CMS-10137 Medicare Part D Application for New PACE Organizations

Medicare Part D Application for New PACE Organizations
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 information collection contained in this chapter is 0938-0936. The time required to
complete this information collection is estimated to average 15.25 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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I. GENERAL INFORMATION (§423.1- §423.910)
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 section 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‖).
Overview
The Part D benefit constitutes perhaps the most significant change to the Medicare program
since its inception in 1965 by recognizing the vital role of prescription drugs in our health care
delivery system. However, PACE organizations have a longstanding history of providing
statutorily required prescription drugs to all participants. Prior to Part D, prescription drugs were
included as a portion of the Medicaid capitation rate. However, the MMA mandates that State
Medicaid programs may no longer cover Part D drugs on behalf of dual eligible beneficiaries.
PACE organizations may elect to offer a Part D plan in a similar manner as MA-PD local plans
in order to account for this shift in payer source for prescription drugs.
This chapter of the PACE provider application serves as the Medicare Part D application.
NOTE: CMS reserves the right to amend or cancel this solicitation at any time. CMS also
reserves the right to revise the Medicare Prescription Drug Benefit program implementation
schedule, including the solicitation and bidding process timelines.

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Summary of PACE Organization‘s Roles and Responsibilities
Each PACE Organization should have the ability to:
Submit a formulary each year for CMS approval (as applicable).
Submit a Part D bid each year for CMS approval.
Administer the Part D benefit.
Provide all required prescription drug services as outlined in the PACE statute and
regulation.
Operate quality assurance, drug utilization review, and medication therapy management
programs in accordance with existing PACE requirements.
Protect the privacy of beneficiaries and beneficiary-specific health information.
Develop and/or maintain systems to support enrollment, provide claims-based data to CMS,
accept CMS payment, and support e-prescribing.
Provide necessary data to CMS to support payment, oversight, and quality improvement
activities and otherwise cooperate with CMS oversight responsibilities.
Ensure the integrity of the Medicare Trust Fund by eliminating fraud, abuse, and waste
within its organization.
Health Plan Management System (HPMS)
Completion of the CMS PACE Provider Application and the Part D application (chapter 11) is a
significant step towards attaining CMS approval to provide the Part D benefit to eligible PACE
participants. In addition, PACE organizations are required to secure access to the CMS Health
Plan Management System (HPMS) in order to carry out additional Part D functions including the
formulary submission process (as applicable), the bid submission process, ongoing operations
of the Part D program, and reporting and oversight activities.
PACE organizations must obtain HPMS user ID‘s and access to the system only after being
assigned a CMS provider number or ―H-number‖. PACE organizations are assigned CMS "Hnumbers" upon CMS receipt of the PACE provider application. We note that the PACE provider
application is routed to CMS only after it has been reviewed by the SAA. Once your application
has arrived and CMS assigns an ―H-number, you will be notified by your CMS PACE team lead.
At this point, the PACE organizations staff must obtain HPMS user ID‘s in order to access the
system. The HPMS user ID application may be accessed at:
http://www.cms.hhs.gov/AccesstoDataApplication/Downloads/Access.pdf

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In addition, instructions to PACE organization for completing this form are located at:
http://www.cms.hhs.gov/pace/hpmsconn.pdf
Questions concerning HPMS user IDs should be directed to the HPMS Help Desk at
helpdesk@hpms@cms.hhs.gov
Summary Instruction for Part D Formularies (42 CFR §423.120)
Applicants that meet one or more of the definitive criteria for formularies described later in this
document will be required to upload their plan formularies to HPMS using a pre-defined file
format and record layout.
Summary Instruction for Part D Bids (42 CFR §423.265)
Each PACE applicant must submit to CMS, via HPMS, two Part D bids; 1 for dual eligible
enrollees and 1 for Medicare-only enrollees. Applicants using this solicitation must apply to
offer full risk Part D plans.
The applicants bid will represent the expected monthly cost to be incurred by the applicant for
qualified prescription drug coverage in the plan‘s service area for a Part D-eligible beneficiary on
a standardized basis. The costs represented in each bid should be those for which the
applicant would be responsible. The bid will require the separate identification, calculation, and
reporting of costs assumed to be reimbursed by CMS through reinsurance. CMS requires that
the bid represent a uniform benefit package among all beneficiaries enrolled in the plan. The
benefit packages submitted must be cross walked appropriately from the formulary (as
applicable). Pursuant to 42 CFR §423.505(k)(4), the CEO, CFO, or an individual delegated with
the authority to sign on behalf of one of these officers, and who reports directly to such officer,
must certify (based on best knowledge, information and belief) that the information in the bid
submission is accurate, complete, and truthful, and fully conforms to the requirements in section
42 CFR §423.265 of the regulations (except section 42 CFR §423.265(b), the applicability of
which is discussed below). In addition, the pricing component of the bid must be certified by a
qualified actuary.
PACE organizations must submit annual Part D bids and receive CMS approval of the Part D
bids prior to providing or continuing to provide Part D benefits. Any PACE organization that
wishes to either continue receiving Part D payment or begin receiving Part D payment in
January of a given year, must submit their Part D bids no later than the first Monday in June of
the year prior. The June bid submission deadline (42 CFR §423.265(b)) has been waived for
newly forming PACE organizations pending the development of a methodology for accepting
mid-year bids.
In order to prepare plan bids, Applicants will use HPMS to define their plan structures and
associated plan service areas and then download the Plan Benefit Package (PBP) and Bid
Pricing Tool (BPT) software. For each plan being offered, Applicants will use the PBP software
to describe the detailed structure of their Part D benefit and the BPT software to define their bid
pricing information. The formulary (as applicable) must accurately crosswalk to the PBP.
Once the PBP and BPT software has been completed for each plan being offered, Applicants
will upload their bids to HPMS.
CMS Review of Part D Bids
CMS will evaluate the bids based on four broad areas: 1) administrative costs, 2) aggregate
costs, 3) benefit structure, and 4) plan management. CMS will evaluate the administrative costs
for reasonableness in comparison to other PACE bidders. CMS will also examine aggregate

