Medicare part D modernization redesign

(a)

Benefit structure redesign

Section 1860D–2(b) of the Social Security Act (42 U.S.C. 1395w–102(b)) is amended—(1)in paragraph (2)—(A)in subparagraph (A), in the matter preceding clause (i), by inserting for a year preceding 2024 and for costs above the annual deductible specified in paragraph (1) and up to the annual out-of-pocket threshold specified in paragraph (4)(B) for 2024 and each subsequent year after paragraph (3);(B)in subparagraph (C)—(i)in clause (i), in the matter preceding subclause (I), by inserting for a year preceding 2024, after paragraph (4),; and(ii)in clause (ii)(III), by striking and each subsequent year and inserting , 2021, 2022, and 2023; and(C)in subparagraph (D)—(i)in clause (i)—(I)in the matter preceding subclause (I), by inserting for a year preceding 2024, after paragraph (4),; and(II)in subclause (I)(bb), by striking a year after 2018 and inserting each of years 2018 through 2023; and(ii)in clause (ii)(V), by striking 2019 and each subsequent year and inserting each of years 2019 through 2023;(2)in paragraph (3)(A)—(A)in the matter preceding clause (i), by inserting for a year preceding 2024, after and (4),; and(B)in clause (ii), by striking for a subsequent year and inserting for each of years 2007 through 2023;(3)in paragraph (4)—(A)in subparagraph (A)—(i)in clause (i)—(I)by redesignating subclauses (I) and (II) as items (aa) and (bb), respectively, and indenting appropriately;(II)in the matter preceding item (aa), as redesignated by subclause (I), by striking is equal to the greater of— and inserting “is equal to—

(I)for a year preceding 2024, the greater of—

;

(III)by striking the period at the end of item (bb), as redesignated by subclause (I), and inserting ; and; and(IV)by adding at the end the following:

(II)for 2024 and each succeeding year, $0.

; and

(ii)in clause (ii)—(I)by striking clause (i)(I) and inserting clause (i)(I)(aa); and(II)by adding at the end the following new sentence: The Secretary shall continue to calculate the dollar amounts specified in clause (i)(I)(aa), including with the adjustment under this clause, after 2023 for purposes of section 1860D–14(a)(1)(D)(iii).;(B)in subparagraph (B)—(i)in clause (i)—(I)in subclause (V), by striking or at the end;(II)in subclause (VI)—(aa)by striking for a subsequent year and inserting for 2021, 2022, and 2023; and(bb)by striking the period at the end and inserting a semicolon; and(III)by adding at the end the following new subclauses:

(VII)for 2024, is equal to $3,100; or(VIII)for a subsequent year, is equal to the amount specified in this subparagraph for the previous year, increased by the annual percentage increase described in paragraph (6) for the year involved.

; and

(ii)in clause (ii), by striking clause (i)(II) and inserting clause (i);(C)in subparagraph (C)(i), by striking and for amounts and inserting and for a year preceding 2024 for amounts; and(D)in subparagraph (E), by striking In applying and inserting For each of 2011 through 2023, in applying.(b)

Reduction in beneficiary coinsurance

(1)

In general

Section 1860D–2(b)(2)(A) of the Social Security Act (42 U.S.C. 1395w–102(b)(2)(A)), as amended by subsection (a), is amended—(A)by redesignating clauses (i) and (ii) as subclauses (I) and (II) and moving such subclauses 2 ems to the right;(B)by striking 25 percent coinsurance.—Subject to and inserting “Coinsurance.—

(i)

In general

Subject to

;

(C)in each of subclauses (I) and (II), as redesignated by subparagraph (A), by striking 25 percent and inserting the applicable percentage (as defined in clause (ii)); and(D)by adding at the end the following new clause:

(ii)

Applicable percentage defined

For purposes of clause (i), the term applicable percentage means—(I)for a year preceding 2024, 25 percent; and(II)for 2024 and each subsequent year, 20 percent.

