/42/300aa–33.md?p=3) for [covered discount card drugs](#a-4-A) under an [endorsed discount card program](#a-4-C) under this section shall (notwithstanding any other provision of law) not be taken into account for the purposes of establishing the best price under [section 1396r–8(c)(1)(C) of this title](/usc/42/1396r–8.md?p=c-1-C). - (2) **Reduction of medication errors and adverse drug interactions—** Each [endorsed discount card program](#a-4-C) shall implement a system to reduce the likelihood of medication errors and adverse [drug](/usc/42/282.md?p=j-1-A-vii) interactions and to improve medication use. - (f) **Eligibility procedures for endorsed programs and transitional assistance—** - (1) **Determinations—** - (A) **Procedures—** The determination of whether an individual is a [discount card eligible individual](#b-1-A) or a [transitional assistance eligible individual](#b-2-A) or a [special transitional assistance eligible individual](#b-3) (as defined in [subsection (b)](#b)) shall be determined under procedures specified by the [Secretary](/usc/42/1301.md?p=a-6) consistent with this subsection. - (B) **Income and family size determinations—** For purposes of this section, the [Secretary](/usc/42/1301.md?p=a-6) shall define the terms “income” and “family size” and shall specify the methods and period for which they are determined. If under such methods income or family size is determined based on the income or family size for prior periods of time, the [Secretary](/usc/42/1301.md?p=a-6) shall permit (whether through a process of reconsideration or otherwise) an individual whose income or family size has changed to elect to have eligibility for transitional assistance determined based on income or family size for a more recent period. - (2) **Use of self-certification for transitional assistance—** - (A) **In general—** Under the procedures specified under [paragraph (1)(A)](#f-1-A) an individual who wishes to be treated as a [transitional assistance eligible individual](#b-2-A) or a [special transitional assistance eligible individual](#b-3) under this section (or another [qualified person](/usc/42/1395x.md?p=ggg-2-A) on such individual’s behalf) shall certify on the enrollment form under [subsection (c)(1)(B)](#c-1-B) (or similar form specified by the [Secretary](/usc/42/1301.md?p=a-6)), through a simplified means specified by the [Secretary](/usc/42/1301.md?p=a-6) and under penalty of perjury or similar sanction for false statements, as to the amount of the individual’s [income](#f-1-B), [family size](#f-1-B), and individual’s prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage (if any) insofar as they relate to eligibility to be a [transitional assistance eligible individual](#b-2-A) or a [special transitional assistance eligible individual](#b-3). Such certification shall be deemed as consent to verification of respective eligibility under [paragraph (3)](#f-3). A certification under this paragraph may be provided before, on, or after the time of enrollment under an [endorsed program](#a-4-C). - (B) **Treatment of self-certification—** The [Secretary](/usc/42/1301.md?p=a-6) shall treat a certification under [subparagraph (A)](#f-2-A) that is verified under [paragraph (3)](#f-3) as a determination that the individual involved is a [transitional assistance eligible individual](#b-2-A) or [special transitional assistance eligible individual](#b-3) (as the case may be) for the entire period of the enrollment of the individual in any [endorsed program](#a-4-C). - (3) **Verification—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish methods (which may include the use of sampling and the use of information described in [subparagraph (B)](#f-3-B)) to verify eligibility for individuals who seek to enroll in an [endorsed program](#a-4-C) and for individuals who provide a certification under [paragraph (2)](#f-2). - (B) **Information described—** The information described in this subparagraph is as follows: - (i) **Medicaid-related information—** Information on eligibility under subchapter XIX and provided to the [Secretary](/usc/42/1301.md?p=a-6) under [arrangements](/usc/42/1395x.md?p=w-1) between the [Secretary](/usc/42/1301.md?p=a-6) and [States](#a-4-F) in order to verify the eligibility of individuals who seek to enroll in an [endorsed program](#a-4-C) and of individuals who provide certification under [paragraph (2)](#f-2). - (ii) **Social security information—** Financial information made available to the [Secretary](/usc/42/1301.md?p=a-6) under [arrangements](/usc/42/1395x.md?p=w-1) between the [Secretary](/usc/42/1301.md?p=a-6) and the [Commissioner](/usc/42/12302.md?p=1) of [Social](/usc/42/1397j.md?p=20) Security in order to verify the eligibility of individuals who provide such certification. - (iii) **Information from Secretary of the Treasury—** Financial information made available to the [Secretary](/usc/42/1301.md?p=a-6) under section 6103(l)(19) of the Internal Revenue Code of 1986 in order to verify the eligibility of individuals who provide such certification. - (C) **Verification in cases of medicaid enrollees—** - (i) **In general—** Nothing in this section shall be construed as preventing the [Secretary](/usc/42/1301.md?p=a-6) from finding that a [discount card eligible individual](#b-1-A) meets the [income](#f-1-B) requirements under [subsection (b)(2)(A)](#b-2-A) if the individual is within a [category](/usc/42/1395w–4.md?p=j-1) of [discount card eligible individuals](#b-1-A) who are enrolled under subchapter XIX (such as qualified medicare beneficiaries (QMBs), specified low-[income](#f-1-B) medicare beneficiaries (SLMBs), and certain [qualified individuals](/usc/42/18032.md?p=f-1-A) (QI–1s)). - (ii) **Availability of information for verification purposes—** As a condition of provision of Federal financial participation to a [State](#a-4-F) that is one of the 50 [States](#a-4-F) or the District of Columbia under subchapter XIX, for purposes of carrying out this section, the [State](#a-4-F) shall provide the information it submits to the [Secretary](/usc/42/1301.md?p=a-6) relating to such subchapter in a manner specified by the [Secretary](/usc/42/1301.md?p=a-6) that permits the [Secretary](/usc/42/1301.md?p=a-6) to identify individuals who are described in [subsection (b)(1)(B)](#b-1-B) or