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costs to determine whether the revenue requirements for qualified prescription drug coverage
are reasonable and equitable. In addition, CMS will review the steps the PACE Part D sponsor
is taking to control costs, such as through various programs to encourage use of generic drugs.
Finally, CMS will examine indicators concerning plan management.
CMS is also required to make certain that bids and plan designs meet statutory and regulatory
requirements. We will conduct an actuarial analysis to determine whether the proposed benefit
meets the standard of providing qualified prescription drug coverage.
Overview of Part D Bid Negotiation
CMS evaluates the reasonableness of bids submitted by PACE Part D sponsors by means of an
actuarial valuation analysis. This requires evaluating assumptions regarding the expected
distribution of costs, including average utilization and cost by drug coverage tier. CMS could
test these assumptions for reasonableness through actuarial analysis and comparison to
industry standards and other comparable bids. Bid negotiation could take the form of
negotiating changes upward or downward in the utilization and cost per script assumptions
underlying the bid‘s actuarial basis. We could exercise our authority to deny a bid if we do not
believe that the bid and its underlying drug prices reflect market rates.
Standard Contract with PACE Part D Sponsors
Successful Applicants will be deemed qualified to enter into a PACE program agreement that
includes Part D coverage. Under this agreement the PACE Part D sponsor will be authorized to
operate the Medicare Part D benefit for all eligible PACE participants. Only after the qualified
Applicant and CMS have reached agreement on the Applicant‘s bid submissions will the
Applicant be asked to execute its PACE program agreement.
General Enrollment Processing
CMS has developed a system to review an individual‘s eligibility for the Part D benefit. For
individuals applying for enrollment in a Part D plan, CMS reviews an individual‘s status as a
Medicare beneficiary. CMS tracks enrollments and ensures that the beneficiary does not enroll
in more than one plan. Also, CMS tracks low-income subsidy status and auto-enrollments of
full-benefit dual eligible individuals into Part D plans and facilitated enrollments for other lowincome Medicare beneficiaries. 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.
Eligibility for the Low Income Subsidy Program
Low-income Medicare beneficiaries receive full or partial subsidies of premiums and reductions
in cost sharing under the Part D benefit. Certain groups of Medicare beneficiaries are
automatically be eligible for the low-income subsidy program. These beneficiaries include
Medicare beneficiaries who are full-benefit dual eligible individuals (eligible for full benefits
under Medicaid), Medicare beneficiaries who are recipients of Supplemental Security Income
benefits; and participants in Medicare Savings Programs as Qualified Medicare Beneficiaries
(QMBs), Specified Low-Income Medicare Beneficiaries (SLMBs), and Qualifying Individuals
(QIs). Beneficiaries who are low-income 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

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enrollment processing system described below. For additional information regarding the low
income subsidy program, refer to the www.cms.hhs.gov/ website.
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 C.F.R.
§5.65(d) and by Executive Order 12,600 to give the submitter notice before the information is
disclosed. To decide whether the Applicant‘s information is protected by Exemption 4, CMS
must determine whether the Applicant has shown that— (1) disclosure of the information might
to impair the government's ability to obtain necessary information in the future; (2) disclosure of
the information would cause substantial harm to the competitive position of the submitter; (3)
disclosure would impair other government interests, such as program effectiveness and
compliance; or (4) disclosure would impair other private interests, such as an interest in
controlling availability of intrinsically valuable records, which are sold in the market. Consistent
with our approach under the Medicare Advantage program, we would not release information
under the Medicare Part D program that would be considered proprietary in nature.
Payment to PACE Part D Sponsors
Payments will be wired to the organization‘s account on the first day of each month (or the last
business day of the prior month if the first day of the month is not a business day). The monthly
payment will include premiums that SSA or other agencies are deducting from beneficiary
Social Security payments or other payments as well as those premiums CMS is paying on
behalf of low-income individuals. Estimated monthly reinsurance subsidies, and low-income
subsidies are also included.
Applicability of the National Provider Identifier (NPI) to PACE Organizations
The Administrative Simplification provisions of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) mandated the adoption of standard unique identifiers for
health care providers, as well as the adoption of standard unique identifiers for health plans.
The purpose of these provisions is to improve the efficiency and effectiveness of the electronic
transmission of health information. The NPI has been adopted as the standard unique identifier
for health care providers. The National Plan and Provider Enumeration System (NPPES) is the
entity that assigns these unique identifiers.
For purposes of HIPAA, PACE organizations may be defined as both health plans and health
care providers. We note that an enumeration system applicable to health plans is still in the
development stages. However, any health care provider, as that term is defined for purposes of
HIPAA that transmits any health information in electronic form in connection with one of the
standard transactions, including electronically billing any health plan (including Medicare), must
obtain an NPI. Health care providers are defined at 45 CFR §160.103 as ―a provider of services
(as defined in section 1861 (u) of the Act, 42 USC 1395x (u)), a provider of medical or health
services (as defined in section 1861(s) of the Act, 42 ISC 1395x(s)), and any other person or
organization who furnishes, bills, or is paid for health care in the normal course of business.‖
Although PACE organizations may meet the definition or a health care provider, as described
above, only those that transmit health information in electronic form in connection with one of
the standard transactions, including billing any health plan electronically must obtain an NPI.

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We note that in some instances, PACE organizations may elect to provide Medicare services to
a beneficiary prior to the beneficiary‘s effective date of PACE enrollment. These services may
be billable under Medicare Fee-For-Service. To the extent a PACE organization that is a HIPAA
health care provider elects to bill Medicare electronically for these non-PACE services, an NPI
would be needed.
In addition, consistent with HIPAA requirements, as health plans, all PACE organizations
(regardless of whether the NPI requirements apply to them as health care providers) are
required to accept and recognize the NPI as the health care provider identifier in standard
transactions that are submitted to them from health care providers or other health plans.

