supporting_statement 9_16_2010

Supporting Statement for Applications for
Prescription Drug Plans, Medicare Advantage Organizations, Cost Plans, PACE, Employer
Group Waiver Plans, and Service Area Expansions to
Provide Part D Benefits as defined in
Part 423 of 42 C.F.R.

A.

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 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 (“Part D”). The MMA was amended on July 15,
2008 by the enactment of the Medicare Improvements for Patients and Providers Act of 2008
(MIPPA).
Coverage for the prescription drug benefit is provided through contracted prescription drug plans
(PDPs) or through Medicare Advantage (MA) plans that offer integrated prescription drug and
health care coverage (MA-PD plans). Cost Plans that are regulated under Section 1876 of the
Social Security Act, and Employer Group Waiver Plans (EGWP) may also provide a Part D benefit.
Organizations wishing to provide services under the Prescription Drug Benefit Program must
complete an application, negotiate rates and receive final approval from CMS. Existing Part D
Sponsors may also expand their contracted service area by completing the Service Area Expansion
(SAE) application.

B.

Justification
1. Need and Legal Basis

Collection of this information is mandated in Part D of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) in Subpart 3. The application requirements
are codified in Subpart K of 42 CFR 423 entitled “Application Procedures and Contracts with PDP
Sponsors.”
Effective January 1, 2006, the Part D program established an optional prescription drug benefit for
individuals who are entitled to Medicare Part A or enrolled in Part B. In general, coverage for the
prescription drug benefit is provided through PDPs that offer drug-only coverage, or through MA
organizations that offer integrated prescription drug and health care coverage (MA-PD plans).
PDPs must offer a basic drug benefit. Medicare Advantage Coordinated Care Plans (MA-CCPs)
must offer either a basic benefit or may offer broader coverage for no additional cost. Medicare
Advantage Private Fee for Service Plans (MA-PFFS) may choose to offer a Part D benefit. Cost
Plans that are regulated under Section 1876 of the Social Security Act, and Employer Group Plans
may also provide a Part D benefit. If any of the contracting organizations meet basic requirements,
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they may also offer supplemental benefits through enhanced alternative coverage for an additional
premium.
Applicants may offer either a PDP or MA-PD plan with a service area covering the nation (i.e.,
offering a plan in every region) or covering a limited number of regions. MA-PD and Cost Plan
applicants may offer local plans.
There are 34 PDP regions and 26 MA regions in which PDPs or regional MA-PDs may be offered
respectively. The MMA requires that each region have at least two Medicare prescription drug
plans from which to choose, and at least one of those must be a PDP.
Requirements for contracting with Part D Sponsors are defined in Part 423 of 42 C.F.R.
This clearance request is for the information collected to ensure applicant compliance with CMS
requirements and to gather data used to support determination of contract awards.
2. Information Users
The information will be collected under the solicitation of proposals from PDP, MA-PD, Cost Plan,
PACE, and EGWP applicants. The collected information will be used by CMS to: (1) ensure that
applicants meet CMS requirements, (2) support the determination of contract awards.
Participation in the Part D program is voluntary in nature. Only organizations that are interested in
participating in the program will respond to the solicitation. MA-PDs that voluntarily participate in
the Part C program must submit a Part D application and successful bid.
3. Improved Information Technology
CMS has worked to improve the application process from prior years. As a result, applicants are
asked to complete the application through CMS’ online Health Plan Management System (HPMS).
This will entail clicking checkboxes, completing some minor text fields electronically, and
uploading certain supporting documentation. Applicants are not asked to provide any
documentation by CD or hardcopy.
Technology is used in the collection, processing and storage of the data used in the application and
bidding process. The paperwork burden is offset by requesting electronic copies of the applicant
submissions for review by specific CMS program areas. Specifically the Applicant must submit the
entire application and supporting documentation electronically through HPMS.