are [transitional assistance eligible individuals](#b-2-A) or [special transitional assistance eligible individuals](#b-3). - (4) **Reconsideration—** - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a process under which a [discount card eligible individual](#b-1-A), who is determined through the certification and verification methods under paragraphs [(2)](#f-2) and [(3)](#f-3) not to be a [transitional assistance eligible individual](#b-2-A) or a [special transitional assistance eligible individual](#b-3), may request a reconsideration of the determination. - (B) **Contract authority—** The [Secretary](/usc/42/1301.md?p=a-6) may enter into a contract to perform the reconsiderations requested under [subparagraph (A)](#f-4-A). - (C) **Communication of results—** Under the process under [subparagraph (A)](#f-4-A) the results of such reconsideration shall be communicated to the individual and the [prescription drug card sponsor](#h-1-A) involved. - (g) **Transitional assistance—** - (1) **Provision of transitional assistance—** An individual who is a [transitional assistance eligible individual](#b-2-A) (as determined under this section) and who is enrolled with an [endorsed program](#a-4-C) is entitled— - (A) to have payment made of any annual enrollment fee charged under [subsection (c)(2)](#c-2) for enrollment under the [program](/usc/42/274l–1.md?p=4); and - (B) to have payment made, up to the amount specified in [paragraph (2)](#g-2), under such [endorsed program](#a-4-C) of 90 percent (or 95 percent in the case of a [special transitional assistance eligible individual](#b-3)) of the costs incurred for [covered discount card drugs](#a-4-A) obtained through the [program](/usc/42/274l–1.md?p=4) taking into account the [negotiated price](/usc/42/1395w–114c.md?p=g-6) (if any) for the [drug](/usc/42/282.md?p=j-1-A-vii) under the [program](/usc/42/274l–1.md?p=4). - (2) **Limitation on dollar amount—** - (A) **In general—** Subject to [subparagraph (B)](#g-2-B), the amount specified in this paragraph for a [transitional assistance eligible individual](#b-2-A)— - (i) for costs incurred during 2004, is $600; or - (ii) for costs incurred during 2005, is— - (I) $600, plus - (II) except as provided in [subparagraph (E)](#g-2-E), the amount by which the amount available under this paragraph for 2004 for that individual exceeds the amount of payment made under [paragraph (1)(B)](#g-1-B) for that individual for costs incurred during 2004. - (B) **Proration—** - (i) **In general—** In the case of an individual not described in [clause (ii)](#g-2-B-ii) with respect to a year, the [Secretary](/usc/42/1301.md?p=a-6) may prorate the amount specified in [subparagraph (A)](#g-2-A) for the balance of the year involved in a manner specified by the [Secretary](/usc/42/1301.md?p=a-6). - (ii) **Individual described—** An individual described in this clause is a [transitional assistance eligible individual](#b-2-A) who— - (I) with respect to 2004, enrolls in an [endorsed program](#a-4-C), and provides a certification under [subsection (f)(2)](#f-2), before the initial implementation date of the [program](/usc/42/274l–1.md?p=4) under this section; and - (II) with respect to 2005, is enrolled in an [endorsed program](#a-4-C), and has provided such a certification, before February 1, 2005. - (C) **Accounting for available balances in cases of changes in program enrollment—** In the case of a [transitional assistance eligible individual](#b-2-A) who changes the [endorsed discount card program](#a-4-C) in which the individual is enrolled under this section, the [Secretary](/usc/42/1301.md?p=a-6) shall provide a process under which the [Secretary](/usc/42/1301.md?p=a-6) provides to the [sponsor](#h-1-A) of the [endorsed program](#a-4-C) in which the individual enrolls information concerning the balance of amounts available on behalf of the individual under this paragraph. - (D) **Limitation on use of funds—** Pursuant to [subsection (a)(2)(C)](#a-2-C), no assistance shall be provided under [paragraph (1)(B)](#g-1-B) with respect to [covered discount card drugs](#a-4-A) dispensed after December 31, 2005. - (E) **No rollover permitted in case of voluntary disenrollment—** Except in such exceptional cases as the [Secretary](/usc/42/1301.md?p=a-6) may provide, in the case of a [transitional assistance eligible individual](#b-2-A) who voluntarily disenrolls from an endorsed plan, the provisions of [subclause (II)](#g-2-A-ii-II) of subparagraph (A)(ii) shall not apply. - (3) **Payment—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide a method for the reimbursement of [prescription drug card sponsors](#h-1-A) for assistance provided under this subsection. - (4) **Coverage of coinsurance—** - (A) **Waiver permitted by pharmacy—** Nothing in this section shall be construed as precluding a pharmacy from reducing or waiving the application of coinsurance imposed under [paragraph (1)(B)](#g-1-B) in accordance with [section 1320a–7b(b)(3)(G) of this title](/usc/42/1320a–7b.md?p=b-3-G). - (B) **Optional payment of coinsurance by State—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish an arrangement under which a [State](#a-4-F) may provide for payment of some or all of the coinsurance under [paragraph (1)(B)](#g-1-B) for some or all enrollees in the [State](#a-4-F), as specified by the [State](#a-4-F) under the arrangement. Insofar as such a payment arrangement is made with respect to an enrollee, the amount of the coinsurance shall be paid directly by the [State](#a-4-F) to the pharmacy involved. - (ii) **No Federal matching available under medicaid or SCHIP—** Expenditures made by a [State](#a-4-F) for coinsurance described in [clause (i)](#g-4-B-i) shall not be treated as [State](#a-4-F) expenditures for purposes of Federal matching payments under subchapter XIX or XXI. - (iii) **Not treated as medicare cost-sharing—** Coinsurance described in [paragraph (1)(B)](#g-1-B) shall not be treated as coinsurance under this subchapter for purposes of [section 1396d(p)(3)(B) of this title](/usc/42/1396d.md?p=p-3-B). - (C) **Treatment of coinsurance—** The amount of any coinsurance imposed under [paragraph (1)(B)](#g-1-B), whether paid or waived under this paragraph, shall not be taken into account in applying the limitation in dollar amount