Form CMS-10137 Applications for New Cost Plan Sponsors

MEDICARE PRESCRIPTION DRUG BENEFIT
Solicitation for Applications for New Cost Plan Sponsors
2011 Contract Year

PUBLIC REPORTING BURDEN: According to the Paperwork Reduction Act of 1995, no
persons are required to respond to a collection of information unless it displays a valid
OMB control number. The valid OMB control number for this information collection is
0938-0936. The time required to complete this information collection is estimated to
average 37.75 hours per response, including the time to review instructions, search
existing data resources, and gather the data needed, and complete and review the
information collection. If you have any comments concerning the accuracy of the time
estimate(s) or suggestions for improving this form, please write to: CMS, 7500 Security
Boulevard, C4-26-05, Baltimore, Maryland 21244-1850

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1.

2.

General Information ................................................................................................. 6
1.1.

Purpose of Solicitation ...................................................................................... 6

1.2.

Background ....................................................................................................... 6

1.3.

Objectives and Structure ................................................................................... 6

1.4.

Schedule ........................................................................................................... 7

1.5.

Summary of Cost Plan Sponsor Role and Responsibilities ............................... 8

1.6.

Summary of CMS Role and Responsibilities................................................... 10

1.6.1.

Application Approval, Part D Bid Review, and Contracting Processes .... 10

1.6.2.

Part D Program Oversight........................................................................ 10

1.6.3.

Education and Outreach .......................................................................... 11

1.6.4.

Marketing Guidelines and Review ........................................................... 11

1.6.5.

Eligibility for the Low Income Subsidy Program ....................................... 12

1.6.6.

General Enrollment Processing ............................................................... 12

1.6.7.

Payment to Cost Plan Sponsors .............................................................. 12

INSTRUCTIONS .................................................................................................... 14
2.1.

Overview ......................................................................................................... 14

2.2.

Other Technical Support ................................................................................. 14

2.3.

Health Plan Management System (HPMS) Data Entry ................................... 14

2.4.

Instructions and Format of Qualifications ........................................................ 14

2.4.1.

Instructions .............................................................................................. 15

2.4.2. Applicant Seeking to Offer New Employer/Union-Only Group Waiver Plans
(EGWPs) ................................................................................................................ 16
2.4.3.

Applicant Entity Same as Contracting Entity ............................................ 16

2.4.4.

Withdrawal of a Part D Application .......................................................... 17

2.4.5.

Technical Assistance ............................................................................... 17

2.5.

Submission Software Training ........................................................................ 17

2.6.

System Access and Data Transmissions with CMS ........................................ 18

2.6.1.

HPMS ...................................................................................................... 18

2.6.2.

Enrollment and Payment.......................................................................... 18

2.6.3.

Payment for Cost Plan Sponsors ............................................................. 18

2.7.

Summary Instruction and Format for Individual Market Bids ........................... 19

2.7.1.

Format of Bids ......................................................................................... 19

2.7.2.

CMS Review of Bids ................................................................................ 20

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2.7.3.
2.8.

Pharmacy Access ........................................................................................... 20

2.8.1.

Retail Pharmacy Access .......................................................................... 21

2.8.2.

Home Infusion Pharmacy Access ............................................................ 22

2.8.3.

Long-Term Care Pharmacy Access ......................................................... 22

2.8.4.
(I/T/U)

Indian Tribe and Tribal Organization, and Urban Indian Organization
23

2.8.5.

Waivers Related to Pharmacy Access ..................................................... 23

2.9.

3.

Overview of Bid Negotiation..................................................................... 20

Waivers Related to Attestations for Cost Plan EGWP Applicants ................... 24

2.10.

Standard Contract with Cost Plan Sponsors ............................................... 24

2.11.

Protection of Confidential Information ......................................................... 24

2.12.

Waivers ....................................................................................................... 25

APPLICATION ....................................................................................................... 27
3.1.

Applicant Experience, Contracts, Licensure and Financial Stability ................ 27

3.1.1.

Management and Operations 42 CFR Part 423 Subpart K ...................... 27

3.1.2.

Experience and Capabilities .................................................................... 32

3.1.3. Business Integrity 2 CFR Part 376; Prescription Drug Benefit Manual,
Chapter 9 ............................................................................................................... 33
3.1.4. HPMS Part D Contacts CMS Guidance issued 08/16/06, 08/22/07,
11/30/07, 08/06/07, 03/17/09, 07/09/09, and 08/04/09 ........................................... 35
3.2.

Benefit Design................................................................................................. 38

3.2.1. Formulary/Pharmacy and Therapeutics (P&T) Committee 42 CFR
§423.120(b), 42 CFR §423.272(b)(2); Prescription Drug Benefit Manual, Chapter 6;
2010 Call Letter ...................................................................................................... 38
3.2.2. Utilization Management Standards 42 CFR §423.153(b); Prescription Drug
Benefit Manual, Chapter 6 and Chapter 7 .............................................................. 43
3.2.3. Quality Assurance and Patient Safety 42 CFR §423.153(c); Prescription
Drug Benefit Manual, Chapter 7 ............................................................................. 44
3.2.4. Medication Therapy Management 42 CFR §423.153(d); Prescription Drug
Benefit Manual, Chapter 7; 2010 Call Letter; CMS issued guidance 04/10/2009 ... 44
3.2.5. Electronic Prescription Program and Health Information Technology
Standards 42 CFR §423.159; Prescription Drug Benefit Manual, Chapter 7; P.L.
111-5 (2009); 2010 Call Letter ............................................................................... 47
3.3. General Pharmacy Access 42 CFR §423.120(a); Prescription Drug Benefit
Manual, Chapter 5 ..................................................................................................... 48

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3.3.1. Retail Pharmacy 42 CFR §423.120(a); 42 CFR §423.859(c); Prescription
Drug Benefit Manual, Chapter 5 ............................................................................. 50
3.3.2. Out of Network Access 42 CFR §423.124; Prescription Drug Benefit
Manual, Chapter 5.................................................................................................. 53
3.3.3. Mail Order Pharmacy 42 CFR §423.120(a)(10); Prescription Drug Benefit
Manual, Chapter 5.................................................................................................. 54
3.3.4. Home Infusion Pharmacy 42 CFR §423.120(a)(4); Prescription Drug
Benefit Manual, Chapter 5; CMS issued guidance 09/09 ....................................... 55
3.3.5. Long -Term Care (LTC) Pharmacy 42 CFR §423.120(a)(5); Prescription
Drug Benefit Manual, Chapter 5; CMS issued guidance 04/28/09 ......................... 56
3.3.6. Indian Health Service, Indian Tribe and Tribal Organization, and Urban
Indian Organization (I/T/U) Pharmacy 42 CFR §423.120(a)(6); Prescription Drug
Benefit Manual, Chapter 5 ..................................................................................... 58
3.3.7.

Specialty Pharmacy Prescription Drug Benefit Manual, Chapter 5 .......... 59

3.4. Enrollment and Eligibility 42 CFR §423.30 and 42 CFR §423.44; Prescription
Drug Benefit Manual, Chapters 3, 4, and 13; Plan Communications User Guide; CMS
issued guidance 07/21/09 .......................................................................................... 60
3.5. Complaints Tracking Prescription Drug Benefit Manual, Chapter 7; CMS issued
guidance 11/16/06, 07/28/2008, and 12/09/08 .......................................................... 62
3.6. Medicare Prescription Drug Plan Finder Prescription Drug Benefit Manual,
Chapter 7; CMS issued guidance 07/17/06, 11/20/07, and 08/21/08 ........................ 63
3.7. Grievances 42 CFR Part 423 Subpart M; Prescription Drug Benefit Manual,
Chapter 18 ................................................................................................................. 64
3.8. Coverage Determinations (including Exceptions) and Appeals 42 CFR Part
423 Subpart M; Prescription Drug Benefit Manual, Chapter 18; 2010 Call Letter ...... 65
3.9. Coordination of Benefits 42 CFR Part 423 Subpart J; Prescription Drug Benefit
Manual, Chapter 14; 2010 Call Letter ........................................................................ 69
3.10.
Tracking Out-of Pocket Costs (TrOOP) 42 CFR Part 423 Subpart J;
Prescription Drug Benefit Manual, Chapters 13 and Chapter 14; 2010 Call Letter .... 71
3.11.
Medicare Secondary Payer 42 CFR §423.462; Prescription Drug Benefit
Manual, Chapter 14; 2010 Call Letter ........................................................................ 73
3.12.
Marketing/Beneficiary Communications 42 CFR §423.50, 42 CFR §423.128;
Prescription Drug Benefit Manual, Chapter 2; 2010 Call Letter ................................. 74
3.13.

Provider Communications Prescription Drug Benefit Manual, Chapter 2 .... 77

3.14.
Compliance Plan 42 CFR §423.504(b)(4)(vi); Prescription Drug Benefit
Manual, Chapter 9 ..................................................................................................... 79
3.15.

Reporting Requirements 42 CFR §423.514; 2010 Reporting Requirements
81

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3.16.
(k)

Data Exchange between Part D Sponsor and CMS 42 CFR §423.505(c) and
84

3.17.
Health Insurance Portability and Accountability Act of 1996 (HIPAA) and
Related CMS Requirements 45 CFR Parts 160, 162, and 164; CMS issued guidance
08/15/2006 and 08/26/08; 2008 Call Letter; and P.L. 111-5 (2009) ........................... 86
3.18.
Prohibition on Use of SSN or Medicare ID number on Enrollee ID Cards
Prescription Drug Benefit Manual, Chapter 2 ............................................................ 87
3.19.

Record Retention 42 CFR §423.505(d) ....................................................... 87

3.20.
Prescription Drug Event (PDE) Records; 42 CFR Part 423 Subpart G; CMS
issued guidance 04/27/2006 ...................................................................................... 88
3.21.

Claims Processing; CMS issued guidance 04/26/2006 ............................... 89

3.22.

Premium Billing 42 CFR §423.293; CMS issued guidance 03/08/2007 ....... 91

3.23.
Consumer Assessment Health Providers Survey (CAHPS) Administration
2010 Call Letter ......................................................................................................... 92
4.

Certification ............................................................................................................ 93

5.

Appendices ............................................................................................................ 95
APPENDIX I – Summary of PDP Application Requirements Fulfilled under Part C
for Cost Plan Prescription Drug Applicants ......................................................... 96
APPENDIX II—Attestation for Cost Plan Employer/Union-Only Group Waiver
Plans (800-Series) .............................................................................................. 97
APPENDIX III -- Crosswalks of Section 3.1.1D Requirements in Subcontracts
submitted as Attachments to Section 3.1.1 ...................................................... 101
APPENDIX IV -- Crosswalk for Retail Pharmacy Access Contracts ................. 105
APPENDIX V -- Crosswalk for Mail Order Pharmacy Access Contracts .......... 108
APPENDIX VI -- Crosswalk for Home Infusion Pharmacy Access Contracts ... 111
APPENDIX VII -- Crosswalk for Long-Term Care Pharmacy Access Contracts114
APPENDIX VIII -- Crosswalk for Indian Tribe and Tribal Organization, and Urban
Indian Organization (I/T/U) Pharmacy Access Contracts ................................. 119
APPENDIX IX -- Applicant Submission of P&T Committee Member List and
Certification Statement ..................................................................................... 123
APPENDIX X -- Retail Pharmacy Network Access Instructions........................ 128
APPENDIX XI -- I/T/U Revised Addendum ....................................................... 133
APPENDIX XI -- I/T/U Revised Addendum ....................................................... 133

1.

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General Information
1.1.

Purpose of Solicitation

The Centers for Medicare & Medicaid Services is seeking applications from qualified
entities to enter into cost contracts under section 1876 of the Social Security Act
(referred to here as ―Cost Plan sponsors‖ or ―Cost Plan Applicants‖) to offer Medicare
Prescription Drug Plans (PDPs) as described in the Medicare Prescription Drug Benefit
Final Rule published in the Federal Register on January 28, 2005 (70 Fed. Reg.4194).
Please submit your applications according to the process described in Section 2.0.
If your organization, or your parent or affiliated organization already has a Cost Plan
contract with CMS to offer the Part D benefit, and you are expanding your service area
offered under the existing contract please refer to the www.cms.hhs.gov/ website for the
Part D Service Area Expansion application for instructions to complete an application for
a Service Area Expansion (SAE). If your organization, or your parent or affiliated
organization already has a Medicare Advantage – Prescription Drug (MA-PD) or Cost
Plan contract with CMS to offer the Part D benefit, and you are seeking a PDP contract,
you are required to complete the PDP application package.

1.2.

Background

The Medicare Prescription Drug Benefit program was established by section 101 of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and is
codified in sections 1860D-1 through 1860 D-42 of the Social Security Act (the Act).
Section 101 of the MMA amended Title XVIII of the Social Security Act by redesignating Part D as Part E and inserting a new Part D, which establishes the
Voluntary Prescription Drug Benefit Program (hereinafter referred to as ―Part D‖).

1.3.

Objectives and Structure

Effective January 1, 2006, MMA established an optional prescription drug benefit,
known as the Part D program for individuals who are entitled to Medicare Part A and/or
enrolled in Part B.
In general, coverage for the prescription drug benefit is provided predominantly through
prescription drug plans (PDPs) that offer drug-only coverage, or through Medicare
Advantage (MA) plans that offer integrated prescription drug and health care coverage
(MA-PD plans). If the MA-PD sponsor meets the basic requirement, then it may also
offer supplemental benefits through enhanced alternative drug coverage for an
additional premium. MA-PD sponsors must offer either a basic benefit or broader
coverage for no additional cost. Medicare Cost Plans may, at their election, offer a Part
D drug plan as an optional supplemental benefit, subject to the same rules that apply to
an MA-PD plan. Program of All-Inclusive Care for the Elderly (PACE) organizations
may elect to offer a Part D plan in a similar manner as MA-PD local sponsors in order to
account for the shift in payor source from the Medicaid capitation rate to a private Part D
Sponsors. If the MA-PD sponsor meets the basic requirement, the MA-PD may also
offer supplemental benefits through enhanced alternative coverage for an additional

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premium. For Cost Plans, the drug benefit, including the basic Part D benefit, will be an
optional supplemental benefit.
Applicants who offer either a PDP or MA-PD plan may offer national plans (with
coverage in every region) or regional plans. MA-PD plan applicants may also offer local
plans. CMS has identified 26 MA Regions and 34 PDP Regions; in addition, each
territory is its own PDP region. Additional information about the regions can be found on
the www.cms.hhs.gov/ website.
This solicitation is only for entities seeking to offer a Part D supplemental benefit in
addition to their Cost Plan (either in the individual market, or a combination of both the
individual and employer markets. Separate Part D solicitations are also posted on the
CMS website for entities offering MA plans with a Part D benefit at the local or regional
levels, and for entities offering a stand-alone PDP. Throughout this solicitation reference
is made to a Part D Sponsor, which is meant to encompass stand-alone PDPs, MA
Plans with a Part D benefit and Cost Plans with a Part D benefit.
Medicare reasonable cost plans (as defined under Section 1876 of the Social Security
Act), and PACE organizations (as defined in section 1894 of the Social Security Act),
may also offer pharmacy benefits under the MMA. Those entities must not complete
this Part D qualification application, but should refer to the separate applications posted
on the CMS website.
Part D sponsors have flexibility in terms of benefit design. This flexibility includes, but is
not limited to, authority to establish a formulary that designates specific drugs that will
be available within each therapeutic class of drugs and the ability to have a cost-sharing
structure other than the statutorily defined structure (subject to certain actuarial tests).
(Sponsors are required to follow CMS formulary guidance. See Section 2.7.1 of this
application). The plans also may include supplemental benefits coverage such that the
total value of the coverage exceeds the value of basic prescription benefit coverage.
CMS payment for qualified drug benefits is separate from interim and settlement cost
payments Cost Plan sponsors receive for Part A and/or Part B services under their cost
contract agreements. CMS provides payment to Cost Plan sponsors in the form of
advance monthly payments, reinsurance subsidies (when incurred), and low-income
subsidies. Further detail on payment for Part D services is provided in Section 2.6 of
this document.
As stated above, Section 1876 cost contractors are not required to offer a Part D benefit
to their enrollees. Section 1876 cost contractors may offer qualified prescription drug
coverage as an optional supplemental benefit under 42 CFR §417.440(b)(2). Further,
Section 1876 cost contractors may offer enhanced prescription drug coverage, but only
if they offer the basic Part D benefit to their enrollees as well. Section 1876 Cost Plan
enrollees may elect whether to receive their Part D benefits through their Medicare Cost
Plan. In the alternative, they may elect to enroll in a PDP to receive prescription drug
benefits.

1.4.

Schedule

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APPLICATION REVIEW PROCESS

Date

Milestone

November 17, 2009

Submit Notice of Intent to Apply Form to CMS

December 2, 2009

CMS User ID form due to CMS

January 5, 2010

Final Applications posted by CMS

February 25, 2010

Applications due

March 29, 2010

Release of Health Plan Management System
(HPMS) formulary submissions module

April 9, 2010

Plan Creation module, Plan Benefit Package (PBP),
and Bid Pricing Tool (BPT) available on HPMS

April 19, 2010

Formulary submission due to CMS
Transition Policy Attestations due to CMS

May/June 2010

CMS sends Part D contract eligibility determination
to Applicants, based on review of application.
Applicant‘s bids must still be negotiated (see below)

May 21, 2010

PBP/BPT Upload Module available on HPMS

June 7, 2010

All bids due

Early August 2010

CMS publishes national average Part D premium

September 2010

CMS completes review and approval of bid data.
CMS executes Part D contracts to those
organizations who submit an acceptable bid

November 15, 2010

2011 Annual Coordinated Election Period begins

NOTE: This timeline does not represent an all-inclusive list of key dates related to the
Medicare Prescription Drug Benefit program. CMS reserves the right to amend or
cancel this solicitation at any time. CMS also reserves the right to revise the Medicare
Prescription Drug Benefit program implementation schedule, including the solicitation
and bidding process timelines.

1.5.

Summary of Cost Plan Sponsor Role and Responsibilities

Key aspects of each Cost Plan Sponsor shall include the ability to:

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Submit a formulary (considered an element of the bid) each year for CMS approval.
Submit a Part D sponsor plan bid each year for CMS approval.
Enroll all eligible Medicare beneficiaries who apply and reside within the Cost Plan
sponsor‘s approved service area.
Administer the Part D benefit (consistent with the Part D Sponsor‘s approved bid),
including providing coverage for drugs included in a CMS-approved formulary,
administering appropriate deductibles and co-payments, managing the benefit using
appropriate pharmacy benefit managerial tools, and operating effective oversight of
that benefit.
Provide access to negotiated prices on covered Part D drugs, with different
strengths and doses available for those drugs, including a broad selection of generic
drugs.
Ensure that records are maintained in accordance with CMS rules and regulations
and that both records and facilities are available for CMS inspection and audit.
Disclose the information necessary for CMS to oversee the program and ensure
appropriate payments.
Offer a contracted retail pharmacy network, providing convenient access to retail
pharmacies.
Process claims at the point of sale.
Operate quality assurance, drug utilization review, and medication therapy
management programs.
Administer coverage determinations, grievances, exceptions, and an appeals
process consistent with CMS requirements.
Provide customer service to beneficiaries, including enrollment assistance, toll-free
telephone customer service help, and education about the Part D benefit.
Protect the privacy of beneficiaries and beneficiary-specific health information.
Develop marketing materials and conduct outreach activities consistent with CMS
standards.
Develop and/or maintain systems to support enrollment, provide claims-based data
to CMS, accept CMS payment (including subsidies for low-income beneficiaries),
track true out-of-pocket costs and gross covered prescription drug costs, coordinate
benefits with secondary insurers (or primary insurers when Medicare is secondary)
and support e-prescribing.
Provide necessary data to CMS to support payment (including Prescription Drug
Event (PDE) records and data on direct and indirect remuneration, oversight, and
quality improvement activities and otherwise cooperate with CMS oversight
responsibilities.

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Provide accurate drug pricing and pharmacy network data that will be published on
the Medicare Prescription Drug Plan Finder tool. Sponsors must submit data based
on the format and schedule provided by CMS.

1.6.

Summary of CMS Role and Responsibilities

1.6.1. Application Approval, Part D Bid Review, and Contracting
Processes
There are three distinct phases to the overall review to determine whether CMS will
enter into a contract with an Applicant. The first phase is the application review process.
CMS reviews the applications submitted on or by February 25, 2010 to determine
whether the Applicant meets the qualifications we have established to enter into a Part
D addendum to the Applicant‘s cost contract.
The second phase has two steps – the formulary upload which begins March 29, 2010
and the bid upload which begins May 21, 2010. The formulary review entails
determining that the proposed formulary (if one is used) has at least two drugs in every
therapeutic category and class (unless special circumstances exist that would allow only
one drug); does not substantially discourage enrollment by certain types of Part D
eligible individuals; includes adequate coverage of the types of drugs most commonly
needed by Part D enrollees; and includes an appropriate transition policy. CMS will
contact Applicants if any issues are identified during the review for discussion and
resolution. The intent is to provide an opportunity for Applicants to make any necessary
corrections prior to the Part D bid submission date which is on the first Monday in June
each year. The second step involves the bid review and negotiations with applicants to
ensure valuations of the proposed benefits are reasonable and actuarially equivalent.
The third phase involves contracting. Applicants judged qualified to enter into a Part D
addendum as a result of successfully completing phase one and two will be offered a
Part D addendum to their Medicare Cost plan contract by CMS.

1.6.2. Part D Program Oversight
CMS has developed a Medicare Prescription Drug Benefit program monitoring system
to ensure that the Part D sponsors deliver good value through defined benefits and are
compliant with program requirements. This monitoring system was developed in
coordination with CMS personnel responsible for oversight of the Medicare Advantage
program to minimize duplication of effort. We focus on several operational areas critical
to the value of the benefit, including beneficiary access to and satisfaction with their Part
D benefit and protection of the financial integrity of the program. Specific areas include
pharmacy access, adequacy and value of the benefit, benefit management, enrollment
and disenrollment, marketing, program safeguard activities, customer service,
confidentiality and security of enrollee information, and effectiveness of tracking true
out-of-pocket costs and gross covered prescription drug costs. The types of reporting
that CMS requires of Part D sponsors are presented in the application. For additional
information on reporting requirements, refer to the www.cms.hhs.gov/ website. (NOTE:
Part D sponsors, as covered entities under the Health Insurance Portability and
Accountability Act of 1996, are subject to investigation and penalties for findings of

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HIPAA violations as determined by the Department of Health and Human Services
Office for Civil Rights and the Department of Justice.)
We monitor compliance, through the analysis of data we collect from Part D sponsors,
CMS contractors, and our own systems. The types of data we collect from sponsors
include: certain benefit data, PDE records, direct and indirect remuneration data, cost
data, benefit management data, marketing review information, customer satisfaction
and complaints data, and information used to determine low-income subsidy (LIS)
match rates. We also conduct beneficiary satisfaction surveys and operate a
complaints tracking system to monitor and manage complaints brought to our attention
that are not satisfactorily resolved through the Part D sponsors‘ grievance processes as
well as conduct periodic site visits to verify Part D sponsor compliance with Part D
program requirements. We use information from all the specified sources to analyze
the appropriateness and value of the benefit delivered, and to evaluate the opportunity
for additional value and quality improvement. We publish the results of our monitoring
activities on CMS‘ websites, including performance ratings on the Medicare Prescription
Drug Plan Finder, and we also post information regarding the issuance of Corrective
Action Plans on our website.
If any trends we identify indicate less than satisfactory performance, contract violations,
significant departures from the marketed Part D offering, or fraud or other violations of
State or Federal laws, appropriate action is taken consistent with 42 CFR §423.509 and
Part 423, Subpart O. We also make referrals if appropriate to the Office of the Inspector
General or to Federal and State authorities where violations of laws under the
jurisdictions of these agencies are in question.

1.6.3. Education and Outreach
CMS is committed to educating Medicare beneficiaries about the Part D program. CMS
plans to continue to educate beneficiary and consumer groups, health care providers,
States, and other interested groups about the Part D program. Among the topics
discussed with these groups is the identification and reporting of possible fraud and/or
abuse. CMS also engages in other activities that publicize or otherwise educate
beneficiaries about the program. For example, the Medicare Prescription Drug Plan
Finder assists beneficiaries in finding a plan to meet their specific needs; refer to the
www.medicare.gov/MPDPF website. CMS displays data that allow comparisons of
plans‘ costs, quality and operational performances. These data may also be used for
monitoring purposes.

1.6.4. Marketing Guidelines and Review
Marketing Guidelines are posted on the www.cms.hhs.gov/ website. Part D sponsors
are required to adhere to these guidelines in developing their marketing materials and
marketing strategy. Cost Plan sponsors are required to submit materials to CMS based
on the Medicare Marketing Guidelines.

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1.6.5. Eligibility for the Low Income Subsidy Program
Low-income Medicare beneficiaries receive full or partial subsidies of premiums and
reductions in cost sharing under the Part D benefit. Certain groups of Medicare
beneficiaries are automatically eligible for the low-income subsidy program. These
beneficiaries include Medicare beneficiaries who are full-benefit dual eligible individuals
(eligible for full benefits under Medicaid), Medicare beneficiaries who are recipients of
Supplemental Security Income benefits; and participants in Medicare Savings Programs
as Qualified Medicare Beneficiaries (QMBs), Specified Low-Income Medicare
Beneficiaries (SLMBs), and Qualifying Individuals (QIs). Beneficiaries who are lowincome and who do not fall into one of the automatic subsidy eligibility groups apply for
a low-income subsidy and have their eligibility determined by either the state in which
they reside or the Social Security Administration (SSA). CMS has developed a
database to track individuals who are automatically deemed subsidy-eligible or who are
determined subsidy-eligible by states or SSA, and communicates the names and
eligibility category of those individuals to Part D sponsors as part of the enrollment files
from the enrollment processing system described below. Occasionally, due to time
lags, CMS‘s database does not reflect a low-income subsidy eligible individual true
maximum cost sharing amount under the program or an individual‘s correct low-income
subsidy status. Part D Sponsors are required to adhere to CMS‘s Best Available
Evidence policy under 42 CFR §423.800(d), under which an individual can provide
acceptable evidence supporting a revised cost-sharing amount that the sponsor must
accept for the purpose of administering the benefit. For additional information regarding
the low income subsidy program, refer to the www.cms.hhs.gov/ website.

1.6.6. General Enrollment Processing
CMS has a system to receive and process enrollment, disenrollment and membership
information provided by Part D organizations. CMS reviews an individual‘ status as a
Medicare beneficiary. CMS tracks enrollments and ensures that the beneficiary does
not enroll in more than one Part D plan. Also CMS tracks low-income subsidy status
and auto-enrollments of full-benefit dual eligible beneficiaries in Part D plans and
―facilitated enrollments‖ for other low-income Medicare beneficiaries. Full-benefit dual
eligible beneficiaries who do not enroll in Part D plans are automatically enrolled into a
stand-alone drug plan, and other low-income beneficiaries are enrolled through
―facilitated enrollment‖. Finally, CMS tracks dis-enrollments from Part D plans and will
deny new enrollments during any given year unless the enrollment occurs during an
allowable enrollment period. For additional information regarding enrollment
processing, refer to the www.cms.hhs.gov/ website.

1.6.7. Payment to Cost Plan Sponsors
CMS provides payment to Cost Plan sponsors in the form of advance monthly
payments (consisting of the Cost Plan sponsor‘s Part D standardized bid, risk adjusted
for health status, minus the beneficiary monthly premium), estimated reinsurance
subsidies, and estimated low-income subsidies (low-income cost sharing and
premiums). After the end of the payment year, CMS reconciles the actual amounts of
low-income cost sharing subsidies and reinsurance amounts reported on PDE records

12

against the amount paid as a part of the prospective monthly payments. Risk sharing
amounts (if applicable) are determined after all other reconciliations have been
completed. For a more complete description refer to CMS‘ prescription drug event
reporting instructions that are posted at www.csscoperations.com and on the
www.cms.hhs.gov website.

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2. INSTRUCTIONS
2.1.

Overview

This application is to be completed only by section 1876 Cost Plan contractors that
intend to offer a new Part D benefit to their Cost Plan enrollees during 2011. This
application is to be submitted to CMS in conjunction with your organization‘s attestation
to renew your cost contract with CMS in 2011.

2.2.