(2)

Conforming amendment

Section 1860D–14(a)(2)(D) of the Social Security Act (42 U.S.C. 1395w–114(a)(2)(D)) is amended by striking 25 percent and inserting the applicable percentage.(c)

Decreasing reinsurance payment amount

Section 1860D–15(b) of the Social Security Act (42 U.S.C. 1395w–115(b)) is amended—(1)in paragraph (1)—(A)by striking equal to 80 percent and inserting “equal to—

(A)for a year preceding 2024, 80 percent

;

(B)in subparagraph (A), as added by paragraph (1), by striking the period at the end and inserting ; and; and(C)by adding at the end the following new subparagraph:

(B)for 2024 and each subsequent year, the sum of—(i)an amount equal to the applicable percentage specified in paragraph (5)(A) of such allowable reinsurance costs attributable to that portion of gross prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B) with respect to applicable drugs (as defined in section 1860D–14B(g)(2)); and(ii)an amount equal to the applicable percentage specified in paragraph (5)(B) of allowable reinsurance costs attributable to that portion of gross prescription drug costs as specified in paragraph (3) incurred in the coverage year after such individual has incurred costs that exceed the annual out-of-pocket threshold specified in section 1860D–2(b)(4)(B) with respect to covered part D drugs that are not applicable drugs (as so defined).

; and

(2)by adding at the end the following new paragraph:

(5)

Applicable percentage specified

For purposes of paragraph (1)(B), the applicable percentage specified in this paragraph is—(A)with respect to applicable drugs (as defined in section 1860D–14B(g)(2))—(i)for 2024, 60 percent;(ii)for 2025, 40 percent; and(iii)for 2026 and each subsequent year, 20 percent; and(B)with respect to covered part D drugs that are not applicable drugs (as so defined)—(i)for 2024, 80 percent;(ii)for 2025, 60 percent; and(iii)for 2026 and each subsequent year, 40 percent.

(d)

Manufacturer discount program during initial and catastrophic phases of coverage

(1)

In general

Part D of title XVIII of the Social Security Act is amended by inserting after section 1860D–14A (42 U.S.C. 1495w–114) the following new section:

1860D–14B.

Manufacturer discount program

(a)

Establishment

The Secretary shall establish a manufacturer discount program (in this section referred to as the program). Under the program, the Secretary shall enter into agreements described in subsection (b) with manufacturers and provide for the performance of the duties described in subsection (c). The Secretary shall establish a model agreement for use under the program by not later than January 1, 2023, in consultation with manufacturers, and allow for comment on such model agreement.(b)

Terms of agreement

(1)

In general

(A)

Agreement

An agreement under this section shall require the manufacturer to provide applicable beneficiaries access to discounted prices for applicable drugs of the manufacturer that are dispensed on or after January 1, 2024.(B)

Provision of discounted prices at the point-of-sale

The discounted prices described in subparagraph (A) shall be provided to the applicable beneficiary at the pharmacy or by the mail order service at the point-of-sale of an applicable drug.(2)

Provision of appropriate data

Each manufacturer with an agreement in effect under this section shall collect and have available appropriate data, as determined by the Secretary, to ensure that it can demonstrate to the Secretary compliance with the requirements under the program.(3)

Compliance with requirements for administration of program

Each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the Secretary or a third party with a contract under subsection (d)(3), as applicable, for purposes of administering the program, including any determination under subparagraph (A) of subsection (c)(1) or procedures established under such subsection (c)(1).(4)

Length of agreement

(A)

In general

An agreement under this section shall be effective for an initial period of not less than 12 months and shall be automatically renewed for a period of not less than 1 year unless terminated under subparagraph (B).(B)

Termination

(i)

By the Secretary

The Secretary may provide for termination of an agreement under this section for a knowing and willful violation of the requirements of the agreement or other good cause shown. Such termination shall not be effective earlier than 30 days after the date of notice to the manufacturer of such termination. The Secretary shall provide, upon request, a manufacturer with a hearing concerning such a termination, and such hearing shall take place prior to the effective date of the termination with sufficient time for such effective date to be repealed if the Secretary determines appropriate.(ii)

By a manufacturer

A manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—(I)if the termination occurs before January 30 of a plan year, as of the day after the end of the plan year; and(II)if the termination occurs on or after January 30 of a plan year, as of the day after the end of the succeeding plan year.(iii)

Effectiveness of termination

Any termination under this subparagraph shall not affect discounts for applicable drugs of the manufacturer that are due under the agreement before the effective date of its termination.(iv)

Notice to third party

The Secretary shall provide notice of such termination to a third party with a contract under subsection (d)(3) within not less than 30 days before the effective date of such termination.(5)

Effective date of agreement

An agreement under this section shall take effect on a date determined appropriate by the Secretary, which may be at the start of a calendar quarter.(c)