4. Duplication of Similar Information
This form does not duplicate any information currently collected. It contains information essential
to the operation and implementation of the Medicare Prescription Drug Benefit program. It is the
only standardized mechanism available to record data from organizations interested in contracting
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with CMS.
As possible, for Medicare Advantage Organizations (MAOs) and Cost Plans, we have modified the
standard PDP application to accommodate information that is captured in prior data collection.
Removing the duplication of data collection decreases the estimated hour burden for MAO and Cost
Plan applicants by an estimated 2 hours per applicant. Five matrices are attached that summarize
duplicative data collection or areas where requirements were waived in the Medicare Advantage,
Section 1876 Cost Plan, Employer Waiver Group Plan, PACE, and Service Area Expansion
applications (See attachments One through Five).
5. Small Businesses
The collection of information will have a minimal impact on small businesses or other small
organizational entities since the applicants must possess an insurance license and be able to accept
risk. Generally, state statutory licensure requirements effectively prevent small organizations from
accepting the level of risk needed to provide the pharmacy benefits required in the Medicare
Prescription Drug Benefit Program.
6. Less Frequent Collection
If this information is not collected CMS will have no mechanism to: (1) ensure that applicants meet
CMS requirements, (2) to support determination of new or expanding contract awards.
7. Special Circumstances
Each applicant is required to enter and maintain data in the CMS Health Plan Management System
(HPMS). Prompt entry and ongoing maintenance of these data in HPMS will facilitate the tracking
of the applicant’s application throughout the review process. If the applicant is awarded a contract
after negotiation, the collected information will be used for frequent communications. Applicants
are expected to ensure the accuracy of the collected information on an ongoing basis.

3

8. Federal Register Notice/Outside Consultation
The final rule was published January 28, 2005. Below is a table that identifies each of the
subsequent publications of regulations related to the Part D program.

Reference
CMS-4124FC
CMS-0016-F
and CMS0018-F
CMS-4133-F

CMS-4130-F
CMS-4119-F
CMS-4138IFC
CMS-4131-F
CMS-4138IFC2
CMS-4131FC
CMS-4138IFC4
CMS-4085-F

Additional Part D Regulations Since 2006
Title
Medicare Program; Revisions to the Medicare Advantage
and Part D Prescription Drug Contract Determinations,
Appeals, and Intermediate Sanctions Processes
Medicare Programs; Standards for E-Prescribing Under
Medicare Part D and Identification of Backward Compatible
Version of Adopted Standard for E-Prescribing and the
Medicare Prescription Drug Program (Version 8.1)
Medicare Program; Weighting Methodology Used to
Calculate the Low-Income Benchmark Amount
Medicare Program; Policy and Technical Changes to the
Medicare Prescription Drug Benefit
Medicare Program; Medicare Part D Claims Data
Medicare Program; Revisions to the Medicare Advantage
and Prescription Drug Benefit Programs
Medicare Program; Medicare Advantage and Prescription
Drug Benefit Programs: Final Marketing Provisions
Medicare Program; Revision to the Medicare Advantage and
Prescription Drug Benefit Programs: Clarification of
Compensation Plans
Medicare Program; Medicare Advantage and Prescription
Drug Benefit Programs: Negotiated Pricing and Remaining
Revisions
Medicare Programs; Medicare Advantage and Prescription
Drug Programs MIPPA Drug Formulary & Protected Classes
Policies
Medicare Program; Policy and Technical Changes to the
Medicare Advantage and the Medicare Prescription Drug
Benefit Programs

Date Published
December 5, 2007

April 7, 2008

April 3, 2008,
corrected April 17,
2008
April 15, 2008
May 28, 2008
September 18,
2008
September 18,
2008
November 10,
2008
January 12, 2009