Other Technical Support

CMS conducts technical support calls, also known as User Group calls, for Applicants
and existing Part D sponsors. CMS operational experts (e.g., from areas such as
enrollment, information systems, marketing, bidding, formulary design, and coordination
of benefits) are available to discuss and answer questions regarding the agenda items
for each meeting. Registration for the technical support calls and to join the list serve to
get updates on CMS guidance can be found at www.mscginc.com/Registration/.
CMS also conducts special training sessions, including a user group call dedicated to
addressing issues unique to sponsors that are new to the Part D program.

2.3.

Health Plan Management System (HPMS) Data Entry

Cost Plan organizations that submit a Notice of Intent to Apply form are assigned a
pending contract number (H number) to use throughout the application and subsequent
operational processes. Once the contract number is assigned, Cost Plan Applicants
apply for an receive their CMS User ID(s) and password(s) for HPMS access and need
to input contact and other related information into the HPMS. Applicants are required to
provide prompt entry and ongoing maintenance of data in HPMS. By keeping the
information in HPMS current, the Applicant facilitates the tracking of their application
throughout the review process and ensures that CMS has the most current information
for application updates, guidance and other types of correspondence.
In the event that an Applicant is awarded a contract, this information will also be used
for frequent communications during implementation. Therefore, it is important that this
information be accurate at all times.

2.4.

Instructions and Format of Qualifications

Applications may be submitted until February 25, 2010. Applicants must use the 2011
solicitation. CMS will not accept or review in anyway those submissions using the prior
versions of the solicitation, including the use of CMS provided templates from prior
years (e.g. 2010 and earlier).

14

2.4.1. Instructions
Applicants will complete the entire solicitation via HPMS.
In preparing your application in response to the prompts in Section 3.0 of this
solicitation, please mark ―Yes‖ or ―No‖ or ―Not Applicable‖ in sections organized with that
format within HPMS.
In many instances Applicants are directed to affirm within HPMS that they will meet
particular requirements by indicating ―Yes‖ next to a statement of a particular Part D
program requirement. By providing such attestation, an Applicant is committing its
organization to complying with the relevant requirements as of the date your contract is
signed, unless an alternative date is noted in Section 3.0.
CMS will not accept any information in hard copy. If an Applicant submits the
information via hard copy, the application will not be considered received.
Organizations will receive a confirmation number from HPMS upon clicking final submit.
Failure to obtain a confirmation number indicates that an applicant failed to properly
submit its Part D application by the CMS-established deadline. Any entity that
experiences technical difficulties during the submission process must contact the HPMS
Help Desk and CMS will make case by case determinations where appropriate
regarding the timeliness of the application submission.
CMS will check the application for completeness shortly after its receipt. Consistent
with the 2010 Call Letter, CMS will make determinations concerning the validity of each
organization‘s submission. Some examples of invalid submissions include but are not
limited to the following: Applicants that fail to upload executed agreements or contract
templates, Applicants that upload contract crosswalks instead of contracts, or
Applicants that fail to upload any pharmacy access reports. CMS will notify any
Applicants that are determined to have provided invalid submissions.
For those Applicants with valid submissions, CMS will notify your organization of any
deficiencies and afford them a courtesy opportunity to amend their applications. CMS
will only review the last submission provided during this courtesy cure period.
CMS will provide communication back to all Applicants throughout the application
process via email. The email notifications will be generated through HPMS, so
organizations must ensure that the Part D application contract information provided
through the ―Notice of Intent to Apply‖ process is current and correct, and that there are
no firewalls in place that would prevent an email from the hpms@cms.hhs.gov web
address from being delivered.
CMS has established that all aspects of the program that the Applicant attests to must
be ready for operation by the contract signature date. As with all aspects of a Part D
sponsor‘s operations under its contract with CMS, we may verify a sponsor‘s
compliance with qualifications it attests it will meet, through on-site visits at the Part D
sponsor‘s facilities as well as through other program monitoring techniques. Failure to
meet the requirements attested to in this solicitation and failure to operate its Part D
plan(s) consistent with the requirements of the applicable statutes, regulations, call
letter, and the Part D contract may delay a Part D sponsor‘s marketing and enrollment

15

activities or, if corrections cannot be made in a timely manner, the Part D sponsor will
be disqualified from participation in the Part D program.
An individual with legal authority to bind the Applicant shall execute to the certification
found in Section 4.0. CMS reserves the right to request clarifications or corrections to a
submitted application. Failure to provide requested clarifications within the time period
specified by CMS for responding could result in the applicant receiving a notice of intent
to deny the application, in which case, the Applicant will then have 10 days to seek to
remedy its application. The end of the 10 day period is the last opportunity an Applicant
has to provide CMS with clarifications or corrections. CMS will only review the last
submission provided during this cure period. Such materials will not be accepted after
this 10-day time period.
This solicitation does not commit CMS to pay any cost for the preparation and
submission of an application.
CMS will not review applications received after 11:59 P.M. Eastern Standard Time
on February 25, 2010. CMS will lock access to application fields within HPMS as of
this time. CMS will not review any submissions based on earlier versions of the
solicitation. Applicants must complete the 2011 solicitation in order to be considered
for Part D sponsorship.
If a subsidiary, parent, or otherwise related organization is also applying to offer Part D
benefits, these entities MUST submit separate applications. There are four types of
Part D solicitations for which applications are due on February 25, 2010; they are PDP,
MA-PD, Cost Plan solicitations, and the Service Area Expansion Application.
Organizations that intend to offer more than one of these types of Part D contracts must
submit a separate application for each type. (PACE sponsors will also have separate
solicitations). For example, a MA-PD and PDP product may not be represented in the
same application. Entities intending to have both local MA-PD and Regional PPO
contracts must submit separate MA-PD applications.

2.4.2. Applicant Seeking to Offer New Employer/Union-Only Group
Waiver Plans (EGWPs)
All new Part D Applicants seeking to offer new ―800 series‖ EGWPs, including
Applicants that have not previously applied to offer plans to individual beneficiaries or
―800 series‖ EGWPs must complete the appropriate EGWP attestation provided in
Appendix II. The attestation provided in Appendix I specifies those individual market
requirements that are not applicable in the employer market.
Cost Plan applicants must have the same service area for its Part D EGWPs as its
individual plan service area.

2.4.3. Applicant Entity Same as Contracting Entity
The legal entity that submits this application must be the same entity with which CMS
enters into a Part D contract, or in the case of an MA-PD and Cost Plan sponsor, the
same legal entity seeking an addendum to an MA or Cost Plan contract. An entity that
qualifies for a Part D contract, or for an addendum to an MA or Cost Plan contract, may

16

hold multiple contracts for the same plan type (e.g. PDP, MA-PD, or Cost Plan) in the
service area described in the application.

2.4.4. Withdrawal of a Part D Application
In those instances where an organization seeks to withdraw its application or reduce the
service area of a pending application prior to the execution of a Part D contract, then the
organization must send an official notice to CMS. The notice should be on organization
letterhead and clearly identify the pending application number and service area (as
appropriate). The notice should be delivered via email to drugbenefitimpl@cms.hhs.gov
and the subject line of the email should read ―Pending application withdrawal or
reduction to pending service area.‖ The withdrawal will be considered effective as of the
date of the requested letter.

2.4.5. Technical Assistance
For technical assistance in the completion of this Application, contact:
Marla Rothouse by email at marla.rothouse@cms.hhs.gov, or by phone at 410-7868063 or Linda Anders by email at linda.anders@cms.hhs.gov, or by phone at 410-7860459. As stated in section 2.4.1, Applicants must contact the HPMS Help Desk if they
are experiencing technical difficulties in uploading or completing any part of this
solicitation within HPMS prior to the submission deadline.

2.5.

Submission Software Training

Applicants use the CMS Health Plan Management System (HPMS) during the
application, formulary, and bid processes. Applicants are required to enter contact and
other information collected in HPMS in order to facilitate the application review process.
Applicants are required to upload their plan formularies to HPMS using a pre-defined file
format and record layout. The formulary upload functionality will be available on March
29, 2010. The deadline for formulary submission to CMS is 11:59 PM EDT on April 19,
2010. CMS will use the last successful upload received for an Applicant as the official
formulary submission.
In order to prepare plan bids, Applicants will use HPMS to define their plan structures
and associated plan service areas and then download the Plan Benefit Package (PBP)
and Bid Pricing Tool (BPT) software. For each plan being offered, Applicants will use
the PBP software to describe the detailed structure of their Part D benefit and the BPT
software to define their bid pricing information. The formulary must accurately
crosswalk to the PBP.
Once the PBP and BPT software has been completed for each plan being offered,
Applicants will upload their bids to HPMS. Applicants will be able to submit bid uploads
to HPMS on their PBP or BPT one or more times between May 21, 2010 and the CY
2011- bid deadline of June 7, 2010. CMS will use the last successful upload received
for a plan as the official bid submission.

17

CMS will provide technical instructions and guidance upon release of the HPMS
formulary and bid functionality as well as the PBP and BPT software. In addition,
systems training will be available at the Bid Training in April 2010.

2.6.

System Access and Data Transmissions with CMS

2.6.1. HPMS
Cost Plan sponsors will use HPMS to communicate with CMS in support of the
application process, formulary submission process, bid submission process, ongoing
operations of the Part D program, and reporting and oversight activities. Cost Plan
sponsors are required to secure access to HPMS in order to carry out these functions.

2.6.2. Enrollment and Payment
All Cost Plan sponsors must submit information about their membership to CMS
electronically and have the capability to download files or receive electronic information
directly. Prior to the approval of your contract, Cost Plan sponsors must contact the
MMA Help Desk at 1-800-927-8069 for specific guidance on establishing connectivity
and the electronic submission of files. Instructions are also on the MMA Help Desk web
page, www.cms.hhs.gov/mmahelp, in the Plan Reference Guide for CMS Part C/D
systems link. The MMA Help Desk is the primary contact for all issues related to the
physical submission of transaction files to CMS.
Daily, weekly, and monthly, CMS provides responses to Sponsor submitted information
and reports to each Cost Plan sponsor for each of their plans with member and planlevel information. Cost Plan sponsors must compare the membership and payment
information in those reports on a monthly basis with their records and report any
discrepancies CMS according to the instructions provided by CMS for that purpose.
Each Cost Plan sponsor must complete and submit the monthly CEO certification of
enrollment data by the due date of each month. The due date is provided in the Plan
Monthly MARx Calendar, which is updated annually. Definitive information about the
format and submission of files, as well as the MARx calendar, can be found in the Plan
Communications User‘s Guide available at www.cms.hhs.gov/MedicareMangCareSys/.
The MMA Help Desk also provides additional system and technical information at
www.cms.hhs.gov/mmahelp/.

2.6.3. Payment for Cost Plan Sponsors
Payments to Cost Plan sponsors for their Part D services will be wired to sponsor
accounts on the first day of each month (or the last business day of the prior month if
the first day of the month is not a business day).
The monthly payment includes premiums that SSA or other agencies are deducting
from beneficiary Social Security payments or other payments as well as those
premiums CMS is paying on behalf of low-income individuals. Estimated monthly
reinsurance subsidies, and low-income subsidies are also included.

18

2.7.

Summary Instruction and Format for Individual Market Bids

Cost Plan sponsors must submit to CMS a bid for each prescription drug plan it intends
to offer. Applicants using this solicitation may apply to offer full risk Part D plans.
Applicants must submit their formularies to HPMS on or before April 19, 2010 and the
PBPs and BPTs on or before the bid submission date.

2.7.1. Format of Bids
Bid-Related Sections Due Prior to Bid Submission Date
To facilitate the timely review of all the bid submissions, CMS requires Applicants to
submit the portion of their bid related to formulary and covered drugs from March 29April 19, 2010. CMS reviews areas of each proposed drug plan formulary by tier and
drug availability and evaluates each element against evidence-based standards such as
widely accepted treatment guidelines. Elements include, but may not be limited to the
list of drugs, the categories and classes, tier structures (not cost sharing), and utilization
management tools such as quantity limits, step therapy, and prior authorization. CMS
makes the review criteria available to Applicants well in advance of the date Applicants
must submit this information to CMS. Outliers are selected for further evaluation during
the formulary review process prior to CMS approval of the bid. CMS makes reasonable
efforts to inform Applicants of their outliers so that they may substantiate their offering.
If such substantiation is not satisfactory to CMS, the Applicant is given the opportunity
to modify the formulary. CMS intends to complete as much of this work as possible
before the, PBP and BPT submissions so that any modification may be reflected in
those documents.
Bid Submissions
The Applicant‘s bid represents the expected monthly cost to be incurred by the
Applicant to provide qualified prescription drug coverage in the approved service area
for a Part D-eligible beneficiary on a standardized basis. The costs represented in each
bid should be those for which the Applicant would be responsible. These costs would
not include payments made by the plan enrollee for deductible, coinsurance, copayments, or payments for the difference between the plan‘s allowance and an out-ofnetwork pharmacy‘s usual and customary charge. The bid requires the separate
identification, calculation, and reporting of costs assumed to be reimbursed by CMS
through reinsurance. CMS requires that the bid represent a uniform benefit package
based upon a uniform level of premium and cost sharing among all beneficiaries
enrolled in the plan. The benefit packages submitted must be cross walked
appropriately from the formulary. Pursuant to 42 CFR §423.505(k)(4), the CEO, CFO,
or an individual delegated with the authority to sign on behalf of one of these officers,
and who reports directly to such officer, must certify (based on best knowledge,
information and belief) that the information in the bid submission, and assumptions
related to projected reinsurance and low-income cost sharing subsidies, is accurate,
complete, and truthful, and fully conforms to the requirements in section 42 CFR
§423.265 of the regulations. In addition, consistent with section 42 CFR §423.265(c)(3),
the pricing component of the bid must also be certified by a qualified actuary.

19

As part of its review of Part D bids, CMS conducts an analysis to ensure that multiple
plan offerings by a sponsor represents a meaningful variation based on plan
characteristics that will provide beneficiaries with substantially different options. In
general, CMS expects that more than three bids from a sponsoring organization would
not provide meaningful variation. CMS reviews multiple bids received from a Part D
Applicant as a whole and applies a reasonableness test to determine examples of a
strong likelihood of incompetence and/or ‗gaming‘, including, but not limited to: a)
multiple bid submissions that would fail a reasonableness test; b) multiple bid
submissions based on different formulary drug lists; c) multiple bid submissions based
on different levels of utilization management control; and d) multiple bid submissions
that reflect a significant unexplained variation in costs between the plans, particularly
between plans offered to the group versus the individual market.

2.7.2. CMS Review of Bids
CMS evaluates the bids based on four broad areas: 1) administrative costs, 2)
aggregate costs, 3) benefit structure, and 4) plan management. CMS evaluates the
administrative costs for reasonableness in comparison to other bidders. CMS also
examines aggregate costs to determine whether the revenue requirements for qualified
prescription drug coverage are reasonable and equitable. In addition, CMS reviews the
steps the Part D sponsor is taking to control costs, such as through various programs
that encourage use of generic drugs. Finally, CMS examines indicators concerning plan
management, such as customer service.
CMS is also required to make certain that bids and plan designs meet statutory and
regulatory requirements. We conduct actuarial analysis to determine whether the
proposed benefit meets the standard of providing qualified prescription drug coverage.
Also, CMS reviews the structure of the premiums, deductibles, co-payments, and
coinsurance charged to beneficiaries and other features of the benefit plan design to
ensure that it is not discriminatory (that is, that it does not substantially discourage
enrollment by certain Part D eligible individuals).

2.7.3. Overview of Bid Negotiation
CMS evaluates the reasonableness of bids submitted by Cost Plan sponsors by means
of an actuarial valuation analysis. This requires evaluating assumptions regarding the
expected distribution of costs, including average utilization and cost by drug coverage
tier. CMS may test these assumptions for reasonableness through actuarial analysis
and comparison to industry standards and other comparable bids. Bid negotiation may
take the form of negotiating changes upward or downward in the utilization and cost per
script assumptions underlying the bid‘s actuarial basis. We may exercise our authority
to deny a bid if we do not believe that the bid and its underlying drug prices reflect
market rates.

2.8.

Pharmacy Access

An integral component of this Solicitation concerns the pharmacy access standards
established under section 1860D-4(b)(1)(C) of the Social Security Act. The standards
require in part that each Part D sponsor must secure the participation in their pharmacy

20

networks of a sufficient number of pharmacies to dispense drugs directly to patients
(other than by mail order) to ensure convenient access to covered Part D drugs by Part
D plan enrollees. To implement this requirement, specific retail pharmacy access rules
consistent with the TRICARE standards were developed and are delineated in 42 CFR
§423.120. Furthermore, Part D sponsors must provide adequate access to home
infusion and convenient access to long-term care, and Indian Health Service, Indian
Tribe and Tribal Organization, and Urban Indian Organization (I/T/U) pharmacies in
accordance with 42 CFR §423.120 and related CMS instructions and guidance.

2.8.1. Retail Pharmacy Access
Applicants must ensure that their retail pharmacy network meets the criteria established
under 42 CFR §423.120. Applicants must ensure the pharmacy network has a
sufficient number of pharmacies that dispense drugs directly to patients (other than by
mail order) to ensure convenient access to Part D drugs. CMS rules require that
Applicants establish retail pharmacy networks in which:
In urban areas, at least 90 percent of Medicare beneficiaries in the Applicant‘s
service area, on average, live within 2 miles of a retail pharmacy participating in the
Applicant‘s network;
In suburban areas, at least 90 percent of Medicare beneficiaries in the Applicant‘s
service area, on average, live within 5 miles of a retail pharmacy participating in the
Applicant‘s network; and
In rural areas, at least 70 percent of Medicare beneficiaries in the Applicant‘s service
area, on average, live within 15 miles of a retail pharmacy participating in the
Applicant‘s network.
Applicants may count I/T/U pharmacies and pharmacies operated by Federally
Qualified Health Centers and Rural Health Centers towards the standards of
convenient access to retail pharmacy networks.
Section 3.3.1 of this Solicitation includes a reference to the Appendix entitled Retail
Pharmacy Network Access Instructions that provides Applicants with detailed
instructions to complete the retail pharmacy network access portion of this submission.
For purposes of meeting the 2011 Pharmacy Access requirements, Applicants may use
their contracted PBM‘s existing 2010 Part D network to demonstrate compliance. If an
Applicant is creating a new Part D network, the submission must be based on executed
contracts for Year 2011. CMS conducts the review of Retail Pharmacy Access based
on the service area that the Applicant has provided in HPMS by February 25, 2010. To
the extent that the service area is reduced during the application review process, the
pharmacy access submission reports must pass a full and complete CMS review,
including a review that ensures the access submission matches the service area in
HPMS at one of the following points in time:
At the HPMS gate closing time of the initial application submission (a fully passing
retail access review at this point in the application process will not require a
subsequent review even if the service area is later reduced), or

21

At the HPMS gate closing time of the courtesy submission window after CMS has
issued an interim deficiency notice, if the initial application retail submission is found
to contain retail access related deficiencies of any type (a fully passing retail access
review at this point in the application process will not require a subsequent review
even if the service area is later reduced), or
At the HPMS gate closing time of the final submission window after CMS has issued
a Notice of Intent to Deny (see Section 2.4), if the courtesy retail submission is found
to contain retail access related deficiencies of any type.
If none of the submissions includes a service area that perfectly matches the service
area shown for that application/contract number in HPMS at that exact point in time,
CMS will conclude that the Applicant is itself unclear about its service area intentions,
will find the submission deficient, and will deny the application for (at a minimum) being
unable to demonstrate that it meets the retail access requirements.
While Applicants are required to demonstrate that they meet the Part D pharmacy
access requirements at the time this solicitation is submitted to CMS, CMS expects that
pharmacy network contracting will be ongoing in order to maintain compliance with our
retail pharmacy access requirements. See the Appendix entitled Retail Pharmacy
Network Access Instructions for detailed instructions for the retail pharmacy network
analysis.

2.8.2. Home Infusion Pharmacy Access
Applicants must demonstrate that their contracted pharmacy network provides adequate
access to home infusion pharmacies. In order to demonstrate adequate access to home
infusion pharmacies, Applicants must provide a list of all contracted home infusion
pharmacies (see section 3.3.4). CMS uses this pharmacy listing to compare Applicants‘
home infusion pharmacy network against existing Part D sponsors in the same service
area to ensure that Applicants have contracted with an adequate number of home
infusion pharmacies. The adequate number of home infusion pharmacies is developed
based on data provided by all Part D sponsors through the annual Part D Reporting
Requirements. A reference file entitled ―Adequate Access to Home Infusion
Pharmacies‖ is provided on the CMS website.

2.8.3. Long-Term Care Pharmacy Access
Applicants must demonstrate that their contracted pharmacy network provides
convenient access to long-term care pharmacies. In order to demonstrate convenient
access to long-term care pharmacies, Applicants must provide a list of all contracted
long-term care pharmacies (see section 3.3.5). CMS uses this pharmacy listing, as well
as information reported as part of Applicants‘ reporting requirements and complaints
data, to evaluate initial and ongoing compliance with the convenient access standard.

22

2.8.4. Indian Tribe and Tribal Organization, and Urban Indian
Organization (I/T/U)
Applicants must demonstrate that they have offered standard contracts to all I/T/U
pharmacies residing within the Applicants‘ service areas. In order to demonstrate
convenient access to I/T/U pharmacies, Applicants must provide a list of all I/T/U
pharmacies to which they have offered contracts (see section 3.3.6). CMS provides the
current national list of all I/T/U pharmacies to assist Applicants in identifying the states
in which I/T/U pharmacies reside at the www.cms.hhs.gov/PrescriptionDrugCovContra/
website.

2.8.5. Waivers Related to Pharmacy Access
Waivers for Cost Plans. CMS guidance regarding waivers of the pharmacy access and
any willing pharmacy requirements for certain Cost Plan sponsors is contained at
sections 50.7 and 50.8.1 of Chapter 5 of the Prescription Drug Benefit Manual. These
waivers are described below.
Waiver of Retail Convenient Access Standards
As described in section 50.7.1 of Chapter 5 of the Prescription Drug Benefit Manual, the
requirement that Applicants must offer their Part D plan benefit through a contracted
retail pharmacy network that meets CMS convenient access standards is waived for
Applicants that operate their own pharmacies. Applicants must demonstrate at the plan
level that a majority (50%) of the prescriptions are filled at retail pharmacies owned and
operated by the organization in order to be granted the waiver.
Waiver of Any Willing Pharmacy Requirements
As described in section 50.8.2 of Chapter 5 of the Prescription Drug Benefit Manual, the
requirement that Applicants must offer a network pharmacy contract to any willing
pharmacy that agrees to accept Applicant‘s standard terms and conditions is waived for
Applicants that own and operate the pharmacies in their network. Applicants must
demonstrate at the plan level that at least 98% of prescriptions are filled through
pharmacies that are owned and operated by plan sponsor in order to be granted the
waiver.
Waivers for Plans in the Territories.
To ensure access to coverage in the territories, §1860D-42(a) of the Social Security Act
grants CMS the authority to waive the necessary requirements to secure access to
qualified prescription drug coverage for Part D eligible individuals residing in the
territories. The regulations at 42 CFR §423.859(c) allow CMS to waive or modify the
requirement for access to coverage in the territories to be waived or modified either
through an Applicant‘s request or at CMS‘ own determination. Under that authority,
CMS will consider waiving the convenient access requirements for a plan‘s Part D
contracted retail pharmacy network, found in 42 CFR §423.120(a)(1) for the Territories,
if an Applicant requests such a waiver, and demonstrates that it has made a good faith
effort to meet the requirements described in Section 3.3.1E of this solicitation.

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2.9.
Waivers Related to Attestations for Cost Plan EGWP
Applicants
As a part of the application process, those organizations seeking to offer 800 series
plans may submit individual waiver/modification requests to CMS. Applicants should
submit an attachment via an upload in the HPMS Part D Attestations section that
addresses the following:
Specific provisions of existing statutory, regulatory, and/or CMS policy
requirement(s) the entity is requesting to be waived or modified (please identify
the specific requirement (e.g., 42 CFR §423.32, Section 30.4 of the Part D
Enrollment Manual) and whether you are requesting a waiver or a modification of
these requirements);
How the particular requirement(s) hinder the design of, the offering of, or the
enrollment in, the employer-sponsored group plan;
Detailed description of the waiver/modification requested including how the
waiver/modification will remedy the impediment (i.e., hindrance) to the design of,
the offering of, or the enrollment in, the employer-sponsored group prescription
drug plan;
Other details specific to the particular waiver/modification that would assist CMS
in the evaluation of the request; and
Contact information (contract number, name, position, phone, fax and email
address) of the person who is available to answer inquiries about the
waiver/modification request.

2.10.

Standard Contract with Cost Plan Sponsors

Successful Applicants will be deemed qualified to enter into a Part D addendum to their
section 1876 Cost Plan contract allowing the Applicant to offer a Medicare prescription
drug plan(s) as an optional supplemental benefit after CMS has reviewed the
Applicant‘s entire submission. Only after the qualified Applicant and CMS have reached
agreement on the Applicant‘s bid submissions will the Applicant be asked to execute its
Part D addendum. Approved Part D applications are valid for the forthcoming contract
year. Should an applicant decide to not execute a contract after receiving application
approval, then the organization will need to submit a new application if it chooses to
enter the Part D market in a future contract year.

2.11.

Protection of Confidential Information

Applicants may seek to protect their information from disclosure under the Freedom of
Information Act (FOIA) by claiming that FOIA Exemption 4 applies. The Applicant is
required to label the information in question ―confidential‖ or ―proprietary‖, and explain
the applicability of the FOIA exemption it is claiming. This designation must be in
writing. When there is a request for information that is designated by the Applicant as
confidential or that could reasonably be considered exempt under Exemption 4, CMS is
required by its FOIA regulation at 45 CFR §5.65(d) and by Executive Order 12,600 to

24

give the submitter notice before the information is disclosed. To decide whether the
Applicant‘s information is protected by Exemption 4, CMS must determine whether the
Applicant has shown that— (1) disclosure of the information might impair the
government's ability to obtain necessary information in the future; (2) disclosure of the
information would cause substantial harm to the competitive position of the submitter;
(3) disclosure would impair other government interests, such as program effectiveness
and compliance; or (4) disclosure would impair other private interests, such as an
interest in controlling availability of intrinsically valuable records, which are sold in the
market. Consistent with our approach under the Medicare Advantage program, we
would not release information under the Medicare Part D program that would be
considered proprietary in nature.

2.12.

Waivers

CMS is authorized to grant waivers of Part D program requirements otherwise
applicable to Cost Plans, where such a requirement conflicts with or duplicates a
requirement under Section 1876 (or 42 CFR Part 417), or where granting such a waiver
would improve the Cost Plan sponsor‘s coordination of Part A, B, and Part D benefits.
Accordingly, CMS has identified the waivers it is granting to all Cost Plan sponsors in
the chart shown in Summary of PDP Application Requirements Waived for Cost
Plan Prescription Drug Applicants (Appendix I). As a result of these CMS-granted
waivers, the Cost Plan sponsor application is less comprehensive than the PDP
sponsor application. These waivers will be reflected in each Cost Plan sponsor‘s Part D
addendum.
Applicant Requests for Additional Waivers: CMS may grant additional waivers upon an
Cost Plan sponsor‘s request, provided that the waivers may be justified because the
Part D requirement is duplicative of or conflicting with section 1876 Cost Plan
requirements and granting the waiver will improve the coordination of Part A and/or Part
B benefits with Part D benefits. Any waiver granted by CMS will apply to all similarly
situated Cost Plan sponsors.
For each waiver request, the Applicant must provide, as an upload in HPMS, a
statement that includes:
1. The Part D regulation reference.
2. The appropriate waiver criteria (e.g., duplicative, conflicts, improves benefit
coordination).
3. A discussion of how the requested waiver meets at least one of the three waiver
criteria.
CMS will notify Applicants whether their requests were approved via a CMS web
posting of all approved waivers. As noted above, waivers granted will be reflected in
each Cost Plan sponsor‘s Part D addendum.
Where this application directs the Applicant to attest that it will meet a particular Part D
requirement for which the Applicant has requested a waiver, the Applicant should check
both the ―Yes‖ box and the ―Waiver Requested‖ box within HPMS. In the event that

25

CMS does not approve a particular waiver, the Applicant will still have attested that it
will meet all the applicable Part D program requirements and remain eligible to enter
into a Part D addendum upon approval of its bids. This process will prevent Applicants
from having to submit additional application responses after the original February 25,
2010 deadline. If, as a result of CMS‘ denial of its waiver request, the Applicant no
longer intends to offer a Part D benefit plan, the Applicant must notify CMS in writing on
or before June 30, 2010. CMS will not execute a Part D addendum with Applicants that
submit such a notice. This notice of withdrawal should be sent to:
Centers for Medicare & Medicaid Services (CMS)
Center for Drug and Health Plan Choice
Attention: Application Withdrawal
7500 Security Boulevard
Mail Stop C1-26-12
Baltimore, Maryland 21244-1850

26

3. APPLICATION
Note: Nothing in this application is intended to supersede the regulations at 42 CFR
Part 423. Failure to reference a regulatory requirement in this application does not
affect the applicability of such requirement, and Cost Plan sponsors and/or Applicants
are required to comply with all applicable requirements of the regulations in Part 423 of
42 CFR. In particular, the attestations in this application are intended to highlight
examples of key requirements across a variety of functional and operational areas, but
are in no way intended to reflect a complete or thorough description of all Part D
requirements.
For most of the Part D program requirements described in this solicitation, CMS has
issued operational policy guidance that provides more detailed instructions to Part D
sponsors. Organizations submitting an application in response to this solicitation
acknowledge that in making the attestations stated below, they are also representing to
CMS that they have reviewed the associated guidance materials posted on the CMS
web site and will comply with such guidance should they be approved for a Part D
contract. Applicants must visit the CMS web site periodically to stay informed about
new or revised guidance documents.
NOTE: All uploads and templates will be accessed in HPMS through the HPMS
Contract Management Module. Applicants should refer to the Contract Management –
Online Application User‘s Guide Version 2.0 for further instructions.