Duties described

The duties described in this subsection are the following:(1)

Administration of program

Administering the program, including—(A)the determination of the amount of the discounted price of an applicable drug of a manufacturer;(B)the establishment of procedures under which discounted prices are provided to applicable beneficiaries at pharmacies or by mail order service at the point-of-sale of an applicable drug;(C)the establishment of procedures to ensure that, not later than the applicable number of calendar days after the dispensing of an applicable drug by a pharmacy or mail order service, the pharmacy or mail order service is reimbursed for an amount equal to the difference between—(i)the negotiated price of the applicable drug; and(ii)the discounted price of the applicable drug;(D)the establishment of procedures to ensure that the discounted price for an applicable drug under this section is applied before any coverage or financial assistance under other health benefit plans or programs that provide coverage or financial assistance for the purchase or provision of prescription drug coverage on behalf of applicable beneficiaries as the Secretary may specify; and(E)providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, applicable beneficiaries, and the third party with a contract under subsection (d)(3).(2)

Monitoring compliance

(A)

In general

The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.(B)

Notification

If a third party with a contract under subsection (d)(3) determines that the manufacturer is not in compliance with such agreement, the third party shall notify the Secretary of such noncompliance for appropriate enforcement under subsection (e).(3)

Collection of data from prescription drug plans and ma–pd plans

The Secretary may collect appropriate data from prescription drug plans and MA–PD plans in a timeframe that allows for discounted prices to be provided for applicable drugs under this section.(d)

Administration

(1)

In general

Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c).(2)

Limitation

In providing for the implementation of this section, the Secretary shall not receive or distribute any funds of a manufacturer under the program.(3)

Contract with third parties

The Secretary shall enter into a contract with 1 or more third parties to administer the requirements established by the Secretary in order to carry out this section. At a minimum, the contract with a third party under the preceding sentence shall require that the third party—(A)receive and transmit information between the Secretary, manufacturers, and other individuals or entities the Secretary determines appropriate;(B)receive, distribute, or facilitate the distribution of funds of manufacturers to appropriate individuals or entities in order to meet the obligations of manufacturers under agreements under this section;(C)provide adequate and timely information to manufacturers, consistent with the agreement with the manufacturer under this section, as necessary for the manufacturer to fulfill its obligations under this section; and(D)permit manufacturers to conduct periodic audits, directly or through contracts, of the data and information used by the third party to determine discounts for applicable drugs of the manufacturer under the program.(4)

Performance requirements

The Secretary shall establish performance requirements for a third party with a contract under paragraph (3) and safeguards to protect the independence and integrity of the activities carried out by the third party under the program under this section.(5)

Administration

Chapter 35 of title 44, United States Code, shall not apply to the program under this section.(6)

Funding

For purposes of carrying out this section, the Secretary shall provide for the transfer, from the Federal Supplementary Medical Insurance Trust Fund under section 1841 to the Centers for Medicare & Medicaid Services Program Management Account, of $4,000,000 for each of fiscal years 2021 through 2024, to remain available until expended.”.(e)

Enforcement

(1)

Audits

Each manufacturer with an agreement in effect under this section shall be subject to periodic audit by the Secretary.(2)

Civil money penalty

(A)

In general

The Secretary shall impose a civil money penalty on a manufacturer that fails to provide applicable beneficiaries discounts for applicable drugs of the manufacturer in accordance with such agreement for each such failure in an amount the Secretary determines is commensurate with the sum of—(i)the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and(ii)25 percent of such amount.(B)

Application

The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under this paragraph in the same manner as such provisions apply to a penalty or proceeding under section 1128A(a).(f)

Clarification regarding availability of other covered part d drugs

Nothing in this section shall prevent an applicable beneficiary from purchasing a covered part D drug that is not an applicable drug (including a generic drug or a drug that is not on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in).(g)

Definitions

In this section:(1)

Applicable beneficiary

The term applicable beneficiary means an individual who, on the date of dispensing a covered part D drug—(A)is enrolled in a prescription drug plan or an MA–PD plan;(B)is not enrolled in a qualified retiree prescription drug plan; and(C)has incurred costs for covered part D drugs in the year that are above the annual deductible specified in section 1860D–2(b)(1) for such year.(2)