under [paragraph (2)](#g-2). - (5) **Ensuring access to transitional assistance for qualified residents of long-term care facilities and American Indians—** - (A) **Residents of long-term care facilities—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish procedures and may waive requirements of this section as necessary to negotiate [arrangements](/usc/42/1395x.md?p=w-1) with [sponsors](#h-1-A) to provide [arrangements](/usc/42/1395x.md?p=w-1) with pharmacies that support [long-term care facilities](/usc/42/1397j.md?p=15) in order to ensure access to transitional assistance for [transitional assistance eligible individuals](#b-2-A) who reside in [long-term care facilities](/usc/42/1397j.md?p=15). - (B) **American Indians—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish procedures and may waive requirements of this section to ensure that, for purposes of providing transitional assistance, pharmacies operated by the [Indian](/usc/42/6862.md?p=6) Health Service, [Indian tribes](/usc/42/1397j.md?p=12-A) and [tribal organizations](/usc/42/629a.md?p=a-6), and urban [Indian](/usc/42/6862.md?p=6) organizations (as defined in [section 1603 of title 25](/usc/25/1603.md)) have the opportunity to participate in the pharmacy networks of at least two [endorsed programs](#a-4-C) in each of the 50 [States](#a-4-F) and the District of Columbia where such a pharmacy operates. - (6) **No impact on benefits under other programs—** The availability of [negotiated prices](/usc/42/1395w–114c.md?p=g-6) or transitional assistance under this section shall not be treated as benefits or otherwise taken into account in determining an individual’s eligibility for, or the amount of benefits under, any other Federal [program](/usc/42/274l–1.md?p=4). - (7) **Disregard for purposes of part C—** Nonuniformity of benefits resulting from the implementation of this section ([including](/usc/42/1301.md?p=b) the provision or nonprovision of transitional assistance and the payment or waiver of any enrollment fee under this section) shall not be taken into account in applying [section 1395w–24(f) of this title](/usc/42/1395w–24.md?p=f). - (h) **Qualification of prescription drug card sponsors and endorsement of discount card programs; beneficiary protections—** - (1) **Prescription drug card sponsor and qualifications—** - (A) **Prescription drug card sponsor and sponsor defined—** For purposes of this section, the terms “[prescription drug card sponsor](#a-4-E)” and “[sponsor](#a-4-E)” mean any nongovernmental entity that the [Secretary](/usc/42/1301.md?p=a-6) determines to be appropriate to offer an [endorsed discount card program](#a-4-C) under this section, which may include— - (i) a pharmaceutical benefit management company; - (ii) a wholesale or retail pharmacy delivery system; - (iii) an insurer ([including](/usc/42/1301.md?p=b) an insurer that offers [medicare supplemental policies](/usc/42/1320d–9.md?p=b-2) under [section 1395ss of this title](/usc/42/1395ss.md)); - (iv) an organization offering a plan under part C; or - (v) any combination of the entities described in [clauses (i) through (iv)](#h-1-A-i..h-1-A-iv). - (B) **Administrative qualifications—** Each [endorsed discount card program](#a-4-C) shall be operated directly, or through [arrangements](/usc/42/1395x.md?p=w-1) with an affiliated organization (or organizations), by one or more entities that have demonstrated experience and expertise in operating such a [program](/usc/42/274l–1.md?p=4) or a similar [program](/usc/42/274l–1.md?p=4) and that meets such business stability and integrity requirements as the [Secretary](/usc/42/1301.md?p=a-6) may specify. - (C) **Accounting for transitional assistance—** The [sponsor](#a-4-E) of an [endorsed discount card program](#a-4-C) shall have [arrangements](/usc/42/1395x.md?p=w-1) satisfactory to the [Secretary](/usc/42/1301.md?p=a-6) to account for the assistance provided under [subsection (g)](#g) on behalf of [transitional assistance eligible individuals](#b-2-A). - (2) **Applications for program endorsement—** - (A) **Submission—** Each [prescription drug card sponsor](#a-4-E) that seeks endorsement of a prescription [drug](/usc/42/282.md?p=j-1-A-vii) discount card [program](/usc/42/274l–1.md?p=4) under this section shall submit to the [Secretary](/usc/42/1301.md?p=a-6), at such time and in such manner as the [Secretary](/usc/42/1301.md?p=a-6) may specify, an application containing such information as the [Secretary](/usc/42/1301.md?p=a-6) may require. - (B) **Approval; compliance with applicable requirements—** The [Secretary](/usc/42/1301.md?p=a-6) shall review the application submitted under [subparagraph (A)](#h-2-A) and shall determine whether to endorse the prescription [drug](/usc/42/282.md?p=j-1-A-vii) discount card [program](/usc/42/274l–1.md?p=4). The [Secretary](/usc/42/1301.md?p=a-6) may not endorse such a [program](/usc/42/274l–1.md?p=4) unless— - (i) the [program](/usc/42/274l–1.md?p=4) and [prescription drug card sponsor](#a-4-E) offering the [program](/usc/42/274l–1.md?p=4) comply with the applicable requirements under this section; and - (ii) the [sponsor](#a-4-E) has entered into a contract with the [Secretary](/usc/42/1301.md?p=a-6) to carry out such requirements. - (C) **Termination of endorsement and contracts—** An endorsement of an [endorsed program](#a-4-C) and a contract under [subparagraph (B)](#h-2-B) shall be for the duration of the [program](/usc/42/274l–1.md?p=4) under this section ([including](/usc/42/1301.md?p=b) any transition applicable under [subsection (a)(2)(C)(ii)](#a-2-C-ii)), except that the [Secretary](/usc/42/1301.md?p=a-6) may, with notice and for [cause](/usc/42/9908.md?p=c-2) (as defined by the [Secretary](/usc/42/1301.md?p=a-6)), terminate such endorsement and contract. - (D) **Ensuring choice of programs—** - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall ensure that there is available to each [discount card eligible individual](#b-1-A) a choice of at least 2 [endorsed programs](#a-4-C) (each offered by a different [sponsor](#a-4-E)). - (ii) **Limitation on number—** The [Secretary](/usc/42/1301.md?p=a-6) may limit (but not below 2) the number of [sponsors](#a-4-E) in a [State](#a-4-F) that are awarded contracts under this paragraph. - (3) **Service area encompassing entire