3.1.
Applicant Experience, Contracts, Licensure and Financial
Stability
SPECIAL INSTRUCTIONS FOR JOINT ENTERPRISE APPLICANTS: If an application
is being submitted by a joint enterprise, as described above in Section 2.4, a separate
set of responses to the requirements in Section 3.1 must be provided as part of this
application by each member organization of the joint enterprise.

3.1.1. Management and Operations 42 CFR Part 423 Subpart K
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS:
1. Applicant is a legal entity that intends to enter into a
Medicare Prescription Drug Plan addendum to its Cost Plan
contract with CMS.

27

Yes

No

Requesting
Waiver?

Yes or No

2. Applicant agrees to abide by all applicable Federal laws,
regulations and CMS instructions.
3. Applicant maintains contracts or other legal arrangements
between or among the entities combined to meet the
functions identified in subsection 3.1.1C.
B. Upload in HPMS a .pdf document that provides a brief summary of the history,
structure and ownership of your organization (including the identification of the
parent organization). Include a chart showing the structure of ownership,
subsidiaries, and business affiliations. Additionally, include a chart showing the
organizational structure of your organization that clearly depicts the placement of
the Part D operations within your legal entity.
C. First tier, Downstream and Related entities Function Chart
In HPMS, on the
Contract &
Management/Part D
Information/Part D
Data Page, provide
names of the first
tier, downstream
and related entities
you will use to carry
out each of the
functions listed in
this chart:
(Indicate with
―name of
Applicant‘s
Organization‖
where applicant will
perform those
functions)

Function

First tier, Downstream and
Related entities

A pharmacy benefit
program that performs
adjudication and
processing of pharmacy
claims at the point of sale.
A pharmacy benefit
program that performs
negotiation with
prescription drug
manufacturers and others
for rebates, discounts, or
other price concessions on
prescription drugs.
A pharmacy benefit
program that performs
administration and tracking
of enrollees‘ drug benefits
in real time, including
TrOOP balance
processing.

28

A pharmacy benefit
program that performs
coordination with other
drug benefit programs,
including, for example,
Medicaid, state
pharmaceutical assistance
programs, or other
insurance.
A pharmacy benefit
program that develops and
maintains a pharmacy
network.
A pharmacy benefit
program that operates an
enrollee grievance and
appeals process
A pharmacy benefit
program that performs
customer service
functionality, that includes
serving seniors and
persons with a disability.
A pharmacy benefit
program that performs
pharmacy technical
assistance service
functionality.
A pharmacy benefit
program that maintains a
pharmaceutical and
therapeutic committee.
A pharmacy benefit
program that performs
enrollment processing.
D. In HPMS, upload copies of executed contracts, fully executed letters of
agreement, administrative services agreements, or intercompany agreements (in
.pdf format) with each first tier, downstream and related entities identified in
Sections 3.1.1 C that:

29

1. Clearly identify the parties to the contract (or letter of agreement).
2. Describe the functions to be performed by the first tier, downstream or related
entity. 42 CFR §423.505(i)(4)(i)
3. Describe the reporting requirements the first tier, downstream, or related entity
has to the Applicant. 42 CFR §423.505(i)(4)(i)
4. Contain language clearly indicating that the first tier, downstream, or related
entity has agreed to participate in your Medicare Prescription Drug Benefit
program (except for a network pharmacy if the existing contract would allow
participation in this program).
5. Contains flow-down clauses requiring their activities be consistent and comply
with the Applicant‘s contractual obligations as a Part D sponsor. 42 CFR
§423.505(i)(3)(iii)
6. Describe the payment the first tier, downstream, or related entity will receive for
performance under the contract, if applicable.
7. Clearly indicates that the contract is for a term of at least the initial one-year
contract period (i.e., January 1 through December 31) for which this application is
being submitted. Where the contract is for services or products to be used in
preparation for the next contract year‘s Part D operations (e.g., marketing,
enrollment), the initial term of such contract must include this period of
performance (e.g., contracts for enrollment-related services must have a term
beginning no later than November 15 extending through the full contract year
ending on December 31 of the next year).
8. Are signed by a representative of each party with legal authority to bind the
entity.
9. Contain language obligating the first tier, downstream, or related entity to abide
by all applicable Federal laws and regulations and CMS instructions. 42 CFR
§423.505(i)(4)(iv)
10. Contain language obligating the first tier, downstream, or related entity to abide
by State and Federal privacy and security requirements, including the
confidentiality and security provisions stated in the regulations for this program at
42 CFR §423.136.
11. Contain language ensuring that the first tier, downstream, or related entity will
make its books and other records available in accordance with 42 CFR
423.505(e)(2) and 42 CFR 423.505(i)(2). Generally stated these regulations give
HHS, the Comptroller General, or their designees the right to audit, evaluate and
inspect any books, contracts, records, including medical records and
documentation involving transactions related to CMS‘ contract with the Part D
sponsor and that these rights continue for a period of 10 years from the final date
of the contract period or the date of audit completion, whichever is later. 42 CFR
§423.505(i)(2)

30

12. Contain language that the first tier, downstream, or related entity will ensure that
beneficiaries are not held liable for fees that are the responsibility of the Part D
sponsor. 42 CFR §423.505(i)(3)(i)
13. Contain language that the first tier, downstream, or related entity indicates clearly
that any books, contracts, records, including medical records and documentation
relating to the Part D program will be provided to either the sponsor to provide to
CMS or its designees, or will be provided directly to CMS or its designees. 42
CFR §423.505(i)(3)(iv)
14. Contain language that if the Applicant, upon becoming a Part D sponsor,
delegates an activity or responsibility to the first tier, downstream, or related
entity, that such activity or responsibility may be revoked if CMS or the Part D
sponsor determines the first tier, downstream, or related entity has not performed
satisfactorily. Note: The contract/administrative services agreement may include
remedies in lieu of revocation to address this requirement. 42 CFR
§423.505(i)(4)(ii)
15. Contain language specifying that the Applicant, upon becoming a Part D
sponsor, will monitor the performance of the first tier, downstream, or related
entity on an ongoing basis. 42 CFR §423.505(i)(4)(iii)
16. If the first tier, downstream, or related entity will establish the pharmacy network
or select pharmacies to be included in the network contain language that the Part
D sponsor retains the right to approve, suspend, or terminate any arrangement
with a pharmacy. 42 CFR §423.505(i)(5)
17. If the first tier, downstream, or related entity will establish the pharmacy network
or select pharmacies to be included in the network contain language that
payment to such pharmacies (excluding long-term care and mail order) shall be
issued, mailed, or otherwise transmitted with respect to all clean claims
submitted by or on behalf of pharmacies within 14 days for electronic claims and
within 30 days for claims submitted otherwise. 42 CFR §423.505(i)(3)(vi)
18. If the first tier, downstream, or related entity will establish the pharmacy network
or select pharmacies to be included in the network contain language that if a
prescription drug pricing standard is used for reimbursement, identify the source
used by the Part D sponsor for the standard of reimbursement. 42 CFR
§423.505(i)(3)(viii)(B)
19. If the first tier, downstream, or related entity will establish the pharmacy network
or select pharmacies to be included in the network contain language that if a
prescription drug pricing standard is used for reimbursement, a provision that
updates to such a prescription drug pricing standard occur not less frequently
than once every 7 days beginning with an initial update on January 1 of each
year, to accurately reflect the market price of acquiring the drug. 42 CFR
§423.505(i)(3)(viii)(A)
E. Upload in HPMS electronic lists of the contract/administrative service
agreement/intercompany agreement citations demonstrating that the

31

requirements of Section 3.1.D are included in each contract and administrative
service agreement. Submit these data by downloading the appropriate
spreadsheet found in HPMS that mimics the Appendix entitled, Crosswalk of
Citations of Section 3.1.1D to location in contracts/administrative service
agreements/intercompany agreements submitted as attachments to Section 3.1.1.
F. In HPMS, on the Contract Management/Part D Information/Part D Data Page identify
the methodology used for the prescription drug pricing standard reimbursement of
pharmacies and the commercial source used to obtain the prescription drug pricing
standard reimbursement updates.

3.1.2. Experience and Capabilities
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate
response in HPMS:
1. Applicant and/or one of its first tier, downstream, or
related entities currently operate a pharmacy benefit
program that performs adjudication and processing of
pharmacy claims at the point of sale.
2. Applicant and/or one of its first tier, downstream, or
related entities currently operates a pharmacy benefit
program that performs negotiation with prescription
drug manufacturers and others for rebates, discounts,
or other price concessions on prescription drugs.
3. Applicant and/or one of its first tier, downstream, or
related entities currently operate a pharmacy benefit
program that performs administration and tracking of
enrollees‘ drug benefits in real time, including tracking
of enrollee‘s TrOOP balances, as applicable.
4. Applicant and/or one of its first tier, downstream, or
related entities currently operates a pharmacy benefit
program that performs coordination with other drug
benefit programs, including, for example, Medicaid,
state pharmaceutical assistance programs, or other
insurance.
5. Applicant and/or one of its first tier, downstream, or
related entities currently develop and maintain a

32

Requesting
Yes No Waiver?

Yes or No

pharmacy network.
6. Applicant and/or one of its first tier, downstream, or
related entities currently operate a pharmacy benefit
program that operates an enrollee grievance and
appeals process.
7. Applicant and/or one of its first tier, downstream, or
related entities) currently operate a pharmacy benefit
program that performs customer service functionality,
which includes serving seniors and persons with a
disability.
8. Applicant and/or one of its first tier, downstream, or
related entities currently operate a pharmacy benefit
program that performs pharmacy technical assistance
service functionality.
9. Applicant and/or one of its first tier, downstream, or
related entities) currently operate a pharmacy benefit
program that maintains a pharmaceutical and
therapeutic committee.
10. Applicant and/or one of its first tier, downstream, or
related entities currently operate a pharmacy benefit
program that performs enrollment processing.

3.1.3. Business Integrity 2 CFR Part 376; Prescription Drug Benefit
Manual, Chapter 9
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ or ‘no’ to each of the
following qualifications to be approved for a Part
D contract. Attest ‘yes’ or ‘no’ to each of the
following qualifications by clicking on the
appropriate response in HPMS:
1. Applicant, applicant staff, and its affiliated
companies, subsidiaries or first tier, downstream
and related entities, and staff of the first tier,
downstream and related entities agree that they
are bound by 2 CFR Part 376 and attest that they
are not excluded by the Department of Health and
Human Services Office of the Inspector General or
by the General Services. Please note that this

33

Requesting
Yes No Waiver?

Yes or No

includes any member of its board of directors, and
any key management or executive staff or any
major stockholder.
2. Applicant has any past or pending investigations,
legal actions, administrative actions, or matters
subject to arbitration brought involving the
Applicant (and Applicant‘s parent firm if
applicable), including any key management or
executive staff, by a government agency (state or
federal including CMS) over the past three years
on matters relating to payments from governmental
entities, both federal and state, for healthcare
and/or prescription drug services.
3. Applicant‘s Pharmacy Benefit Manager (PBM)
(and PBM‘s parent firm if applicable) has any past
or pending investigations, legal actions,
administrative actions, or matters subject to
arbitration brought involving the PBM (and PBM‘s
parent firm if applicable), including any key
management or executive staff, by a government
agency (state or federal including CMS) over the
past three years on matters relating to payments
from governmental entities, both federal and state,
for healthcare and/or prescription drug services.
B. If Applicant answered Yes to 3.1.3A2 and/or 3.1.3A3, upload in HPMS as a .pdf
document, all past or pending, if known, investigations, legal actions, or matters
subject to arbitration brought by a government agency (state or federal including
CMS) over the past three years relating to payments from government entities, for
healthcare and/or prescription drug services involving the following:
1. Applicant (and Applicant‘s parent firm if applicable).
2. PBM (and PBM‘s parent firm if applicable).
3. Key management or executive staff.
Provide as part of the upload a brief explanation of each action, including the following:
1. Legal names of the parties.
2. Circumstances.
3. Status (pending or closed).
4. If closed, provide the details concerning resolution and any monetary payments.
5. Settlement agreements or corporate integrity agreements.

34

3.1.4. HPMS Part D Contacts CMS Guidance issued 08/16/06, 08/22/07,
11/30/07, 08/06/07, 03/17/09, 07/09/09, and 08/04/09
A. In HPMS, in the Contract Management/Contact Information/Contact Data page
provide the name/title; mailing address; phone number; fax number; and email
address for the following required Applicant contacts:
Note: The same individual should not be identified for each of these contacts. If a
general phone number is given then CMS requires specific extensions for the individual
identified. Under no circumstances should these numbers merely lead to a company‘s
general automated phone response system. Further, Applicants must provide specific
email addresses for the individuals named.
Note: Contract definitions are provided in HPMS in the Contract Management/Contact
Information/Contact Data/Documentation link entitled Contact Definitions.
Contact

Name/Title Mailing
Address

Corporate Mailing
CEO – Sr. Official for
Contracting
Chief Financial Officer
Medicare Compliance
Officer
Enrollment Contact
Medicare Coordinator
System Contact
Customer Service
Operations Contact
General Contact
User Access Contact
Backup User Access
Contact
Marketing Contact
Medical Director

35

Phone/Fax
Numbers

Email
Address

Bid Primary Contact
Payment Contact
Part D Claims
Submission Contact
Formulary Contact
Pharmacy Network
Management Contact
Medication Therapy
Management Contact
Patient Safety Contact
Part D Benefits
Contact
Part D Quality
Assurance Contact
Part D Application
Contact
Pharmacy Director
HIPAA Security Officer
HIPAA Privacy Officer
Part D Price File
Contact (Primary)
Part D Price File
Contact (Back-up)
Part D Appeals
Government Relations
Contact
Emergency Part D
Contact
Pharmacy Technical

36

Help Desk Contact
Processor Contact
CMS Casework
Communication
Contact
Part D Exceptions
Contact
EOB Transfer Contact
Coordination of
Benefits Contact
CEO – CMS
Administrator Contact
Plan to Plan
Reconciliation Contact
Bid Audit Contact
Plan Directory Contact
for Public Website
CAP Report Contact
for Public Website
Financial Reporting
Contact
Best Available
Evidence Contact
Automated TrOOP
Balance Transfer
Contact
Agent/Broker
Compensation Data
Contact
Complaint Tracking
Module (CTM) Contact

37

Part D Reporting
Requirements Contact
Fraud Investigation
Contact
B.

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

Yes No

Requesting
Waiver?

Yes or No

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

3.2.

Benefit Design

3.2.1. Formulary/Pharmacy and Therapeutics (P&T) Committee 42
CFR §423.120(b), 42 CFR §423.272(b)(2); Prescription Drug
Benefit Manual, Chapter 6; 2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS:
1. Applicant will submit a formulary to CMS for the Part D
benefit by the date listed in section 1.4.
2. Applicant will link all associated contracts to an initial
formulary submission on or before the formulary submission
deadline; otherwise, Applicant will be considered to have
missed the formulary submission deadline.
3. Applicant agrees to comply with formulary guidance that is
contained in Chapter 6 of the Prescription Drug Benefit
Manual, the HPMS Formulary Submission Module and
Reports Technical Manual, and all other formulary
instructions.
4. Applicant agrees, when using a formulary, to meet all
formulary submission deadlines established by CMS.

38

Requesting
Yes No Waiver?

Yes or No

Applicant further agrees that CMS may discontinue its review
of the Applicant‘s formulary submission upon the Applicant‘s
failure to meet any of the formulary submission deadlines.
Applicant acknowledges that failure to receive CMS approval
of its formulary may prevent CMS from approving the
Applicant‘s bid(s) and contracting with the Applicant for the
following benefit year.
5. Applicant agrees that its formulary must include substantially
all drugs in the protected classes that are specified as of the
CMS-established formulary submission deadline. Applicant
further agrees that any new drugs or newly approved uses
for drugs within the protected classes that come onto the
market after the CMS-established formulary submission
deadline will be subject to an expedited P&T committee
review. The expedited review process requires P&T
committees to make a decision within 90 days, rather than
the normal 180 day requirement.
6. Applicant will provide for an appropriate transition for new
enrollees prescribed Part D drugs that are not on its
formulary. This transition process must satisfy the
requirements specified in Chapter 6 of the Prescription Drug
Benefit Manual.
7. Applicant agrees to attest that its organization‘s approach to
transitioning beneficiaries on drug regimens that are not on
the plan‘s Part D approved formulary meets CMS criteria.
The transition policy attestation will be completed in HPMS
by close of business on the CMS-established formulary
submission deadline in section 1.4.
8. Applicant agrees to submit its organization‘s transition policy
to CMS upon request.
9. Applicant agrees, where appropriate, to extend transition
periods beyond 30 days for enrollees using non-formulary
drugs that have not been transitioned to a formulary drug or
gone through the plan exception process within 30 days.
10. Applicant agrees to ensure that staff are trained and
information systems are in place to accommodate
administration of the transition policy. This includes adoption
of necessary information system overrides.
11. Applicant will establish an emergency supply of nonformulary Part D drugs (31-day supplies, unless the

39

prescription is written for fewer days) for long-term care
residents to allow the plan and/or the enrollee time for the
completion of an exception request to maintain coverage of
an existing drug based on reasons of medical necessity.
12. Applicant will establish appropriate timeframes and ―first fill‖
procedures for non-formulary Part D medications in long-term
care and retail settings.
13. Applicant will abide by CMS guidance related to vaccine
administration reimbursement under Part D.
B. In HPMS, complete the table below:
If Applicant is intending for its Part D benefit to include the
use of a formulary, then Applicant must also provide a P&T
committee member list either directly or through its
pharmacy benefit manager (PBM). Applicant must attest
‘yes’ or ‘no’ that it is using its PBM’s P&T committee, in
order to be approved for a Part D contract. Attest ‘yes’ or
‘no’ by clicking the appropriate response in HPMS:
1. Applicant is using the P&T Committee of its PBM for
purposes of the Part D benefit.
2. If answered yes to B1, Applicant‘s PBM is operating under a
confidentiality agreement for purposes of the P&T Committee
(meaning Applicant has no knowledge of the membership of
the PBM‘s P&T Committee). (If not applicable, check ―NO.‖)
Note: If answer is YES, then Applicant must complete P&T
Committee Certification Statement and PBM must complete
the P&T Committee Member List located in the Appendix
entitled Applicant Submission of P&T Committee Member
List and Certification Statement.
3. Applicant will develop and use a P&T committee to develop
and review the formulary and to ensure that the formulary is
appropriately revised to adapt to both the number and types
of drugs on the market.
Note: While the P&T committee may be involved in
providing recommendations regarding the placement of a
particular Part D drug on a formulary cost-sharing tier, the
ultimate decision maker on such formulary design issues
is the Part D plan sponsor, and that decision weighs both
clinical and non-clinical factors.

40

Yes

No

Requesting
Waiver?

Yes or No

4. Applicant‘s P&T committee will first look at medications that
are clinically effective. When two or more drugs have the
same therapeutic advantages in terms of safety and efficacy,
the committee may review economic factors that achieve
appropriate, safe, and cost-effective drug therapy.
5. Applicant will assure that the P&T committee uses
appropriate scientific and economic considerations to
consider utilization management activities that affect access
to drugs, such as access to non-formulary drugs, prior
authorization, step therapy, generic substitution, and
therapeutic interchange protocols.
6. Applicant will adhere to P&T guidelines that will, from time to
time, be promulgated with regard to such subject areas as
membership, conflict of interest, meeting schedule, meeting
minutes, therapeutic classes, drug review and inclusion,
formulary management, utilization management and review,
formulary exceptions, and educational programs for
providers.
7. Applicant‘s P&T committee will make a reasonable effort to
review a new FDA approved drug product within 90 days,
and will make a decision on each new drug product within
180 days of its release onto the market, or a clinical
justification will be provided if this timeframe is not met.
These timeframes also include the review of products for
which new FDA indications have been approved.
8. Applicant‘s P&T committee will approve inclusion or
exclusion of the therapeutic classes in the formulary on an
annual basis.
9. The majority of the membership of the Applicant‘s P&T
committee shall be practicing physicians and/or practicing
pharmacists.
10. The membership of the Applicant‘s P&T committee will
include at least one practicing physician and at least one
practicing pharmacist who are both free of conflict with
respect to the Applicant organization and pharmaceutical
manufacturers.
11. The membership of the Applicant‘s P&T committee will
include at least one practicing physician and at least one
practicing pharmacist who are experts in the care of the

41

elderly or disabled persons.
12. Applicant‘s P&T committee will recommend protocols and
procedures for the timely use of and access to both formulary
and non-formulary drug products.
13. Applicant will verify that their P&T Committee members
(listed in 3.2.1 C) do not appear on the HHS Office of
Inspector General‘s Exclusion List. This list can be found at
http://exclusions.oig.hhs.gov/search.html
C. If Applicant is intending for its Part D benefit to include use of a formulary,
then the members of the P&T committee must be provided either directly by
the Applicant or by the Applicant’s PBM. The membership of the P&T
committee must be comprised as described in items B, 10, 11 and 13 above. If
Applicant is providing names of P&T committee directly, then provide the
membership in HPMS’ Contract Management/Part D Data page. If the PBM
operates under a confidentiality agreement (where the Applicant does not
know the membership of the PBM’s P&T Committee) refer to the Appendix
entitled Applicant Submission of P & T Committee Member List and
Certification Statement for additional instructions.
D. In HPMS complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest ‘yes’
or ‘no’ to each of the following qualifications by clicking on
the appropriate response in HPMS:
1. Applicant‘s formulary will include at least two Part D drugs that
are not therapeutically equivalent and bioequivalent in each
therapeutic category and class of covered Part D drugs –
except where a particular category or class includes only one
Part D drugs – as provided at 42 CFR §423.120(b)(2)(i).
2. Applicant seeks to obtain a waiver of the requirement at 42 CFR
§423.120(b)(2)(i) for applicable formulary categories and
classes when Part D home infusion drugs are provided as part
of a bundled service as a supplemental benefit under Part C.
3. If Applicant attests YES to 3.2.1D2, it will always cover a
particular home infusion drug as part of a bundled service under
Part C or will always cover a particular home infusion drug
under Part D.
4. If Applicant attests YES to 3.2.1D2, it will ensure that the
bundled service is available to all enrollees of any MA-PD plan
in which it chooses to provide Part D home infusion drugs as

42

Requesting
Yes No Waiver?
Yes or No

part of a supplemental benefit under Part C.
5. If Applicant attests YES to 3.2.1D2, it will appropriately
apportion costs between Part D and Part C components of its
bid to account for these drugs, as well as provide, in a
supplemental formulary file submission, the home infused
covered Part D drugs that will be offered as part of a
supplemental benefit under Part C.

3.2.2. Utilization Management Standards 42 CFR §423.153(b);
Prescription Drug Benefit Manual, Chapter 6 and Chapter 7
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS.
1. Applicant maintains policies and procedures to prevent overutilization and under-utilization of prescribed medications,
including but not limited to the following elements:
Programs designed to improve adherence/compliance with
appropriate medication regimens
Monitoring procedures to discourage over-utilization through
multiple prescribers or multiple pharmacies
Quantity versus time edits
Early refill edits
2. Applicant maintains methods to ensure cost-effective drug
utilization management. Examples of these tools include, but
are not limited to:
Step therapy
Prior authorization
Tiered cost-sharing
3. Applicant makes enrollees aware of utilization management
(UM) program requirements through information and
outreach materials.
4. Applicant develops incentives to reduce costs when
medically appropriate such as, but not limited to

43

Requesting
Yes No Waiver?
Yes or No

encouragement of generic utilization.
5. Applicant agrees to submit corresponding utilization
management criteria for each drug identified on the
Applicant‘s formulary flat file with prior authorization or step
therapy via HPMS.

3.2.3. Quality Assurance and Patient Safety 42 CFR §423.153(c);
Prescription Drug Benefit Manual, Chapter 7
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS.

Yes

Requesting
No Waiver?

Yes or No

1. Applicant establishes a concurrent drug utilization review
program but not limited to, the following checks each time a
prescription is dispensed:
Screening for potential drug therapy problems due to
therapeutic duplication;
Age/gender-related contraindications;
Over-utilization and under utilization;
Drug-drug interactions;
Incorrect drug dosage or duration of drug therapy;
Drug-allergy contraindications; and
Clinical abuse/misuse.

2. Applicant performs retrospective drug utilization review.
3. Applicant develops and implements internal medication error
identification and reduction systems.

3.2.4. Medication Therapy Management 42 CFR §423.153(d);
Prescription Drug Benefit Manual, Chapter 7; 2010 Call Letter;
CMS issued guidance 04/10/2009
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest

44

Requesting
Waiver?

‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS:
1. Applicant will develop and implement a Medication Therapy
Management (MTM) Program designed to:
Ensure optimum therapeutic outcomes for targeted
beneficiaries through improved medication use
For targeted beneficiaries, reduce the risk of adverse events,
including adverse drug interactions
2. Applicant will develop the MTM program in cooperation with
licensed and practicing pharmacists and physicians.
3. Applicant will target beneficiaries for enrollment in the MTM
program based on all three of the following criteria:
Beneficiary must have multiple chronic diseases (list to be
determined by organization). In defining multiple chronic
diseases, organizations must meet requirements for the
minimum number and types of diseases for targeting as
determined by CMS;
Beneficiary must be taking multiple covered Part D drugs
(specifics to be determined by organization). In defining
multiple Part D drugs, organizations must meet requirements
for the minimum number of Part D drugs for targeting as
determined by CMS; and
Beneficiary must be identified as likely to incur annual costs
for covered Part D drugs that exceed a predetermined level
specified by the Secretary through CMS guidance.
4. Applicant will establish an appropriate MTM enrollment policy
which enrolls targeted beneficiaries using an opt-out method
of enrollment only.
5. Applicant will establish an appropriate policy which targets
beneficiaries for enrollment at least quarterly during each
year.
6. Applicant will establish appropriate policies and procedures
for offering a minimum level of MTM services including
interventions for both beneficiaries and prescribers, an
annual comprehensive medication review for the beneficiary,
which includes a review of medications, interactive, personto-person consultation, and an individualized, written
summary of interactive consultation, and quarterly targeted

45

Yes

No Yes or No

medication reviews.
7. The Applicant agrees to submit a description of its MTM
program including, but not limited to, policies, procedures,
services, payments and criteria provided in item #3 above
used for identifying beneficiaries eligible for the MTM
program. Note: Instructions to submit a description of your
MTM program will be forthcoming in future guidance from
CMS and this description is not due at the time of this
application.
8. Applicant will establish an appropriate policy on how they will
set MTM fees paid to pharmacists or others providing MTM
services for covered Part D drugs. The policy will explain
how the Applicant‘s fee or payment structure takes into
account the resources used and the time required for those
providing MTM services.
9. The Applicant agrees to submit a description of how they will
set MTM fees paid to pharmacists or others providing MTM
services for covered Part D drugs. The policy will explain
how the Applicant‘s fee or payment structure takes into
account the resources used and the time required for those
providing MTM services. Note: Instructions to submit a
description of MTM fees with a description of your MTM
program will be forthcoming in future guidance from CMS
and is not due at the time of this application.
10. Applicant will establish appropriate policies and procedures
to meet CMS expectations for administering the MTM
program, including, but not limited to, services, payments and
criteria used for identifying beneficiaries eligible for the MTM
program. Such expectations include:
Once enrolled, beneficiaries will not be disenrolled from
the MTMP program if they no longer meet one or more of
the MTMP eligibility criteria (as determined by the
organization) and will remain in the MTMP program for
the remainder of the calendar year.
Applicant‘s MTMP will serve and provide interventions for
enrollees who meet all three of the required criteria as
defined above regardless of setting (e.g., ambulatory,
long term care, etc.)
Applicant‘s MTMP will not include discriminatory
exclusion criteria. If an enrollee meets all three of the
required criteria as described by your organization, the

46

enrollee should be eligible for MTM intervention.
Applicant will consider the provision of other prescription
drug quality improvement interventions to beneficiaries
who do not meet all three of the required MTMP criteria
as described by your organization, however, these
beneficiaries cannot be considered for MTM
reimbursement by CMS.
Applicant will put into place safeguards against
discrimination based on the nature of their MTM
interventions (i.e., TTY if phone based, Braille if mail
based, etc.)
Applicant will promote continuity of care by performing an
end-of-year analysis that identifies current MTM program
participants who will continue to meet eligibility criteria for
the next program year for the same plan.
Applicant will have procedures in place to drive
participation and follow-up with beneficiaries that do not
respond to initial offers for MTM services.
Applicant will consider using more than one approach
when possible to reach all eligible patients who may wish
to receive MTM services.
Applicant will analyze and evaluate their MTMP and make
changes to continuously improve their programs.