Applicable drug

The term applicable drug means, with respect to an applicable beneficiary, a covered part D drug—(A)approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act or, in the case of a biologic product, licensed under section 351 of the Public Health Service Act (including a product licensed under subsection (k) of such section 351); and(B)(i)if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan uses a formulary, which is on the formulary of the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in;(ii)if the PDP sponsor of the prescription drug plan or the MA organization offering the MA–PD plan does not use a formulary, for which benefits are available under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in; or(iii)is provided through an exception or appeal.(3)

Applicable number of calendar days

The term applicable number of calendar days means—(A)with respect to claims for reimbursement submitted electronically, 14 days; and(B)with respect to claims for reimbursement submitted otherwise, 30 days.(4)

Discounted price

(A)

In general

Except as provided in subparagraph (B), the term discounted price means 90 percent of the negotiated price of the applicable drug of a manufacturer.(B)

Phase-in for certain drugs dispensed for subsidy eligible individuals

(i)

In general

In the case of an applicable drug of a specified manufacturer (as defined in clause (ii)) that is dispensed for an applicable beneficiary who is a subsidy eligible individual (as defined in section 1860D–14(a)(3)), the term discounted price means the specified LIS percent (as defined in clause (iii)) of the negotiated price of the applicable drug of the manufacturer.(ii)

Specified manufacturer

In this subparagraph, the term specified manufacturer means a manufacturer of an applicable drug for which, in the calendar year 2 years prior to the current plan year (referred to in this clause as the applicable period), the total reimbursement under this title during the applicable period represented less than 1 percent of the total reimbursement under this title for all prescription drugs during such period.(iii)

Specified LIS percent

In this subparagraph, the term specified LIS percent means—(I)for 2024, 98 percent;(II)for 2025, 97 percent;(III)for 2026, 96 percent;(IV)for 2027, 95 percent;(V)for 2028, 94 percent;(VI)for 2029, 93 percent;(VII)for 2030, 92 percent;(VIII)for 2031, 91 percent; and(IX)for 2032 and each subsequent year, 90 percent.(C)

Clarification

Nothing in this section shall be construed as affecting the responsibility of an applicable beneficiary for payment of a dispensing fee for an applicable drug.(5)

Manufacturer

The term manufacturer means any entity which is engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. Such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law.(6)

Negotiated price

The term negotiated price has the meaning given such term in section 1860D–2(d)(1)(B), except that such negotiated price shall not include any dispensing fee for the applicable drug.(7)

Qualified retiree prescription drug plan

The term qualified retiree prescription drug plan has the meaning given such term in section 1860D–22(a)(2).

(2)

Sunset of Medicare coverage gap discount program

Section 1860D–14A of the Social Security Act (42 U.S.C. 1395–114a) is amended—(A)in subsection (a), in the first sentence, by striking The Secretary and inserting Subject to subsection (h), the Secretary; and(B)by adding at the end the following new subsection:

(h)

Sunset of program

(1)

In general

The program shall not apply to applicable drugs dispensed on or after January 1, 2024, and, subject to paragraph (2), agreements under this section shall be terminated as of such date.(2)

Continued application for applicable drugs dispensed prior to sunset

The provisions of this section (including all responsibilities and duties) shall continue to apply after January 1, 2024, with respect to applicable drugs dispensed prior to such date.

(3)

Inclusion of actuarial value of manufacturer discounts in bids

Section 1860D–11 of the Social Security Act (42 U.S.C. 1395w–111) is amended—(A)in subsection (b)(2)(C)(iii)—(i)by striking assumptions regarding the reinsurance and inserting “assumptions regarding—

(I)the reinsurance

; and

(ii)by adding at the end the following:

(II)for 2024 and each subsequent year, the manufacturer discounts provided under section 1860D–14B subtracted from the actuarial value to produce such bid; and

; and

(B)in subsection (c)(1)(C)—(i)by striking an actuarial valuation of the reinsurance and inserting “an actuarial valuation of—

(i)the reinsurance

;

(ii)in clause (i), as added by clause (i) of this subparagraph, by adding and at the end; and(iii)by adding at the end the following:

(ii)for 2024 and each subsequent year, the manufacturer discounts provided under section 1860D–14B;

(4)

Clarification regarding exclusion of manufacturer discounts from TrOOP

Section 1860D–2(b)(4) of the Social Security Act (42 U.S.C. 1395w–102(b)(4)) is amended—(A)in subparagraph (C), by inserting and subject to subparagraph (F) after subparagraph (E); and(B)by adding at the end the following new subparagraph:

(F)

Clarification regarding exclusion of manufacturer discounts

In applying subparagraph (A), incurred costs shall not include any manufacturer discounts provided under section 1860D–14B.