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II. GENERAL INSTRUCTIONS
Summary Instructions and Technical Support
This application is to be completed by those newly forming PACE organizations that intend to
provide the Part D benefit to eligible participants beginning in 2011. Applicants projecting PACE
provider status by 1/1/2011 may submit the Part D application (chapter 11 of the PACE provider
application) up until July 1, 2010. Applicants must use the 2011 solicitation. CMS will not accept
or review in any way those submissions using prior version of the application.
For technical assistance in the completion of this application, contact:
Eric Nevins by email at: eric.nevins@cms.hhs.gov or by phone at 410-786-1162.
Instructions
Applicants must include the name of the PACE organization in the heading on each page of the
Part D application submitted to CMS.
In many instances Applicants are directed to affirm that they will meet particular requirements by
indicating ―Yes‖ next to a statement of a particular Part D program requirement. By providing
such attestation, an Applicant is committing its organization to complying with the relevant
requirements as of the date your contract is signed, unless an alternative date is noted.
Additional supporting documentation is notated in the following manner throughout the
application and is to be submitted as follows:
Forms: documents supplied by CMS that are contained at the end of this application. They are
to be completed by the Applicant and returned to CMS as indicated.
Legal documents such as subcontracts should be provided in hard copy as an attachment to the
application. In addition, all subcontracts and other legal documents should be provided on the
CD or diskette copies of the application. The CD/diskette identification should include the form
number.
CMS will check the Part D application for completeness shortly after its receipt. We will notify
Applicants of any deficiencies and afford them the opportunity to amend their Part D
applications.
CMS may verify a sponsor‘s compliance with qualifications it attests it will meet, through on-site
facility visits as well as through other program monitoring techniques.
Failure to meet the requirements attested to in the Applicant‘s response to this solicitation and
failure to operate its Part D plan(s) consistent with the requirements of the applicable statutes,
regulations, and the Part D contract may disqualify it from participation in the Part D program.
An individual with legal authority to bind the Applicant shall sign and submit the certification.
CMS reserves the right to request clarifications or corrections to a submitted application.
Failure to provide requested clarifications 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.
This solicitation does not commit CMS to pay any cost for the preparation and submission of a
Part D application.

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Format
All responses should be completed in Microsoft Word (in a version that is compatible
with Office 2003). Attachments (such as existing contracts) can be submitted in
Microsoft Word (in a version that is compatible with Windows 2003) or as a PDF file.
At the time you receive notification from CMS that your provider application has been
received from the State, you must submit a cover letter and six (5) hard copies of the
Part D application (Chapter 11) and supporting documentation to CMS. In addition, the
applicant should simultaneously submit one copy to the State Administrating Agency
(SAA).
Centers for Medicare & Medicaid Services (CMS)
Eric Nevins
Mail Stop: C4-21-08
Attn: PACE Part D Application
7500 Security Boulevard
Baltimore, Maryland 21244-1850
Each hard copy of the Part D application should include tab indexing identifying all of the
major sections of the Part D application. Page size should be 8 ½ by 11 inches. Font
size should be 12 point.
One Part D application should be clearly marked, ―Original‖ and contain all original
signed certifications requested in the application.
Note: It is important that Applicant provide 2 separate contact persons and
applicable contact information for PACE organization Application submission(s).
This will help to avoid delays in the processing of an application.
Along with five paper copies of the Part D application each applicant must submit five (5)
duplicate CDs or diskettes. This will support the review of the application by different
CMS components.
Each CD or diskette must be clearly labeled with the information in the table below:
Applicant’s Organization Name
CD or Diskette Number (Copy 1, Copy 2, Copy 3, etc.)
Note: If multiple CDs or diskettes are required to include written application,
appendices, attachments and other supporting documentation, label as follows:
Copy 1 (1 of 2), Copy 1 (2 of 2), Copy 2 (1 of 2), Copy 2 (2 of 2), etc.
In order for CMS to receive your application in a timely manner, please note that Federal
Express and the US Postal Service possess a CMS security clearance. Applications
mailed through carriers that do not have CMS Security Clearance could be delayed due
to clearance processing.
Failure to submit a Part D application consistent with these instructions may delay its
review by CMS and could result in receipt of a notice of intent to deny.
Bid and formulary (as applicable) submissions are required on an annual basis. Although CMS
will not require resubmission of this chapter on an annual basis, we expect to be notified of any
changes to responses initially provided.

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

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PART D WAIVERS
CMS is authorized to grant waivers of Part D program requirements where such a requirement conflicts with or duplicates a PACE
requirement, or where granting such a waiver would improve the PACE Organization‘s coordination of PACE and Part D benefits.
The following waivers are in effect for all PACE organizations.
Summary of Medicare Part D Regulatory Requirements Waived for PACE Organizations
Part D Regulation
423.44
423.48
423.50
423.104(g)(1)
423.112
423.120(a)
423.120(c)
423.124
423.128
423.132

423.136
423.153(a)-423.153(d)
423.156
423.159(c), 423.160(a)
423.162
423.265(b)
Note: Automatic waiver applies to new or potential
organizations that are not operational by the June deadline.
Those organizations with effective program agreements
must submit a Part D waiver request in the event they are
unable to meet the June deadline.
423.401(a)(1)

Regulatory Requirement(s)
Description
Involuntary disenrollment
Information about Part D
Approval of marketing materials and enrollment forms
Access to negotiated prices
Establishment of PDP service areas
Access to covered Part D drugs
Use of standardized technology
Out-of-network access to covered Part D drugs at out-of-network
pharmacies
Dissemination of Part D plan information
Public disclosure of pharmaceutical prices for equivalent drugs

Privacy, confidentiality, and accuracy of enrollee records
Drug utilization management, quality assurance, and medication
therapy management programs (MTMPs)
Consumer satisfaction surveys
Electronic prescribing
Quality Improvement organization activities
Part D bid submission deadline

Licensure

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Part D Regulation
423.420

Regulatory Requirement(s)
Description
Solvency standards for non-licensed entities

423.462

Medicare secondary payer procedures

423.464(c)
423.464(f)(2) and 423.464(f)(4)
423.502(b)(1)(i-ii)
423.504(b)(2-3), 423.504(b)(4)(i-v) and (vi)(A-E), and 423.504(d)
Note: Organizations are required to abide by
423.504(b)(4)(vi)(F-H), 423.504(b)(5), 423.504(c), and
423.504(e)
423.505(a-c) and 423.505(e-i)
Note: Organizations are required to abide by 423.505(d and
j)
423.505(k)(6)
Note: Organizations are required to abide by 423.505(k)(1-5)
423.506(a)-(b)
Note: Organizations are required to abide by 423.506(c)-(e)
423.512 – 423.514

Coordination of benefits and user fees
Coordination with other prescription drug coverage
Documentation of State licensure or Federal waiver
Conditions necessary to contract as a Part D plan sponsor

423.551-423.552

Change of ownership or leasing of facilities during term of
contract
Grievances, coverage determinations, and appeals
A PDP sponsor is required to be a nongovernmental entity

423.560-423.638
N/A

Contract provisions

Certification for purposes of price compare
Effective date and term of contract
Contracting terms

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Applicant Requests for Additional Waivers:
CMS may grant additional waivers upon a PACE Organization‘s request, provided that
the waivers may be justified because the Part D requirement is duplicative of or
conflicting with PACE requirements, or the waiver will improve the coordination of PACE
and Part D benefits. Any waiver granted by CMS will apply to all similarly situated PACE
Organizations.
PACE Organizations that identify the need for additional Part D waivers must submit a
separate Part D waiver request package 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.
Four copies of these requests should be submitted to the following address:
Centers for Medicare and Medicaid Services (CMS)
Janet Samen
Attn: Part D PACE Waiver Request
Mail Stop: C5-05-27
7500 Security Boulevard
Baltimore, MD 21244-1850
Finally, the PACE Organization should also copy their State Administering Agency on
the request as well as their CMS PACE Team Lead.
Determinations will be coordinated between Part D and PACE policy staff and issued to
applicants following a comprehensive review of the request in a similar manner as PACE
BIPA 903 waivers are evaluated in accordance with sections 42 CFR §460.26(b) and 42
CFR §460.28 of the PACE regulation.