States—** Except as provided in [paragraph (9)](#h-9), if a [prescription drug card sponsor](#a-4-E) that offers an [endorsed program](#a-4-C) enrolls in the [program](/usc/42/274l–1.md?p=4) individuals residing in any part of a [State](#a-4-F), the [sponsor](#a-4-E) must permit any [discount card eligible individual](#b-1-A) residing in any portion of the [State](#a-4-F) to enroll in the [program](/usc/42/274l–1.md?p=4). - (4) **Savings to medicare beneficiaries—** Each [prescription drug card sponsor](#a-4-E) that offers an [endorsed discount card program](#a-4-C) shall pass on to [discount card eligible individuals](#b-1-A) enrolled in the [program](/usc/42/274l–1.md?p=4) [negotiated prices](/usc/42/1395w–114c.md?p=g-6) on [covered discount card drugs](#a-4-A), [including](/usc/42/1301.md?p=b) discounts negotiated with pharmacies and [manufacturers](/usc/42/300aa–33.md?p=3), to the extent disclosed under [subsection (i)(1)](#i-1). - (5) **Grievance mechanism—** Each [prescription drug card sponsor](#a-4-E) shall provide meaningful procedures for hearing and resolving grievances between the [sponsor](#a-4-E) ([including](/usc/42/1301.md?p=b) any entity or individual through which the [sponsor](#a-4-E) carries out the [endorsed discount card program](#a-4-C)) and enrollees in [endorsed discount card programs](#a-4-C) of the [sponsor](#a-4-E) under this section in a manner similar to that required under [section 1395w–22(f) of this title](/usc/42/1395w–22.md?p=f). - (6) **Confidentiality of enrollee records—** - (A) **In general—** For purposes of the [program](/usc/42/274l–1.md?p=4) under this section, the operations of an [endorsed program](#a-4-C) are covered functions and a [prescription drug card sponsor](#a-4-E) is a covered entity for purposes of applying part C of subchapter XI and all regulatory provisions promulgated thereunder, [including](/usc/42/1301.md?p=b) [regulations](/usc/42/1395hh.md?p=a-1) (relating to privacy) adopted pursuant to the authority of the [Secretary](/usc/42/1301.md?p=a-6) under [section 264(c)](/usc/42/264.md?p=c) of the Health Insurance Portability and Accountability Act of 1996 ([42 U.S.C. 1320d–2](/usc/42/1320d–2.md) note).[^1] - (B) **Waiver authority—** In order to promote participation of [sponsors](#a-4-E) in the [program](/usc/42/274l–1.md?p=4) under this section, the [Secretary](/usc/42/1301.md?p=a-6) may waive such relevant portions of [regulations](/usc/42/1395hh.md?p=a-1) relating to privacy referred to in [subparagraph (A)](#h-6-A), for such appropriate, limited period of time, as the [Secretary](/usc/42/1301.md?p=a-6) specifies. - (7) **Limitation on provision and marketing of products and services—** The [sponsor](#a-4-E) of an [endorsed discount card program](#a-4-C)— - (A) may provide under the [program](/usc/42/274l–1.md?p=4)— - (i) a product or service only if the product or service is directly related to a [covered discount card drug](#a-4-A); or - (ii) a discount price for nonprescription [drugs](/usc/42/1395x.md?p=t-2-A); and - (B) may, to the extent otherwise permitted under [paragraph (6)](#h-6) (relating to application of HIPAA requirements), market a product or service under the [program](/usc/42/274l–1.md?p=4) only if the product or service is directly related to— - (i) a [covered discount card drug](#a-4-A); or - (ii) a [drug](/usc/42/282.md?p=j-1-A-vii) described in [subparagraph (A)(ii)](#h-7-A-ii) and the marketing consists of information on the [discounted price](/usc/42/1395w–114c.md?p=g-4-B-i) made available for the [drug](/usc/42/282.md?p=j-1-A-vii) involved. - (8) **Additional protections—** Each [endorsed discount card program](#a-4-C) shall meet such additional requirements as the [Secretary](/usc/42/1301.md?p=a-6) identifies to protect and promote the interest of [discount card eligible individuals](#b-1-A), [including](/usc/42/1301.md?p=b) requirements that ensure that [discount card eligible individuals](#b-1-A) enrolled in [endorsed discount card programs](#a-4-C) are not charged more than the lower of the price based on [negotiated prices](/usc/42/1395w–114c.md?p=g-6) or the usual and customary price. - (9) **Special rules for certain organizations—** - (A) **In general—** In the case of an organization that is offering a plan under part C or enrollment under a reasonable cost reimbursement contract under [section 1395mm(h) of this title](/usc/42/1395mm.md?p=h) that is seeking to be a [prescription drug card sponsor](#a-4-E) under this section, the organization may elect to apply the special rules under [subparagraph (B)](#h-9-B) with respect to enrollees in any plan described in [section 1395w–21(a)(2)(A) of this title](/usc/42/1395w–21.md?p=a-2-A) that it offers or under such contract and an [endorsed discount card program](#a-4-C) it offers, but only if it limits enrollment under such [program](/usc/42/274l–1.md?p=4) to individuals enrolled in such plan or under such contract. - (B) **Special rules—** The special rules under this subparagraph are as follows: - (i) **Limitation on enrollment—** The [sponsor](#a-4-E) limits enrollment under this section under the [endorsed discount card program](#a-4-C) to [discount card eligible individuals](#b-1-A) who are enrolled in the part C plan involved or under the reasonable cost reimbursement contract involved and is not required nor permitted to enroll other individuals under such [program](/usc/42/274l–1.md?p=4). - (ii) **Pharmacy access—** Pharmacy access requirements under [subsection (e)(1)(B)](#e-1-B) are deemed to be met if the access is made available through a pharmacy network (and not only through mail order) and the network used by the [sponsor](#a-4-E) is approved by the [Secretary](/usc/42/1301.md?p=a-6). - (iii) **Sponsor requirements—** The [Secretary](/usc/42/1301.md?p=a-6) may waive the application of such requirements for a [sponsor](#a-4-E) as the [Secretary](/usc/42/1301.md?p=a-6) determines to be duplicative or to conflict with a requirement of the organization under part C or [section 1395mm of this title](/usc/42/1395mm.md) (as the case may be) or to be necessary in order to improve coordination of this section with the benefits under such part or section. - (i) **Disclosure and oversight—** - (1) **Disclosure—** Each [prescription drug card sponsor](#h-1-A) offering an [endorsed