(e)

Determination of allowable reinsurance costs

Section 1860D–15(b) of the Social Security Act (42 U.S.C. 1395w–115(b)) is amended—(1)in paragraph (2)—(A)by striking costs.—For purposes and inserting “costs.—

(A)

In general

Subject to subparagraph (B), for purposes

; and

(B)by adding at the end the following new subparagraph:

(B)

Inclusion of manufacturer discounts on applicable drugs

For purposes of applying subparagraph (A), the term allowable reinsurance costs shall include the portion of the negotiated price (as defined in section 1860D–14B(g)(6)) of an applicable drug (as defined in section 1860D–14B(g)(2)) that was paid by a manufacturer under the manufacturer discount program under section 1860D–14B.

; and

(2)in paragraph (3)—(A)in the first sentence, by striking For purposes and inserting Subject to paragraph (2)(B), for purposes; and(B)in the second sentence, by inserting or, in the case of an applicable drug, by a manufacturer after by the individual or under the plan.(f)

Updating risk adjustment methodologies To account for part D modernization redesign

Section 1860D–15(c) of the Social Security Act (42 U.S.C. 1395w–115(c)) is amended by adding at the end the following new paragraph:

(3)

Updating risk adjustment methodologies to account for part D modernization redesign

The Secretary shall update the risk adjustment methodologies used to adjust bid amounts pursuant to this subsection as appropriate to take into account changes in benefits under this part pursuant to the amendments made by section 2 of the Seniors Prescription Drug Relief Act.

(g)

Conditions for coverage of drugs under this part

Section 1860D–43 of the Social Security Act (42 U.S.C. 1395w–153) is amended—(1)in subsection (a)—(A)in paragraph (2), by striking and at the end;(B)in paragraph (3), by striking the period at the end and inserting a semicolon; and(C)by adding at the end the following new paragraphs:

(4)participate in the manufacturer discount program under section 1860D–14B;(5)have entered into and have in effect an agreement described in subsection (b) of such section 1860D–14B with the Secretary; and(6)have entered into and have in effect, under terms and conditions specified by the Secretary, a contract with a third party that the Secretary has entered into a contract with under subsection (d)(3) of such section 1860D–14B.

;

(2)by striking subsection (b) and inserting the following:

(b)

Effective date

Paragraphs (1) through (3) of subsection (a) shall apply to covered part D drugs dispensed under this part on or after January 1, 2011, and before January 1, 2024, and paragraphs (4) through (6) of such subsection shall apply to covered part D drugs dispensed on or after January 1, 2024.

; and

(3)in subsection (c), by striking paragraph (2) and inserting the following:

(2)the Secretary determines that in the period beginning on January 1, 2011, and ending on December 31, 2011 (with respect to paragraphs (1) through (3) of subsection (a)), or the period beginning on January 1, 2024, and ending December 31, 2024 (with respect to paragraphs (4) through (6) of such subsection), there were extenuating circumstances.

(h)

Conforming amendments

(1)Section 1860D–2 of the Social Security Act (42 U.S.C. 1395w–102) is amended—(A)in subsection (a)(2)(A)(i)(I), by striking , or an increase in the initial and inserting or for a year preceding 2024 an increase in the initial;(B)in subsection (c)(1)(C)—(i)in the subparagraph heading, by striking