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IV. APPLICATION FORMS
Please do not submit the previous pages of this chapter in the printed copy of your
application.

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CENTERS FOR MEDICARE AND MEDICAID SERVICES
MEDICARE PART D APPLICATION
PROGRAM OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)

NAME OF LEGAL ENTITY

MAILING ADDRESS

TRADE NAME (if different)

PARENT ORGANIZATION (if applicable)

AREA CODE TELEPHONE NO.
EXTENSION

FAX

CEO OR EXECUTIVE DIRECTOR:
NAME AND TITLE

MAILING ADDRESS

TELEPHONE NUMBER

PRIMARY APPLICANT CONTACT
PERSON:
NAME
TITLE
ADDRESS

E-MAIL
FAX
TELEPHONE NUMBER

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SECONDARY APPLICANT CONTACT
PERSON:
NAME
TITLE
ADDRESS

E-MAIL
FAX
TELEPHONE NUMBER

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Management and Operations

Subcontractor (first tier, downstream and related entities) Function Chart
In HPMS, on the
Contract and
Management/Part D
Information/Part D
Data Page, provide
the names of the first
tier, downstream and
related entities you
will use to carry out
each of the functions
listed in this chart:
(Indicate
―APPLICANT‖ where
applicant will perform
those functions)

Function

Subcontractor(s) (first tier,
downstream and related
entities)

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

A pharmacy benefit program
that operates an enrollee
grievance and appeals
process
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.

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PACE organizations
functioning with formularies
agree to maintain
pharmaceutical and
therapeutic committees.

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Provide as attachments copies of executed contracts, fully executed letters of
agreement, or administrative services agreements with each (first tier, downstream and
related entities identified in the above table that:
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 PACE 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. Are signed by a representative of each party with legal authority to bind the entity;
8. 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)
9. Contain language obligating the first tier, downstream, or related entities 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.
10. 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 PACE 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)
11. 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 PACE Part D
sponsor. 42 CFR §423.505(i)(3)(i)
12. Contain language that the first tier, downstream, or related entity indicates 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)

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13. Contain language that if the Applicant, upon becoming a PACE 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 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)
14. Contain language specifying that the Applicant, upon becoming a PACE 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);
15. If the first tier, downstream, or related entity will establish the pharmacy network or
select pharmacies to be included in the network, contain language that the PACE Part D
sponsor retains the right to approve, suspend, or terminate any arrangement with a
pharmacy. 42 CFR §423.505(i)(5)
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 payment to such
pharmacies (excluding long-term care and mail order) shall be issued, mailed, or otherwise
transmitted with respect to all clean claims submitted by or on behalf of pharmacies within
14 days for electronic claims and within 30 days for claims submitted otherwise. 42 CFR
§423.505(i)(3)(vi) and 42 CFR §423.520
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 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)
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, 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) and 42 CFR §423.505(b)(21)

20

Crosswalks of Requirements in Contracts/Administrative Services Agreements

INSTRUCTIONS: Applicants must complete the following chart for each contract/administrative services
agreement submitted. Applicants must identify where specifically (i.e., section numbers, page numbers,
paragraph numbers, etc.) in each contract/administrative services agreement the following elements are found.
[E.g., Medicare Part D Addendum, page 14, section 3.2, paragraph 2.]
Requirement
Citation
The parties to the contract
The functions to be performed by the first tier, downstream, or related entity.
42 CFR §423.505(i)(4)(i)
Describes the reporting requirements the first tier, downstream, or related
entity has to the Applicant. 42 CFR §423.505(i)(4)(i)
Language clearly indicating that the first tier, downstream, or related entity has
agreed to participate in your Medicare Prescription Drug Benefit program
(except for a network pharmacy if the existing contract would allow
participation in this program).
Contains flow-down clauses requiring the first tier, downstream, or related
entity‘s activities to be consistent and comply with the Applicant‘s contractual
obligations as a Part D sponsor. 42 CFR §423.505(i)(3)(iii)
The payment the first tier, downstream, or related entity will receive for
performance under the contract, if applicable.
Are for a term of at least the one-year contract period for which application is
submitted.
Are signed by a representative of each party with legal authority to bind the
entity.
Language obligating the first tier, downstream, or related entity to abide by all
applicable Federal laws and regulations and CMS instructions. 42 CFR
§423.505(i)(4)(iv)
Language obligating the first tier, downstream, or related entity to abide by
State and Federal privacy and security requirements, including the
confidentiality and security provisions stated in the regulations for the program
at 42 CFR §423.136. 42 CFR §423.136
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
PACE Part D sponsor and that these rights continue for a period of 10 years
from the final date of the contract period or the date of audit completion,
whichever is later. 42 CFR §423.505
Language stating that the first tier, downstream, or related entity will ensure
that beneficiaries are not held liable for fees that are the responsibility of the
Applicant. 42 CFR §423.505(i)(3)(i)
Contain 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)

21

Contain language that if the Applicant, upon becoming a PACE 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
sponsor determines the first tier, downstream, or related entity has not
performed satisfactorily. Note: The contract/administrative services
agreement may include remedies in lieu of revocation to address this
requirement. 42 CFR §423.505(i)(4)(ii)
Language specifying that the Applicant, upon becoming a Part D sponsor, will
monitor the performance of the first tier, downstream, or related entity on an
ongoing basis. 42 CFR §423.505(i)(4)(iii)
Language that the Part D sponsor retains the right to approve, suspend, or
terminate any arrangement with a pharmacy if the first tier, downstream, or
related entity will establish the pharmacy network or select pharmacies to be
included in the network. 42 CFR §423.505(i)(5)
Language that if the first tier, downstream, or related entity will establish the
pharmacy network or select pharmacies to be included in the network contain
language that payment to such pharmacies (excluding long-term care and mail
order) shall be issued, mailed, or otherwise transmitted with respect to all
clean claims submitted by or on behalf of pharmacies within 14 days for
electronic claims and within 30 days for claims submitted otherwise. 42 CFR
§423.505(i)(3)(vi)
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 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)
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 updates to such a standards 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)