discount card program](#a-4-C) shall disclose to the [Secretary](/usc/42/1301.md?p=a-6) (in a manner specified by the [Secretary](/usc/42/1301.md?p=a-6)) information relating to [program](/usc/42/274l–1.md?p=4) performance, use of prescription [drugs](/usc/42/1395x.md?p=t-2-A) by [discount card eligible individuals](#b-1-A) enrolled in the [program](/usc/42/274l–1.md?p=4), the extent to which [negotiated price](/usc/42/1395w–114c.md?p=g-6) concessions described in [subsection (e)(1)(A)(ii)](#e-1-A-ii) made available to the entity by a [manufacturer](/usc/42/300aa–33.md?p=3) are passed through to enrollees through pharmacies or otherwise, and such other information as the [Secretary](/usc/42/1301.md?p=a-6) may specify. The provisions of [section 1396r–8(b)(3)(D) of this title](/usc/42/1396r–8.md?p=b-3-D) shall apply to [drug](/usc/42/282.md?p=j-1-A-vii) pricing data reported under the previous sentence (other than data in aggregate form). - (2) **Oversight; audit and inspection authority—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide appropriate oversight to ensure compliance of [endorsed discount card programs](#a-4-C) and their [sponsors](#h-1-A) with the requirements of this section. The [Secretary](/usc/42/1301.md?p=a-6) shall have the right to audit and inspect any books and records of a prescription discount card [sponsor](#h-1-A) (and of any affiliated organization referred to in [subsection (h)(1)(B)](#h-1-B)) that pertain to the [endorsed discount card program](#a-4-C) under this section, [including](/usc/42/1301.md?p=b) amounts payable to the [sponsor](#h-1-A) under this section. - (3) **Sanctions for abusive practices—** The [Secretary](/usc/42/1301.md?p=a-6) may implement intermediate sanctions or may revoke the endorsement of a [program](/usc/42/274l–1.md?p=4) offered by a [sponsor](#h-1-A) under this section if the [Secretary](/usc/42/1301.md?p=a-6) determines that the [sponsor](#h-1-A) or the [program](/usc/42/274l–1.md?p=4) no longer meets the applicable requirements of this section or that the [sponsor](#h-1-A) has engaged in false or misleading marketing [practices](/usc/42/17061.md?p=19). The [Secretary](/usc/42/1301.md?p=a-6) may impose a civil money penalty in an amount not to exceed $10,000 for conduct that a party knows or should know is a [violation](/usc/42/2000e–16a.md?p=c) of this section. The provisions of [section 1320a–7a of this title](/usc/42/1320a–7a.md) (other than subsections [(a)](#a) and [(b)](#b) and the second sentence of [subsection (f)](#f)) shall apply to a civil money penalty under the previous sentence in the same manner as such provisions apply to a penalty or proceeding under [section 1320a–7a(a) of this title](/usc/42/1320a–7a.md?p=a). - (j) **Treatment of territories—** - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) may waive any provision of this section ([including](/usc/42/1301.md?p=b) [subsection (h)(2)(D)](#h-2-D)) in the case of a resident of a [State](#a-4-F) (other than the 50 [States](#a-4-F) and the District of Columbia) insofar as the [Secretary](/usc/42/1301.md?p=a-6) determines it is necessary to secure access to [negotiated prices](/usc/42/1395w–114c.md?p=g-6) for [discount card eligible individuals](#b-1-A) (or, at the option of the [Secretary](/usc/42/1301.md?p=a-6), individuals described in [subsection (b)(1)(A)(i)](#b-1-A-i)). - (2) **Transitional assistance—** - (A) **In general—** In the case of a [State](#a-4-F), other than the 50 [States](#a-4-F) and the District of Columbia, if the [State](#a-4-F) establishes a plan described in [subparagraph (B)](#j-2-B) (for providing transitional assistance with respect to the provision of prescription [drugs](/usc/42/1395x.md?p=t-2-A) to some or all individuals residing in the [State](#a-4-F) who are described in [subparagraph (B)(i)](#j-2-B-i)), the [Secretary](/usc/42/1301.md?p=a-6) shall pay to the [State](#a-4-F) for the entire period of the operation of this section an amount equal to the amount allotted to the [State](#a-4-F) under [subparagraph (C)](#j-2-C). - (B) **Plan—** The plan described in this subparagraph is a plan that— - (i) provides transitional assistance with respect to the provision of [covered discount card drugs](#a-4-A) to some or all individuals who are entitled to benefits under part A or enrolled under part B, who reside in the [State](#a-4-F), and who have [income](#f-1-B) below 135 percent of the [poverty line](/usc/42/1395w–114.md?p=a-3-C-ii); and - (ii) assures that amounts received by the [State](#a-4-F) under this paragraph are used only for such assistance. - (C) **Allotment limit—** The amount described in this subparagraph for a [State](#a-4-F) is equal to $35,000,000 multiplied by the ratio (as estimated by the [Secretary](/usc/42/1301.md?p=a-6)) of— - (i) the number of individuals who are entitled to benefits under part A or enrolled under part B and who reside in the [State](#a-4-F) (as determined by the [Secretary](/usc/42/1301.md?p=a-6) as of July 1, 2003), to - (ii) the sum of such numbers for all [States](#a-4-F) to which this paragraph applies. - (D) **Continued availability of funds—** Amounts made available to a [State](#a-4-F) under this paragraph which are not used under this paragraph shall be added to the amount available to that [State](#a-4-F) for purposes of carrying out [section 1396u–5(e) of this title](/usc/42/1396u–5.md?p=e). - (k) **Funding—** - (1) **Establishment of Transitional Assistance Account—** - (A) **In general—** There is created within the Federal Supplementary Medical Insurance [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3) established by [section 1395t of this title](/usc/42/1395t.md) an account to be known as the “Transitional Assistance Account” (in this subsection referred to as the “Account”). - (B) **Funds—** The Account shall consist of such gifts and bequests as may be made as provided in [section 401(i)(1) of this title](/usc/42/401.md?p=i-1), accrued interest on balances in the Account, and such amounts as may be deposited in, or appropriated to, the Account as provided in this subsection. - (C) **Separate from rest of Trust Fund—** [Funds](/usc/42/12854.md?p=3) provided under this subsection to the Account shall be kept separate from all other [funds](/usc/42/12854.md?p=3) within the Federal Supplementary