January 16, 2009

April 15, 2010

The 60-day notice for public comment began on June 11, 2010. Four comments on the Part D
Applications were received by CMS.
9. Payment/Gift To Respondent
There are no payments or gifts associated with this collection.
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10. Confidentiality
Consistent with federal government and CMS policies, CMS will protect the confidentiality of the
requested proprietary information. Specifically, only information within a submitted application (or
attachments thereto) that constitutes a trade secret, privileged or confidential information, (as such
terms are interpreted under the Freedom of Information Act and applicable case law), and is clearly
labeled as such by the Applicant, and which includes an explanation of how it meets one of the
exceptions specified in 45 CFR Part 5, will be protected from release by CMS under 5 U.S.C. §
552(b) (4). Information not labeled as trade secret, privileged, or confidential or not including an
explanation of why it meets one of the FOIA exceptions in 45 CFR Part 5 will not be withheld from
release under 5 U.S.C. § 552(b)(4).
11. Sensitive Questions
Other than the labeled information noted above in section 10, there are no sensitive questions
included in the information request.
12. Burden Estimate (Total Hours & Wages) update
Tables 1 and 2 provide an estimate of the total hours and costs by activity related to the application
processes. Our estimates include the review of application instructions, and completion of the
application. The completion of the application encompasses completing attestations and uploading
supporting documentation. Overall, the estimated hour burden for completion of the prescription
drug applications is 3,576 hours. This is a decrease from the 2011 prescription drug applications.
Based on prior years’ experience CMS has determined that the estimated the number of 2012
applicants should be adjusted to properly reflect the vastly different number of organizations that
submit Notices of Intent to Apply (NOIA) to become a Part D sponsor from the number of
organizations that submit applications (see section 15 for further detail). . The estimated wage
burden for the Prescription Drug Applications is $196,680 and estimates of overall wages were
calculated by assuming a $55.00 per hour wage rate. CMS kept the hour wage rate constant from
2011 calculations.
As discussed in Item 4 above, the paperwork burden is reduced for MA-PD, Cost Plan, PACE,
EGWP Plan, and SAE applicants by excluding the collection of information that is collected in
other CMS programs. Attachments 1-5 provide detail on the sections of the PDP application that
are not included in other applications.
Generally, a large portion of the applications are simple attestations and require minimal
documentation (i.e., check Yes or No). These attestations are collected electronically within HPMS
and reduce the burden hours of completing each of these sections in paper from one hour to 15
minutes. The most substantial portion of the application remains the documentation of pharmacy
networks for use by Medicare beneficiaries. We estimate that completion of the entire pharmacy
network section of the applications requires 33% of the total 3,576 hours or 1,170 hours. The
estimated number of hours required to document pharmacy networks for each type of applicant is
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20 hours. Table 3 provides a summary of the estimated number of hours to complete each type of
Part D application for 2012.

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Table 1
Summary of Hour Burden by Type of Applicant and Process
Hours Estimate

Activity

Review of
Instructions
Complete
Application
Total All

PDP

MA-PD

Cost
Plans

PACE

Direct
EGWP

800 Series
Only EGWP

EGWP

SAE

Total
Hours

28

266

0

6

16

10

100

300

726

101

1314.25

0

36.75

30

76

100

1192

2,850

129

1580.25

0

42.75

46

86

200

1492

3,576

Table 2
Summary of Wage Burden by Type of Applicant and Process
Wages Estimate
Activity

PDP

MA-PD

Cost
Plans

PACE

Direct
EGWP

Review of
Instructions
Complete
Application

1540

14,630

0

330

5555

72,284

0

2021

Total All

7,095

0

2,351

86,914

EGWP

SAE

Total Wages

880

800 Series
Only
EGWP
550

5,500

16,500

39,930

1,650

4,180

5,500

65,560

156,750

2,530

4,730

11,000

82,060

196,680

Table 3
Summary of Burden Hours by Type of Application
Type of Part D Application