INSTRUCTIONS: Applicants must complete the following chart (which contains applicable requirements from
above AND additional requirements specific to Pharmacy Access) for each Long-Term Care pharmacy contract
template submitted. Applicants must identify where specifically (i.e., section numbers, page numbers,
paragraph numbers, etc.) in each contract template the following elements are found. [E.g., Medicare Part D
Long-Term Care Pharmacy Addendum, page 14, section 3.2, paragraph 2.]
The provisions listed below must be in all pharmacy contracts. If contracts reference policies and
procedures with which the pharmacy must comply, provide the relevant documentation as evidence
and cite this documentation accordingly.
Requirement
Citation
The functions to be performed by the first tier,
downstream, or related entity. 42 CFR

22

§423.504(i)(4)(i)
Describes the reporting requirements the first tier,
downstream, or related entity identified in the
application has to the Applicant. 42 CFR
§423.504(i)(4)(i)
Language obligating the first tier, downstream, or
related entity to abide by all applicable Federal laws
and regulations and CMS instructions. 42 CFR
§423.504(i)(4)(iv)
Language obligating the first tier, downstream, or
related entity to abide by State and Federal privacy
and security requirements, including the
confidentiality and security provisions stated in the
regulations for the program at 42 CFR §423.136.
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 PACE Part D sponsor and that these rights
continue for a period of 10 years from the final date of
the contract period or the date of audit completion,
whichever is later. 42 CFR §423.505
Language stating that the first tier, downstream, or
related entity will ensure that beneficiaries are not
held liable for fees that are the responsibility of the
Applicant. 42 CFR §423.505(i)(3)(i)
Contain 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)
Contain language that if the Applicant, upon
becoming a PACE 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 sponsor determines
the first tier, downstream, or related entity has not
performed satisfactorily. Note: The subcontract may
include remedies in lieu of revocation to address this
requirement. 42 CFR §423.505(i)(3)(i)

23

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)(ii)
Provisions requiring that the long-term care
pharmacy have not less than 30 days (but not more
than 90 days) to submit claims to the sponsor for
reimbursement under the plan. 42 CFR
§423.505(i)(3)(vii)
For those contracts that use a standard for
reimbursement, a provision that indicate the source
used by the Part D sponsor for the standard of
reimbursement. 42 CFR §423.505(i)(3)(viii)(B)
For those contracts that use a standard for
reimbursement, a provision that updates to such a
standard occur not less frequently than once every 7
days beginning with an initial update on January 1 of
each year, to accurately reflect the market price of
acquiring the drug. 42 CFR §423.505(i)(3)(viii)(A)
Provisions governing submitting claims to a real-time
claims adjudication system. 42 CFR §423.505(j) and
§423.505(b)(17)
Note: Applicant may indicate for I/T/U pharmacies
and for certain pharmacies that are allowed to submit
claims in the X 12 format that these may be batch
processed.
Provisions governing providing Part D enrollees
access to negotiated prices as defined in 42 CFR
423.100. 42 CFR §423.104(g)
Provisions regarding charging/applying the correct
cost-sharing amount. 42 CFR §423.104(g)

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 are required to incorporate at a minimum, 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

1. 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

24

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.

2. 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.

3. 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.

4. 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.

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

6. 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.

7. 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 in-between
regularly scheduled visits. Emergency delivery service must be available 24

25

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‖.

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

9. 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.

10. 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.

26

HPMS Part D Contacts
A. In HPMS, on the Contract Management/Contact Information/Contact Data Page provide
the name/title, mailing address, phone number, fax number, and email address for the
following Applicant contacts. We recognize that due to the many PACE Part D waivers,
several of the requested contacts bear no relevance for PACE organizations. However,
for systems purposes all sections must be populated. Therefore, in instances where a
contact does not apply, please list the Application Contact.
Note: The same individual should not be identified for each of these contracts. If a general
phone number is given then CMS requires specific extensions for the individual identified. Under
no circumstances should these numbers merely lead to a company‘s general automated phone
response system. Further, Applicants must provide specific email addresses for the individuals
named.
Note: Contact definitions are provided in HPMS in the Contract Management/Contact
Information/Contact Data/Documentation link entitled Contact Definitions.
Contact

Name/Title

Mailing
Address

Phone/Fax
Numbers

Email 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

27

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 Help
Desk Contact
Processor
Contact

28

Contact

Name/Title

Mailing
Address

Phone/Fax
Numbers

Email Address

CMS Casework
Communication
Contact
Part D
Exceptions
Contact
EOB Transfer
Contact
Coordination of
Benefits
Contact
CEO – CMS
Administrator
Contact
Plan to Plan
Reconciliation
Contact
CAP Report
Contact for
Public Website
Financial
Reporting
Contact
Plan Directory
Contact for
Public Website
Best Available
Evidence
Contact
Automated
TrOOP Balance
Transfer
Contact
Complaints
Tracking
Module (CTM)
Contact
Part D
Reporting
Requirements
Contact
Fraud
Investigation
Contact

B. Complete the table below:

29

APPLICANT MUST ATTEST ‘YES’ TO THE FOLLOWING
QUALIFICATION TO BE APPROVED FOR A PART D

Requesting
YES

NO

CONTRACT. ATTEST ‘YES’ OR ‘NO’ TO THE FOLLOWING

Waiver? –
Yes or No

QUALIFICATION BY PLACING A CHECKMARK IN THE
RELEVANT COLUMN:
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.
Business Integrity
A. Complete the table below:
APPLICANT MUST ATTEST ‘YES’ OR ‘NO’ TO THE
FOLLOWING QUALIFICATION TO BE APPROVED FOR A
PART D CONTRACT. ATTEST ‘YES’ OR ‘NO’ TO THE

Requesting
Yes

No

Waiver? –
Yes or No

FOLLOWING QUALIFICATION BY PLACING A CHECKMARK
IN THE RELEVANT COLUMN:
1. Applicant, applicant staff, and its affiliated companies,
subsidiaries or first tier, downstream and related entities, and
staff of 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
Administration. Please note that this includes any member of
its board of directors, and any key management or executive
staff or any major stockholder.
2. Applicant has no 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 Pharmaceutical Benefit Manager (PBM) (and the
PBM‘s parent firm if applicable) has no 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.