Medical Insurance [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3), but shall be invested, and such investments redeemed, in the same manner as all other [funds](/usc/42/12854.md?p=3) and investments within such [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3). - (2) **Payments from account—** - (A) **In general—** The Managing Trustee shall pay from time to time from the Account such amounts as the [Secretary](/usc/42/1301.md?p=a-6) certifies are necessary to make payments for transitional assistance provided under subsections [(g)](#g) and [(j)(2)](#j-2). - (B) **Treatment in relation to part B premium—** Amounts payable from the Account shall not be taken into account in computing actuarial rates or premium amounts under [section 1395r of this title](/usc/42/1395r.md). - (3) **Appropriations to cover benefits—** There are appropriated to the Account in a fiscal year, out of any moneys in the Treasury not otherwise appropriated, an amount equal to the payments made from the Account in the year. - (4) **For administrative expenses—** There are authorized to be appropriated to the [Secretary](/usc/42/1301.md?p=a-6) such sums as may be necessary to carry out the [Secretary](/usc/42/1301.md?p=a-6)’s responsibilities under this section. - (5) **Transfer of any remaining balance to Medicare Prescription Drug Account—** Any balance remaining in the Account after the [Secretary](/usc/42/1301.md?p=a-6) determines that [funds](/usc/42/12854.md?p=3) in the Account are no longer necessary to carry out the [program](/usc/42/274l–1.md?p=4) under this section shall be transferred and deposited into the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10) under [section 1395w–116 of this title](/usc/42/1395w–116.md). - (6) **Construction—** Nothing in this section shall be construed as authorizing the [Secretary](/usc/42/1301.md?p=a-6) to provide for payment (other than payment of an enrollment fee on behalf of a [transitional assistance eligible individual](#b-2-A) under [subsection (g)(1)(A)](#g-1-A)) to a [sponsor](#h-1-A) for administrative expenses incurred by the [sponsor](#h-1-A) in carrying out this section ([including](/usc/42/1301.md?p=b) in administering the transitional assistance provisions of subsections [(f)](#f) and [(g)](#g)). # §1395w–151. Definitions; treatment of references to provisions in part C - (a) **Definitions—** For purposes of this part: - (1) **Basic prescription drug coverage—** The term “[basic prescription drug coverage](/usc/42/1395w–102.md?p=a-3)” is defined in [section 1395w–102(a)(3) of this title](/usc/42/1395w–102.md?p=a-3). - (2) **Covered part D drug—** The term “[covered part D drug](/usc/42/1395w–141.md?p=a-4-A)” is defined in [section 1395w–102(e) of this title](/usc/42/1395w–102.md?p=e). - (3) **Creditable prescription drug coverage—** The term “[creditable prescription drug coverage](/usc/42/1395w–113.md?p=b-4)” has the meaning given such term in [section 1395w–113(b)(4) of this title](/usc/42/1395w–113.md?p=b-4). - (4) **Part D eligible individual—** The term “[part D eligible individual](/usc/42/1395w–101.md?p=a-3-A)” has the meaning given such term in [section 1395w–101(a)(3)(A) of this title](/usc/42/1395w–101.md?p=a-3-A).[^1] - (5) **Fallback prescription drug plan—** The term “[fallback prescription drug plan](/usc/42/1395w–111.md?p=g-4)” has the meaning given such term in [section 1395w–111(g)(4) of this title](/usc/42/1395w–111.md?p=g-4). - (6) **Initial coverage limit—** The term “initial coverage limit” means such limit as established under [section 1395w–102(b)(3) of this title](/usc/42/1395w–102.md?p=b-3) for a year before 2025, or, in the case of coverage that is not [standard prescription drug coverage](/usc/42/1395w–102.md?p=b), the comparable limit (if any) established under the coverage for such year. - (7) **Insurance risk—** The term “insurance risk” means, with respect to a participating pharmacy, risk of the type commonly assumed only by insurers licensed by a [State](/usc/42/1397n–12.md?p=6) and does not include payment variations designed to reflect performance-based measures of activities within the control of the pharmacy, such as formulary compliance and generic [drug](/usc/42/282.md?p=j-1-A-vii) substitution. - (8) **MA plan—** The term “[MA plan](/usc/42/1395w–101.md?p=a-3-B)” has the meaning given such term in [section 1395w–101(a)(3)(B) of this title](/usc/42/1395w–101.md?p=a-3-B).[^1] - (9) **MA–PD plan—** The term “[MA–PD plan](/usc/42/1395w–101.md?p=a-3-C)” has the meaning given such term in [section 1395w–101(a)(3)(C) of this title](/usc/42/1395w–101.md?p=a-3-C).[^1] - (10) **Medicare Prescription Drug Account—** The term “Medicare Prescription Drug Account” means the Account created under [section 1395w–116(a) of this title](/usc/42/1395w–116.md?p=a). - (11) **PDP approved bid—** The term “[PDP approved bid](/usc/42/1395w–113.md?p=a-6)” has the meaning given such term in [section 1395w–113(a)(6) of this title](/usc/42/1395w–113.md?p=a-6). - (12) **PDP region—** The term “PDP region” means such a [region](/usc/42/1395ww.md?p=d-2-D) as provided under [section 1395w–111(a)(2) of this title](/usc/42/1395w–111.md?p=a-2). - (13) **PDP sponsor—** The term “PDP sponsor” means a nongovernmental entity that is certified under this part as meeting the requirements and [standards](/usc/42/1320d.md?p=7) of this part for such a sponsor. - (14) **Prescription drug plan—** The term “prescription drug plan” means prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage that is offered— - (A) under a policy, contract, or plan that has been approved under [section 1395w–111(e) of this title](/usc/42/1395w–111.md?p=e); and - (B) by a [PDP sponsor](#a-13) pursuant to, and in accordance with, a contract between the [Secretary](/usc/42/1301.md?p=a-6) and the sponsor under [section 1395w–112(b) of this title](/usc/42/1395w–112.md?p=b). - (15) **Qualified prescription drug coverage—** The term “[qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1)” is defined in [section 1395w–102(a)(1) of this title](/usc/42/1395w–102.md?p=a-1). - (16) **Standard prescription drug coverage—** The term “[standard prescription drug coverage](/usc/42/1395w–102.md?p=b)” is defined in [section 1395w–102(b) of this title](/usc/42/1395w–102.md?p=b). - (17) **State Pharmaceutical