2011 (hours)
Estimates

2012 (hours)
Estimates

PDP
MA-PD
Cost Plan
PACE
Direct EGWP
800 Series Only EGWP
EGWP
SAE

40.00
38.00
37.75
15.25
39.25
39.25
6.25
25.25

24.50
22.75
22.25
17.50
24.25
24.25
6.25
9.00

13. Capital Costs (Maintenance of Capital Costs)
We do not anticipate that additional capital costs are incurred. CMS requirements do not require the
acquisition of new systems or the development of new technology to complete the application.
CMS anticipates that all qualified applicants maintain systems for maintenance of their pharmacy
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network contracts, pharmacy benefits, and financial records.
System requirements for submitting HPMS applicant information are minimal. PDPs will need the
following to access HPMS: (1) Internet or Medicare Data Communications Network (MDCN)
connectivity, (2) use of a Microsoft Internet Explorer web browser (version 5.1 or higher) with 128bit encryption, and (3) a CMS-issued user ID and password with access rights to HPMS for each
user within the PDP organization who will require such access. CMS anticipates that all qualified
applicants meet these systems requirements and will not incur additional capital costs.
14. Cost to Federal Government
The estimated cost for preparation, review, and evaluation of the prescription drug applications is
approximately $140,000.00. This estimated cost is based on the budgeted amount for application
review and support and is inclusive of wages, operational expenses (equipment, overhead, printing,
and support staff), and other expenses incurred in the application effort.

15. Program or Burden Changes
CMS reduced the burden hours to complete the Part D applications for several reasons identified
below.

In prior years, CMS has estimated total burden hours based on a number of applicants that submit
NOIA to the Part D program. Since the inception of the program, the number of NOIAs received
does not reflect the number of actual applications that are submitted to CMS. Typically, CMS
receives significantly fewer Part D applications compared to the NOIAs. As a result for the 2012
applications, CMS based the burden hours to submit the NOIAs and review the overall application
instructions on the number of organizations that typically complete the NOIA; however, the burden
hours were reduced to complete the actual Part D application to reflect the number of organizations
that typically submit applications. To demonstrate the difference between NOIAs received and the
Part D applications received for the 2009 Contract Year CMS received 880 notices of intent to
apply and received 384 Part D applications. For the 2010 Contract Year CMS received 1135 notices
of intent to apply and received 244 Part D applications.
In addition to changing the burden hour calculation to more accurately reflect the appropriate
number of applicants, the estimated burden hours for existing questions and the re-evaluation of the
need for certain documentation within the applications has caused an overall decrease in the total
burden hours for each of the Part D applications. Specifically, attestation tables related to key Part
D functions, general pharmacy access and the compliance plan that are duplicative of required
supporting documentation were deleted. Supporting documentation related to past and present legal
actions that are not considered in the evaluation of whether an organization is qualified to contract
as a Part D sponsor were removed.
In another effort to reduce the burden on organizations to complete the Part D applications, CMS is
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automating the retail pharmacy access section of the application. The pharmacy access section of
the applications accounts for the most burden. In prior years, organizations had to provide an access
report that reflected each organization’s retail pharmacy access in the urban, suburban, and rural
parts of their service area. To relieve the burden of generating this report, CMS has automated the
process. Beginning with the 2012 applications, applying organizations will provide their contracted
retail pharmacy list (a document that is already required) and CMS will calculate the access levels.
Applying organizations no longer need to generate or submit an access report.
The enactment of the Patient Protection and Affordable Care Act of 2010 and the Health Care and
Education Reconciliation Act of 2010, and the issuance of a new regulation have generated minor
additions and clarifications to the Part D applications for 2012. General attestations were added to
several sections that reflect statutory language from the Patient Protection and Affordable Care Act
( PPACA).

CMS does not expect that the changes from PPACA and the new regulation will increase the
burden hours when combined with the deletions and automation improvements made to the
applications. The burden hours represent the time it takes for an applicant to complete the Part D
solicitation and not the time that applicants spend drafting and negotiating contracts with
downstream and related entities to perform key Part D functions on their behalf.
Clarifying updates were also made to the existing language of the Part D solicitations. Such updates
include date changes and incorporating the most current references in statute, regulation and CMS
guidance above each section as appropriate.
16. Publication and Tabulation Dates
This information is not published or tabulated.
17. Expiration Date
This collection of information applies to contract years 2012-2014.
18. Certification Statement
There are no exceptions to the certification statement.
C.

Collection of Information Employing Statistical Methods

There have been no statistical methods employed in this collection.