3.2.5. Electronic Prescription Program and Health Information
Technology Standards 42 CFR §423.159; Prescription Drug
Benefit Manual, Chapter 7; P.L. 111-5 (2009); 2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS.
1. Applicant agrees to support and comply with electronic
prescription standards relating to covered Part D drugs for
Part D enrollees developed by CMS once final standards are
effective.
2. Applicant agrees to establish and maintain an electronic
prescription drug program that complies with final Part D
standards when transmitting, directly or through an
intermediary, prescriptions and prescription-related

47

Yes

Requesting
No Waiver?
Yes or No

information using electronic media for covered Part D drugs
for Part D eligible individuals.
3. Applicant agrees to obtain the Prescription Origin Code on
original prescriptions submitted via the NCPDP 5.1 option
field 419 DJ and report this code on their PDE submissions.
4. Applicant agrees that as it implements, acquires, or upgrades
health information technology (HIT), where available, the HIT
systems and products will meet standards and
implementation specifications adopted under section 3004 of
the Public Health Services Act as added by section 13101 of
the American Recovery and Reinvestment Act of 2009, P.L.
111-5.

3.3.
General Pharmacy Access 42 CFR §423.120(a);
Prescription Drug Benefit Manual, Chapter 5
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS:
1. Applicant agrees to permit in its plan networks any pharmacy
that is willing to accept and meets the plans‘ standard terms
and conditions. However, terms and conditions may vary,
particularly with respect to payment terms to accommodate
geographical areas (e.g. rural pharmacies) or different types
of pharmacies (e.g. mail order and retail), provided that all
similarly-situated pharmacies are offered the same standard
terms and conditions.
2. Applicant agrees not to require a pharmacy to accept
insurance risk as a condition of participation in the Cost
Plan‘s optional supplemental Part D pharmacy network.
3. Where applicable, Applicant‘s network pharmacy contracts
contain provisions governing the submission of claims to a
real-time adjudication system, except in the limited case of
pharmacies for which only batch processing is feasible (e.g.
some I/T/U pharmacies and certain pharmacies that are
allowed to submit claims in the X12 format).

48

Yes

Requesting
No Waiver?

Yes or No

4. Applicant‘s network pharmacy contracts contain provisions
governing providing Part D enrollees access to negotiated
prices as defined in 42 CFR §423.100.
5. Applicant‘s network pharmacy contracts contain provisions
regarding charging/applying the correct cost-sharing amount,
including that which applies to individuals qualifying for the
low-income subsidy.
6. Where applicable, Applicant‘s network pharmacy contracts
contain provisions governing informing the Part D enrollee at
the point of sale (or at the point of delivery for mail order
drugs) of the lowest-priced, generically equivalent drug, if
one exists for the beneficiary‘s prescription, as well as any
associated differential in price.
7. Applicant agrees that each of the contract provisions
referenced in the Appendices entitled,
Crosswalk for Retail Pharmacy Access Contracts
Crosswalk for Mail Order Pharmacy Access Contracts
Crosswalk for Home Infusion Pharmacy Access Contracts
Crosswalk for Long-Term Care Pharmacy Access Contracts
Crosswalk for I/T/U Pharmacy Access Contracts
will be included in the respective downstream pharmacy network
contracts.
8. Applicant agrees to notify CMS when the Applicant changes
its pharmacy benefit manager.
9. Applicant agrees to notify CMS about any substantive
change in its pharmacy network that may impact its ability to
maintain a Part D pharmacy network that meets CMS‘
requirements.
B. Upload in HPMS a contract template in .pdf format for each for the following
types of pharmacies: Retail, Mail Order, Home Infusion, Long-Term Care and
I/T/U. The mail order contract template is only necessary if the plan is offering
mail order. The I/T/U template is only necessary if the Applicant’s projected
service area includes states in which I/T/U pharmacies reside. If Applicant has
contracted with a Pharmacy Benefit Manager to provide a pharmacy network,
those downstream contract templates must also be uploaded. If there are several
different types of standard terms and conditions for the same type of pharmacy,
please provide a contract template for all versions and label according to type of
pharmacy. For example, if different terms for retail pharmacies apply depending

49

upon geographic location, a separate template representing each variation must
be provided. Each contract template type must contain the unsigned standard
terms and conditions, including the provisions listed in the Appendices entitled
Crosswalk for Retail Pharmacy Contracts
Crosswalk for Mail Order Pharmacy Contracts
Crosswalk for Home Infusion Pharmacy Access Contracts
Crosswalk for Long-Term Care Pharmacy Access Contracts
Crosswalk for I/T/U Pharmacy Access Contracts.
C. Upload in HPMS crosswalks of the Pharmacy Access Contract Citations [for
Retail, Mail Order (if offered), Home Infusion, Long-Term Care and I/T/U Pharmacy
networks] demonstrating that all applicable requirements are included in such
contracts. Submit this data by downloading the Microsoft Excel worksheets from
HPMS that are located on the Pharmacy Upload page, complete the worksheets
and upload the finished document back into HPMS for each of the Appendices
entitled
Crosswalk for Retail Pharmacy Contracts
Crosswalk for Mail Order Pharmacy Contracts
Crosswalk for Home-Infusion Pharmacy Access Contracts
Crosswalk for Long-Term Care Pharmacy Access Contracts
Crosswalk for I/T/U Pharmacy Access Contracts.

3.3.1. Retail Pharmacy 42 CFR §423.120(a); 42 CFR §423.859(c);
Prescription Drug Benefit Manual, Chapter 5
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following qualifications
by clicking on the appropriate response in HPMS.
1. Applicant agrees to meet the CMS Standards for
Convenient Access [42 CFR §423.120 (a)(1) and (2) no
later than the application submission date (See the
Appendix entitled Retail Pharmacy Network Access
Instructions).
2. Applicant agrees that when Applicant is offering extended
supplies via mail order, it also has to contract with a
sufficient number of network retail pharmacies so as to
ensure that enrollees have reasonable access to the
same extended day supply benefits at retail that are

50

Yes

No

Requesting
Waiver?

Yes or No

available at mail-order.
3. Applicant agrees to use the CMS beneficiary counts in
the data file entitled ―Beneficiary Count Data‖ to prepare
the retail network analyses.
4. Applicant seeks to obtain a waiver of retail pharmacy
convenient access standards. If YES, complete table G
below in HPMS.
5. Applicant seeks to obtain a waiver of any willing
pharmacy requirements. If YES, complete table H below
in HPMS.
B. Upload in HPMS the Pharmacy Network Access Reports as described in the
Appendix entitled Retail Pharmacy Network Access Instructions.
C. Upload in HPMS the Retail Pharmacy List:
To submit retail pharmacy listings to CMS, Applicants must download the Microsoft
Excel worksheet from HPMS that is located specifically on the Pharmacy Upload page,
complete the worksheet and upload the finished document back into HPMS.
D. Submission of Supporting Discussion in Areas Failing to Meet Access
Standards
CMS will consider supporting discussion provided by an Applicant in evaluating the
applicant‘s application to determine if Applicant is qualified to be a Part D Sponsor.
While you have the opportunity to provide this discussion, CMS‘ expectation is that your
organization will meet the required access standards in all cases. Providing the
discussion below does not mean CMS will allow you to fail the access standards, but in
extreme or unusual circumstances, we may consider this information.
Provide as an upload in HPMS, in .pdf format, the following information to demonstrate
that meeting the access standard within the service area is not practical or is
impossible.
1. Indicate the geographic areas in which the applicant cannot demonstrate that it
meets the retail pharmacy convenient access standards as defined in Appendix
entitled Retail Pharmacy Network Access Instructions.
2. Explain why these standards cannot be met. Include in the discussion relevant
information such as geographic barriers, pharmacy infrastructure barriers, and/or
market barriers.
3. Describe how the pharmacies in the Applicant‘s retail contracted network will provide
access to all eligible Part D individuals enrolled in the Applicant‘s plan(s) in each of
the geographic areas defined in item 1 above.
E. In HPMS, indicate whether you are seeking a waiver of the convenient access
standards for the territories in which your organization intends to offer the Part D

51

benefit. If your organization is not intending to offer the Part D benefit in the
territories check N/A within HPMS.
Request for a Waiver of Convenient Access Standards for the Territories
Yes

No N/A

Region 35 – American Samoa
Region 36 – Guam
Region 37 – Northern Mariana Islands
Region 38 – Puerto Rico
Region 39 – US Virgin Islands
F. Complete the following if you marked YES to requesting a waiver of
convenient access standards for any of the territories in 3.3.1E. In HPMS, in .pdf
format, provide the following information:
1. Explain why your organization cannot demonstrate compliance with the access
standards or why these standards cannot be met.
2. Describe the Applicant‘s efforts to identify and contract with all of the retail
pharmacies in each of the applicable territories.
3. Describe how the pharmacies in the Applicant‘s contracted network demonstrate
convenient access to all eligible Part D individuals enrolled in the Applicant‘s plan(s)
in each of the territories listed above as not meeting the standards in 42 CFR
§423.120(a)(1).
G. In HPMS complete the table below:
Waiver of Retail Convenient Access Standards
Provide the number of prescriptions provided in 2009 by retail
pharmacies owned and operated by Applicant
Provide the number of prescriptions provided in 2009 at all retail
pharmacies contracted by Applicant.
NOTE: CMS will determine the percentage of prescriptions provided at retail
pharmacies owned and operated by Applicant over total prescriptions provided at all
retail pharmacies contracted by Applicant.
H. In HPMS complete the table below:
Waiver of Any Willing Pharmacy Requirements
Provide the number of prescriptions provided in 2009 by all pharmacies

52

owned and operated by Applicant
Provide the number of prescriptions provided in 2009 at all pharmacies
contracted by Applicant.
NOTE: CMS will determine the percentage of prescriptions provided at all pharmacies
owned and operated by Applicant over total prescriptions provided at all pharmacies
contracted by Applicant.

3.3.2. Out of Network Access 42 CFR §423.124; Prescription Drug
Benefit Manual, Chapter 5
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate
response in HPMS.
1. Applicant agrees to ensure that enrollees have
adequate access to covered Part D drugs dispensed
at out-of-network pharmacies when an enrollee cannot
reasonably be expected to obtain such drugs at a
network pharmacy and provided such enrollees do not
access Part D drugs at an out-of-network pharmacy
on a routine basis. The coverage rules applicable to
covered Part D drugs dispensed at out-of-network
pharmacies may generally mirror those applicable to
covered Part D drugs dispensed at network
pharmacies (to the extent that the out-of-network
pharmacy has the ability to effectuate those coverage
rules). However, Applicant agrees to develop policies
and procedures governing reasonable rules for
appropriately limiting out-of-network access (for
example, quantity limits, purchase of maintenance
medications via mail-order for extended out-of-area
travel, or plan notification or authorization processes).
2. Applicant agrees to ensure that enrollees have
adequate access to covered Part D drugs dispensed
at physician offices for covered Part D drugs that are
appropriately dispensed and administered in physician
offices (e.g. Part D-covered vaccines).
3. Applicant agrees to abide by42 CFR § 423.124(b)
relating to the financial responsibility for out-of-

53

Yes

No

Requesting
Waiver?

Yes or No

network access to covered Part D drugs and may
require its Part D enrollees accessing covered Part D
drugs to assume financial responsibility for any
differential between the out-of-network pharmacy‘s
usual and customary price and the MA-PD sponsor
plan allowance, consistent with the requirements of 42
CFR §§ 423.104(d)(2)(i)(B) and 423.104(e).
4. Applicant agrees to ensure that it will not routinely
permit coverage of more than a month‘s supply of
medication to be dispensed at an out-of-network
pharmacy. Applicant may override the one month limit
on a case-by-case basis when warranted by
extraordinary circumstances.

3.3.3. Mail Order Pharmacy 42 CFR §423.120(a)(10); Prescription Drug
Benefit Manual, Chapter 5
A. In HPMS, complete the table below:
Applicants may offer a mail order option in addition to
their contracted Part D pharmacy network but mail
Yes
order pharmacies do not count in meeting network
adequacy standards. Indicate in HPMS ‘yes’ or ‘no’
whether such mail order pharmacy is offered.
1. Applicant will offer mail order pharmacy as part of its
Part D plan(s).
2. If Applicant attests ‗Yes‘ to 3.3.3A1, will Applicant‘s
mail order contract include an extended (e.g., 90) day
supply?
3. If Applicant attests ‗YES‘ to 3.3.3A2, then Applicant
will include in its contracts with at least some retail
pharmacies a provision that will allow a retail
pharmacy to offer an extended supply of drugs to any
Plan beneficiary at the same price, reimbursement
rate and cost sharing as the Plan‘s mail order
pharmacy or pharmacies—the network mail order
pharmacy rate; or an Applicant may use an alternative
retail/mail order pharmacy rate with a higher
contracted reimbursement rate provided that any
differential in charge between the Network Mail Order
Pharmacy rate and the higher contract reimbursement
rate would be reflected in higher cost sharing paid by
the beneficiary. Applicant must ensure that the

54

No

Requesting
Waiver?

Yes or No

availability of an extended day supply at retail does
not increase the costs to the government and that
enrollee cost-sharing for an extended day supply
never exceeds what the enrollee would have paid had
he/she filled his/her prescription in multiple one-month
supply increments at retail pharmacy rates.
B. Mail Order Pharmacy List
To submit mail order pharmacy listings to CMS, Applicants must download the Microsoft
Excel worksheet from HPMS that is located on the Pharmacy Upload page, complete
the worksheet and upload the finished document back into HPMS.

3.3.4. Home Infusion Pharmacy 42 CFR §423.120(a)(4); Prescription
Drug Benefit Manual, Chapter 5; CMS issued guidance 09/09
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Yes
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS:
1. Applicant agrees to provide adequate access to home
infusion pharmacies. Applicant should use the
reference file entitled ―Adequate Access to Home
Infusion Pharmacies‖ located on the
www.cms.hhs.gov website.
2. Applicant agrees that its network contracts will
address Part D drugs delivered and administered in
the home setting.
3. Applicant agrees that its contracted home infusion
pharmacies will deliver home infused drugs in a form
that can be administered in a clinically appropriate
fashion in the beneficiary‘s place of residence.
4. Applicant agrees that its home infusion pharmacy
network in the aggregate has a sufficient number of
contracted pharmacies capable of providing infusible
Part D drugs for both short term acute care (e.g. IV
antibiotics) and long term chronic care (e.g. alpha
protease inhibitor) therapies.
5. Applicant agrees that its contracted network
pharmacies that deliver home infusion drugs ensure

55

No

Requesting
Waiver?

Yes or No

that the professional services and ancillary supplies
necessary for home infusion are in place before
dispensing home infusion drugs to the beneficiary in
his/her place of residence.
6. Applicant agrees that its contracted network
pharmacies that deliver home infusion drugs provide
home infusion drugs within 24 hours of discharge from
an acute setting, unless the next required dose, as
prescribed, is required to be administered later than
24 hours after discharge.
B. Home Infusion Pharmacy List
To submit home infusion pharmacy listings to CMS, Applicants must download the
Microsoft Excel worksheet template from HPMS that is located on the Pharmacy Upload
page, complete the worksheet and upload the finished document back into HPMS.

3.3.5. Long -Term Care (LTC) Pharmacy 42 CFR §423.120(a)(5);
Prescription Drug Benefit Manual, Chapter 5; CMS issued
guidance 04/28/09
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Yes
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant agrees to offer standard contracting terms
and conditions to all long-term care pharmacies in its
service area. These terms and conditions must
include all the performance and service criteria for
long-term care pharmacies that are cited in section
50.5.2 of Chapter 5 of the Prescription Drug Benefit
Manual.
2. Applicant agrees that all of the Part D contracted
pharmacies in Applicant‘s LTC network have signed
directly or through a power of attorney a contract that
meets the LTC performance and service criteria
established by CMS.
3. Applicant agrees to recognize the CMS special
election period (SEP) or open enrollment period for
institutionalized individuals for Part D drug plan
enrollment and disenrollment for beneficiaries

56

No

Requesting
Waiver?

Yes or No

entering, living in, or leaving a long-term care facility.
4. Applicant agrees that it will ensure convenient access
to network LTC pharmacies for all of its enrollees
residing in an IMD or ICF-MR designated by the State
as an institution and in which any institutionalized
individuals reside.
5. Applicant agrees to provide convenient access to
network LTC pharmacies for all of its enrollees who
are inpatients in a hospital that is a ―medical
institution‖ under section 1902(q)(1)B) of the Act – and
therefore would meet the Part D definition of a LTC
facility – and whose Part A benefits have been
exhausted.
6. Applicant agrees that it will contract with a sufficient
number of LTC pharmacies to provide all of the plan‘s
institutionalized enrollees‘ convenient access to the
plan‘s LTC pharmacies.
7. Applicant agrees that it will not rely upon beneficiary
SEPs or on out-of-network access in lieu of
contracting with a sufficient number of pharmacies to
ensure that an enrollee can remain in his/her current
plan for as long as he/she reside in a LTC facility in
Applicant‘s service area.
8. Applicant ensures that LTC pharmacy contracting
activity is ongoing as Applicant continues to identify
LTC facilities and LTC pharmacies.
9. Applicant agrees that the appropriate action to take
when a beneficiary is enrolled in its plan and Applicant
does not have a contract with an LTC pharmacy that
can serve the LTC facility in which that enrollee
resides is to sign a contract with the facility‘s
contracted pharmacy, or – if that pharmacy will not
sign a contract – with another pharmacy that can
serve that facility. Applicant recognizes that, in some
cases, a retroactive contract may be necessary to
ensure convenient access to LTC pharmacies.
10. Applicant agrees that it is prepared to readily negotiate
with States with regard to contracting with State-run
and operated LTC pharmacies in facilities such as
ICFs/MR, IMDs, and LTC hospitals. States may not

57

be able to agree to certain clauses in some LTC
standard contracts because of constitutional and legal
restraints. Applicants should be prepared to negotiate
with States to address these issues.
11. Applicant agrees to utilize CMS data on beneficiary
residence in LTC facilities to facilitate its LTC
contracting efforts.
12. Applicant will ensure that, in contracting with LTC
pharmacies, it does not agree to particular contracting
terms and conditions containing provisions that have
the net result of creating a non-uniform benefit for plan
enrollees served by those LTC pharmacies relative to
those residing in LTC facilities serviced by other
network LTC pharmacies whose contracts with the
Applicant may not include the same provisions.
B. LTC Pharmacy List
To submit LTC pharmacy listings to CMS, Applicants must download the Microsoft
Excel worksheet template from HPMS that is located on the Pharmacy Upload page,
complete the worksheet and upload the finished document back into HPMS.

3.3.6. Indian Health Service, Indian Tribe and Tribal Organization, and
Urban Indian Organization (I/T/U) Pharmacy 42 CFR
§423.120(a)(6); Prescription Drug Benefit Manual, Chapter 5
A.

In HPMS, complete the table below:

Applicant must attest ‘yes’ or ‘no’ to each of the
following qualifications by clicking on the appropriate
response in HPMS to be approved for a Part D contract.

Yes

No

Requesting
N/A Waiver?

No

Requesting
N/A Waiver?

Yes or No

1. Using the list of I/T/U pharmacies provided at the
www.cms.hhs.gov/PrescriptionDrugCovContra/ indicate
whether your service area includes at least one state in
which an I/T/U pharmacy resides.
Not all Part D regions have I/T/U pharmacies. If the
Applicant’s service area covers any region that includes
I/T/U pharmacies, then the Applicant must attest ‘yes’ to
each of the following qualifications to be approved for a
Part D contract. If all of the Applicant’s service area
does not include I/T/U pharmacies, then the Applicant
may answer ‘no’ or n/a and still be approved for a Part D
contract since these requirements do not apply. Attest
‘yes,’ ‘no’ or n/a to each of the following qualifications

58

Yes

Yes or No

by clicking on the appropriate response in HPMS.
2. Applicant agrees to offer standard terms and conditions
that conform to the model contract addendum provided by
CMS to all I/T/U pharmacies in its service area by sending
a conforming contract offer to all such pharmacies. The
model contract addendum is posted on the
www.cms.hhs.gov/PrescriptionDrugCovContra/ website.
The model contract addendum account for differences in
the operations of I/T/U pharmacies and retail pharmacies.
3. Applicant agrees to submit documentation upon CMS‘
request to demonstrate offering all I/T/U pharmacies in its
service area a conforming contract. Such documentation
may be proof of fax or U.S. postage or other carrier‘s
receipt of delivery.
B.

I/T/U Pharmacy List

In order to demonstrate that a Part D Applicant meets these requirements Applicants
must submit a complete list of all I/T/U pharmacies to which it has offered contracts.
CMS provides the current list of I/T/U pharmacies, including the official name, address,
and provider number (when applicable). The Applicant‘s list must be submitted using
the Microsoft Excel template provided by CMS on the HPMS Pharmacy Upload page
and must include all I/T/U pharmacies residing in any and all counties within its service
area. To submit I/T/U pharmacy listings to CMS, Applicants must first download the
Microsoft Excel worksheet template from HPMS that is located on the Pharmacy
Upload page, complete the worksheet and upload the finished document back into
HPMS.

3.3.7. Specialty Pharmacy Prescription Drug Benefit Manual, Chapter
5
A.

In HPMS, complete the table below.
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS.
1. Applicant agrees not to restrict access to Part D drugs by
limiting distribution through a subset of network
pharmacies, except when necessary to meet FDA limited
distribution requirements or to ensure the appropriate
dispensing of Part D drugs that require extraordinary
special handling, provider coordination, or patient
education when such extraordinary requirements cannot
be met by a network pharmacy. Applicant agrees that

59

Yes

No

Requesting
Waiver?

Yes or No

additional education or counseling alone does not qualify a
drug for limited distribution within the overall pharmacy
network.
2. Applicant agrees not to restrict access solely on the
placement of a Part D drug in a ―specialty/high cost‖ tier
because this tier placement alone is not indicative of any
special requirements associated with such drug. Applicant
further agrees that any drug-by-drug requirements for
network pharmacies only apply to special handling and
dispensing that may be required for a particular ―specialty‖
drug and not to reimbursement or other standard terms
and conditions.
3. Applicant agrees not to require a pharmacy to be a
―specialty‖ pharmacy in order to dispense any drug that
requires special handling if the network pharmacy is
capable of appropriately dispensing the particular Part D
drug or drugs in question.

3.4.
Enrollment and Eligibility 42 CFR §423.30 and 42 CFR
§423.44; Prescription Drug Benefit Manual, Chapters 3, 4, and
13; Plan Communications User Guide; CMS issued guidance
07/21/09
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant agrees to comply with the CMS MA Eligibility
and Enrollment and Disenrollment Guidance
documents that are provided on the www.cms.hhs.gov/
website.
2. Applicants will identify full dual and other LIS eligible
individuals enrolled in MA-only plans and agrees to
conduct auto- and facilitated enrollment of these
individuals in accordance with the guidance provided
by CMS.
3. Applicant agrees to comply with CMS operational
guidance on Creditable Coverage and the Late

60

Yes No

Requesting
Waiver?
Yes or No?

Enrollment Penalty.
4. Applicant agrees to establish business processes for
quickly resolving urgent issues affecting beneficiaries,
such as late changes in enrollment or copay status, in
collaboration with CMS caseworkers.
5. Applicant will query the Batch Eligibility Query (BEQ) or
the User Interface (UI) for every new enrollment
request to receive:
Verification of Medicare Entitlement and Part D
Eligibility,
Periods of enrollment in a Medicare plan that provides
prescription drug coverage, and
Periods of enrollment in a retiree prescription drug plan
whose sponsor receives a retiree drug subsidy from
Medicare.
Information regarding the Low Income Subsidy
applicable to each new enrollee
6. Applicant will collect, review and transmit creditable
coverage information in accordance with CMS
guidance and policies.
7. Applicant agrees to use information provided by CMS,
including the Low-Income Subsidy/Part D Premium
Report Data File, to determine match rates of their
information to that of CMS within 72 hours of receipt.
Applicant further agrees that their match rate should
achieve 95 percent and that non-matches are resolved
within 72 hours.
8. Applicant agrees to adhere to CMS‘s Best Available
Evidence policy under 42 CFR §423 .800(d), under
which an individual can provide acceptable evidence
supporting a revised cost-sharing amount that the
sponsor must accept for the purpose of administering
the benefit, and to submit information to CMS with
respect to Best Available Evidence in accordance with
CMS procedures outlined in Chapter 13 of the
Prescription Drug Manual.
9. Applicant agrees to ensure a process is in place to
transmit plan-generated enrollment transactions that
include active 4Rx data, and for CMS-generated

61

enrollments, to transmit active 4Rx data on an update
transaction within 3 business days of receipt of the
TRR transmitting the enrollments.
10. Applicant agrees not to disenroll members for failure to
pay premiums (or notify them of impending
disenrollment) in cases where the member has
requested that premiums be withheld from his/her
Social Security benefit check in accordance with CMS
Enrollment and Disenrollment Guidance and Premium
Payment policies.
11. Applicant agrees that it may not disenroll a member or
initiate the disenrollment process if the organization
has been notified that a State Pharmaceutical
Assistance Program (SPAP) or other payer intends to
pay the entire Part D premium on behalf of an
individual.
12. Applicant agrees to submit enrollment and
disenrollment data to CMS within the timeframes
required in CMS guidance available on the
cms.hhs.gov website.
13. Applicant agrees to review all systems responses, files
and reports received from CMS and compare these to
its internal data to identify discrepancies and reconcile.
14. Applicant agrees to complete the reconciliation of all
enrollment, membership and payment data in
compliance with the 45-day schedule to submit the
monthly CEO certification of enrollment data for
payment.
15. Applicant will establish connectivity to CMS as noted in
the instructions provided by the MMA Help Desk at 1800-927-8069 or via the MMA Help Desk webpage,
www.cms.hhs.gov/mmahelp, in the Plan Reference
Guide for CMS Part C/D system link.
16. Applicant will obtain CMS User ID and Password.

3.5.
Complaints Tracking Prescription Drug Benefit Manual,
Chapter 7; CMS issued guidance 11/16/06, 07/28/2008, and
12/09/08
A.

In HPMS, complete the table below:

62

Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.

Yes No

Requesting
Waiver?

Yes or No

1. Applicant will resolve 95% of complaints designated as
immediate needs complaints via the CMS Complaints
Tracking Module within 2 calendar days.
2. Applicant is expected to resolve at least 95% of
complaints designated as ―urgent‖ via the CMS
Complaints Tracking Module in accordance with CMS
issued guidance.
3. Applicant is expected to resolve at least 95% of
complaints without an issue level via the CMS
Complaints Tracking Module in accordance with CMS
issued guidance.
4. Applicant will continue to monitor and document
complaint resolutions for complaints attributed to their
contracts in the CMS‘ Complaint Tracking Module in
accordance with CMS‘ Standard Operating Procedures
for Part D sponsors.
5. Applicant will maintain Standard Operating Procedures
that address how its organization will handle and
quickly resolve immediate action cases, as well as,
outline the steps the organization intends to take to
have enrollees call your customer service directly for
the prompt resolution of all inquiries.

3.6.
Medicare Prescription Drug Plan Finder Prescription Drug
Benefit Manual, Chapter 7; CMS issued guidance 07/17/06,
11/20/07, and 08/21/08
A.