30

B. If Applicant answered No to Attestation #2 and/or Attestation #3, provide as an attachment,
all past or pending, if known, investigations, legal actions, administrative actions, or matters
subject to arbitration brought by a government agency (state or federal including CMS over the
past three years on matters relating to payments from governmental 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 of executive staff.
Provide as part of the attachment 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; and
5) Settlement agreements or corporate integrity agreements.

31

Compliance Plan
A. 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

Requesting
YES

NO

Waiver? –
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
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 sponsor. 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 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 or 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

32

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 attachment 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 clearly articulate that the appropriate elements listed at 42
CFR §423.504(b)(4)(vi) and are being implemented within the context of the compliance plan
and are specific to the issues and challenges presented by the Part D program. In addition, the
Part D compliance plan must demonstrate that all 7 elements in the regulation and 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 sufficient.
Note: Please be advised that the Part D Sponsor is ultimately responsible for the
implementation and monitoring of the day-to-day operations of its Part D compliance program.
As applicable, 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 that the Medicare Compliance Officer identified in HPMS Contacts
must be an employee of the Applicant. A compliance plan adopted and operated by a Part D
Applicant‘s first tier, downstream, or related entity is not sufficient to demonstrate that the Part D
Applicant meets the compliance program requirement.

33

Health Information Technology
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
1. Applicant agrees that as it implements, acquires, or upgrades
health information technology (HIT) systems, 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.

34

Enrollment and Eligibility
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
1. Applicant agrees to comply with operational guidance on
Creditable Coverage and the Late Enrollment Penalty.
2. Applicant will query the Batch Eligibility Query (BEQ) or the
User Interface (UI) to receive:
a) Verification of Medicare Eligibility
b) The end date of the beneficiary‘s Part D IEP;
c) Periods of enrollment in a Medicare plan that provides
prescription drug coverage: and
d) Periods of enrollment in a retiree prescription drug plan
whose sponsor receives a retiree subsidy from Medicare.
3. Applicant will collect, review and transmit creditable coverage
information in accordance with CMS guidance and policies.
4. Applicant agrees to use the 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.
5. 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 until the
organization receives a reply from CMS indicating that the
member‘s request has been rejected.
6. 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.

35

Complaints Tracking
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
1. Applicant will resolve 95% of complaints designated as
immediate needs complaints via the CMS Complaints
Tracking Module (CTM) within 2 calendar days.
2. Applicant is expected to resolve at least 95% of complaints
designated as ―urgent‖ via the CMS CTM in accordance with
CMS issued guidance.
3. Applicant is expected to resolve at least 95% of complaints
without an issue level via CMS CTM 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‘ CTM in accordance with CMS‘ Standard Operating
Procedures for Part D sponsors.
5. Applicant will maintain Standard Operating Procedures that
address how your organization will handle and quickly
resolve immediate action cases.

36

Coordination of Benefits
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
1. Applicant agrees to comply with Coordination of Benefits
guidance.
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 will permit SPAPs and other third party payers to
coordinate benefits as required by the regulations in 42 CFR
Part 423.464 and Chapter 14 of the Prescription Drug Benefit
Manual. For example, an SPAP may require agreements to
be signed in order for the state to pay premiums on behalf of
the beneficiary. CMS expects Part D sponsors to execute
these trading partner agreements within a reasonable
timeframe.
4. Applicant agrees not to impose fees on SPAPs or other thirdparty insurers that are unreasonable and/or unrelated to the
cost of coordination of benefits.

37

Tracking Out-of-Pocket Costs (TrOOP)
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
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 specified by CMS and use these data in the
Applicant‘s TrOOP calculation process.
3. 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.
4. Applicant agrees to receive and respond promptly to
transactions requesting TrOOP-related data (i.e., gross
covered prescription drug spending and TrOOP balances
from any prior Part D plans in which the beneficiary was
enrolled during the coverage year) for disenrollling Part D
beneficiaries as well as to receive these data for newly
enrolling Part D beneficiaries transferring mid-year from
another plan.
NOTE: For information regarding the TrOOP facilitator, Applicant may link
to http://medifacd.ndchealth.com/

38

Medicare Secondary Payer
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
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.
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 as
applicable.
4. Applicant will collect mistaken primary payment from insurers,
group health plans, employer sponsors, enrollees and other
entities.
5. 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, or No-Fault,
or Liability coverage and has previously established that a
certain drug is being used exclusively to treat a related injury.
6. Applicant agrees that in situations involving workers‘
compensation Medicare set-asides including prescription drugs,
the Applicant will establish point-of-sale edits to deny payment
and reject claims for the included drugs.

39

Data Collection and Reporting Requirements
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
REBATE DATA
1. The Applicant or the Applicant‘s representative has
accounting systems capable of accomplishing the provision of
documentation, as specified by CMS, to support the accuracy
and completeness of rebate data. Documentation will be
provided to CMS in response to an audit-based request.
2. The Applicant will report rebate dollars on a quarterly basis at
the manufacturer/brand name level (unique strength and
package size not required) in the manner specified by CMS.
3. The Applicant or the Applicant‘s representative has
accounting systems capable of accomplishing the production
of financial reports to support rebate accounting. The rebate
accounting must allow for step-down cost reporting in which
rebates received at the aggregate level may be apportioned
down to the level of plan enrollees.

40

Data Exchange Between PACE Organizations and CMS
A. Complete the table below:
APPLICANT MUST ATTEST ‘YES’ TO EACH OF THE
FOLLOWING QUALIFICATIONS TO BE APPROVED FOR A

Requesti
YES

NO

ng

PART D CONTRACT. ATTEST ‘YES’ OR ‘NO’ TO EACH OF

Waiver?

THE FOLLOWING QUALIFICATIONS BY PLACING A

Yes or No

CHECKMARK IN THE RELEVANT COLUMN:
HPMS
1. Applicant will use HPMS to communicate with CMS in support
of the Part D application process, formulary submission
process, bid submission process, ongoing operations of the
Part D program, and reporting and oversight activities. PACE
Organizations are required to secure access to HPMS in order
to carry out these functions.
ENROLLMENT & PAYMENT
2. Applicant will establish connectivity to CMS noted in the
instructions provided by the MMA Help Desk at 1-800-9278069 or via the MMA HelpDesk webpage,
www.cms.hhs.gov/mmahelp, in the Plan Reference Guide for
CMS Part C/D system link.
3. Applicant will obtain CMS User ID and Password.