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Attachment 1
Summary of Medicare Part D Regulatory Requirements Waived for
Medicare Advantage Prescription Drug (MA-PD) Applicants
Part D Regulation
42 CFR 423 Subpart I,
excepting 42 CFR
§423.440 (which
concerns Federal
preemption of State
law and prohibition of
State premium taxes)
42 CFR §423.153(b)
&(d)
Waiver applies to MAPFFS only
42 CFR §423.153(b)
&(d)
Waiver applies to MAPFFS only

42 CFR §423.112 (a)

42 CFR §423.120
(a)(7)(i)
Waiver applies only to
MA-PDs that operate
their own pharmacies

42 CFR
§423.120(a)(7)(ii)
Waiver applies to MAPFFS plan that
provides access
through all
pharmacies.

42 CFR
§423.120(a)(8)(i)
Waiver applies only to
MA-PDs that operate
their own pharmacies

42CFR §423.34
42 CFR §423.36
42 CFR §423.38
42 CFR §423.42

Regulatory Requirement(s)
Description

Basis for Waiver

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

Duplicative of MA Organization requirements
for licensure and solvency under 42 CFR
§422.6 (i); 42 CFR §422.400; and 42 CFR
§422.501).

Utilization Management – Applicant must
have a cost effective utilization management
system.

Waiver stated in regulations at 42 CFR
§423.153 (e) excuses MA PFFS organizations
from meeting the utilization management
requirements specified in 42 CFR §423.153 (b).
Waiver stated in regulations at 42 CFR
§423.153 (e) excuses MA PFFS organizations
from meeting Medication Therapy Management
Program requirements specified in 42 CFR
§423.155.

Medication Therapy Management Program –
Applicant must have a program to manage
medication therapy to optimize outcomes,
reduce adverse drug interactions.
Service Area – Applicant must offer a Part D
plan that serves at least an entire PDP region.
Pharmacy Network – Applicant must offer its
Part D plan benefit through a contracted retail
pharmacy network that meets CMS convenient
access standards.

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

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

Enrollment and Eligibility – Applicant agrees
to accept Part D plan enrollments and
determine Part D plan eligibility consistent
with Part D program requirements.

10

Conflicts with MA regulations (42 CFR §422.2)
that allow MA organizations to offer local MA
plans (i.e., plans that serve less than an entire
state).
Waiver stated in regulations at 42 CFR
§423.120(a)(7) (i) excuses from the CMS
convenient access standards those MA
organizations that administer their Part D
benefit through pharmacies owned by the MA
organization if that organization’s pharmacy
network access is comparable to the CMS
convenient access standards .
Waiver stated in regulations at 42 CFR
§423.120 (a) (7) (ii) excuses from the CMS
convenient access standards those MA-PFFS
organizations that offer a qualified prescription
drug coverage, and provide plan enrollees with
access to covered Part D drugs dispensed at all
pharmacies, without regard to whether they are
contracted network pharmacies and without
charging cost-sharing in excess of the
requirements for qualified prescription drug
coverage.
Waiver promotes the coordination of Parts C
and D benefits. Excuses from CMS any willing
pharmacy requirement those MA organizations
that administer their Part D benefit through
pharmacies owned by the MA organization and
dispense at least 98% of all prescriptions
through pharmacies owned and operated by
Applicant.
Duplicative of MA requirements under 42 CFR
422 Subpart B - Eligibility, Election, and
Enrollment. MA organizations will conduct
enrollment and determine eligibility consistent
with MA program requirements. These

Part D Regulation

Regulatory Requirement(s)
Description

42 CFR §423.44

42 CFR §423.514(b)
and (c)

42 CFR §423.514(e)

42 CFR §423.512

Reporting Requirements – Applicant must
report information concerning significant
business transactions.
Reporting Requirements – Applicant must
notify CMS of any loans or any other special
arrangements it makes with contractors,
subcontractors, and related entities.
Experience and Capabilities – Applicant must
reach the minimum enrollment standard within
the first year it offers a Part D benefit.

11

Basis for Waiver
requirements mirror those stated in the Part D
regulation.
Duplicative of MA requirements for reporting
significant transactions under 42 CFR §422.500
and 42 CFR §422.516(b) and (c) and
requirements for providing annual financial
statements.
Duplicative of MA requirement for reporting
loans or special arrangements under 42 CFR
§422.516(e).
Conflicts with MA regulation that permits three
years to achieve the minimum enrollment level.