In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant agrees to provide its current and accurate

63

Yes No

Requesting
Waiver?

Yes or No

calendar year drug pricing and pharmacy network data
for publishing on the ―Medicare Prescription Drug Plan
Finder (MPDPF)‖ in the format and on a schedule
required by CMS.
2. Applicant agrees to perform quality checks for data
submitted to CMS for display on the MPDPF and
agrees that failure to conduct quality checks may result
in suppression of the Applicant‘s pricing data from the
website.
3. Applicant agrees that errors or omissions identified by
CMS during analyses of the data will also result in the
suppression of the Applicant‘s pricing data from the
website.
4. Applicant agrees to respond to CMS‘ MPDPF quality
assurance outlier emails as directed by CMS, and
agrees that failure to respond in accordance with these
directions will result in the suppression of the
Applicant‘s pricing data from the website.

3.7.
Grievances 42 CFR Part 423 Subpart M; Prescription Drug
Benefit Manual, Chapter 18
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant will process beneficiary grievances
consistent with 42 CFR §423 subpart M.
2. Applicant agrees to abide by Chapter 18 of the
Prescription Drug Benefit Manual.
3. Applicant will, consistent with 42 CFR §423.564:
Track and address enrollees‘ grievances,
Process enrollees‘ grievances within the appropriate
timeframes,
Work with the QIO to resolve quality of care grievances
when appropriate,

64

Yes No

Requesting
Waiver?

Yes or No

Provide appropriate and timely notification to enrollees
of grievance dispositions, and
Train relevant staff and first tier, downstream and
related entities on all regulatory requirements.
4. Applicant will inform enrollees about the grievance
process through information and outreach materials.
5. Applicant will accept grievances from enrollees at least
by telephone and in writing (including facsimile).
6. Applicant will maintain, and provide to CMS upon
request, records on all grievances received both orally
and in writing. At a minimum, such records must track
the:
Date of receipt of the grievance
Mode of receipt of grievance (i.e. fax, telephone, letter,
etc.)
Person who filed the grievance
Subject of the grievance
Final disposition of the grievance
Date the enrollee was notified of the disposition
Note: A grievance is any complaint or dispute, other than one that involves a coverage
determination, expressing dissatisfaction with any aspect of a Part D sponsor‘s
operations, activities, or behavior, regardless of whether remedial action is requested.
Examples of subjects of a grievance include, but are not limited to:
Timeliness, appropriateness, access to, and/or setting of services provided by the
Part D sponsor
Concerns about waiting times, demeanor of pharmacy or customer service staff
A dispute concerning the timeliness of filling a prescription or the accuracy of filling
the prescription.

3.8.
Coverage Determinations (including Exceptions) and
Appeals 42 CFR Part 423 Subpart M; Prescription Drug Benefit
Manual, Chapter 18; 2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following

65

Requesting
Waivers?

Yes or No

qualifications by clicking on the appropriate response
in HPMS.
1. Applicant will process coverage determinations
(including exceptions) and appeals consistent with 42
CFR §423 subpart M.
2. Applicant agrees to abide by the coverage
determination and appeals policies contained in
Chapter 18 of the Prescription Drug Benefit Manual
and the Part D QIC Reconsideration Procedures
Manual.
3. Applicant will make arrangements with its network
pharmacies for the standardized pharmacy notice
(―Medicare Prescription Drug Coverage and Your
Rights‖) to be posted or distributed to enrollees in
accordance with the requirements set out in 42 CFR
§423.562 (a)(3).
4. Applicant will, in accordance with 42 CFR §423 subpart
M:
Track coverage determination (including exceptions)
and redetermination requests received both orally and
in writing,
Process coverage determinations (including
exceptions) and redeterminations within the
appropriate timeframes,
Provide appropriate and timely notification to enrollees
(and prescribing physicians or other prescribers, when
appropriate) of coverage determination (including
exceptions) and redetermination decisions, and
Train relevant staff and first tier, downstream and
related entities on all regulatory requirements.
5. At a minimum, Applicant must track the:
Date of receipt of a coverage determination request
(including an exception request) or redetermination
request,
Mode of receipt (i.e. fax, telephone, letter, etc.),
Person who filed the request,
Type of request made (i.e., standard or expedited),

66

Yes No

Date of receipt of a physician's or other prescriber‘s
supporting statement (for an exception request),
Disposition of request, and
Date of disposition
6. Applicant will notify the enrollee (and the prescribing
physician or other prescriber involved, as appropriate)
of an expedited coverage determination as
expeditiously as the enrollee‘s health condition
requires, but no later than 24 hours after receipt of the
request.
7. Applicant will ensure that an enrollee is notified of
standard coverage determination as expeditiously as
the enrollee‘s health condition requires, but no later
than 72 hours after receipt of the request.
8. Applicant will ensure that an enrollee is notified of a
standard coverage determination regarding
reimbursement and receives reimbursement (when
appropriate) no later than 14 calendar days after
receipt of the request.
9. Applicant will ensure that an enrollee is notified of a
decision on an exception request in accordance with
the regulatory timelines applicable to coverage
determinations. For exception requests, the
processing timeframe begins upon receipt of the
physician's or other prescriber‘s supporting statement.
10. Applicant will notify the enrollee (and the prescribing
physician or other prescriber involved, as appropriate)
of an expedited redetermination as expeditiously as the
enrollee‘s health condition requires, but no later than
72 hours after receipt of the request.
11. Applicant will ensure that an enrollee is notified of a
standard redetermination as expeditiously as the
enrollee‘s health condition requires, but no later than 7
calendar days after receipt of the request.
12. Applicant must automatically forward coverage
determination (including exception) and
redetermination requests to the Independent Review
Entity (IRE) when the notification timeframes are not
met.

67

13. Applicant will maintain an exceptions process that
includes a written description of how the organization
will provide for standard and expedited tiering
exception requests and non-formulary exception
requests (including exceptions to utilization
management tools), and how the organization will
comply with such description. Such policies and
procedures will be made available to CMS on request.
14. Applicant will ensure that it will comply with 42 CFR
§423.578(a) (b) which require a Part D sponsor to:
Grant a tiering or non-formulary exception (including an
exception to a utilization management tool) when it is
medically appropriate to do so, and
Provide the criteria for evaluating whether approval is
appropriate.
These requirements also apply to exceptions requests by
Medicare eligible children for off-formulary Part D pediatric
drugs and doses that are medically appropriate.
15. Applicant agrees that the exceptions process will not
be overly burdensome or onerous. For example, a Part
D Sponsor may not require that ALL exception
requests be accompanied by laboratory evidence.
16. Applicant agrees that approved non-formulary drugs
must be assigned to a single existing tier, unless
Applicant elects to apply a second less expensive level
of cost sharing for approved formulary exceptions for
generic drugs, so long as the second level of cost
sharing is associated with an existing formulary tier and
is applied uniformly to all approved formulary
exceptions for generic drugs. Applicant may not create
a tier specifically designed for non-formulary
exceptions.
17. Applicant agrees it may not restrict the number of
exception requests submitted by an enrollee.
18. Applicant agrees to :
Timely effectuate favorable decisions issued by the
IRE, an Administrative Law Judge, the Medicare
Appeals Council, or a federal court, and
Timely notify the IRE when a favorable decision has

68

been effectuated.
18. Applicant agrees to timely forward case files to the IRE
(upon request by the IRE) when an enrollee requests a
reconsideration by the IRE.
19. Applicant will inform its enrollees about of the
coverage determination (including exceptions) and
appeals process through information provided in the
Evidence of Coverage and outreach materials.
20. Applicant will make available to CMS upon CMS
request, coverage determination (including exceptions)
and appeals records.

3.9.
Coordination of Benefits 42 CFR Part 423 Subpart J;
Prescription Drug Benefit Manual, Chapter 14; 2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant agrees to comply with Chapter 14 of the
Prescription Drug Benefit Manual.
2. Applicant develops and operates a system for
requesting and collecting updated information from
enrollees about enrollees‘ other health insurance,
including whether such insurance covers outpatient
prescription drugs.
3. Applicant permits SPAPs and other third party payers
to coordinate benefits as required by the regulations in
42 CFR Part 423, Subpart J, and Chapter 14 of the
Prescription Drug Benefit Manual. For example, an
SPAP may require agreements be signed in order for
the state to pay premiums on behalf of a beneficiary.
CMS expects Part D sponsors to execute these trading
partner agreements within a reasonable timeframe.
4. Applicant agrees to pay user fees as required under 42
CFR §423.6 and as may be required under 42 CFR
§423.464(c).

69

Requesting
Waiver?
Yes No

Yes or No

5. Applicant agrees not to impose fees on SPAPs or other
third-party insurers that are unreasonable and/or
unrelated to the cost of coordination of benefits.
6. Applicant agrees to send updated information captured
in the beneficiary COB notification process about its
enrollees‘ other sources of prescription drug coverage
by sending electronic updates to the COB contractor.
7. Applicant agrees to receive COB files from CMS and
update its systems with these data at least weekly.
8. When a supplemental payer wishes to pay premiums
on behalf of plan enrollees, Applicant will:
As may be required by a supplemental payer, enter into
agreements with, and accept premium payments made
by these supplemental payers;
Suppress premium billing to the beneficiaries for whom
it accepts premium payments from supplemental
payers;
Inform enrollees not to use the SSA withhold when
another payer is paying their premium (in whole or in
part); and
Ensure that, the overall premium payment made by or
on behalf of a beneficiary does not vary among plan
enrollees (e.g., Sponsor cannot charge a different
premium to SPAPs for their members versus all other
enrollees).
9. If Applicant agrees to enter into an agreement with
SPAPs, accepting a risk-based, per capita amount to
administer a wrap-around benefit on behalf of the
beneficiary, the Applicant must follow the requirements
set forth in Chapter 14 of the Prescription Drug Benefit
Manual.
10. When the Applicant‘s service area includes States that
subsidize a portion of beneficiary cost-sharing through
their SPAPs through a non-risk lump-sum contract with
reconciliation, Applicant will:
Enter into an agreement to receive such subsidies;
Apply such subsidies to the first dollar of beneficiary
cost sharing under the Applicant‘s Part D plan; and

70

Submit claims information to the State to support
reconciliation.
11. Applicant will provide clear and prominently displayed
information identifying the SPAP as a co-sponsor of
benefits when the Applicant participates in a risk- or
non-risk lump sum per capita contract with an SPAP to
provide wrap-around benefits to Part D enrollees.
12. Applicant agrees to receive and process plan to plan
reconciliation reports on a monthly basis.
13. Applicant agrees to coordinate the reconciliation of
claims when a Part D sponsor other than the Part D
sponsor on record paid claims or when a non-Part D
payer (e.g., SPAP) paid claims and should not have
paid at all or paid out of the correct payer order in
accordance with Chapter 14 of the Prescription Drug
Benefit Manual.

3.10.
Tracking Out-of Pocket Costs (TrOOP) 42 CFR Part 423
Subpart J; Prescription Drug Benefit Manual, Chapters 13 and
Chapter 14; 2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant will track each enrollee‘s true out of pocket
(TrOOP) costs reflecting the amount the enrollee has
spent out of pocket during a program year on covered
Part D drugs.
2. Applicant will accept data concerning third party payers
in a format to be specified by CMS and use these data
in the Applicant‘s TrOOP calculation process.
3. Applicant will process claims and track TrOOP in real
time using the current HIPAA-approved NCPDP
standard.
4. Applicant will provide enrollees with a report on their
TrOOP status at least monthly if the enrollee‘s TrOOP

71

Requesting
Waiver?
Yes No

Yes or No

status has changed.
5. Applicant will provide enrollees daily access to their
current TrOOP status through the organization‘s tollfree customer service phone number.
6. In the event of disenrollment, Applicant agrees to
provide the TrOOP status of the beneficiary as of the
effective date of the disenrollment to the beneficiary, if
there has been a change in these data since the last
report to the beneficiary.
7. Applicant will retroactively adjust claims and
recalculates TrOOP balances based on Nx
transactions received from the TrOOP Facilitation
Contractor that were created based on other than realtime TrOOP-eligible claims.
8. Applicant will retroactively adjust claims and recalculate
TrOOP balances based on receipts received from its
Medicare enrollees that reflect amounts the enrollee
paid on other than real-time TrOOP-eligible claims.
9. Applicant agrees that when it receives an Nx
transaction, but has no supplemental payer information
on file to identify the payer, the Applicant contacts the
beneficiary to identify the payer and sends the payer
information to the COB Contractor via ECRS
verification.
10. Applicant agrees to retroactively adjust claims,
recalculate TrOOP balances, and reimburses other
payers (when applicable) whenever it receives
information (e.g., an LIS status change) that affects
how the Applicant previously adjudicated a claim, or
that indicates an error in the order of payment when
another payer(s) was involved.
11. Applicant will count other payer paid amounts as
satisfying the Part D deductible whether or not the
entire amount counts toward TrOOP.
12. Applicant will establish and identify in the Health Plan
Management System (HPMS) a COB contact who can
be contacted by CMS, the States and other payers to
resolve COB issues.

72

13. Applicant will establish an Automated TrOOP Balance
Transfer (ATBT) contact who can be contacted by CMS
or the TrOOP Facilitation Contractor to resolve ATBT.
14. Applicant agrees to develop the systems capability to
receive and respond to real-time (or batch) transactions
requesting TrOOP-related data for disenrolling Part D
beneficiaries as well as to receive these data for newly
enrolling Part D beneficiaries transferring mid-year from
another plan.
15. Applicant agrees that, when an exception to the ATBT
process is required, the Applicant will send TrOOPrelated data manually for disenrolling Part D
beneficiaries as well as receive these for newly
enrolling Part D beneficiaries transferring mid-year from
another plan.
16. Applicant agrees to develop the capacity to integrate
data received via electronic transactions (as well as
data received manually when the exception process is
required) into those systems that track and apply
beneficiary-level TrOOP and gross covered
prescription drug costs.
•
NOTE: For information regarding the TrOOP facilitator, Applicant may link to
http://medifacd.ndchealth.com/home/medifacd_home.htm

3.11.
Medicare Secondary Payer 42 CFR §423.462; Prescription
Drug Benefit Manual, Chapter 14; 2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant is familiar with rules that determine when
other payers are primary or secondary to Medicare as
referenced in 42 CFR §423.462.
2. Applicant will adhere to MSP laws and any other
Federal and State laws in establishing payers of last
resort.

73

Requesting
Waiver?
Yes

No

Yes or No

3. Applicant will follow the Rules for Coordination of
Benefits adopted in the most current National
Association of Insurance Commissioner Coordination of
Benefits Model Regulation.
4. Applicant will process claims in real time to support the
TrOOP facilitation process when it is a secondary payer
in accordance with the application of MSP rules.
5. Applicant will collect mistaken primary payment from
insurers, group health plans, employer sponsors,
enrollees and other entities.
6. Applicant agrees that in situations involving workers‘
compensation, Black Lung, No-Fault, or Liability
coverage to make conditional primary payment and
recover any mistaken payments, unless the Applicant is
already aware that the enrollee has workers‘
compensation, Black Lung, No-Fault, or Liability
coverage and has previously established that a certain
drug is being used exclusively to treat a related injury.
7. Applicant agrees that in situations involving workers‘
compensation Medicare set-asides including
prescription drugs, the Applicant will establish point-ofsale edits to deny payment and reject claims for the
included drugs.

3.12.
Marketing/Beneficiary Communications 42 CFR §423.50, 42
CFR §423.128; Prescription Drug Benefit Manual, Chapter 2;
2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant will comply with marketing guidelines and
approval procedures that are contained with Chapter 2
of the Prescription Drug Benefit Manual and posted on
the www.cms.hhs.gov/ website.
2. Applicant will make available to beneficiaries only those

74

Requesting
Waiver?

Yes or No
Yes

No

marketing materials that comply with CMS‘ marketing
guidelines.
3. Annually and at the time of enrollment, the Applicant
agrees to provide enrollees information about the
following Part D features, as described in the marketing
guidelines:
Enrollment and Disenrollment Procedures
Beneficiary Procedural Rights
Potential for Contract Termination
Benefits
Types of Pharmacies in the Pharmacy Network
Out-of-network Pharmacy Access
Formulary
Premiums and cost-sharing
Service Area
4. Applicant agrees to provide general coverage
information, as well as information concerning
utilization, grievances, appeals, exceptions, quality
assurance, and sponsor financial information to any
beneficiary upon request.
5. Applicant agrees to make marketing materials available
in any language that is the primary language of more
than 10% of an Applicant‘s plan‘s geographic service
area.
6. Applicant will maintain a toll-free customer service call
center that provides customer telephone service in
compliance with CMS standards. This means that the
Applicant must comply with at least the following:
Call center operates during normal business hours,
seven days a week from 8:00 AM to 8:00 PM for all time
zones in which the Applicant offers a Part D plan.
A customer service representative will be available to
answer beneficiary calls directly during the annual
enrollment period and 60 days after the annual
enrollment period.
On Saturdays, Sundays, and holidays from March 2nd
until the following annual enrollment period, a customer

75

service representative or an automated phone system
may answer beneficiary calls.
If a beneficiary is required to leave a message in voice
mail box due to the utilization of an automated phone
system, the applicant must ensure that a return call to a
beneficiary is made in a timely manner, but no later than
one business day from the leaving of the message by
the beneficiary.
The average hold time for a beneficiary to reach a
customer service representative must be two minutes or
less.
The disconnect rate of all incoming customer calls does
not exceed 5 percent.
Call center provides thorough information about the Part
D benefit plan, including co-payments, deductibles, and
network pharmacies.
Call center features an explicit process for handling
customer complaints.
Call center shall provide service to non-English
speaking, limited English proficient (LEP) and hearing
impaired beneficiaries.
7. Applicant will operate an Internet Web site that includes
all items identified in Chapter 2 of the Prescription Drug
Benefit Manual, including but not limited to: a)
describes the Applicant‘s Part D current, approved
formularies, b) describes prior authorization criteria, step
therapy requirements, and quantity limits, c) provides
60-days‘ notice to potential and current plan enrollees
regarding negative changes including the removal or
change in the tier placement of any drug on the plan‘s
formulary.
8. Applicant agrees to ensure that the marketed and
adjudicated formularies are consistent with the HPMS
approved formulary file.
9. Applicant will provide its plan enrollees, in a form
understandable to enrollees and on at least a monthly
basis for those months in which the enrollees use their
Part D benefits, an explanation of benefits that states a)
the item or service for which payment was made; b)
notice of the enrollee‘s right to an itemized statement; c)
a year-to-date statement of the total Part D benefits

76

provided in relation to deductibles, coverage limits, and
annual out-of-pocket thresholds; d) cumulative year-todate total of incurred costs; and e) applicable formulary
changes.
10. Applicant agrees not to include co-branding names
and/or logos of contracted providers or names and/or
logos that are substantially similar to a contracted
provider‘s name and/or logo on member identification
cards.
11. Applicant agrees that the subsequent CY Annual Notice
of Change (ANOC) / Summary of Benefits (SB) /
Formulary must be received by members (if applicable)
by October 31st of the current benefit year
12. Applicant will notify its enrollees that the Applicant will
release the enrollee‘s information, including the
enrollee‘s prescription drug event data, to CMS which
may release it for research and other purposes
consistent with all applicable Federal statutes and
regulations.
13. Applicant agrees to provide initial and renewal
compensation to a broker or agent for the sale of a
Medicare health plan with prescription drug coverage
consistent with CMS-established requirements in 42
CFR §422.2274 and 42 CFR §423.2274.
14. Applicant must ensure that brokers and agents selling
Medicare products are trained and tested on Medicare
rules and the specifics of the plans they are selling, and
that they pass with a minimum score as specified in
CMS guidance.
Note: While Cost Plan sponsors have to meet the Part D marketing guidelines, the
CMS review process will be integrated in the Part C Review required under 42 CFR
417.428.

3.13.
Provider Communications Prescription Drug Benefit
Manual, Chapter 2
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following

77

Requesting
Waiver?

Yes or No

qualifications by clicking on the appropriate response
in HPMS.
1. Applicant will operate toll-free call center to respond to
inquiries from pharmacies and providers regarding the
Applicant‘s Medicare prescription drug benefit. Inquiries
will concern such operational areas as claims
processing, benefit coverage, claims submission, and
claims payment. This means that the Applicant must
comply with at least the following:
Be available 24 hours a day when the pharmacy
network includes pharmacies that are open 24 hours a
day;
The average hold time for a pharmacist to reach a
customer service representative must be two minutes or
less.
The disconnect rate of all incoming calls does not
exceed 5 percent.
2. Applicant agrees that it will have a ―one-stop‖ area on its
website that provides needed information on the
procedures, the forms and the contact information for
their prior authorization, coverage determination
(including exceptions), and appeals processes.
3. Applicant will operate a toll-free call center to respond to
physicians and other prescribers for information related
to prior authorizations, coverage determinations
(including exceptions), and appeals requests . The call
center must operate during normal business hours and
never less than 8:00 a.m. to 6:00 p.m., Monday through
Friday according to the time zones for the regions in
which their plans operate. Applicant may use voicemail
provided the message:
Indicates that the mailbox is secure.
Lists the information that must be provided so the case
can be worked (e.g., provider identification, beneficiary
identification, type of request (coverage determination,
exception, or appeal, and whether the request is an
expedited exception or standard request).
For coverage determination (including exception)
requests : articulates and follows a process for
resolution within 24 hours of call for expedited requests

78

Yes

No

or 72 hours for standard requests.
For appeals requests: articulates and follows a process
for resolution within 72 hours for expedited appeals, and
7 calendar days for standard appeals.
Provides and follows a process for immediate access in
situations where an enrollee‘s life or health is in serious
jeopardy.

3.14.
Compliance Plan 42 CFR §423.504(b)(4)(vi); Prescription
Drug Benefit Manual, Chapter 9
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant‘s Part D compliance plan is in accordance
with all Federal and State regulations and guidelines,
including Chapter 9—Part D Program to Control Fraud,
Waste and Abuse of the Prescription Drug Benefit
Manual by time of CMS contract with the Part D
Applicant. The compliance plan must clearly establish
that it will address Part D.
2. Applicant‘s Part D compliance plan consists of written
policies, procedures, and standards of conduct
addressing Part D issues and articulating your
organization‘s commitment to abide by all applicable
Federal and State standards.
3. Applicant‘s Part D compliance plan designates an
employee as the compliance officer and compliance
committee accountable to senior management. (Note:
This requirement cannot be delegated to a first tier,
downstream or related entity.)
4. Applicant‘s Part D compliance plan includes effective
training and education between the compliance officer
and the Part D Applicant‘s employees, managers and
directors and the Part D Applicant‘s first tier,
downstream and related entities. Note: To the extent

79

Requesting
Waiver?
Yes or No
Yes

No

that aspects of the compliance plan are delegated, it is
important to remember that the Applicant‘s compliance
officer must maintain appropriate oversight of the
delegated activities.
5. Applicant‘s Part D compliance plan includes effective
lines of communication between the compliance officer,
members of the compliance committee, the Part D
Applicant‘s employees, managers and directors and the
Part D Applicant‘s first tier, downstream and related
entities.
6. Applicant‘s Part D compliance plan includes disciplinary
standards that are well-publicized within the
organization.
7. Applicant‘s Part D compliance plan includes procedures
for internal monitoring and auditing (including first tier,
downstream, and related entities) of operations as they
relate to Part D administration.
8. Applicant‘s Part D compliance plan includes procedures
for ensuring prompt response to detected Part D
offenses and development of corrective action
initiatives, relating to the Applicant‘s contract as a Part D
sponsor. This compliance plan should include
procedures to voluntarily self report potential fraud or
misconduct related to the Part D program to CMS or its
designee.
B.
Provide as an upload via HPMS, in a .pdf format, a copy of your
organization’s Medicare Part D Compliance Plan that you intend to use for this
contract.
The Part D compliance plan must be in accordance with 42 CFR §423.504(b)(4)(vi). In
addition, the Part D compliance plan must demonstrate that all 7 elements in the
regulation and in Chapter 9 are being implemented and are specific to the issues and
challenges presented by the Part D program. A general compliance plan applicable to
healthcare operations is not acceptable.
Note: Please be advised that the Part D Applicant is ultimately responsible for the
implementation and monitoring of the day-to-day operations of its Part D compliance
program. Section 40.1 of Chapter 9 of the Prescription Drug Benefit Manual indicates
that the compliance officer and compliance committee functions may not be delegated
or subcontracted. This means the Medicare Compliance Officer identified in HPMS
(see section entitled HPMS Part D Contacts) must be an employee of the Applicant. A
compliance plan adopted and operated by a Part D Applicant‘s first tier, downstream or

80

related entity is not sufficient to demonstrate that the Part D Applicant meets the
compliance program requirement.
C.
In HPMS, complete and upload the table below. Applicant must clearly
identify where each requirement can be found in the uploaded documents.
Crosswalk for Part D Compliance Plan

Document
Page
Number

Written policies, procedures, and standards of conduct
addressing Part D issues and articulating your organization‘s
commitment to abide by all applicable Federal and State
standards.
Designation of an employee as the compliance officer and
compliance committee accountable to senior management.
(Note: This requirement cannot be delegated to a first tier,
downstream, or related entity).
Effective training and education between the compliance officer
and organization employees, contractors, agents, directors, first
tier, downstream and related entities.
Effective lines of communication between the compliance officer
and organization employees, contractors, agents and directors
and members of the compliance committee.
Enforcement of standards through disciplinary guidelines that
are well-publicized in the organization.
Procedures for internal monitoring and auditing (including first
tier, downstream, or related entities) of operations as they relate
to Part D administration.
Procedures for ensuring prompt response to detected Part D
offenses and development of corrective action initiatives,
relating to the Applicant‘s contract as a Part D sponsor.

3.15.
Reporting Requirements 42 CFR §423.514; 2010 Reporting
Requirements
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response

81

Requesting
Waiver?

in HPMS:

Yes

No

Yes or No

Reporting Requirements Guidance
1. Applicant agrees to comply with the Reporting
Requirements Guidance that is posted on the
www.cms.hhs.gov/ website.
2. Applicant agrees that an individual with authority to sign
on behalf of your organization will attest that the
reporting requirements data has been audited internally
for accuracy consistent with forthcoming CMS guidance.
BUSINESS TRANSACTIONS AND FINANCIAL REQUIREMENTS
3. Applicant will report, consistent with 42 CFR
§423.514(b), information related to significant business
transactions between the Part D plan sponsor and a
party in interest within 120 days of the end of each fiscal
year. This qualification includes combined financial
statements, where required under 42 CFR
§423.514(b)(2).
4. Applicant will notify CMS of any loans or other special
financial arrangements made with contractors, first tier,
downstream and related entities as that term is defined
in 42 CFR §423.501.
5. Applicant will submit audited financial statements to
CMS annually.
Claims Data
6. The Applicant or the Applicant‘s representative, such as
a first tier, downstream, or related entity, has data
management processes and data systems capable of
collecting, storing and protecting electronic eligibility and
claims data. Data to be collected will encompass
quantity, type, and costs of pharmaceutical prescriptions
filled for enrollees. The plan must link this information to
Medicare beneficiary identification numbers (HIC#s).
7. The Applicant or the Applicant‘s representative, such as
a first tier, downstream, or related entity, has data
management processes and data systems capable of
creating and submitting prescription drug event records
for Medicare enrollees for every Part D drug prescription
in the format required by CMS, using batch submission

82

processes. Data to be submitted will encompass
quantity, type and costs of pharmaceutical prescriptions
filled for enrollees. The plan must link this information to
Medicare beneficiary identification numbers (HIC#s).
8. The Applicant or the Applicant‘s representative, such as
a first tier, downstream, or related entity, has data
management processes and data systems capable of
submitting data to CMS via the Medicare Data
Communications Network (MDCN).
9. The Applicant or the Applicant‘s representative, such as
a first tier, downstream, or related entity, has data
management processes and data systems capable of
performing data edit and quality control procedures
(including resolution of rejected claims) to ensure
accurate and complete prescription drug data.
10. The Applicant or the Applicant‘s representative, such as
a first tier, downstream, or related entity, has data
management processes and data systems capable of
correcting all data errors identified by CMS.
11. The Applicant or the Applicant‘s representative, such as
a first tier, downstream, or related entity, has data
management processes and data systems capable of
collecting data for dates of service within the coverage
year with a 3-month closeout window for the submission
of remaining unreported claims data.
12. The Applicant or the Applicant‘s representative, such as
a first tier, downstream, or related entity, has data
management processes and data systems capable of
providing additional information for the purposes of
reconciliation of risk factors, low income subsidy
payments, reinsurance payments, and risk corridor as
required by CMS.
Rebate Data
13. The Applicant will report direct and indirect
remuneration (DIR) dollars for payment reconciliation on
an annual basis at the Plan Benefit Package (PBP)
level/plan level in the manner specified by CMS. In
addition, the Applicant will maintain records and
documentation to verify the DIR data reported to CMS.

