---
kind: "section"
citation: "42 U.S.C. § 1395w–131"
title: "42"
title_heading: "The Public Health and Welfare"
number: "1395w–131"
heading: "Application to Medicare Advantage program and related managed care programs"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/1395w-131"
units:
  - "Chapter 7 — Social Security"
  - "Subchapter XVIII — Health Insurance for Aged and Disabled"
  - "Part D — Voluntary Prescription Drug Benefit Program"
  - "Subpart 3 — application to medicare advantage program and treatment of employer-sponsored programs and other prescription drug plans"
---

# §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–151.md?p=a-8) 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–151.md?p=a-8) offered by the organization in that same service area) [includes](/usc/42/1301.md?p=b) required prescription [drug](/usc/42/11851.md?p=4) coverage (as defined in [paragraph (2)](#a-2)); and
    - (B) may not offer prescription [drug](/usc/42/11851.md?p=4) 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–151.md?p=a-8) unless such [drug](/usc/42/11851.md?p=4) coverage under such other plan provides [qualified prescription drug coverage](/usc/42/1395w–151.md?p=a-15) 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–151.md?p=a-9)—
    - (A) [basic prescription drug coverage](/usc/42/1395w–151.md?p=a-1); or
    - (B) [qualified prescription drug coverage](/usc/42/1395w–151.md?p=a-15) that provides supplemental prescription [drug](/usc/42/11851.md?p=4) 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–151.md?p=a-9) unless such health benefits plan provides any prescription [drug](/usc/42/11851.md?p=4) 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–151.md?p=a-8) shall not be considered to have been deemed to make an election into an [MA–PD plan](/usc/42/1395w–151.md?p=a-9) unless—
    - (A) for purposes of the election as of January 1, 2006, the [MA plan](/usc/42/1395w–151.md?p=a-8) provided as of December 31, 2005, any prescription [drug](/usc/42/11851.md?p=4) coverage; or
    - (B) for periods after January 1, 2006, such [MA plan](/usc/42/1395w–151.md?p=a-8) is an [MA–PD plan](/usc/42/1395w–151.md?p=a-9).
  - (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–151.md?p=a-9), 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.
  - (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–151.md?p=a-8) (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–151.md?p=a-15), if the organization offering such coverage discontinues the offering with respect to the individual of all [MA plans](/usc/42/1395w–151.md?p=a-8) that do not provide such coverage—
    - (i) the individual is deemed to have elected the original medicare fee-for-service program option, unless the individual affirmatively elects to enroll in an [MA–PD plan](/usc/42/1395w–151.md?p=a-9); 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–151.md?p=a-8) 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–151.md?p=a-8) 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–151.md?p=a-15) 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/42/11851.md?p=4) coverage provided under [MA–PD plans](/usc/42/1395w–151.md?p=a-9) 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–151.md?p=a-9) that provides access (other than mail order) to [qualified prescription drug coverage](/usc/42/1395w–151.md?p=a-15) 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–151.md?p=a-8) 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–151.md?p=a-15), 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 (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/42/11851.md?p=4) purchased from all pharmacies, without charging additional cost-sharing, and without regard to whether they are participating pharmacies in a network or have entered into contracts or agreements with pharmacies to provide [drugs](/usc/42/11851.md?p=4) 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–151.md?p=a-9) 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–151.md?p=a-9) 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–151.md?p=a-2) 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–151.md?p=a-15) to a [part D eligible individual](/usc/42/1395w–151.md?p=a-4) 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–151.md?p=a-15) 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–151.md?p=a-4) 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/42/11851.md?p=4) coverage under this subsection shall not be taken into account in computing the national average monthly bid amount and low-income 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 under [section 1395eee of this title](/usc/42/1395eee.md) that elects to provide [qualified prescription drug coverage](/usc/42/1395w–151.md?p=a-15) to a [part D eligible individual](/usc/42/1395w–151.md?p=a-4) who is enrolled under such program, 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 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–151.md?p=a-4) who are not enrolled under the PACE program involved.
  - (3) **Bids not included in determining standardized bid amount—** The bid of an organization offering prescription [drug](/usc/42/11851.md?p=4) coverage under this subsection is not be taken into account in computing any average benchmark bid amount and low-income benchmark premium amount under this part.

## Source credit

(Aug. 14, 1935, ch. 531, title XVIII, § 1860D–21, as added Pub. L. 108–173, title I, § 101(a)(2), Dec. 8, 2003, 117 Stat. 2122; amended Pub. L. 117–169, title I, § 11201(e)(4), Aug. 16, 2022, 136 Stat. 1891.)

## Notes

### Editorial Notes

### Amendments

2022—Subsec. (d)(7). Pub. L. 117–169 substituted “section 1395w–102(b)(4)(C)(i)” for “section 1395w–102(b)(4)(B)(i)”.