4. Applicant will submit enrollment, disenrollment and change
transactions to communicate membership information to CMS
within the timeframes provided by CMS.
5. Applicant will reconcile Part D data to CMS enrollment/payment
reports within 45 days of availability.
6. Applicant will submit enrollment/payment attestation forms
within 45 days of CMS
report availability.
7. Applicant will participate in connectivity testing and other
system testing measures as provided to the Applicants prior to
contract execution to validate system setup.
8. Applicant will establish system(s) to process enrollment and
payment transactions as exchanged with CMS in accordance with
system development lifecycle standards.
9. Applicant will ensure appropriate security safeguards and
protocols are in place to protect the protected health information in
the system(s).
10. Applicant will maintain all pertinent system security and
disaster recovery plans and procedures.

41

Health Insurance Portability and Accountability Act of 1996 (HIPAA)
A. 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’

Requesting
YES

NO

Waiver?
Yes or No

TO EACH OF THE FOLLOWING QUALIFICATIONS BY
PLACING A CHECKMARK IN THE RELEVANT
COLUMN:
1. Applicant will comply with any 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 any applicable standards,
implementation specifications, and requirements in the
Security Standards under 45 CFR Parts 160, 162 and 164
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 any applicable standards,
implementation specifications, and requirements in the
Standard Unique Health Identifier for Health Care
Providers under 45 CFR Part 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 that when its organization receives a
National Provider Identifier (NPI) it will implement a
contingency plan related to compliance with the NPI
provisions.
8. Applicant will comply with any applicable standards,
implementation specifications, and requirements in the
Standards for Electronic Transactions under 45 CFR Parts
160 and 162 subparts I et seq.
9. Applicant agrees to submit the Offshore Subcontract
Information and Attestation via HPMS for each offshore
subcontractor (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 of the upcoming contract year.

42

9.

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.

43

Prohibition on Use of SSN or Medicare ID number on Enrollee ID Cards
A. 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

Requesting
YES

NO

Waiver?
Yes or No

THE FOLLOWING QUALIFICATIONS BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN:
1. Applicant agrees not to use an enrollee‘s Social Security
Number (SSN) or Medicare ID Number on the enrollee‘s
identification card.

44

Prescription Drug Event (PDE) Records
A. 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:

Requesting
Yes

No

Waiver?
Yes or No

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/pdd-training/pddtraining.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 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.

45

Claims Processing
A. 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

Requesting
YES

NO

Waiver?
Yes or No

FOLLOWING QUALIFICATIONS BY PLACING A CHECKMARK IN
THE RELEVANT COLUMN:
1. Applicant either:
(a) Contracts with a third party that agrees to
develop and operate an on-line claims
processing system that operates in real time
to ensure accurate and timely payment of all
claims submitted by network pharmacies.
System operates according to the following
standards:
98% response within 4 seconds
99% of all claims paid with no errors
99% system availability
(b) Has internal procedures in a place to
ensure accurate and timely payment of all
claims submitted by network pharmacies.
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 its claims adjudication system including:
Hardware and software;
Operating system;
Commercial organization for which Applicant receives pricing
files, including file revision history;
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

46

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 reimbursements
and recoveries due to network pharmacies and beneficiaries.
Deductible files/TrOOP/and gross covered 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,
consistent with CMS requirements.
9. Applicant will document the manner and extent to which it has tested
benefit designs such as drugs excluded or quantity limitations and plan
parameters such as the dual eligible plan vs. the Medicare-only plan.
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.

47

Record Retention
A. 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 PLACING A CHECKMARK IN THE RELEVANT
COLUMN:

Request
YE
S

NO

ing
Waiver?
Yes or
No

1. The Applicant will maintain, for 10 years, 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 replicated 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 D and Part D
in the format(s) required by either State law or the HIPAA Privacy
Rule, if applicable, or at the Applicant‘s discretion.

48

CERTIFICATION
I, the undersigned, certify to the following:
1) I have read the contents of the completed application and the information contained
herein is true, correct, and complete. If I become aware that any information in this
application is not true, correct, or complete, I agree to notify the Centers for Medicare
& Medicaid Services (CMS) immediately and in writing.
2) I authorize CMS to verify the information contained herein. I agree to notify CMS in
writing of any changes that may jeopardize my ability to meet the qualifications
stated in this application prior to such change or within 30 days of the effective date
of such change. I understand that such a change may result in termination of the
approval.
3) I agree that if my organization meets the minimum qualifications and is Medicareapproved, and my organization enters into a Part D Addendum with CMS, I will abide
by the requirements contained in this Application and provide all required services
outlined in this application and in accordance with sections 1894 and 1934 of the Act.
4) I agree that CMS may inspect any and all information necessary including inspecting
of the premises of the Applicant‘s organization or plan to ensure compliance with
stated Federal requirements including specific provisions for which I have attested. I
further agree to immediately notify CMS if despite these attestations I become aware
of circumstances which preclude full compliance by January 1 of the upcoming
contract year with the requirements stated here in this application as well as in Part
423 of 42 CFR of the regulation.
5) I understand that in accordance with 18 U.S.C. § 1001, any omission,
misrepresentation or falsification of any information contained in this application or
contained in any communication supplying information to CMS to complete or clarify
this application may be punishable by criminal, civil, or other administrative actions
including revocation of approval, fines, and/or imprisonment under Federal law.
6) I further certify that I am an authorized representative, officer, chief executive officer,
or general partner of the business organization that is applying for qualification to
enter into a Part D Addendum with CMS.
7) For several 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 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.
__________________________________
Authorized Representative Name (printed)

___________________
Title

49

__________________________________________
Authorized Representative Signature

________________________
Date (MM/DD/YYYY)

50

Electronic Prescription Program
Only those applicants that answer yes to #1 must complete items 2 and 3 below and will
be required to adhere to electronic prescription program requirements specified in 42
CFR §§ 423.159 and 423.160. All applicants must complete #4.
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:

Yes

No

1. Applicant agrees to establish an electronic prescription program.
2. Applicant agrees to comply with electronic prescription standards relating to
covered Part D drugs for Part D enrollees developed by CMS once final
standards are effective.
3. 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 information using
electronic media for covered Part D drugs for Part D eligible individuals.
4. Applicant agrees to obtain the Prescription Origin Code on original prescriptions
submitted via the NCPDP 5.1 optional field 419 DJ and report this code on their
PDE submissions.