83

Other Data
14. Applicant will report at a frequency determined by CMS
specified data (pursuant to 42 CFR §423.514(a)) on a
variety of measures to support payment, program
integrity, program management, and quality
improvement activities in a manner prescribed by CMS.
Such data submissions will be accurate and timely.
15. The Applicant will provide CMS with routine
administrative reports (pursuant to 42 CFR §423.514
(a)) on a variety of measures that concern the
Applicant‘s performance in the administration of the Part
D benefit. Such reports shall be submitted according to
instructions issued with timely notice by CMS.
Supporting www.medicare.gov
16. The Applicant will submit pricing and pharmacy network
information to be publicly reported on
www.medicare.gov in order to provide Medicare
beneficiaries with necessary information regarding
prescription drug costs under the respective plans.
Details regarding this data requirement will be posted on
www.cms.hhs.gov by April of the prior year.
Conflict of Interest
17. The Applicant will provide financial and organizational
conflict of interest reports to CMS, pursuant to
instructions to be issued by CMS.

3.16.
Data Exchange between Part D Sponsor and CMS 42 CFR
§423.505(c) and (k)
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
HPMS
1. Applicant will use HPMS to communicate with CMS in
support of the application process, formulary submission

84

Requesting
Waiver?
Yes

No

Yes or No

process, bid submission process, ongoing operations of
the Part D program, and reporting and oversight
activities. Part D sponsors are required to secure
access to HPMS in order to carry out these functions.
Enrollment & Payment
2. Applicant will establish connectivity to CMS as noted in
the instructions provided by the MMA Help Desk at 1800-927-8069 or via the MMA Help Desk web page,
www.cms.hhs.gov/mmahelp, in the Plan Reference
Guide for CMS Part C/D Systems link.
3. Applicant will submit enrollment, disenrollment, and
change transactions to communicate membership
information to CMS each month.
4. Applicant will reconcile Part D data to CMS
enrollment/payment reports within 45 days of
availability.
5. Applicant will submit enrollment/payment attestation
forms within 45 days of CMS report availability.
6. Applicant will participate in connectivity testing and other
system testing measures as provided to the Applicants
prior to contract execution to validate system setup.
7. Applicant will establish system(s) to process enrollment
and payment transactions as exchanged with CMS in
accordance with system development lifecycle
standards.
8. Applicant will ensure appropriate security safeguards
and protocols are in place to protect the protected health
information in the system(s).
9. Applicant will maintain all pertinent system security and
disaster recovery plans and procedures.
10. In accordance with 42 CFR §423.322, the Applicant
agrees to provide CMS with any data required to ensure
accurate prospective, interim, and/or final reconciled
payments including, but not limited to, the following: test
data, Prescription Drug Event (PDE) records, enrollment
transactions, Direct and Indirect Remuneration (DIR)
data, discrepancy records, and premium payment data.

85

3.17.
Health Insurance Portability and Accountability Act of 1996
(HIPAA) and Related CMS Requirements 45 CFR Parts 160, 162,
and 164; CMS issued guidance 08/15/2006 and 08/26/08; 2008
Call Letter; and P.L. 111-5 (2009)
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate
response in HPMS.
1. Applicant will comply with all applicable standards,
implementation specifications, and requirements in
the Standards for Privacy of Individually Identifiable
Health Information under 45 CFR Parts 160 and 164,
Subparts A and E.
2. Applicant will comply with all applicable standards,
implementation specifications, and requirements in
the Security Standards under 45 CFR Parts 160 and
164, Subparts A and C.
3. Applicant agrees to encrypt all hard drives or other
storage media within the device as well as all
removable media.
4. Applicant agrees to develop and implement policies
addressing the secure handling of portable media that
is accessed or used by the organization.
5. Applicant will comply with all applicable standards,
implementation specifications, and requirements in
the Standard Unique Health Identifier for Health Care
Providers final rule under 45 CFR Parts 160 and 162.
6. Applicant agrees that when its organization receives
a National Provider Identifier (NPI) in prescription
drug event data, that the organization must report an
NPI.
7. Applicant agrees to implement a contingency plan
related to compliance with the NPI provisions.
8. Applicant will comply with all applicable standards,
implementation specifications, and requirements in

86

Requesting
Waiver?
Yes

No

Yes or No

the Standards for Electronic Transactions under 45
CFR Parts 160 and 162.
9. Applicant agrees to transmit payment and remittance
advice consistent with the HIPAA-adopted ACS X12N
835, Version 4010/4010A1: Health Care Claim
Payment and Remittance Advice Implementation
Guide (―835‖).
10. Applicant agrees to submit the Offshore Subcontract
Information and Attestation via HPMS for each
offshore subcontractor (first tier, downstream and
related entities) (including downstream offshore
subcontractors‘ first tier, downstream and related
entities) that receive, process, transfer, handle, store,
or access Medicare beneficiary protected health
information (PHI) by the last Friday in September for
the upcoming contract year.
11. Applicant agrees to comply with privacy and security
provisions found in sections 13401, 13402, and
13404 of the American Recovery and Reinvestment
Act of 2009, P.L. 111-5 and forthcoming CMS
guidance related to Part D sponsor‘s business
associates that obtain or create protected health
information.

3.18.
Prohibition on Use of SSN or Medicare ID number on
Enrollee ID Cards Prescription Drug Benefit Manual, Chapter 2
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate
response in HPMS.
1. Applicant agrees not to use an enrollee‘s Social
Security Number (SSN) or Medicare ID Number on
the enrollee‘s identification card.

3.19.

Record Retention 42 CFR §423.505(d)

A. In HPMS, complete the table below:

87

Requesting
Waiver?
Yes

No

Yes or No

Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.

Requesting
Waiver?

Yes or No
Yes

No

1. The Applicant will maintain books, records, documents,
and other evidence of accounting procedures and
practices consistent with 42 CFR §423.505(d).
2. Applicant agrees to have pharmacies, contracted for
the Part D benefit, maintain prescription records in their
original format for the greater of 3 years or the period
required by State law and allow those records to be
transferred to an electronic format that replicates the
original prescription for the remaining 7 years of the 10
year record retention requirement.
3. Applicant agrees to keep all other records—except
prescription records—that must be retained for
Medicare under Part C and Part D in the format(s)
required by State law or at the Applicant‘s discretion.

3.20.
Prescription Drug Event (PDE) Records; 42 CFR Part 423
Subpart G; CMS issued guidance 04/27/2006
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS:
1. Applicant agrees to abide by CMS guidance related
to PDE data. Such guidance includes the 2008
Regional Prescription Drug Event Data Technical
Assistance Resource Guide which can be found at
www.csscoperations.com/new/pdic/pddtraining/pdd-training.html.
2. Applicant agrees to submit data and information
necessary for CMS to carry out payment provisions.
3. Applicant agrees to submit PDE data at least
monthly.
4. Applicant agrees to submit the PDE data in the

88

Requesting
Waiver?

Yes or No
Yes

No

format described by CMS and in accordance with
the National Council for Prescription Drug Programs
(NCPDP) industry standard format.
5. Applicant agrees to provide diagnosis data for risk
adjustment as required by CMS.
6. Applicant agrees to meet all data submission
deadlines.

3.21.

Claims Processing; CMS issued guidance 04/26/2006

A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant develops and operates an on-line claims
processing system that operates in real time to ensure
accurate and timely payment of all claims submitted by
network pharmacies on behalf of Part D plan enrollees.
System operates according to the following standards:
98% response within 4 seconds;
99% of all claims paid with no errors;
99% system availability.
2. Applicant develops and operates a system designed
to:
Pay non-electronic claims submissions from network
pharmacies in accordance with 42 CFR §423.520; and
Pay requests for reimbursement from beneficiaries in
accordance with 42 CFR §423.568(b).
3. Applicant will develop and have available for CMS
inspection a complete description of your claims
adjudication system including:
Hardware and software;
Operating system;
Commercial organization from which Applicant receives

89

Requesting
Waiver?

Yes or No
Yes

No

pricing files, including file revision history saved;
Number of sites processing claims (including disaster
recovery back-up system);
System volume in covered lives, including the number
of transactions the system can support per day and per
hour.
4. Applicant will develop and have available to CMS upon
request policies and procedures that include a
complete description and flow chart detailing the claims
adjudication process for each:
Contracted network pharmacies;
Paper claims;
Out-of-network pharmacy claims submitted by
beneficiaries;
Non-electronic claims submitted by network
pharmacies, and other payers seeking to coordinate
benefits;
Batch-processed claims; and
Manual claim entry (e.g. for processing direct
member reimbursement).
5. Applicant will develop and will make available to CMS
upon request policies and procedures that include a
complete description of claim detail management,
including:
The length of time that detailed claim information is
maintained online (not less than 12 months)
The data storage process after it is no longer online
The length of time that detailed claim information is
stored when it is no longer online (not less than 10
years)
6. Applicant will develop and have available to CMS upon
request policies and procedures that include a
complete description of the accessibility of this
information for data capture purposes and flow chart of
the claims data retrieval process for each:
Entire claims history file;
File claims adjustments including records of

90

reimbursements and recoveries due to network
pharmacies and beneficiaries;
Deductible files/TrOOP/ and gross covered prescription
drug cost accumulator.
7. Applicant will have a robust testing process that will
identify and correct any plan configuration errors prior
to implementation.
8. Applicant will use HIPPA compliant transactions where
applicable.
9. Applicant can and will document the manner and extent
to which it has tested benefit designs such as drug
exclusions or quantity limitations and plan parameters
such as co-payments and benefit intervals (phases) .
10. Applicant agrees to rapidly adopt any new messaging
approved by the NCPDP Workgroup to adjudicate a
Part D claim and appropriately coordinate benefits in
real time.
11. Applicant agrees to regularly update their systems with
the most current information on sanctioned providers
and have processes in place to identify and prevent
payment of Part D claims at point-of-sale when such
claims have been prescribed by excluded providers.

3.22.
Premium Billing 42 CFR §423.293; CMS issued guidance
03/08/2007
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following
qualifications to be approved for a Part D contract.
Attest ‘yes’ or ‘no’ to each of the following
qualifications by clicking on the appropriate response
in HPMS.
1. Applicant agrees it will take steps to ensure that
members are not over billed or double billed for their
monthly premiums. The Applicant will promptly refund
members when billing errors occur.
2. Applicant agrees it cannot prevent excessive billing
when a member exercises their right to have Social
Security withholding and has a secondary payer (e.g.,

91

Requesting
Waiver?
Yes or No
Yes

No

SPAP) paying part of their premium. In such cases the
Applicant agrees it will promptly reimburse members
for overpayments.
3. Applicant agrees it will not direct bill a member when
the member is already in Premium Withholding status
until the status change with both CMS and SSA has
been confirmed.
4. Applicant agrees that when a member is in Premium
Withholding status and the withheld amount has not
been issued by CMS in the monthly plan payments, the
Applicant will resolve the matter with CMS not with the
member.

3.23.
Consumer Assessment Health Providers Survey (CAHPS)
Administration 2010 Call Letter
A. In HPMS, complete the table below:
Applicant must attest ‘yes’ to each of the following

Requesting
Waiver?

qualifications to be approved for a Part D contract. Attest
‘yes’ or ‘no’ to each of the following qualifications by
clicking on the appropriate response in HPMS.
1. Applicant agrees once its enrollment is more than 600
enrollees (as of July in the preceding contract year), it will
contract with an approved CAHPS survey vendor and pay for the
CAHPS data collection costs.
2. Applicant agrees to abide by forthcoming CMS guidance to the
process for contracting with approved CAHPS survey vendors.

92

Yes or No

Yes

No

Upload in HPMS, in a .pdf format, the following certification:

4. Certification
I, _________________________________, attest to the following:
NAME, TITLE
I have read the contents of the completed application and the information contained
herein is true, correct, and complete. If I become aware that any information in this
application is not true, correct, or complete, I agree to notify the Centers for Medicare &
Medicaid Services (CMS) immediately and in writing.
I authorize CMS to verify the information contained herein. I agree to notify CMS in
writing of any changes that may jeopardize my ability to meet the qualifications stated in
this application prior to such change or within 30 days of the effective date of such
change. I understand that such a change may result in termination of the approval.
I agree that if my organization meets the minimum qualifications and is Medicareapproved, and my organization enters into a Part D contract with CMS, I will abide by
the requirements contained in Section 3.0 of this Application and provide the services
outlined in my application.
I agree that CMS may inspect any and all information necessary including inspecting of
the premises of the Applicant‘s organization or plan to ensure compliance with stated
Federal requirements including specific provisions for which I have attested. I further
agree to immediately notify CMS if despite these attestations I become aware of
circumstances which preclude full compliance by January 1 of the upcoming contract
year with the requirements stated here in this application as well as in Part 423 of 42
CFR of the regulation.
I understand that in accordance with 18 U.S.C. §1001, any omission, misrepresentation
or falsification of any information contained in this application or contained in any
communication supplying information to CMS to complete or clarify this application may
be punishable by criminal, civil, or other administrative actions including revocation of
approval, fines, and/or imprisonment under Federal law.
I further certify that I am an authorized representative, officer, chief executive officer, or
general partner of the business organization that is applying for qualification to enter
into a Part D contract with CMS.
I acknowledge that I am aware that there is operational policy guidance, including the
forthcoming Call Letter, relevant to this application that is posted on the CMS website
and that it is continually updated. Organizations submitting an application in response
to this solicitation acknowledge that they will comply with such guidance should they be
approved for a Part D contract.

93

__________________________

____________________

Authorized Representative Name (printed)

Title

__________________________________

_________________________

Authorized Representative Signature

Date (MM/DD/YYYY)

94

5. Appendices

95

APPENDIX I – Summary of PDP Application Requirements Fulfilled
under Part C for Cost Plan Prescription Drug Applicants
Part D Regulation
Waived

Regulatory Requirement(s)
Description

Basis and Rationale

42 CFR 423
Subpart I,
excepting 42 CFR
§423.440 ( which
concerns Federal
preemption of
State law and
prohibition of
State premium
taxes)

Licensure and Solvency – Applicant
must be licensed to bear risk in the
State in which it intends to operate
or apply for a licensure waiver and
meet CMS solvency standards.

Duplicative of Cost Plan requirements
for licensure and solvency under 42
CFR §417.404 (General requirements)
and 42 CFR §417.407 (Requirements
for a Competitive Medical Plan (CMP)).
All Cost Plans are State licensed in
some manner or have authority to offer
a Cost Plan in all states in which they
operate.

42 CFR §423.112
(a)

Service Area – Applicant must offer
a Part D plan that serves at least an
entire PDP region.

Conflicts with Cost Plan regulations (42
CFR §417.1) defining the service area
for HMOs and CMPs offering Medicare
reasonable Cost Plans.

42 CFR
§423.120(a)(3)

Pharmacy Network – Applicant must
offer its Part D plan benefit through
a contracted retail pharmacy
network that meets CMS standards
for convenient access.

Waiver stated in regulations at 42 CFR
§423.120(a)(7)(i) excuses from the CMS
standards for convenient access those
Cost contractors that administer their
Part D benefit through pharmacies
owned and operated by the Cost
contractor if that organization‘s
pharmacy network access meets the
CMS convenient access standards .
{Note: Applicants will be expected to
provide comparable information in the
application for organizational
pharmacies}

Pharmacy Network – Applicant must
offer its Part D benefit through any
willing pharmacy that agrees to
meet reasonable and relevant
standard network terms and
conditions.

Waiver promotes the coordination of
Parts C and D benefits. Excuses from
CMS any willing pharmacy requirement
those Cost contractors that administer
their Part D benefit through pharmacies
owned and operated by the Cost
contractor and dispense at least 98% of
all prescriptions through pharmacies
owned and operated by Applicant.

Waiver applies
only to Cost
contractors that
operate their own
pharmacies

42 CFR
§423.120(a)(8)(i)
Waiver applies
only to Cost
contractors that
operate their own
pharmacies

96

APPENDIX II—Attestation for Cost Plan Employer/Union-Only Group
Waiver Plans (800-Series)
1. EGWP SERVICE AREA REQUIREMENTS
Cost Plan applicant understands that as a Cost plan with Optional Supplemental Part D ―800
series‖ EGWPs, it can provide coverage to beneficiaries eligible for the EGWP throughout the
service area where the applicant also offers individual plans.
NOTE: {Cost plan sponsor must have the same service area for its Part D EGWPs as its
individual plan service area.}
I certify that I am an authorized representative, officer, chief executive officer, or general
partner of the business organization that is applying for qualification to offer employer/union-only
group waiver plans in association with my organization‘s Cost Plan Sponsor Contract with CMS.
I have read, understand, and agree to comply with the above statement about service areas. If I
need further information, I will contact one of the individuals listed in the instructions for this
application.
{Entity MUST complete for a complete application.}
2. CERTIFICATION
This appendix, along with the underlying 2011 Solicitation for Applications for New Cost Plan
Sponsors, comprises the entire ―800 series‖ EGWP application for Cost Plan applicants. All
provisions of the underlying application apply to all employer/union-only group waiver plan
benefit packages offered by the Applicant except where the provisions are specifically modified
and/or superseded by particular employer/union-only group waiver guidance, including those
waivers/modifications set forth below (specific sections of the underlying application that have
been waived or modified for new Cost Plan Applicants are noted in parentheses)
For existing Cost Plan Sponsors, this appendix comprises the entire ―800 series‖ EGWP
application for Cost Plan Sponsors. All provisions of the Part D Sponsor‘s existing contract with
CMS will apply to all employer/union-group waiver plan benefit packages offered by Part D
Sponsor except where the provisions are specifically modified and/or superseded by particular
employer/union-only group waiver guidance, including those waivers/modifications set forth
below.
I, the undersigned, certify to the following:
1) Applicant is applying to offer new employer/union-only group waiver (―800 series‖) plans and
agrees to be subject to and comply with all CMS employer/union-only group waiver guidance.
2) In order to be eligible to offer employer/union-only group waiver plans, Applicant attests that
it will only offer these plans in those areas where it is licensed and satisfies the requirement to
offer individual plans under this contract number.

97

3) Applicant attests that it will restrict enrollment in its employer/union-only group waiver plans
to those Medicare eligible individuals eligible for the employer‘s/union‘s employment-based
group coverage.
4) Applicant understands and agrees that it is not required to submit a 2011 Part D bid (i.e., bid
pricing tool) to offer its employer/union-only group waiver plans. (Section 3.2.6A1)
5) In order to be eligible for the CMS retail pharmacy access waiver of 42 CFR §423.120(a)(1),
Applicant attests that its retail pharmacy network is sufficient (or will be sufficient prior to
enrollment) to meet the needs of its enrollees throughout the employer/union-only group waiver
plan‘s service area, including situations involving emergency access, as determined by CMS.
Applicant acknowledges and understands that CMS may review the adequacy of the Applicant‘s
pharmacy networks and potentially require expanded access in the event of beneficiary
complaints or for other reasons it determines in order to ensure that the Applicant‘s network is
sufficient to meet the needs of its employer group population. (Section 3.3.1A1)
6) Applicant understands that its employer/union-only group waiver plans will not be included in
the processes for auto-enrollment (for full-dual eligible beneficiaries) or facilitated enrollment (for
other low income subsidy eligible beneficiaries). (Section 3.4A2)
7) Applicant understands that its employer/union-only group waiver plans will not be subject to
the requirements contained in 42 CFR §422.64 and 42 CFR §423.48 to submit information to
CMS, including the requirements to submit information (e.g., pricing and pharmacy network
information) to be publicly reported on www.medicare.gov and , Medicare Prescription Drug
Plan Finder (―MPDPF‖). (Sections 3.6A and 3.15A16)
8) Applicant understands that dissemination materials for its employer/union-only group waiver
plans are not subject to the requirements contained in 42 CFR §423.50 to be submitted for
review and approval by CMS prior to use. However, Applicant agrees that it will submit these
materials to CMS at the time of use in accordance with the procedures outlined in Chapter 9 of
the Medicare Managed Care Manual (MMCM). Applicant also understands CMS reserves the
right to review these materials in the event of beneficiary complaints or for any other reason it
determines to ensure the information accurately and adequately informs Medicare beneficiaries
about their rights and obligations under the plan. (Section 3.12A1)
9) Applicant understands that its employer/union-only group waiver plans will not be subject to
the requirements regarding the timing for issuance of certain dissemination materials, such as
the Annual Notice of Change/ Evidence of Coverage (ANOC/EOC), Summary of Benefits (SB),
Formulary, and LIS rider when an employer‘s or union‘s open enrollment period does not
correspond to Medicare‘s Annual Coordinated Election Period. For these employers and
unions, the timing for issuance of the above dissemination materials should be appropriately
based on the employer/union sponsor‘s open enrollment period. For example, the Annual
Notice of Change/Evidence of Coverage (ANOC/EOC), Summary of Benefits (SB), LIS rider,
and Formulary are required to be received by beneficiaries no later than 15 days before the
beginning of the employer/union group health plan‘s open enrollment period. The timing for
other dissemination materials that are based on the start of the Medicare plan (i.e., calendar)
year should be appropriately based on the employer/union sponsor‘s plan year. (Section
3.12A11)
10) Applicant understands that the dissemination requirements set forth in 42 CFR §423.128
will not apply to its employer/union-only group waiver plans when the employer/union sponsor is
subject to alternative disclosure requirements (e.g., the Employee Retirement Income Security
Act of 1974 (―ERISA‖)) and complies with such alternative requirements. Applicant agrees to
comply with the requirements for this waiver contained in employer/union-only group waiver

98

guidance, including those requirements contained in Chapter 9 of the MMCM. (Section 3.12A1A2, A9)
11) Applicant understands that its employer/union-only group waiver plans will not be subject to
the Part D beneficiary customer service call center hours and call center performance
requirements. Applicant attests that it will ensure that a sufficient mechanism is available to
respond to beneficiary inquiries and will provide customer service call center services to these
members during normal business hours. However, CMS may review the adequacy of these call
center hours and potentially require expanded beneficiary customer service call center hours in
the event of beneficiary complaints or for other reasons in order to ensure that the entity‘s
customer service call center hours are sufficient to meet the needs of its enrollee population.
(Section 3.12A6)
12) Applicant understands that CMS has waived the requirement that the employer/union-only
group waiver plans must provide beneficiaries the option to pay their premium through Social
Security withholding. Thus, the premium withhold option will not be available for enrollees in
Applicant‘s employer/union-only group waiver plans. (Sections 3.4A10 and 3.22A2-A4)
13) This Certification is deemed to incorporate any changes that are required by statute to be
implemented during the term of the contract, and any regulations and policies implementing or
interpreting such statutory provisions.
14) I have read the contents of the completed application and the information contained herein
is true, correct, and complete. If I become aware that any information in this application is not
true, correct, or complete, I agree to notify CMS immediately and in writing.
15) I authorize CMS to verify the information contained herein. I agree to notify CMS in writing
of any changes that may jeopardize my ability to meet the qualifications stated in this application
prior to such change or within 30 days of the effective date of such change. I understand that
such a change may result in termination of the approval.
16) I understand that in accordance with 18 U.S.C. §1001, any omission, misrepresentation or
falsification of any information contained in this application or contained in any communication
supplying information to CMS to complete or clarify this application may be punishable by
criminal, civil, or other administrative actions including revocation of approval, fines, and/or
imprisonment under Federal law.
17) I acknowledge that I am aware that there is operational policy guidance, including the
forthcoming, relevant to this application that is posted on the CMS website and that it is
continually updated. Organizations submitting an application in response to this solicitation
acknowledge that they will comply with such guidance should they be approved to offer
employer/union-only group waiver plans in association with the organization‘s Cost Plan
Contract with CMS.
I certify that I am an authorized representative, officer, chief executive officer, or general
partner of the business organization that is applying for qualification to offer employer/union-only
group waiver plans in association with my organization‘s Cost Plan Sponsor Contract with CMS.
I have read and agree to comply with the above certifications.
{Entity MUST check box for a complete application.}

99

{Entity MUST create 800-series PBPs during plan creation and designate EGWP service areas.}

100

APPENDIX III -- Crosswalks of Section 3.1.1D Requirements in
Subcontracts submitted as Attachments to Section 3.1.1
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart for
each contract/administrative services agreement submitted under Section 3.1.1D.
Applicants must identify where specifically (i.e., the pdf page number in each
contract/administrative services agreement the following elements are found.
Section

Requirement

Location in Subcontract
by Page number and
Section

3.1.1D1

The parties to the contract.

3.1.1D2

The functions to be performed by the first tier,
downstream, or related entity. 42 CFR
§423.505(i)(4)(i)

3.1.1D3

Describe the reporting requirements the first
tier, downstream, or related entity identified in
Section 3.1.1C of the application has to the
applicant. 42 CFR §423.505(i)(4)(i)

3.1.1D4

Language clearly indicating that the first tier,
downstream, or related entity has agreed to
participate in your Medicare Prescription Drug
Benefit program (except for a network
pharmacy if the existing contract would allow
participation in this program).

3.1.1D5

Contains flow-down clauses requiring the first
tier, downstream or related entity activities to
be consistent and comply with the Applicant‘s
contractual obligations as a Part D sponsor. 42
CFR §423.505(i)(3)(iii)

3.1.1D6

The payment the first tier, downstream, or
related entity will receive for performance under
the contract, if applicable.

3.1.1D7

Are for a term of at least the one-year contract
period for which application is submitted. Note:
Where the contract is for services or products
to be used in preparation for the next contract
year‘s Part D operations (marketing,

101

enrollment), the initial term of such contract
must include this period of performance (e.g.,
contracts for enrollment-related services must
have a term beginning no later than November
15 extending through the full contract year
ending on December 31 of the next year).
3.1.1D8

Are signed by a representative of each party
with legal authority to bind the entity.

3.1.1D9

Language obligating the first tier, downstream,
or related entity to abide by all applicable
Federal laws and regulations and CMS
instructions. 42 CFR §423.505(i)(4)(iv)

3.1.1D10 Language obligating the first tier, downstream,
or related entity to abide by State and Federal
privacy and security requirements, including the
confidentiality and security provisions stated in
the regulations for the program at 42 CFR
§423.136.
3.1.1D11 Language ensuring that the first tier,
downstream, or related entity will make its
books and other records available in
accordance with 42 CFR 423.505(e)(2) and 42
CFR 423.505(i)(2). Generally stated these
regulations give HHS, the Comptroller General,
or their designees the right to audit, evaluate
and inspect any books, contracts, records,
including medical records and documentation
involving transactions related to CMS‘ contract
with the Part D sponsor and that these rights
continue for a period of 10 years from the final
date of the contract period or the date of audit
completion, whichever is later. 42 CFR
§423.505
3.1.1D12 Language stating that the first tier, downstream,
or related entity will ensure that beneficiaries
are not held liable for fees that are the
responsibility of the Applicant. 42 CFR
§423.505(i)(3)(i)

102

3.1.1D13 Language indicating that any books, contracts,
records, including medical records and
documentation relating to the Part D program
will be provided to either the sponsor to provide
to CMS or its designees or will be provided
directly to CMS or its designees. 42 CFR
§423.505(i)(3)(iv)
3.1.1D14 Language ensuring that if the Applicant, upon
becoming a Part D sponsor, delegates an
activity or responsibility to the first tier,
downstream, or related entity, that such activity
or responsibility may be revoked if CMS or the
Part D sponsor determines the first tier,
downstream, or related entity has not
performed satisfactorily. Note: The contract
may include remedies in lieu of revocation to
address this requirement. 42 CFR
§423.505(i)(4)(ii)
3.1.1D15 Language specifying that the Applicant, upon
becoming a Part D sponsor, will monitor the
performance of the first tier, downstream, or
and related entity on an ongoing basis. 42 CFR
§423.505(i)(4)(iii)
3.1.1D16 Language that the Part D sponsor retains the
right to approve, suspend, or terminate any
arrangement with a pharmacy if the first tier,
downstream, or related entity will establish the
pharmacy network or select pharmacies to be
included in the network. 42 CFR §423.505(i)(5)
3.1.1D17 Language that if the first tier, downstream, or
related entities will establish the pharmacy
network or select pharmacies to be included in
the network contain language that payment to
such pharmacies (excluding long-term care and
mail order) shall be issued, mailed, or
otherwise transmitted with respect to all clean
claims submitted by or on behalf of pharmacies
within 14 days for electronic claims and within
30 days for claims submitted otherwise. 42
CFR §423.505(i)(3)(vi)

103

3.1.1D18 Language that if the first tier, downstream, or
related entity will establish the pharmacy
network or select pharmacies to be included in
the network contain language that if a
prescription drug pricing standard is used for
reimbursement, identify the source used by the
Part D sponsor for the prescription drug pricing
standard for reimbursement. 42 CFR
§423.505(i)(3)(viii)(B)
3.1.1D19 Language that if the first tier, downstream, or
related entity will establish the pharmacy
network or select pharmacies to be included in
the network contain language that if a
prescription drug pricing standard is used for
reimbursement, a provision that updates to
such a standard occur not less frequently than
once every 7 days beginning with an initial
update on January 1 of each year, to accurately
reflect the market price of acquiring the drug.
42 CFR §423.505(i)(3)(viii)(A)

104

APPENDIX IV -- Crosswalk for Retail Pharmacy Access Contracts
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart
(which contains applicable Section 3.11D requirements AND additional requirements
specific to Pharmacy Access) for each Retail pharmacy contract template submitted
under Section 3.3. Applicants must identify where specifically (i.e., the pdf page
number ) in each contract template the following elements are found.
The provisions listed below must be in all pharmacy contracts. If contracts
reference policies and procedures to with which the pharmacy must comply,
provide the relevant documentation as evidence and cite this documentation
accordingly.
Section

Requirement

Citation

3.1.1D2

The functions to be performed by the first tier,
downstream, or related entity. 42 CFR
§423.504(i)(4)(i)

3.1.1D3

Describes the reporting requirements the first
tier, downstream, or related entity identified in
Section 3.1.1C of the application has to the
Applicant. 42 CFR §423.504(i)(4)(i)

3.1.1D8

Language obligating the first tier, downstream, or
related entity to abide by all applicable Federal
laws and regulations and CMS instructions. 42
CFR §423.504(i)(4)(iv)

3.1.1D9

Language obligating the first tier, downstream, or
related entity to abide by State and Federal
privacy and security requirements, including the
confidentiality and security provisions stated in
the regulations for the program at 42 CFR
§423.136.