at initial coverage limit

; and(ii)by inserting for a year preceding 2024 or the annual out-of-pocket threshold specified in subsection (b)(4)(B) for the year for 2024 and each subsequent year after subsection (b)(3) for the year each place it appears; and(C)in subsection (d)(1)(A), by striking or an initial and inserting or for a year preceding 2024 an initial.(2)Section 1860D–4(a)(4)(B)(i) of the Social Security Act (42 U.S.C. 1395w–104(a)(4)(B)(i)) is amended by striking the initial and inserting for a year preceding 2024, the initial.(3)Section 1860D–14(a) of the Social Security Act (42 U.S.C. 1395w–114(a)) is amended—(A)in paragraph (1)—(i)in subparagraph (C), by striking The continuation and inserting For a year preceding 2024, the continuation;(ii)in subparagraph (D)(iii), by striking 1860D–2(b)(4)(A)(i)(I) and inserting 1860D–2(b)(4)(A)(i)(I)(aa); and(iii)in subparagraph (E), by striking The elimination and inserting For a year preceding 2024, the elimination; and (B)in paragraph (2)—(i)in subparagraph (C), by striking The continuation and inserting For a year preceding 2024, the continuation; and(ii)in subparagraph (E)—(I)by inserting for a year preceding 2024, after subsection (c); and(II)by striking 1860D–2(b)(4)(A)(i)(I) and inserting 1860D–2(b)(4)(A)(i)(I)(aa).(4)Section 1860D–21(d)(7) of the Social Security Act (42 U.S.C. 1395w–131(d)(7)) is amended by striking section 1860D–2(b)(B)(4)(B)(i) and inserting section 1860D–2(b)(B)(4)(C)(i).(5)Section 1860D–22(a)(2)(A) of the Social Security Act (42 U.S.C. 1395w–132(a)(2)(A)) is amended—(A)by striking the value of any discount and inserting the following: “the value of—

(i)for years prior to 2024, any discount

;

(B)in clause (i), as inserted by subparagraph (A) of this paragraph, by striking the period at the end and inserting ; and; and(C)by adding at the end the following new clause:

(ii)for 2024 and each subsequent year, any discount provided pursuant to section 1860D–14B.

(6)Section 1860D–41(a)(6) of the Social Security Act (42 U.S.C. 1395w–151(a)(6)) is amended—(A)by inserting for a year before 2024 after 1860D–2(b)(3); and(B)by inserting for such year before the period.(i)

Effective date

The amendments made by this section shall apply to plan year 2024 and subsequent plan years.

Monthly out-of-pocket cost sharing maximum for enrollees who incur a significant portion of costs towards annual out-of-pocket threshold

(a)

In general

Section 1860D–2(b) of the Social Security Act (42 U.S.C. 1395w–102(b)), as amended by section 2, is amended—(1)in paragraph (2)—(A)in subparagraph (A), by striking and (D) and inserting , (D), and (E); and(B)by adding at the end the following new subparagraph:

(E)

Monthly out-of-pocket cost sharing maximum for enrollees who incur a significant portion of costs towards annual out-of-pocket threshold

(i)

Establishment of process

(I)

In general

For plan years beginning on or after January 1, 2024, the Secretary shall, through notice and comment rulemaking, establish a process under which each PDP sponsor offering a prescription drug plan and each MA organization offering an MA–PD plan shall each plan year automatically enroll applicable enrollees in the option to have their monthly out-of-pocket cost-sharing under the plan capped and paid in monthly installments in accordance with this subparagraph (referred to in this subparagraph as the monthly out-of-pocket cost sharing maximum option).(II)

Opt out

The process established under this clause shall permit an applicable enrollee, prior to the beginning of the plan year or at any point during the plan year, to opt out of enrollment in the monthly out-of-pocket cost sharing maximum option and pay any out-of-pocket cost-sharing otherwise applicable for any covered part D drug in full at the time of the dispensing of such drug (or at the time of such opt out in the case of costs incurred during such enrollment that have not yet been billed to the enrollee).(ii)

Definitions

(I)

Applicable enrollee

In this subparagraph, the term applicable enrollee means any enrollee in a prescription drug plan or an MA–PD plan, including an enrollee who is a subsidy eligible individual (as defined in paragraph (3) of section 1860D–14(a)), who incurs or is likely to incur a significant percentage of costs for covered part D drugs.(II)

Significant percentage

For purposes of subclause (I), the Secretary shall, in the rulemaking under clause (i), define the term significant percentage with respect to a percentage of the annual out-of-pocket threshold specified in paragraph (4)(B) but in no case shall the significant percentage be less than 50 percent or more than 100 percent of the annual out-of-pocket threshold.(iii)

Determination of monthly out-of-pocket cost sharing maximum

For each month in a plan year in which an applicable enrollee is enrolled in the monthly out-of-pocket cost sharing maximum option, the PDP sponsor or MA organization shall determine a monthly out-of-pocket cost sharing maximum (as defined in clause (v)) for such enrollee.(iv)