51

Applicability of Formulary Submission Requirements
APPLICABILITY OF FORMULARY SUBMISSION REQUIREMENT
For purposes of formulary submission and review, the following paragraphs describe the
definition of a formulary.
1. COST SHARING TIERS
Any coverage list that utilizes more than one cost sharing tier with differential co-pay or
coinsurance, is considered a formulary.
2. PRIOR AUTHORIZATION
Any coverage list that contains one or more drugs that must undergo prior authorization
before dispensing is considered a formulary. If in the normal course of clinical practice,
the prescribing physician uses FDA-approved indications and use criteria to determine
appropriateness of therapy, this is not considered prior authorization.
3. STEP THERAPY
Any coverage list that contains one or more drugs that are part of a step therapy
management program is considered a formulary. This includes any program that
requires a certain drug to be used first, before a different drug can be dispensed. Step
therapy can apply to certain drug classes or among brand and generic drug
combinations.
4. QUANTITY LIMITATIONS
Any coverage list that contains one or more drugs with quantity limits is considered a
formulary. Quantity limits are often used in cases where FDA-approved prescribing
instructions state that only a certain number of doses should be used in a certain time
period.
5. STEERAGE
Any coverage list that contains one or more drugs that are considered preferred or drugs
that are steered towards is considered a formulary. Common prescribing patterns are
not considered steerage as long as there are no adverse consequences to physicians or
patients if a particular drug is not chosen.
If a plan meets any of the five criteria referenced above, then their coverage list is considered a
formulary and needs to be submitted to CMS for review and approval.

52

Only those applicants that answer yes to 1 or more of items 1-5 listed above will be
required to adhere to formulary requirements specified in 42 CFR § 423.120(b) and
complete the forms that follow.
Formulary/Pharmacy and Therapeutics (P&T) Committee
A. Complete the form below:
APPLICANT MUST ATTEST ‘YES’ OR ‘NO’ TO THE FOLLOWING
QUALIFICATION TO BE APPROVED FOR A PART D CONTRACT. ATTEST

YES

NO

‘YES’ OR ‘NO’ TO EACH OF THE FOLLOWING QUALIFICATIONS BY PLACING
A CHECKMARK IN THE RELEVANT COLUMN IN HPMS.
1. Applicant will submit a formulary to CMS for the Part D benefit by the CMS
specified dates.
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, to meet all formulary submission deadlines established by
CMS. Applicant further agrees that CMS may discontinue its review of the
Applicant‘s formulary submission upon the Applicant‘s failure to meet any of the
formulary submission deadlines. Applicant acknowledges that failure to receive
CMS approval of its formulary may prevent CMS from approving the Applicant‘s
bid(s) and contracting with the Applicant for the following benefit year.
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 Pharmacy and Therapeutic 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.
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

53

place to accommodate administration of the transition policy. This includes
adoption of necessary information system overrides.
11. Applicant will establish an emergency supply of non-formulary Part D drugs
(31-day supplies, unless the prescription if 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. Complete the form 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

Requesting
YES

NO

Waiver?
Yes or No

DIRECTLY OR THROUGH ITS PHARMACY BENEFIT MANAGER
(PBM). APPLICANT MUST ATTEST ‘YES’ OR ‘NO’ THAT IT IS
USING ITS PBM’S P&T COMMITTEE, TO BE APPROVED FOR A
PART D CONTRACT. ATTEST ‘YES’ OR ‘NO’ BY PLACING A
CHECKMARK IN THE RELEVANT COLUMN 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.
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,

54

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 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 directly by the Applicant or by the
Applicant’s PBM. The membership of the P&T Committee must be comprised as
described below. If Applicant is providing names of P&T Committee directly, then
complete the table below in HPMS on the Contract Management/Part D Data page.
Pharmacy and Therapeutics (P&T) Committee

55

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.) ADD ADDITIONAL ROWS AS NECESSARY.
Practice/Expertise
Mark an ‘X’ in Appropriate Column
Full Name of
Member

Practicing
Physician

Practicing
Pharmacist

Free of Any Conflict of
Interest
Type Yes or No
Elderly/Disabled
With
With
Expert
Your
Pharmaceutical
Organization? Manufacturers?

56

Applicant Submission of P&T Committee Member List and Certification Statement
This 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 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, and (2) forward the attached
P&T Committee Member Disclosure Form to the subcontracted PBM and direct the PBM to
submit the form to CMS. The PBM should follow the mailing instructions below.
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 must assure that the PBM) notify the appropriate CMS account
manager (to be assigned at a future date) within 30 days of the effective date of such change.
Mailing Instructions
1. Provide a signed cover sheet indicating that the information being sent to CMS is an
addendum to the Plan‘s Part D Application.
2. Please mail 5 CD‘s or diskettes containing both the completed P&T Committee Member
Disclosure form and the completed Certification for Part D Sponsors Using a Pharmacy Benefit
Manager‘s Pharmacy and Therapeutics Committee under a Confidentiality Agreement form.
3. Please mail 5 hard copies, including one original, of both the completed P&T Committee
Member Disclosure form and the completed Certification for Part D Sponsors Using a Pharmacy
Benefit Manager‘s Pharmacy and Therapeutics Committee under a Confidentiality Agreement
form.
Mail the 5 CD‘s or diskettes and hard copy material via courier to:
Centers for Medicare and Medicaid Services

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ATTN: Eric Nevins
Mail Stop: C4-21-08 Location:
7500 Security Boulevard
Baltimore, MD 21244-1850

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PHARMACY AND THERAPEUTICS COMMITTEE MEMBER DISCLOSURE
Name of Part D Plan or PBM:
If Part D Plan, provide Part D Contract number(s):
Contact Person:
Phone Number:
Email:
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 THAT 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

Contract Number(s)

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CERTIFICATION FOR PART D SPONSORS USING A PHARMACY BENEFIT MANAGER’S
PHARMACY& THERAPEUTICS COMMITTEE UNDER A CONFIDENTIALITY AGREEMENT
A. I, the undersigned, certify, 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 problem with a member of the PBM‘s
P&T Committee, my organization will be notified by CMS of such a problem. In
such an instance, my organization must ensure that the PBM takes appropriate
steps to correct the problem or risk 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
my 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 Plan Contract Number:

__________________________________
Authorized Representative Name (printed)

_____________________________
Title

__________________________________ _______________________________
Authorized Representative Signature
Date (MM/DD/YYYY)

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