3.1.1D10

Language ensuring that the first tier,
downstream, or related entity will make its books
and other records available in accordance with
42 CFR 423.505(e)(2) and 42 CFR 423.505(i)(2).
Generally stated these regulations give HHS, the
Comptroller General, or their designees the right
to audit, evaluate and inspect any books,
contracts, records, including medical records and
documentation involving transactions related to

105

CMS‘ contract with the Part D sponsor and that
these rights continue for a period of 10 years
from the final date of the contract period or the
date of audit completion, whichever is later. 42
CFR §423.505
3.1.1D11

Language stating that the first tier, downstream,
or related entity will ensure that beneficiaries are
not held liable for fees that are the responsibility
of the Applicant. 42 CFR §423.505(i)(3)(i)

3.1.1D12

Language indicating that any books, contracts,
records, including medical records and
documentation relating to the Part D program will
be provided to either the sponsor to provide to
CMS or its designees or will be provided directly
to CMS or its designees. 42 CFR
§423.505(i)(3)(iv)

3.1.1D13

Language ensuring that if the Applicant, upon
becoming a Part D sponsor, delegates an activity
or responsibility to the first tier, downstream, or
related entity, that such activity or responsibility
may be revoked if CMS or the Part D sponsor
determines the first tier, downstream, or related
entity has not performed satisfactorily. Note:
The contract may include remedies in lieu of
revocation to address this requirement. 42 CFR
§423.505(i)(4)(ii)

3.1.1D14

Language specifying that the Applicant, upon
becoming a Part D sponsor, will monitor the
performance of the first tier, downstream, or
related entity on an ongoing basis. 42 CFR
§423.505(i)(4)(iii)

3.1.1D17

Provisions requiring that payment shall be
issued, mailed or otherwise transmitted with
respect to all clean claims submitted by or on
behalf of pharmacies within 14 days for
electronic claims and within 30 days for claims
submitted otherwise. 42 CFR §423.505(i)(3)(vi)

3.1.1D18

For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
indicating the source used by the Part D sponsor
for the prescription drug pricing of

106

reimbursement. 42 CFR §423.505(i)(3)(viii)(B)

3.1.1.D19 For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
that updates to such a standard occur not less
frequently than once every 7 days beginning with
an initial update on January 1 of each year, to
accurately reflect the market price of acquiring
the drug. 42 CFR §423.505(i)(3)(viii)(A)
3.3A3

Provisions governing submitting claims to a realtime claims adjudication system. 42 CFR
§423.505(j) and §423.505(b)(17)
Note: Applicant may indicate for I/T/U
pharmacies and for certain pharmacies that are
allowed to submit claims in the X 12 format that
these may be batch processed.

3.3A4

Provisions governing providing Part D enrollees
access to negotiated prices as defined in 42
CFR §423.100. 42 CFR §423.104(g)

3.3A5

Provisions regarding charging/applying the
correct cost-sharing amount. 42 CFR §423.104

3.3A6

Provisions governing informing the Part D
enrollee at the point of sale (or at the point of
delivery for mail order drugs) of the lowestpriced, generically equivalent drug, if one exists
for the beneficiary's prescription, as well as any
associated differential in price. 42 CFR §423.132

107

APPENDIX V -- Crosswalk for Mail Order Pharmacy Access Contracts
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart
(which contains applicable Section 3.1.1D requirements AND additional requirements
specific to Pharmacy Access) for each Mail Order pharmacy contract template
submitted under Section 3.3. Applicants must identify where specifically (i.e., the pdf
page number) in each contract template the following elements are found.
The provisions listed below must be in all pharmacy contracts. If contracts
reference policies and procedures with which the pharmacy must comply,
provide the relevant documentation as evidence and cite this documentation
accordingly.
Section

Requirement

Citation

3.1.1D2

The functions to be performed by the first tier,
downstream, or related entity. 42 CFR
§423.504(i)(4)(i)

3.1.1D3

Describes the reporting requirements the first
tier, downstream, or related entity identified in
Section 3.1.1C of the application has to the
Applicant. 42 CFR §423.504(i)(4)(i)

3.1.1D8

Language obligating the first tier, downstream, or
related entity to abide by all applicable Federal
laws and regulations and CMS instructions. 42
CFR §423.504(i)(4)(iv)

3.1.1D9

Language obligating the first tier, downstream, or
related entity to abide by State and Federal
privacy and security requirements, including the
confidentiality and security provisions stated in
the regulations for the program at 42 CFR
§423.136.

3.1.1D10 Language ensuring that the first tier,
downstream, or related entity will make its books
and other records available in accordance with
42 CFR 423.505(e)(2) and 42 CFR 423.505(i)(2).
Generally stated these regulations give HHS, the
Comptroller General, or their designees the right
to audit, evaluate and inspect any books,
contracts, records, including medical records and
documentation involving transactions related to

108

CMS‘ contract with the Part D sponsor and that
these rights continue for a period of 10 years
from the final date of the contract period or the
date of audit completion, whichever is later. 42
CFR §423.505
3.1.1D11 Language stating that the first tier, downstream,
or related entity will ensure that beneficiaries are
not held liable for fees that are the responsibility
of the Applicant. 42 CFR §423.505(i)(3)(i)
3.1.1D12 Language indicating that any books, contracts,
records, including medical records and
documentation relating to the Part D program will
be provided to either the sponsor to provide to
CMS or its designees or will be provided directly
to CMS or its designees. 42 CFR
§423.505(i)(3)(iv)
3.1.1D13 Language ensuring that if the Applicant, upon
becoming a Part D sponsor, delegates an activity
or responsibility to the first tier, downstream, or
related entity, that such activity or responsibility
may be revoked if CMS or the Part D sponsor
determines the first tier, downstream, or related
entity has not performed satisfactorily. Note:
The contract may include remedies in lieu of
revocation to address this requirement. 42 CFR
§423.505(i)(4)(iii)
3.1.1D14 Language specifying that the Applicant, upon
becoming a Part D sponsor, will monitor the
performance of the first tier, downstream, or
related entity on an ongoing basis. 42 CFR
§423.505(i)(4)(iii)
3.1.1D18 For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
indicating the source used by the Part D sponsor
for the prescription drug pricing standard of
reimbursement. 42 CFR §423.505(i)(3)(viii)(B)
3.1.1D19 For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
that updates to such a standard occur not less
frequently than once every 7 days beginning with
an initial update on January 1 of each year, to

109

accurately reflect the market price of acquiring
the drug. 42 CFR §423.505(i)(3)(viii)(A)
3.3A3

Provisions governing submitting claims to a realtime claims adjudication system. 42 CFR
§423.505(j) and §423.505(b)(17)

3.3A4

Provisions governing providing Part D enrollees
access to negotiated prices as defined in 42
CFR 423.100. 42 CFR §423.104(g)

3.3A5

Provisions regarding charging/applying the
correct cost-sharing amount. 42 CFR §423.104

3.3A6

Provisions governing informing the Part D
enrollee at the point of sale (or at the point of
delivery for mail order drugs) of the lowestpriced, generically equivalent drug, if one exists
for the beneficiary's prescription, as well as any
associated differential in price. 42 CFR §423.132

110

APPENDIX VI -- Crosswalk for Home Infusion Pharmacy Access
Contracts
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart
(which contains applicable Section 3.1.1D requirements AND additional requirements
specific to Pharmacy Access) for each Home Infusion pharmacy contract template
submitted under Section 3.3. Applicants must identify where specifically (i.e., the pdf
page number ) in each contract template the following elements are found.
The provisions listed below must be in all pharmacy contracts. If contracts
reference policies and procedures with which the pharmacy must comply,
provide the relevant documentation as evidence and cite this documentation
accordingly.
Section

Requirement

Citation

3.1.1D2

The functions to be performed by the first tier,
downstream, or related entity. 42 CFR
§423.504(i)(4)(i)

3.1.1D3

Describes the reporting requirements the first
tier, downstream, or related entity identified in
Section 3.1.1C of the application has to the
Applicant. 42 CFR §423.504(i)(4)(i)

3.1.1D8

Language obligating the first tier, downstream, or
and related entity to abide by all applicable
Federal laws and regulations and CMS
instructions. . 42 CFR §423.504(i)(4)(iv)

3.1.1D9

Language obligating the first tier, downstream, or
and related entity to abide by State and Federal
privacy and security requirements, including the
confidentiality and security provisions stated in
the regulations for the program at 42 CFR
§423.136.

3.1.1D10 Language ensuring that the first tier,
downstream, or related entity will make its books
and other records available in accordance with
42 CFR 423.505(e)(2) and 42 CFR 423.505(i)(2).
Generally stated these regulations give HHS, the
Comptroller General, or their designees the right
to audit, evaluate and inspect any books,
contracts, records, including medical records and

111

documentation involving transactions related to
CMS‘ contract with the Part D sponsor and that
these rights continue for a period of 10 years
from the final date of the contract period or the
date of audit completion, whichever is later. 42
CFR §423.505
3.1.1D11 Language stating that the first tier, downstream,
or related entity will ensure that beneficiaries are
not held liable for fees that are the responsibility
of the Applicant. 42 CFR §423.505(i)(3)(i)
3.1.1D12 Language indicating that any books, contracts,
records, including medical records and
documentation relating to the Part D program will
be provided to either the sponsor to provide to
CMS or its designees or will be provided directly
to CMS or its designees. 42 CFR
§423.505(i)(3)(iv)
3.1.1D13 Language ensuring that if the Applicant, upon
becoming a Part D sponsor, delegates an activity
or responsibility to the first tier, downstream, or
related entity, that such activity or responsibility
may be revoked if CMS or the Part D sponsor
determines the first tier, downstream, or related
entity has not performed satisfactorily. Note:
The contract may include remedies in lieu of
revocation to address this requirement. 42 CFR
§423.505(i)(4)(iii)
3.1.1D14 Language specifying that the Applicant, upon
becoming a Part D sponsor, will monitor the
performance of the first tier, downstream, or
related entity on an ongoing basis. 42 CFR
§423.505(i)(4)(iii)
3.1.1D17 Provisions requiring that payment shall be
issued, mailed or otherwise transmitted with
respect to all clean claims submitted by or on
behalf of pharmacies within 14 days for
electronic claims and within 30 days for claims
submitted otherwise. 42 CFR §423.505(i)(3)(vi)
3.1.1D18 For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
indicating the source used by the Part D sponsor

112

for the prescription drug pricing standard of
reimbursement. 42 CFR §423.505(i)(3)(viii)(B)
3.1.1D19 For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
that updates to such a standard occur not less
frequently than once every 7 days beginning with
an initial update on January 1 of each year, to
accurately reflect the market price of acquiring
the drug. 42 CFR §423.505(i)(3)(viii)(A)
3.3A3

Provisions governing submitting claims to a realtime claims adjudication system. 42 CFR
§423.505(j) and §423.505(b)(17)
Note: Applicant may indicate for I/T/U
pharmacies and for certain pharmacies that are
allowed to submit claims in the X 12 format that
these may be batch processed.

3.3A4

Provisions governing providing Part D enrollees
access to negotiated prices as defined in 42
CFR 423.100. 42 CFR §423.104(g)

3.3A5

Provisions regarding charging/applying the
correct cost-sharing amount.42 CFR §423.104

3.3A6

Provisions governing informing the Part D
enrollee at the point of sale (or at the point of
delivery for mail order drugs) of the lowestpriced, generically equivalent drug, if one exists
for the beneficiary's prescription, as well as any
associated differential in price. 42 CFR §423.132

3.3.4A5

Provisions ensuring that before dispensing home
infusion drugs, pharmacy ensures that the
professional services and ancillary supplies are
in place. 423.120(a)(4)(iii)

3.3.4A6

Provisions ensuring that pharmacy that delivers
home infusion drugs provides delivery of home
infusion drugs within 24 hours of discharge from
an acute care setting, or later if so prescribed.
423.120(a)(4)(iv)

113

APPENDIX VII -- Crosswalk for Long-Term Care Pharmacy Access
Contracts
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart
(which contains applicable Section 3.1.1D requirements AND additional requirements
specific to Pharmacy Access) for each Long-Term Care pharmacy contract template
submitted under Section 3.3. Applicants must identify specifically (i.e., the pdf page
number .) in each contract template the following elements are found.
The provisions listed below must be in all pharmacy contracts. If contracts
reference policies and procedures with which the pharmacy must comply,
provide the relevant documentation as evidence and cite this documentation
accordingly.
Section

Requirement

Citation

3.1.1D2

The functions to be performed by the first tier,
downstream, or related entity. 42 CFR
§423.504(i)(4)(i)

3.1.1D3

Describes the reporting requirements the first
tier, downstream, or related entity identified in
3.1.1C of the application has to the Applicant. 42
CFR §423.504(i)(4)(i)

3.1.1D8

Language obligating the first tier, downstream, or
related entity to abide by all applicable Federal
laws and regulations and CMS instructions. 42
CFR §423.504(i)(4)(iv)

3.1.1D9

Language obligating the first tier, downstream, or
related entity to abide by State and Federal
privacy and security requirements, including the
confidentiality and security provisions stated in
the regulations for the program at 42 CFR
§423.136.

3.1.1D10

Language ensuring that the first tier,
downstream, or related entity will make its books
and other records available in accordance with
42 CFR 423.505(e)(2) and 42 CFR 423.505(i)(2).
Generally stated these regulations give HHS, the
Comptroller General, or their designees the right
to audit, evaluate and inspect any books,
contracts, records, including medical records and

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documentation involving transactions related to
CMS‘ contract with the Part D sponsor and that
these rights continue for a period of 10 years
from the final date of the contract period or the
date of audit completion, whichever is later. 42
CFR §423.505
3.1.1D11

Language stating that the first tier, downstream,
or related entity will ensure that beneficiaries are
not held liable for fees that are the responsibility
of the Applicant. 42 CFR §423.505(i)(3)(i)

3.1.1D12

Language indicating that any books, contracts,
records, including medical records and
documentation relating to the Part D program will
be provided to either the sponsor to provide to
CMS or its designees or will be provided directly
to CMS or its designees. 42 CFR
§423.505(i)(3)(iv)

3.1.1D13

Language ensuring that if the Applicant, upon
becoming a Part D sponsor, delegates an activity
or responsibility to the first tier, downstream, or
related entity, that such activity or responsibility
may be revoked if CMS or the Part D sponsor
determines the first tier, downstream, or related
entity has not performed satisfactorily. Note:
The contract may include remedies in lieu of
revocation to address this requirement. 42 CFR
§423.505(i)(4)(iii)

3.1.1D14

Language specifying that the Applicant, upon
becoming a Part D sponsor, will monitor the
performance of the first tier, downstream, or
related entity on an ongoing basis. 42 CFR
§423.505(i)(4)(iii)

3.1.1D18

For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
indicating the source used by the Part D sponsor
for the prescription drug pricing standard of
reimbursement. 42 CFR §423.505(i)(3)(viii)(B)

3.1.1D19

For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
that updates to such a standard occur not less
frequently than once every 7 days beginning with

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an initial update on January 1 of each year, to
accurately reflect the market price of acquiring
the drug. 42 CFR §423.505(i)(3)(viii)(A)
3.3A3

Provisions governing submitting claims to a realtime claims adjudication system. 42 CFR
§423.505(j) and §423.505(b)(17)
Note: Applicant may indicate for I/T/U
pharmacies and for certain pharmacies that are
allowed to submit claims in the X 12 format that
these may be batch processed.

3.3A4

Provisions governing providing Part D enrollees
access to negotiated prices as defined in 42
CFR 423.100. 42 CFR §423.104(g)

3.3A5

Provisions regarding charging/applying the
correct cost-sharing amount. 42 CFR §423.104

Elements Specific to Long-Term Care Contracts
Note: CMS Long-Term Care Guidance included in Chapter 5 of the Prescription
Drug Benefit Manual contains an updated list of performance and service
criteria for contracting with long-term care pharmacies. Applicants should, at a
minimum, incorporate these criteria in ALL LTC pharmacy network contracts.
Applicant must list the criteria below, and then identify where the elements
reside in the contract template(s) submitted.

Performance and Service Criteria

Citation

Comprehensive Inventory and Inventory Capacity – Network Long Term
Care Pharmacies [NLTCPs] must provide a comprehensive inventory of
Plan formulary drugs commonly used in the long term care setting. In
addition, NLTCPs must provide a secured area for physical storage of
drugs, with necessary added security as required by federal and state law
for controlled substances. This is not to be interpreted that the pharmacy
will have inventory or security measures outside of the normal business
setting.

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Pharmacy Operations and Prescription Orders -- NLTCPs must provide
services of a dispensing pharmacist to meet the requirements of pharmacy
practice for dispensing prescription drugs to LTC residents, including but
not limited to the performance of drug utilization review (DUR). In addition,
the NLTCP pharmacist must conduct DUR to routinely screen for allergies
and drug interactions, to identify potential adverse drug reactions, to identify
inappropriate drug usage in the LTC population, and to promote cost
effective therapy in the LTC setting. The NLTCP must also be equipped
with pharmacy software and systems sufficient to meet the needs of
prescription drug ordering and distribution to an LTC facility. Further, the
NLTCP must provide written copies of the NLTCP‘s pharmacy procedures
manual and said manual must be available at each LTC facility nurses‘ unit.
NLTCPs are also required to provide ongoing in-service training to assure
that LTC facility staff are proficient in the NLTCP‘s processes for ordering
and receiving of medications. NLTCP must be responsible for return and/or
disposal of unused medications following discontinuance, transfer,
discharge, or death as permitted by State Boards of Pharmacy. Controlled
substances and out of date substances must be disposed of within State
and Federal guidelines.

Special Packaging -- NLTCPs must have the capacity to provide specific
drugs in Unit of Use Packaging, Bingo Cards, Cassettes, Unit Dose or other
special packaging commonly required by LTC facilities. NLTCPs must
have access to, or arrangements with, a vendor to furnish supplies and
equipment including but not limited to labels, auxiliary labels, and packing
machines for furnishing drugs in such special packaging required by the
LTC setting.

IV Medications -- NLTCPs must have the capacity to provide IV
medications to the LTC resident as ordered by a qualified medical
professional. NLTCPs must have access to specialized facilities for the
preparation of IV prescriptions (clean room). Additionally, NLTCPs must
have access to or arrangements with a vendor to furnish special equipment
and supplies as well as IV trained pharmacists and technicians as required
to safely provide IV medications.

Compounding /Alternative Forms of Drug Composition -- NLTCPs must be
capable of providing specialized drug delivery formulations as required for
some LTC residents. Specifically, residents unable to swallow or ingest

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medications through normal routes may require tablets split or crushed or
provided in suspensions or gel forms, to facilitate effective drug delivery.

Pharmacist On-call Service -- NLTCP must provide on-call, 24 hours a day,
7 days a week service with a qualified pharmacist available for handling
calls after hours and to provide medication dispensing available for
emergencies, holidays and after hours of normal operations.

Delivery Service -- NLTCP must provide for delivery of medications to the
LTC facility up to seven days each week (up to three times per day) and inbetween regularly scheduled visits. Emergency delivery service must be
available 24 hours a day, 7 days a week. Specific delivery arrangements
will be determined through an agreement between the NLTCP and the LTC
facility. NLTCPs must provide safe and secure exchange systems for
delivery of medication to the LTC facility. In addition, NLTCP must provide
medication cassettes, or other standard delivery systems, that may be
exchanged on a routine basis for automatic restocking. The NLTCP
delivery of medication to carts is a part of routine ―dispensing‖.

Emergency Boxes -- NLTCPs must provide ―emergency‖ supply of
medications as required by the facility in compliance with State
requirements.

Emergency Log Books -- NLTCP must provide a system for logging and
charging medication used from emergency/first dose stock. Further, the
pharmacy must maintain a comprehensive record of a resident‘s medication
order and drug administration.

Miscellaneous Reports, Forms and Prescription Ordering Supplies -NLTCP must provide reports, forms and prescription ordering supplies
necessary for the delivery of quality pharmacy care in the LTC setting.
Such reports, forms and prescription ordering supplies may include, but will
not necessarily be limited to, provider order forms, monthly management
reports to assist the LTC facility in managing orders, medication
administration records, treatment administration records, interim order
forms for new prescription orders, and boxes/folders for order storage and
reconciliation in the facility.

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APPENDIX VIII -- Crosswalk for Indian Tribe and Tribal Organization,
and Urban Indian Organization (I/T/U) Pharmacy Access Contracts
INSTRUCTIONS: Applicants must complete and upload in HPMS the following chart
(which contains applicable Section 3.1.1D requirements AND additional requirements
specific to Pharmacy Access) for each I/T/U pharmacy contract template submitted
under Section 3.3. Applicants must identify where specifically (i.e., the pdf page
number) in each contract template the following elements are found.
The provisions listed below must be in all pharmacy contracts. If contracts
reference policies and procedures with which the pharmacy must comply,
provide the relevant documentation as evidence and cite this documentation
accordingly.
Section

Requirement

Citation

3.1.1D2

The functions to be performed by the first tier,
downstream, or related entity. 42 CFR
§423.504(i)(4)(i)

3.1.1D3

Describes the reporting requirements the first
tier, downstream, or related entity identified in
Section 3.1.1C of the application has to the
Applicant. 42 CFR §423.504(i)(4)(i)

3.1.1D8

Language obligating the first tier, downstream, or
related entity to abide by all applicable Federal
laws and regulations and CMS instructions. . 42
CFR §423.504(i)(4)(iv)

3.1.1D9

Language obligating the first tier, downstream, or
related entity to abide by State and Federal
privacy and security requirements, including the
confidentiality and security provisions stated in
the regulations for the program at 42 CFR
§423.136.

3.1.1D10

Language ensuring that the first tier,
downstream, or related entity will make its books
and other records available in accordance with
42 CFR 423.505(e)(2) and 42 CFR 423.505(i)(2).
Generally stated these regulations give HHS, the
Comptroller General, or their designees the right
to audit, evaluate and inspect any books,
contracts, records, including medical records and

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documentation involving transactions related to
CMS‘ contract with the Part D sponsor and that
these rights continue for a period of 10 years
from the final date of the contract period or the
date of audit completion, whichever is later. 42
CFR §423.505
3.1.1D11

Language stating that the first tier, downstream,
or related entity will ensure that beneficiaries are
not held liable for fees that are the responsibility
of the Applicant. 42 CFR §423.505(i)(3)(i)

3.1.1D12

Language indicating that any books, contracts,
records, including medical records and
documentation relating to the Part D program will
be provided to either the sponsor to provide to
CMS or its designees or will be provided directly
to CMS or its designees. 42 CFR
§423.505(i)(3)(iv)

3.1.1D13

Language ensuring that if the Applicant, upon
becoming a Part D sponsor, delegates an activity
or responsibility to the first tier, downstream, or
related entity, that such activity or responsibility
may be revoked if CMS or the Part D sponsor
determines the first tier, downstream, or related
entity has not performed satisfactorily. Note:
The contract may include remedies in lieu of
revocation to address this requirement. 42 CFR
§423.505(i)(4)(iii)

3.1.1D14

Language specifying that the Applicant, upon
becoming a Part D sponsor, will monitor the
performance of the first tier, downstream, or
related entity on an ongoing basis. 42 CFR
§423.505(i)(4)(iii)

3.1.1D17

Provisions requiring that payment shall be
issued, mailed or otherwise transmitted with
respect to all clean claims submitted by or on
behalf of pharmacies within 14 days for
electronic claims and within 30 days for claims
submitted otherwise. 42 CFR §423.505(i)(3)(vi)

3.1.1D18

For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
indicating the source used by the Part D sponsor

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for the prescription drug pricing standard of
reimbursement. 42 CFR §423.505(i)(3)(viii)(B)
3.1.1.D19 For those contracts that use a prescription drug
pricing standard for reimbursement, a provision
that updates to such a standard occur not less
frequently than once every 7 days beginning with
an initial update on January 1 of each year, to
accurately reflect the market price of acquiring
the drug. 42 CFR §423.505(i)(3)(viii)(A)
3.3A3

Provisions governing submitting claims to a realtime claims adjudication system. 42 CFR
§423.505(j) and §423.505(b)(17)
Note: Applicant may indicate for I/T/U
pharmacies and for certain pharmacies that are
allowed to submit claims in the X 12 format that
these may be batch processed.

3.3A4

Provisions governing providing Part D enrollees
access to negotiated prices as defined in 42
CFR 423.100. 42 CFR §423.104(g)

3.3A5

Provisions regarding charging/applying the
correct cost-sharing amount. 42 CFR §423.104

3.3A6

Provisions governing informing the Part D
enrollee at the point of sale (or at the point of
delivery for mail order drugs) of the lowestpriced, generically equivalent drug, if one exists
for the beneficiary's prescription, as well as any
associated differential in price. 42 CFR §423.132

Elements Specific to Indian Tribe and Tribal Organization, and Urban Indian
Organization (I/T/U) Pharmacy Contracts
Note: Provisions listed below are in the model I/T/U Addendum, located in
Appendix XI or at
www.cms.hhs.gov/10_RxContracting_SpecialGuidance.asp#TopOfPage and all I/T/U
Contracts must contain language consistent with the model addendum that addresses
the following.
Item 1

Supersession of the addendum from underlying
agreement.

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Item 3

The description of the provider.

Item 4

Counting of costs paid for by provider toward any
deductibles.

Item 5

Persons eligible for services of the provider.

Item 6

The applicability of certain Federal law.

Item 7

The non-taxable status of the provider.

Item 8

Insurance and indemnification.

Item 9

Applicability of state licensing law to provider‘s
employees.

Item 10

Provider eligibility for payments

Item 11

Dispute resolution.

Item 12

Federal law as the governing law.

Item 13

The contract will apply to all pharmacies and
dispensaries operated by the provider.

Item 14

The contract will not affect the provider‘s
acquisition of pharmaceuticals.

Item 15

The provider‘s point of sale processing
capabilities.

Item 16

Claims processing.

Item 17

Reasonable and appropriate payment rates.

Item 18

Any information, outreach or enrollment
materials prepared by the Applicant will be
supplied at no cost to the provider.

Item 19

The provider determines the hours of service for
the pharmacies or dispensaries of the provider.