Attachment 2
Summary of PDP Application Requirements Fulfilled under Part C for
Cost Plan Prescription Drug Applicants
Part D Regulation
Waived
42 CFR 423 Subpart I,
excepting 42 CFR
§423.440 ( which
concerns Federal
preemption of State law
and prohibition of State
premium taxes)
42 CFR §423.112 (a)

Regulatory Requirement(s) Description

Basis and Rationale

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

42 CFR §423.120(a)(3)
Waiver applies only to
Cost contractors that
operate their own
pharmacies

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

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

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

Duplicative of Cost Plan requirements for licensure
and solvency under 42 CFR §417.404 (General
requirements) and 42 CFR §417.407 (Requirements
for a Competitive Medical Plan (CMP)). All Cost
Plans are State licensed in some manner or have
authority to offer a Cost Plan in all states in which
they operate.
Conflicts with Cost Plan regulations (42 CFR §417.1)
defining the service area for HMOs and CMPs
offering Medicare reasonable Cost Plans.
Waiver stated in regulations at 42 CFR
§423.120(a)(7)(i) excuses from the CMS standards for
convenient access those Cost contractors that
administer their Part D benefit through pharmacies
owned by the Cost contractor if that organization’s
pharmacy network access is comparable to the CMS
convenient access standards . {Note: Applicants will
be expected to provide comparable information in the
application for organizational pharmacies}
Waiver promotes the coordination of Parts C and D
benefits. Excuses from CMS any willing pharmacy
requirement those Cost contractors that administer
their Part D benefit through pharmacies owned by the
Cost contractor and dispense at least 98% of all
prescriptions through pharmacies owned and operated
by Applicant.

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

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Attachment 3
Summary of Part D Application Requirements Waived or Modified for
Employer/Union-Only Group Waiver Plan (EGWP) Applicants
Part D Regulation

42 CFR §423.104(b)

Type of EGWP Applicant
Waiver or Modification
Applies To
Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

42 CFR
§423.120(a)(1)

Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

42 CFR §423.50(a)

Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

42 CFR §423.128;
Medicare Marketing
Guidelines

Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

Application
Requirement(s)
Description
Enrollment: Applicant will
permit the enrollment of all
Medicare beneficiaries that
reside in the service area.

Retail Pharmacy Access:
Applicant agrees to meet the
“TRICARE” retail pharmacy
access standards defined in
42 CFR §423.120(a).

Prior Review and Approval
of Dissemination Materials:
Applicant must submit all
marketing/dissemination
materials for CMS prior
review and approval.

Timing of Certain
Dissemination Materials:
Annual Notice of Change
(ANOC) Summary of
Benefits (SB), and
Formulary Materials must be
mailed to beneficiaries by
October 31st of each year (15
days before annual
coordinated election period).

13

Waiver/Modification

The requirement to enroll all
beneficiaries residing in service
area is waived for all EGWP
applicants. Enrollment in these
plans is restricted to the
employer/union plan sponsor’s
retirees.
EGWP applicants are required to
submit retail pharmacy access for
review in the same manner as
individual plans but are not held
to the same “TRICARE”
measurement standards as
individual plans. EGWPs are
required to attest that their retail
networks are sufficient to meet
the needs of its retiree population,
and that CMS reserves the right to
review the adequacy of the
networks and potentially require
expanded access.
EGWP applicants are waived
from the requirement for prior
review and approval requirements
of beneficiary dissemination
materials. EGWPs must provide
informational copies of
dissemination materials to CMS
at time of use in accordance with
the specific requirements that
apply to these applicants.
These rules have been modified
for all EGWP applicants when the
employer or union sponsor has an
open enrollment period that does
not correspond with Medicare’s
annual open coordinated election
period. In these cases, the
materials must be sent at least 15
days before the beginning of the
employer or union sponsor’s
annual open enrollment period.