Assistance Program—** The term “[State Pharmaceutical Assistance Program](/usc/42/1395w–133.md?p=b)” has the meaning given such term in [section 1395w–133(b) of this title](/usc/42/1395w–133.md?p=b). - (18) **Subsidy eligible individual—** The term “[subsidy eligible individual](/usc/42/1395w–114.md?p=a-3-A)” has the meaning given such term in [section 1395w–114(a)(3)(A) of this title](/usc/42/1395w–114.md?p=a-3-A). - (b) **Application of part C provisions under this part—** For purposes of applying provisions of part C under this part with respect to a [prescription drug plan](#a-14) and a [PDP sponsor](#a-13), unless otherwise provided in this part such provisions shall be applied as if— - (1) any reference to an [MA plan](/usc/42/1395w–101.md?p=a-3-B) included a reference to a [prescription drug plan](#a-14); - (2) any reference to an MA organization or a [provider-sponsored organization](/usc/42/1395w–28.md?p=a-2) included a reference to a [PDP sponsor](#a-13); - (3) any reference to a contract under [section 1395w–27 of this title](/usc/42/1395w–27.md) included a reference to a contract under [section 1395w–112(b) of this title](/usc/42/1395w–112.md?p=b); - (4) any reference to part C included a reference to this part; and - (5) any reference to an election period under [section 1395w–21 of this title](/usc/42/1395w–21.md) were a reference to an enrollment period under [section 1395w–101 of this title](/usc/42/1395w–101.md). # §1395w–152. Miscellaneous provisions - (a) **Access to coverage in territories—** The [Secretary](/usc/42/1301.md?p=a-6) may waive such requirements of this part, [including](/usc/42/1301.md?p=b) [section 1395w–103(a)(1) of this title](/usc/42/1395w–103.md?p=a-1), insofar as the [Secretary](/usc/42/1301.md?p=a-6) determines it is necessary to secure access to [qualified prescription drug coverage](/usc/42/1395w–102.md?p=a-1) for [part D eligible individuals](/usc/42/1395w–101.md?p=a-3-A) residing in a [State](/usc/42/1397n–12.md?p=6) (other than the 50 [States](/usc/42/1397n–12.md?p=6) and the District of Columbia). - (b) **Application of demonstration authority—** The provisions of [section 402](/usc/42/402.md) of the [Social](/usc/42/1397j.md?p=20) Security Amendments of 1967 (Public Law 90–248) shall apply with respect to this part and part C in the same manner it applies with respect to parts A and B, except that any reference with respect to a [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3) in relation to an experiment or [demonstration project](/usc/42/16281.md?p=d-2) relating to prescription [drug](/usc/42/282.md?p=j-1-A-vii) coverage under this part shall be deemed a reference to the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10) within the Federal Supplementary Medical Insurance [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3). - (c) **Coverage gap rebate for 2010—** - (1) **In general—** In the case of an individual described in subparagraphs (A) through (D) of [section 1395w–114a(g)(1) of this title](/usc/42/1395w–114a.md?p=g-1) who as of the last day of a calendar quarter in 2010 has incurred costs for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) so that the individual has exceeded the [initial coverage limit](/usc/42/1395w–151.md?p=a-6) under [section 1395w–102(b)(3) of this title](/usc/42/1395w–102.md?p=b-3) for 2010, the [Secretary](/usc/42/1301.md?p=a-6) shall provide for payment from the [Medicare Prescription Drug Account](/usc/42/1395w–151.md?p=a-10) of $250 to the individual by not later than the 15th day of the third month following the end of such quarter. - (2) **Limitation—** The [Secretary](/usc/42/1301.md?p=a-6) shall provide only 1 payment under this subsection with respect to any individual. - (d) **Treatment of certain complaints for purposes of quality or performance assessment—** In conducting a quality or performance assessment of a [PDP sponsor](/usc/42/1395w–151.md?p=a-13), the [Secretary](/usc/42/1301.md?p=a-6) shall develop or utilize existing screening methods for reviewing and considering complaints that are received from enrollees in a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) offered by such [PDP sponsor](/usc/42/1395w–151.md?p=a-13) and that are complaints regarding the lack of access by the individual to prescription [drugs](/usc/42/1395x.md?p=t-2-A) due to a [drug](/usc/42/282.md?p=j-1-A-vii) management [program](/usc/42/274l–1.md?p=4) for at-risk beneficiaries. - (e) **Essential retail pharmacies—** - (1) **In general—** With respect to plan years beginning on or after January 1, 2028, the [Secretary](/usc/42/1301.md?p=a-6) shall publish reports, at least once every 2 years until 2034, and periodically thereafter, that provide information, to the extent feasible, on— - (A) trends in ingredient cost reimbursement, dispensing fees, incentive payments and other fees paid by [PDP sponsors](/usc/42/1395w–151.md?p=a-13) offering [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and MA organizations offering [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) under this part to [essential retail pharmacies](#e-2) (as defined in [paragraph (2)](#e-2)) with respect to the dispensing of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), [including](/usc/42/1301.md?p=b) a comparison of such trends between [essential retail pharmacies](#e-2) and pharmacies that are not [essential retail pharmacies](#e-2); - (B) trends in amounts paid to [PDP sponsors](/usc/42/1395w–151.md?p=a-13) offering [prescription drug plans](/usc/42/1395w–151.md?p=a-14) and MA organizations offering [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) under this part by [essential retail pharmacies](#e-2) with respect to the dispensing of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), [including](/usc/42/1301.md?p=b) a comparison of such trends between [essential retail pharmacies](#e-2) and pharmacies that are not [essential retail pharmacies](#e-2); - (C) trends in [essential retail pharmacy](#e-2) participation in pharmacy networks and preferred pharmacy networks for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) offered by [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) offered by MA organizations under this part, [including](/usc/42/1301.md?p=b) a comparison of such trends between [essential retail