Item 20

Endorsement

Item 21

Sovereign Immunity

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APPENDIX IX -- Applicant Submission of P&T Committee Member List
and Certification Statement
This appendix summarizes CMS policy on Part D Applicant/Sponsor and PBM
submission of P&T Committee membership, and the accountability that each Part D
Applicant/Sponsor holds regarding the integrity of the P&T Committee whose
membership is submitted either directly by the Part D Applicant/Sponsor or by the
applicant/sponsor‘s PBM. This appendix also instructs Part D Applicants (or their
PBM‘s) on how to submit the Applicant‘s P&T Committee membership list, and a
Certification of P&T Integrity and Quality in the event the Applicant is planning to
operate under a confidentiality agreement with its PBM (such that the PBM does not
disclose the membership to the Applicant).
P&T Committee Member Disclosure to CMS
As provided in the regulation at 42 CFR §423.120 (b)(1), a Part D Sponsor‘s P&T
Committee list must contain a majority of members who are practicing physicians and/or
pharmacists, include at least one practicing physician and one practicing pharmacist
who are experts regarding care of the elderly or disabled individuals, and includes at
least one practicing physician and one practicing pharmacist who are independent and
free of conflict relative to the Part D Sponsor or Plan and pharmaceutical
manufacturers.
In the event the Part D Applicant/Sponsor has entered into a confidential agreement
such that the PBM will not disclose its P&T Committee membership to the Part D
Applicant/Sponsor, then it is the Part D Sponsor‘s responsibility to notify CMS that this
information will be submitted by the Sponsor‘s PBM. Moreover, the Part D
Applicant/Sponsor must ensure that the PBM notifies CMS of the P&T Committee
membership. Also, the Part D Applicant/Sponsor should ensure that the PBM notifies
the Sponsor that this information has been successfully submitted to CMS.
Instructions to Plans and PBMs
A. If the Part D Applicant sub-contracts with a PBM for its P&T Committee and
operates under a Confidentiality Agreement (such that its members are not disclosed to
the Part D Applicant) then the Applicant must (1) complete the attached Certification in
HPMS, and (2) forward the attached P&T Committee Member Disclosure form to the
sub-contracted PBM and direct the PBM to submit the form to CMS by February 25,
2010. The PBM should email the P&T Committee Member Disclosure form to the
following email box: drugbenefitimpl@cms.hhs.gov.

123

B. In the event of any future changes to the membership of the Part D Sponsor‘s P&T
Committee or the PBM‘s P&T Committee, Part D Sponsors must (or in the case of a
confidential agreement the Part D Sponsor) assure that the PBM will notify the
appropriate CMS account manager (to be assigned at a future date) and make the
correct changes in HPMS on the Contract Management/Part D Data page within 30
days of the effective date of such change.

PHARMACY AND THERAPEUTICS COMMITTEE MEMBER DISCLOSURE
PBM must email the following form to drugbenefitimpl@cms.hhs.gov by February 25,
2010.
Name of Part D Plan or PBM: ______________________________________
If Part D Plan, provide Part D Contract number(s):_________________
Contact Person: ______________________________________
Phone Number: ______________________________________
Email: _____________________________________________
A. Complete the table below.
PROVIDE THE NAMES OF THE MEMBERS OF YOUR ORGANIZATION‘S P&T
COMMITTEE. INDICATE WHICH MEMBERS ARE PRACTICING PHYSICIANS OR
PRACTICING PHARMACISTS. FURTHER, INDICATE WHICH MEMBERS ARE
EXPERTS IN THE CARE OF THE ELDERLY OR DISABLED, AND FREE OF ANY
CONFLICT OF INTEREST WITH YOUR ORGANIZATION AND PHARMACEUTICAL
MANUFACTURERS. (APPLICANTS SHOULD MARK THE INFORMATION AS
PROPRIETARY.) SUBMIT THIS DATA BY CREATING A SPREADSHEET IN
MICROSOFT EXCEL THAT MIMICS THE TABLE BELOW.
Practice/Expertise

Free of Any Conflict of Interest

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Mark an ‘X’ in Appropriate Column
Full Name
of Member

Practicing
Physician

Start Date
and End
Date

B.

Type Yes or No

Practicing

Elderly/Disabled With
With
Expert
Pharmaceutical
Pharmacist
Your
Organization? Manufacturers?

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

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

Organization Name

Type of Application

125

Contract Number(s)

Applicant must upload in HPMS:
CERTIFICATION FOR PART D SPONSORS USING A PHARMACY BENEFIT
MANAGER‘S PHARMACY& THERAPEUTICS COMMITTEE UNDER A
CONFIDENTIALITY AGREEMENT
A.
I, attest, on behalf of LEGAL NAME OF PART D SPONSOR APPLICANT
(―Applicant‖), to the following:
1)
I certify that APPLICANT has entered into a contract with LEGAL NAME OF PBM
(―PBM‖) to perform pharmacy benefit management services related to the operation of a
Medicare Part D benefit plan(s) on behalf of APPLICANT.
2)
I agree, to the best of my knowledge, that ―PBM,‖ has a Pharmacy and
Therapeutics (P&T) Committee that contains a majority of members who are practicing
physicians and/or pharmacists, includes at least one practicing physician and one
practicing pharmacist who are experts regarding the care of the elderly or disabled
individuals, and includes at least one practicing physician and one practicing pharmacist
who are independent and free of conflict relative to my plan and organization and
pharmaceutical manufacturers.
3)
I agree that the PBM will supply to CMS the following information, including but
not limited to, the full legal name of each member of its P&T Committee designated as a
practicing physician or pharmacist specializing in elderly and/or disabled care. Each
member must also disclose any conflict of interest with my organization, and/or
pharmaceutical manufacturers.
4)
I agree that my organization will establish policies and procedures to ensure and
confirm the ongoing integrity, qualifications and expertise of the PBM‘s P&T Committee.
5)
I agree that in the event CMS identifies a PBM‘s P&T Committee member is
listed on the OIG exclusion list, my organization will be notified by CMS of such a
problem. In such an instance, my organization must assure that the PBM takes
appropriate steps to correct the problem or my organization will be at risk of being
subject to a corrective action plan and sanctions, depending on the nature of the
problem.

B.

I agree that CMS may inspect the records and premises of my organization or

126

my subcontractor (first tier, downstream and related entities) to ensure compliance with
the statements to which I have attested above.
C.

I certify that I am authorized to sign on behalf of the Applicant.

Part D Applicant‘s Contract Number: _____________________

__________________________

_______________________

Authorized Representative Name (printed)

__________________________________
Authorized Representative Signature

Title

___________________________
Date (MM/DD/YYYY)

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APPENDIX X -- Retail Pharmacy Network Access Instructions
Accessibility Analysis Instructions
Part D Applicants are strongly encouraged to use network access software that is
compliant with Section 508 of the Rehabilitation Act of 1973, as amended by the
Workforce Investment Act of 1998 to compile the reports as outlined in this appendix.
As of the drafting date of these instructions, the only 508 compliant product to our
knowledge is The Quest Analytics Suite™. While CMS will still accept pharmacy
access reports produced using software that is not Section 508 compliant (for example
GeoNetworks®), we cannot provide instructions or technical support for such software
(see CMS Administrator EIT Accessibility Policy Statement, March 25, 2008 at
http://www.cms.hhs.gov/InfoTechGenInfo/03_Section 508.asp).
Organizations that intend to use software other than The Quest Analytics Suite or
GeoNetworks must contact Angela Stanley at angela.stanley@cms.hhs.gov
(410.786.9496) no later than January 29, 2010 to determine if analyses provided by an
alternative method are acceptable. Alternative methods must produce analyses that will
result in data directly comparable to the results produced by The Quest Analytics
Suite™ or GeoNetworks®. Applicants that wish to use alternative methods will be
required to demonstrate how their analysis is comparable to results produced by either
The Quest Analytics Suite™ or GeoNetworks®.
While we provide specific instructions for formatting and compiling plan accessibility
reports using The Quest Analytics Suite (the available 508 compliant product), this
appendix is not intended to provide step-by-step instructions for the use of the software.
Instructions and examples provided here were developed using The Quest Analytics
Suite version 2007.3. It is the responsibility of Applicant to ensure that their
submission provides adequate information for CMS to determine if each of their
offerings meets the retail pharmacy access submission requirements. Please note that
these retail pharmacy access reports will be uploaded into HPMS on the appropriate
Pharmacy Access Upload page.
I. Instructions for Part D Applicants using The Quest Analytics Suite™
1. Defining the Medicare Beneficiary File
The Medicare Beneficiary File entitled ―Beneficiary Count Data‖ is provided by CMS and
can be accessed at the following URL: www.cms.hhs.gov\PrescriptionDrugCovContra\.
The Medicare Beneficiary File referenced above contains ZIP Codes and beneficiary
counts for Applicants as of September, 2009. Use of this file is required for the
accessibility analysis submission.
•
Download this file and create a sub-file(s) specific to their service area and/or
region(s) and/or state as needed to support the level of analyses required (specified

128

below). Applicants may not use beneficiary counts from other sources in their
accessibility analyses.
•
Open the Quest Analytics Project file you downloaded and link to the data subfile in The Quest Analytics Suite by adding an Employee Group and name it ―All
Beneficiaries‖. Applicants may geocode by selecting the ―Geocoding Tab‖ and select
―Geocode Now‖ during this step, or they may defer geocoding the population file until
run time.
•
Verify that the beneficiary (employee) count in the population file is consistent
with the total beneficiary census for the sub-file used as the basis for the analyses.
CMS will check the count of beneficiaries provided in the reports against the count of
beneficiaries residing in the plan‘s service area.
•
The most recent version of The Quest Analytics Suite™ assigns an Urban,
Suburban, or Rural classification for each Medicare beneficiary record consistent with
the definitions specified in 42 CFR §423.100. Select the appropriate options under
project preferences.
•
Applicants must define three subsets of the Medicare Beneficiary File Extract
used in their analyses. These subsets are based on filtering on the designation of
urban/suburban/rural assigned in the step above. These three subsets are used in the
accessibility reports.
•
To define the subset of Urban beneficiaries, navigate to Employee Groups
resource and Copy the All Beneficiaries group. Change the name to ―Urban
Beneficiaries‖ and on the zip code filter, turn off the suburban and rural check boxes.
•
To define the subset of Suburban beneficiaries, navigate to Employee Groups
resource and Copy the All Beneficiaries group. Change the name to ―Suburban
Beneficiaries‖ and on the zip code filter, turn off the urban and rural check boxes.
•
To define the subset of Rural beneficiaries, navigate to Employee Groups
resource and Copy the All Beneficiaries group. Change the name to ―Rural
Beneficiaries‖ and on the zip code filter, turn off the urban and suburban check boxes.
•
Verify that the urban, suburban, and rural definitions are defined appropriately for
each page of the report. CMS will compare the total of urban, suburban, and rural
beneficiaries for specific counties to totals derived from the Medicare Beneficiary File.

129

•
The Quest Analytics Suite™ default restricts beneficiaries inside your service
area.
•
Applicants may specify that contracted providers outside their service area (e.g.,
across state or county lines) be included in their accessibility analyses. The most recent
release of The Quest Analytics Suite™ allows for inclusion of providers outside the
specified service area under the report area options.
2. Defining the Provider File
Applicants must use their listing of contracted Part D retail pharmacies. The listing used
in these analyses must be consistent with the pharmacy listing provided under the
instructions in Section 3.4.1C of this solicitation that includes address information to
define their provider file. If an Applicant used more than one retail pharmacy network to
provide the Part D benefit, the network must be combined in the analysis (and the
submission provided under Section 3.4.1B of this solicitation to represent one complete
Part D network).
•
Applicant may use representative ZIP Geocoding or the more precise geocoding
methods for pharmacy providers (i.e., the ZIP+ 4 Centroid Method, the ZIP+2 Centroid
Method, or address-based geocoding). CMS strongly encourages the use of more
precise methods for geocoding. Use of address-based geocoding will prevent, in some
market areas, false indications that access standards are not met.
•
The Quest Analytics Suite™ will automatically geocode your provider file using
an ―address-based‖ method (if licensed). If this function is not available on your version
of Quest Analytics Suite™, the default, distributive geocoding methodology, is
acceptable.
•
Define the Provider Group by navigating to Add Provider Groups. Select the
data source on the Source Table button. On the Name enter the label of ―Part D Retail
Pharmacy Network‖, select OK.
•
Verify that the total counts for pharmacy providers in the report do not exceed the
count of pharmacies in your Part D contracted retail pharmacy listing that must also be
provided using the retail list template provided in HPMS.
3.

Defining Access Criteria

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•
The Applicant must define access standards in accordance with the Part D
standards, as defined in 42 CFR §423.120(a)(1).
•
The Urban access standard of 1 provider within 2 miles is predefined within the
Quest project file that you downloaded.
•
The Suburban access standard of 1 provider within 5 miles is predefined within
the Quest project file that you downloaded.
•
The Rural access standard of 1 provider within 15 miles is predefined within the
Quest project file that you downloaded.
4. Defining the Plan Service Area
Applicants should define their service area based on the service area for the entire
contract. The service area defined in your report must EXACTLY match the service
area you have specified in HPMS.
Cost Plan Applicants
Cost Plan Applicants are asked to demonstrate that they meet the accessibility
standards for their entire contract service area. Reports are defined to present
accessibility at the county level and provide summary level statistics for the full contract
area. Please note that CMS does not wish (or require) analyses at the ZIP code level.
•
Define the service area by navigating to Service Area and Add and select your
service area. Applicants must include all counties and partial counties in their Quest
Analytics report.
•
Verify that the service area in your report EXACTLY matches the service area
you have entered in HPMS. New Applicants must include all counties in their report.
•
Verify that the reports provided to CMS include subtotals for each individual state
and grand total summary statistics encompassing all states in the service area.
5. Generating the Accessibility Analyses Reports

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An example analysis is provided in the file entitled ―CMS Quest Analytics Example MAPD‖ that is included in the reference file entitled ―Geographic Access Examples and
Templates‖ that may be downloaded from the following URL:
www.cms.hhs.gov\PrescriptionDrugCovContra\. This includes all the report pages and
access standards along with the applicable sorting options.
6. Providing copies of the Analysis to CMS for review
Applicants must upload their report in Adobe Acrobat readable (*.pdf) format into
HPMS.

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APPENDIX XI -- I/T/U Revised Addendum
Note: All Part D sponsors will be required to use the attached revised version of the
I/T/U Addendum. Existing Part D sponsors will be required to use this version of the
I/T/U Addendum for any future re-contracting or new contracting.
1.

Purpose of Indian Health Addendum; Supersession.

The purpose of this Indian Health Addendum is to apply special terms and conditions to
the agreement by and between ___________________________________(herein
"Part D Plan Sponsor") and ___________________________ (herein "Provider") for
administration of Medicare Prescription Drug Benefit program at pharmacies and
dispensaries of Provider authorized by the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, and implementing regulations in Parts 403, 411, 417,
422 and 423 of Title 42, Code of Federal Regulations. To the extent that any provision
of the Part D Plan Sponsor's agreement or any other addendum thereto is inconsistent
with any provision of this Indian Health Addendum, the provisions of this Indian Health
Addendum shall supercede all such other provisions.
2.

Definitions.

For purposes of the Part D Plan Sponsor's agreement, any other addendum thereto,
and this Indian Health Addendum, the following terms and definitions shall apply:
(a) The term "Part D Plan Sponsor" means a nongovernmental entity that is
certified under 42 CFR 417.472, 42 CFR Part 423 or 42 CFR Part 422 as meeting the
requirements and standards that apply to entities that offer Medicare Part D plans.
(b) The terms "Part D Plan" means prescription drug coverage that is offered
under a policy, contract, or plan that has been approved as specified in 42 CFR
423.272, 42 CFR 422.502 or 42 CFR 417.472 and that is offered by a PDP sponsor that
has a contract with the Centers for Medicare and Medicaid Services that meets the
contract requirements under subpart K of 42 CFR Part 423 or subpart K of 42 CFR Part
422.
(c) The term "Provider" means the Indian Health Service (IHS) and all
pharmacies and dispensaries operated by the IHS, or an Indian tribe, tribal organization
or urban Indian organization which operates one or more pharmacies or dispensaries,
and is identified by name in Section 1 of this Indian Health Addendum.
(d) The term "Centers for Medicare and Medicaid Services" means the agency
of that name within the U.S. Department of Health and Human Services.
(e) The term "Indian Health Service" means the agency of that name within the
U.S. Department of Health and Human Services established by Sec. 601 of the Indian
Health Care Improvement Act (―IHCIA‖), 25 USC §1661.

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(f) The term "Indian tribe" has the meaning given that term in Sec. 4 of the
IHCIA, 25 USC §1603.
(g) The term "tribal organization" has the meaning given than term in Sec. 4 of
the IHCIA, 25 USC §1603.
(h) The term "urban Indian organization" has the meaning given that term in Sec.
4 of the IHCIA, 25 USC §1603.
(i) The term "Indian" has the meaning given to that term in Sec. 4 of the IHCIA,
25 USC §1603.
(j) The term "dispensary" means a clinic where medicine is dispensed by a
prescribing provider.
3.

Description of Provider.

The Provider identified in Section 1 of this Indian Health Addendum is (check
appropriate box):
/_/ IHS operated health care facilities located within the geographic area covered
by the Provider Agreement, including hospitals, health centers and one or more
pharmacies or dispensaries (―IHS Provider‖). Where an IHS Provider operates
more than one pharmacy or dispensary all such pharmacies and dispensaries
are covered by this Addendum.
/_/ An Indian tribe that operates a health program, including one or more
pharmacies or dispensaries, under a contract or compact with the Indian Health
Service issued pursuant to the Indian Self-Determination and Education
Assistance Act, 25 USC §450 et seq.
/_/ A tribal organization authorized by one or more Indian tribes to operate a
health program, including one or more pharmacies or dispensaries, under a
contract or compact with the Indian Health Service issued pursuant to the Indian
Self-Determination and Education Assistance Act, 25 USC §450 et seq.
/_/ An urban Indian organization that operates a health program, including one or
more pharmacies or dispensaries, under a grant from the Indian Health Service
issued pursuant to Title V of the IHCIA.
4.

Deductibles.

The cost of pharmaceuticals provided at a pharmacy or dispensary of Provider
or paid for by the Provider through a referral to a retail pharmacy shall count toward the
deductible applicable to an IHS beneficiary enrolled in a Part D Plan.
5.

Persons eligible for services of Provider.

(a) The parties agree that the IHS Provider is limited to serving eligible IHS
beneficiaries pursuant to 42 CFR Part 136 and section 813(a) of the IHCIA, 25 USC
§1680c-(a) who are also eligible for Medicare Part D services pursuant to Title XVIII,

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Part D of the Social Security Act, and 42 CFR Part 423. The IHS Provider may provide
services to non-IHS eligible persons only under certain circumstances set forth in IHCIA
section 813(b) and in emergencies under section 813(c) of the IHCIA.
(b) The parties agree that the persons eligible for services of the Provider who is
an Indian tribe or a tribal organization or a Provider who is an urban Indian organization
shall be governed by the following authorities:
(1) Title XVIII, Part D of the Social Security Act and 42 C.F.R. Part 423;
(2) IHCIA sections 813(a) and 813(c), 25 USC §1680c (a) and (c);
(3) 42 CFR Part 136; and
(4) The terms of the contract, compact or grant issued to the Provider by the
IHS for operation of a health program.
(c) No clause, term or condition of the Part D Plan Sponsor's agreement or any
addendum thereto shall be construed to change, reduce, expand or alter the eligibility of
persons for services of the Provider under the Part D Plan that is inconsistent with the
authorities identified in subsection (a).
6.

Applicability of other Federal laws.

Federal laws and regulations affecting a Provider, include but are not limited to the
following:
(a) An IHS provider:
(1)

The Anti-Deficiency Act 31 U.S.C. § 1341;

(2)
The Indian Self Determination and Education Assistance Act
(―ISDEAA‖); 25 USC § 450 et seq.;
(3)

The Federal Tort Claims Act (―FTCA‖), 28 U.S.C. § 2671-2680;

(4)

The Federal Medical Care Recovery Act, 42 U.S.C. § 2651-2653;

(5)
The Federal Privacy Act of 1974 (―Privacy Act‖), 5 U.S.C. § 552a,
45 CFR Part 5b;
(6)

Confidentiality of Alcohol and Drug Abuse Patient Records, 42 CFR

Part 2;
(7)
The Health Insurance Portability and Accountability Act of 1996
(―HIPAA‖), 45 CFR Parts 160 and 164; and
(8)

The IHCIA, 25 U.S.C. § 1601 et seq.

(b) A Provider who is an Indian tribe or a tribal organization:
(1)

The ISDEAA, 25 USC §450 et seq.;

(2)

The IHCIA, 25 USC §1601, et seq.;

(3)

The FTCA, 28 USC §2671-2680;

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(4)
and

The Privacy Act, 5 USC §552a and regulations at 45 CFR Part 5b;

(5)

The HIPAA and regulations at 45 CFR parts 160 and 164.

(c) A Provider who is an urban Indian organization:

7.

(1)

The IHCIA, 25 USC §1601, et seq.;

(2)

The Privacy Act, 5 USC §552a and regulations at 42 CFR Part 2;

(3)

The HIPAA and regulations at 45 CFR parts 160 and 164.

Non-taxable entity.

To the extent the Provider is a non-taxable entity, the Provider shall not be required by a
Part D Plan Sponsor to collect or remit any Federal, State, or local tax.
8.

Insurance and indemnification.

(a) As an IHS provider, FTCA coverage obviates the requirement that IHS carry
private malpractice insurance as the United States consents to be sued in place of
federal employees for any damages to property or for personal injury or death caused
by the negligence or wrongful act or omission of federal employees acting within the
scope of their employment. 28 U.S.C. § 2671-2680. Nothing in the Part D Plan
Sponsor‘s Agreement shall be interpreted to authorize or obligate any IHS employee to
perform any act outside the scope of his/her employment. The IHS Provider shall not be
required to acquire insurance, provide indemnification, or guarantee that the Plan will be
held harmless from liability.
(b) A Provider which is an Indian tribe or a tribal organization shall not be
required to obtain or maintain professional liability insurance to the extent such Provider
is covered by the Federal Tort Claims Act (FTCA) pursuant to Federal law (Pub.L. 101512, Title III, §314, as amended by Pub.L. 103-138, Title III, §308 (codified at 25 USC
§450 F note); and regulations at 25 CFR Part 900, Subpt. M. To the extent a Provider
that is an urban Indian organization is covered by the FTCA pursuant to section 224(g)(n) of the Public Health Service Act, as amended by the Federally Supported Health
Centers Assistance Act, Pub.L. 104-73, (codified at 42 USC §233(g)-(n)) and
regulations at 42 CFR Part 6, such Provider shall not be required to obtain or maintain
professional liability insurance. Further, nothing in the Part D Plan Sponsor‘s
agreement or any addendum thereto shall be interpreted to authorize or obligate
Provider or any employee of such Provider to operate outside of the scope of
employment of such employee, and Provider shall not be required to indemnify the Part
D Plan Sponsor.
9.

Licensure.

(a) States may not regulate activities of IHS-operated pharmacies nor require
that the IHS pharmacists be licensed in the State where they are providing services,

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whether the IHS employee is working at an IHS-operated facility or has been assigned
to a pharmacy or dispensary of a tribe, tribal organization, or urban Indian organization.
The parties agree that during the term of the Part D Plan Sponsor‘s Agreement, IHS
pharmacists shall hold state licenses in accordance with applicable federal law, and
that the IHS facilities where the pharmacies and dispensaries are located shall be
accredited in accordance with federal statutes and regulations. During the term of the
Part D Plan Sponsor‘s Agreement, the parties agree to use the IHS facility‘s Drug
Enforcement Agency (DEA) number consistent with federal law.
(b) To the extent that any directly hired employee of a tribal or urban Indian
Provider is exempt from State regulation, such employee shall be deemed qualified to
perform services under the Part D Plan Sponsor's agreement and all addenda thereto,
provided such employee is licensed to practice pharmacy in any State. This provision
shall not be interpreted to alter the requirement that a pharmacy hold a license from the
Drug Enforcement Agency.
10.

Provider eligibility for payments.

To the extent that the Provider is exempt from State licensing requirements, the
Provider shall not be required to hold a State license to receive any payments under the
Part D Plan Sponsor‘s agreement and any addendum thereto.
11.

Dispute Resolution.

a.
For IHS Provider. In the event of any dispute arising under the Participating
Part D Plan Sponsor‘s Agreement or any addendum thereto, the parties agree to meet
and confer in good faith to resolve any such disputes. The laws of the United States
shall apply to any problem or dispute hereunder that cannot be resolved by and
between the parties in good faith. Notwithstanding any provision in the Part D Plan
Sponsor‘s Agreement or any addendum thereto to the contrary, IHS shall not be
required to submit any disputes between the parties to binding arbitration.
b.
For Tribal and Urban Providers. In the event of any dispute arising under the
participating Part D Plan Sponsor‘s Agreement or any addendum thereto, the parties
agree to meet and confer in good faith to resolve any such disputes. Any dispute
hereunder that cannot be resolved by and between the parties in good faith shall be
submitted to the dispute resolution procedure pursuant to the Participating Part D Plan
Sponsor‘s Agreement.
12.

Governing Law.

The Part D Plan Sponsor's agreement and all addenda thereto shall be governed and
construed in accordance with Federal law of the United States. In the event of a conflict
between such agreement and all addenda thereto and Federal law, Federal law shall
prevail. Nothing in the Part D Plan Sponsor's agreement or any addendum thereto shall

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subject an Indian tribe, tribal organization, or urban Indian organization to State law to
any greater extent than State law is already applicable.
13.

Pharmacy/Dispensary Participation.

The Part D Plan Sponsor's agreement and all addenda thereto apply to all pharmacies
and dispensaries operated by the Provider, as listed on the attached Schedule -------- to
this Indian Health Addendum. A pharmacy is required to use a National Council for
Prescription Drug Programs (NCPDP) provider number for reimbursement. To the
extent a dispensary does not have a NCPDP provider number; it is required to use an
NCPDP Alternate Site Enumeration Program (ASEP) number for reimbursement.
14.

Acquisition of Pharmaceuticals.

Nothing in the Part D Plan Sponsor's agreement and all addenda thereto shall affect the
Provider‘s acquisition of pharmaceuticals from any source, including the Federal Supply
Schedule and participation in the Drug Pricing Program of Section 340B of the Public
Health Service Act. Nor shall anything in such agreement and all addenda thereto
require the Provider to acquire drugs from the Part D Plan Sponsor or from any other
source.
15.

Drug Utilization Review/Generic Equivalent Substitution.

Where the Provider lacks the capacity to comply with the information technology
requirements for drug utilization review and/or generic equivalent substitution set forth in
the Part D Plan Sponsor's agreement, the Provider and Part D Plan Sponsor agree that
the Provider shall comply with the Part D Plan Sponsor's drug utilization review and/or
generic equivalent substitution policies and procedures through an alternative
method. Nothing in this paragraph shall be interpreted as waiving the applicability of the
drug utilization review and/or generic equivalent substitution policies and procedures
adopted by Part D sponsor in accordance with 42 C.F.R.§§ 423.153(b) and (c), as
approved by CMS, to covered Part D drugs dispensed by the Provider to enrollees in
the Part D Plan[s]. As specified at 42 C.F.R. §423.132(c)(3), the requirements related
to notification of price differentials is waived for the Provider .
16.

Claims.

The Provider may submit claims to the Part D Plan by telecommunication through an
electronic billing system or by calling a toll-free number for non-electronic claims; in the
case of the latter, Provider shall submit a confirmation paper claim.
17.

Payment Rate.

Claims from the provider shall be paid at rates that are reasonable and appropriate.

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18.

Information, Outreach, and Enrollment Materials.

(a) All materials for information, outreach, or enrollment prepared for the Part D
Plan shall be supplied by the Part D Plan Sponsor to Provider in paper and electronic
format at no cost to the Provider.
(b) All marketing or informational material listing a provider as a pharmacy must
refer to the special eligibility requirements necessary for service to be provided,
consistent with the eligibility requirements as described in this Indian health addendum
in paragraphs 5(a) for IHS providers and 5(b) for tribal and urban providers.
19.

Hours of Service.

The hours of service of the pharmacies or dispensaries of Provider shall be established
by Provider. At the request of the Part D Plan Sponsor, Provider shall provide written
notification of its hours of service.
20.

Endorsement

An endorsement of a non-Federal entity, event, product, service, or enterprise may be
neither stated nor implied by the IHS provider or IHS employees in their official
capacities and titles. Such agency names and positions may not be used to suggest
official endorsement or preferential treatment of any non-Federal entity under this
agreement.
21.

Sovereign Immunity

Nothing in the Part D Plan Sponsor‘s Agreement or in any addendum thereto shall
constitute a waiver of federal or tribal sovereign immunity.

________________________________________________________________________

Signature of Authorized Representative

____________________________________________________________________

Printed Name of Authorized Representative

____________________________________________________________________

Title of Authorized Representative

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