Part D Regulation

42 CFR
§423.128(d)(2)

42 CFR §423.48

Type of EGWP Applicant
Waiver or Modification
Applies To
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

Application
Requirement(s)
Description
Internet Website: Applicants
are required to provide
specific Information via an
Internet website.

Direct Contract PDP
Direct Contract MA-PD

CMS Reporting
Requirements Re:
Information About Part D:
Applicants are required to
submit certain information to
CMS such as pricing and
pharmacy network
information to be publicly
reported to beneficiaries on
www.medicare.gov to make
informed enrollment
decisions.
Part D Bid Submission: All
applicants are required to
submit a Part D bid and to
receive approval from CMS
for the bid.

“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

42 CFR §423.265

Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

42 CFR
§423.272(b)(3)(i)

Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

42 CFR §423.293(a)

Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

42 CFR §423.34

Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

Waiver/Modification
The requirement to post “800
Series” plan information on the
Applicant’s internet plan website
has been waived. These plans are
not open to general enrollment
and the posting of this
information usually takes place on
a separate website or on a website
provided by the employer or
union group plan sponsor.
These requirements have been
waived for all EGWPs. These
plans are not open to general
enrollment and thus this
information would be
inapplicable and confusing to
Medicare beneficiaries.

The requirement to submit a Part
D bid (i.e., Bid Pricing Tool) has
been waived for all Part D
EGWPs beginning in 2008.

Meaningful Differences: All
Applicants are required to
submit plan offerings that
represent meaningful
differences to beneficiaries
with respect to benefit
packages and plan cost
structures.
Premium Withholding
Requirements: All
applicants are required to
allow beneficiaries to request
premium withholding from
their Social Security check.

The requirement to have
meaningful differences in plan
offerings by the sponsor in the
service area has been waived for
all EGWPs.

Auto and Facilitated
Enrollment Requirements:
Part D applicants must
accept auto and facilitated
enrollments.

These requirements are waived
for all EGWPs. These plans do
not receive auto or facilitated
enrollments.

14

The requirement to offer premium
withholding to beneficiaries has
been waived for all EGWPs. This
option is not available to any
EGWP enrollees.

Part D Regulation

Medicare Marketing
Guidelines

Type of EGWP Applicant
Waiver or Modification
Applies To
Direct Contract PDP
Direct Contract MA-PD
“800 Series” PDP
“800 Series” MAO
“800 Series” Cost PD

Application
Requirement(s)
Description
Part D Beneficiary Customer
Service Call Center
Requirements: Applicants
are required to comply with
certain beneficiary customer
service call center hour and
performance requirements.

42 CFR
§423.401(a)(1);
§423.504(b)(2);
§422.400(a);
§422.503(b)(2)

Direct Contract PDP
Direct Contract MA-PD

Licensure and Financial
Solvency: Applicant must be
licensed under State law as a
risk bearing entity eligible to
offer health benefits
coverage in each State in
which the benefits are
offered.

42 CFR
§423.504(b)(4)(i)-(iii)

Direct Contract PDP
Direct Contract MA-PD

Administrative and
Management Requirements:
Applicant must comply with
certain administrative and
management requirements.

42 CFR §423.514(a)

Direct Contract PDP
Direct Contract MA-PD

Reporting Requirements to
the Public and Enrollees:
Applicants are required to
report certain information to
CMS, to the public and to
enrollees (such as the cost of
their operations or financial
statements).