Beneficiary monthly payments

With respect to an applicable enrollee who is enrolled in the monthly out-of-pocket cost sharing maximum option, for each month described in clause (iii), the PDP sponsor or MA organization shall bill such enrollee an amount (not to exceed the monthly out-of-pocket cost sharing maximum) for the out-of-pocket costs of such enrollee in such month.(v)

Monthly out-of-pocket cost sharing maximum defined

In this subparagraph, the term monthly out-of-pocket cost sharing maximum means, with respect to an enrollee—(I)for the first month in which this subparagraph applies, an amount determined by calculating—(aa)the annual out-of-pocket threshold specified in paragraph (4)(B) minus the incurred costs of the enrollee as described in paragraph (4)(C); divided by(bb)the number of months remaining in the plan year; and(II)for a subsequent month, an amount determined by calculating—(aa)the sum of any remaining out-of-pocket costs owed by the enrollee from a previous month that have not yet been billed to the enrollee and any additional costs incurred by the enrollee; divided by(bb)the number of months remaining in the plan year.(vi)

Additional requirements

The following requirements shall apply with respect to the monthly out-of-pocket cost sharing maximum option under this subparagraph:(I)

Secretarial responsibilities

The Secretary shall provide information to part D eligible individuals on the monthly out-of-pocket cost sharing maximum option through educational materials, including through the notices provided under section 1804(a).(II)

PDP sponsor and MA organization responsibilities

Each PDP sponsor offering a prescription drug plan or MA organization offering an MA–PD plan—(aa)shall not limit the application of the monthly out-of-pocket cost sharing maximum option to certain covered part D drugs; (bb)shall, prior to the plan year, notify prospective enrollees of such option, including the availability of the opt out under clause (i)(II);(cc)shall include information on such option in enrollee educational materials, including the availability of the opt out under clause (i)(II);(dd)shall have in place a mechanism to notify a pharmacy during the plan year when an enrollee incurs out-of-pocket costs with respect to covered part D drugs that make it likely the enrollee is an applicable enrollee;(ee)shall provide that a pharmacy, after receiving a notification described in item (dd) with respect to an enrollee, informs the enrollee of such notification;(ff)shall ensure that the application of this subparagraph has no effect on the amount paid to pharmacies (or the timing of such payments) with respect to covered part D drugs dispensed to the enrollee; and(gg)shall have in place a financial reconciliation process to correct inaccuracies in payments made by an enrollee under this subparagraph with respect to covered part D drugs during the plan year.(III)

Failure to pay amount billed under monthly out-of-pocket cost sharing maximum option

If an applicable enrollee fails to pay the amount billed for a month as required under this subparagraph, the applicable enrollee's enrollment in the monthly out-of-pocket cost sharing maximum option shall be terminated and the enrollee shall pay the cost-sharing otherwise applicable for any covered part D drugs subsequently dispensed to the enrollee up to the annual out-of-pocket threshold specified in paragraph (4)(B).(IV)

Clarification regarding past due amounts

Nothing in this subparagraph shall be construed as prohibiting a PDP sponsor or an MA organization from billing an enrollee for an amount owed under this subparagraph. (V)

Treatment of unsettled balances

Any unsettled balances with respect to amounts owed under this subparagraph shall be treated as plan losses and the Secretary shall not be liable for any such balances outside of those assumed as losses estimated in plan bids.

; and

(2)in paragraph (4)—(A)in subparagraph (C), by striking and subject to subparagraph (F) and inserting and subject to subparagraphs (F) and (G); and(B)by adding at the end the following new subparagraph:

(G)

Inclusion of costs paid under monthly out-of-pocket cost sharing maximum option

In applying subparagraph (A), with respect to an applicable enrollee who is enrolled in the monthly out-of-pocket cost sharing maximum option described in clause (i)(I) of paragraph (2)(E), costs shall be treated as incurred if such costs are paid by a PDP sponsor or an MA organization under the process provided under such paragraph.

(b)

Application to alternative prescription drug coverage

Section 1860D–2(c) of the Social Security Act (42 U.S.C. 1395w–102(c)) is amended by adding at the end the following new paragraph:

(4)

Same monthly out-of-pocket cost sharing maximum

For plan years beginning on or after January 1, 2024, the monthly out-of-pocket cost sharing maximum for applicable enrollees under the process provided under subsection (b)(2)(E) shall apply to such coverage.