pharmacies](#e-2) and pharmacies that are not [essential retail pharmacies](#e-2); - (D) trends in the number of [essential retail pharmacies](#e-2), [including](/usc/42/1301.md?p=b) variation in such trends by geographic [region](/usc/42/1395ww.md?p=d-2-D) or other factors; - (E) a comparison of [cost-sharing](/usc/42/18022.md?p=c-3-A) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) dispensed by [essential retail pharmacies](#e-2) that are network pharmacies for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) offered by [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) offered by MA organizations under this part and [cost-sharing](/usc/42/18022.md?p=c-3-A) for [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) dispensed by other network pharmacies for such plans located in similar [geographic areas](/usc/42/11360.md?p=9) that are not [essential retail pharmacies](#e-2); - (F) a comparison of the volume of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A) dispensed by [essential retail pharmacies](#e-2) that are network pharmacies for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) offered by [PDP sponsors](/usc/42/1395w–151.md?p=a-13) and [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) offered by MA organizations under this part and such volume of dispensing by network pharmacies for such plans located in similar [geographic areas](/usc/42/11360.md?p=9) that are not [essential retail pharmacies](#e-2), [including](/usc/42/1301.md?p=b) information on any patterns or trends in such comparison specific to certain types of [covered part D drugs](/usc/42/1395w–141.md?p=a-4-A), such as generic [drugs](/usc/42/1395x.md?p=t-2-A) or [drugs](/usc/42/1395x.md?p=t-2-A) specified as specialty [drugs](/usc/42/1395x.md?p=t-2-A) by a [PDP sponsor](/usc/42/1395w–151.md?p=a-13) under a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) or an MA organization under an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C); and - (G) a comparison of the information described in [subparagraphs (A) through (F)](#e-1-A..e-1-F) between [essential retail pharmacies](#e-2) that are network pharmacies for [prescription drug plans](/usc/42/1395w–151.md?p=a-14) offered by [PDP sponsors](/usc/42/1395w–151.md?p=a-13) under this part and [essential retail pharmacies](#e-2) that are network pharmacies for [MA–PD plans](/usc/42/1395w–101.md?p=a-3-C) offered by MA organizations under this part. - (2) **Definition of essential retail pharmacy—** In this subsection, the term “essential retail pharmacy” means, with respect to a plan year, a retail pharmacy that— - (A) is not a pharmacy that is an [affiliate](#e-4) as defined in [paragraph (4)](#e-4); and - (B) is located in— - (i) a [rural area](/usc/42/1395ww.md?p=d-2-D) in which there is no other retail pharmacy within 10 miles, as determined by the [Secretary](/usc/42/1301.md?p=a-6); - (ii) a suburban area in which there is no other retail pharmacy within 2 miles, as determined by the [Secretary](/usc/42/1301.md?p=a-6); or - (iii) an [urban area](/usc/42/1395ww.md?p=d-2-D) in which there is no other retail pharmacy within 1 mile, as determined by the [Secretary](/usc/42/1301.md?p=a-6). - (3) **List of essential retail pharmacies—** - (A) **Publication of list of essential retail pharmacies—** For each plan year (beginning with plan year 2028), the [Secretary](/usc/42/1301.md?p=a-6) shall publish, on a publicly available internet website of the Centers for Medicare & Medicaid Services, a list of retail pharmacies that meet the criteria described in subparagraphs [(A)](#e-2-A) and [(B)](#e-2-B) of paragraph (2) to be considered an [essential retail pharmacy](#e-2). - (B) **Required submissions from PDP sponsors—** For each plan year (beginning with plan year 2028), each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and each MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) shall submit to the [Secretary](/usc/42/1301.md?p=a-6), for the purposes of determining retail pharmacies that meet the criterion specified in [subparagraph (A)](#e-2-A) of paragraph (2), a list of retail pharmacies that are [affiliates](#e-4) of such sponsor or organization, or are [affiliates](#e-4) of a [pharmacy benefit manager](#e-4) acting on behalf of such sponsor or organization, at a time, and in a form and manner, specified by the [Secretary](/usc/42/1301.md?p=a-6). - (C) **Reporting by PDP sponsors and MA organizations—** For each plan year beginning with plan year 2027, each [PDP sponsor](/usc/42/1395w–151.md?p=a-13) offering a [prescription drug plan](/usc/42/1395w–151.md?p=a-14) and each MA organization offering an [MA–PD plan](/usc/42/1395w–101.md?p=a-3-C) under this part shall submit to the [Secretary](/usc/42/1301.md?p=a-6) information on incentive payments and other fees paid by such sponsor or organization to pharmacies, insofar as any such payments or fees are not otherwise reported, at a time, and in a form and manner, specified by the [Secretary](/usc/42/1301.md?p=a-6). - (D) **Implementation—** Notwithstanding any other provision of law, the [Secretary](/usc/42/1301.md?p=a-6) may implement this paragraph by [program](/usc/42/274l–1.md?p=4) instruction or otherwise. - (E) **Nonapplication of Paperwork Reduction Act—** [Chapter 35](/usc/44/ch35.md) of title 44 shall not apply to the implementation of this paragraph. - (4) **Definition of affiliate; pharmacy benefit manager—** In this subsection, the terms “affiliate” and “pharmacy benefit manager” have the meaning given those terms in [section 1395w–112(h)(7) of this title](/usc/42/1395w–112.md?p=h-7). - (f) **Biennial report on enforcement and oversight of pharmacy access requirements—** - (1) **In general—** Not later than 2 years after February 3, 2026, and at least once every 2 years thereafter, the [Secretary](/usc/42/1301.md?p=a-6) shall publish a report on enforcement and oversight actions and activities undertaken by the [Secretary](/usc/42/1301.md?p=a-6) with respect to the requirements under [section 1395w–104(b)(1) of this title](/usc/42/1395w–104.md?p=b-1). - (2) **Limitation—** A report under [paragraph (1)](#f-1) shall not disclose— - (A) identifiable information about individuals or entities unless such information is otherwise publicly available; or - (B) trade secrets with respect to any entities.