15

Waiver/Modification

These service call center hours
and performance requirements are
waived for all EGWP applicants.
EGWPs must provide beneficiary
customer call center services
during normal business hours.
CMS may require expanded call
center hours in the event of
beneficiary complaints or for
other reasons to ensure hours are
sufficient to meet the needs of
beneficiaries.
Direct Contract EGWPs are not
required to be licensed as they are
providing benefits solely to their
retirees. However, in exchange
for the waiver of licensing
requirements, Direct Contract
EGWPs are required to meet
certain ongoing Part C and/or Part
D financial solvency and capital
adequacy requirements. These
requirements demonstrate that the
entity’s fiscal soundness is
commensurate with its financial
risk and that through other means
the entity can assure that claims
for benefits paid for by CMS and
beneficiaries will be covered.
These requirements have been
waived for all Direct Contract
EGWPs that meet certain
requirements. A waiver applies
when the Applicant is subject to
other administrative and
management requirements such as
ERISA fiduciary standards or
other similar state or federal
standards.
This requirement to report to the
public and enrollees is waived for
Direct Contract EGWPs under
certain circumstances. To avoid
imposing additional and possible
conflicting public disclosure
obligations, CMS modified these
reporting requirements for Direct
EGWPs to allow information to
be reported to enrollees and to the
general public to the extent
required by other law (e.g.,
ERISA or securities laws) or by
contract.

Part D Regulation

42 CFR §423.4

Type of EGWP Applicant
Waiver or Modification
Applies To
Direct Contract PDP

Application
Requirement(s)
Description
Non-Governmental Entity
Requirement: Governmental
entities are not permitted to
be PDP Sponsors

16

Waiver/Modification

This prohibition is waived for
Direct Contract PDPs so that
governmental entities (state and
local governments and
municipalities) may apply to
sponsor a PDP for their retirees.

Attachment 4
Summary of PDP Application Requirements Waived for
PACE Prescription Drug Applicants
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
42 CFR §423.44
42 CFR §423.48
42 CFR §423.50
42 CFR §423.104(g)(1)
42 CFR §423.112
42 CFR §423.120(a)
42 CFR §423.120(c)
42 CFR §423.124
42 CFR §423.128
42 CFR §423.132
42 CFR §423.136
42 CFR §423.153(a)- 42 CFR
§423.153(d)
42 CFR §423.156
42 CFR §423.159(c), 42 CFR §423.160(a)
42 CFR §423.162
42 CFR §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.
42 CFR §423.401(a)(1)
42 CFR §423.420
42 CFR §423.462
42 CFR §423.464(c)
42 CFR §423.464(f)(2) and 42 CFR
§423.464(f)(4)
42 CFR §423.502(b)(1)(i-ii)
42 CFR §423.504(b)(2-3), 42 CFR
§423.504(b)(4)(i-v) and (vi)(A-E), and
42 CFR §423.504(d)
Note: Organizations are required to
abide by 42 CFR §423.504(b)(4)(vi)(FH), 42 CFR §423.504(b)(5), 42 CFR
§423.504(c), and 42 CFR §423.504(e)

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
Solvency standards for non-licensed entities
Medicare secondary payer procedures
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

17

Part D Regulation
42 CFR §423.505(a-c) and 42 CFR
§423.505(e-i)
Note: Organizations are required to
abide by 42 CFR §423.505(dand j)
42 CFR §423.505(k)(6)
Note: Organizations are required to
abide by 42 CFR §423.505(k)(1-5)
42 CFR §423.506(a)-(b)
Note: Organizations are required to
abide by 423.506(c)-(e)
42 CFR §423.512 – 42 CFR §423.514
42 CFR §423.551-42 CFR §423.552
42 CFR §423.560-42 CFR §423.638
N/A

Regulatory Requirement(s)
Description
Contract provisions

Certification for purposes of price compare

Effective date and term of contract

Contracting terms
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

18

Attachment 5
Summary of Part D Application Requirements Needed for
All Service Area Expansion Applicants

Note: SAE Applicants are currently under contract with CMS for the Part D benefit. CMS is only requesting the
sections identified below for the service area not under contract with CMS for 2011. The remaining application sections
are reviewed through the contract renewal process.
Application Section
Rationale
Contract Number
SAE will be expanding regions covered under an existing CMS contract number.
Service Area
Provided to identify the new service area/region that Part D sponsor is seeking to cover.
Licensure and Solvency
For those Part D sponsors operating a PDP, state licensure and solvency requirements
will need to be met for the new service area/region.
Pharmacy Access
Part D sponsors will need to meet the pharmacy access requirements for the new service
area/region.
Certification
Part D sponsors will need to have an authorized representative submit a signed
certification to ensure that submission meets CMS requirements.

19