[Federal Register Volume 66, Number 138 (Wednesday, July 18, 2001)]
[Notices]
[Pages 37564-37574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18088]



[[Page 37563]]

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Part III





Department of Health and Human Services





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Centers for Medicare and Medicaid Services



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Emergency Clearance; Public Information Collection Requirements 
Submitted to the Office of Management and Budget; Notice

  Federal Register / Vol. 66, No. 138 / Wednesday, July 18, 2001 / 
Notices  

[[Page 37564]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare and Medicaid Services

[Document Identifier: CMS-10046]


Emergency Clearance: Public Information Collection Requirements 
Submitted to the Office of Management and Budget (OMB)

AGENCY: Centers for Medicare and Medicaid Services, HHS.
    In compliance with the requirement of section 3506(c)(2)(A) of the 
Paperwork Reduction Act of 1995, the Centers for Medicare & Medicaid 
Services (CMS), Department of Health and Human Services, is publishing 
the following summary of proposed collections for public comment. 
Interested persons are invited to send comments regarding this burden 
estimate or any other aspect of this collection of information, 
including any of the following subjects: (1) The necessity and utility 
of the proposed information collection for the proper performance of 
the agency's functions; (2) the accuracy of the estimated burden; (3) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (4) the use of automated collection techniques or 
other forms of information technology to minimize the information 
collection burden.
    We are, however, requesting an emergency review of the information 
collection referenced below. In compliance with the requirement of 
section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, we have 
submitted to the Office of Management and Budget (OMB) the following 
requirements for emergency review. We are requesting an emergency 
review because the collection of this information is needed before the 
expiration of the normal time limits under OMB's regulations at 5 CFR 
part 1320. This is necessary to ensure compliance with an initiative of 
the Administration. We cannot reasonably comply with the normal 
clearance procedures because of an unanticipated event and possible 
public harm.
    The new Administration plans to implement the Medicare-Endorsed Rx 
Discount Card Initiative by November 1, 2001 and wants to include this 
in the Fall beneficiary education campaign. In order to meet this date, 
we need immediate review and approval of collection.
    CMS is requesting OMB review and approval of this collection by 
July 20, 2001, with a 180-day approval period. Written comments and 
recommendations will be accepted from the public if received by the 
individuals designated below by July 19, 2001.
    Type of Information Collection Request: New collection; Title of 
Information Collection: Medicare Endorsed Rx Discount Card Initiative; 
Form No.: CMS-10046 (OMB# 0938-XXXX); Use: CMS is soliciting 
applications from prescription discount card programs so that it may 
endorse qualifying programs for Medicare beneficiaries. CMS, on its Web 
site, the consortium, and the endorsed programs, on request, will make 
information available for Medicare beneficiaries to use to compare the 
programs for possible enrollment in one of them; Frequency: Annually, 
Semi-annually; Affected Public: Business or other for-profit, Not-for-
profit institutions; Number of Respondents: 15 (estimated); Total 
Annual Responses: 15 (estimated); Total Annual Hours: 2,700.

Background

    The Centers for Medicare & Medicaid Services (CMS) is seeking 
applications from qualified entities interested in entering into a 
Medicare endorsement agreement for their prescription discount card 
program. The general purpose of this Medicare endorsement agreement 
will be to publicize information that allows Medicare beneficiaries to 
compare prescription drug discount cards, assist Medicare beneficiaries 
in understanding and accessing private market methods for securing 
discounts on the purchase of prescription drugs, and raise beneficiary 
awareness of prescription drug discount card programs available in the 
commercial market. Around 73% of Medicare beneficiaries have drug 
coverage at any given time--but only 45% have uninterrupted coverage 
for 2 consecutive years. We expect this initiative will help 
beneficiaries, particularly those who lack prescription drug coverage, 
understand how drug discount card programs can lower beneficiary out-
of-pocket prescription drug expenses. This effort is not, in any way, 
an offer of a Medicare-reimbursed drug benefit.
    Readers can find the application for this initiative attached to 
this notice and on the Web site listed below. This notice is subject to 
OMB approval.
    We have submitted a copy of this notice to OMB for its review of 
these information collections. This notice will be published in the 
Federal Register.
    To obtain copies of the supporting statement and any related forms 
for the proposed paperwork collections referenced above, access CMS' 
Web Site address at http://www.hcfa.gov/regs/prdact95.htm, or E-mail 
your request, including your address, phone number, OMB number, and CMS 
document identifier, to [email protected], or call the Reports 
Clearance Office on (410) 786-1326. The application will also be posted 
on http://www.hcfa.gov/news/pr2001/pr010712__s.htm.
    Interested persons are invited to send comments regarding the 
burden or any other aspect of these collections of information 
requirements. However, as noted above, comments on these information 
collection and record keeping requirements must be received by the 
designees referenced below, by July 19, 2001:
Centers for Medicare & Medicaid Services, Office of Information 
Services, Security and Standards Group, Division of CMS Enterprise 
Standards, Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-
1850, Fax Number: (410) 786-0207, Attn: John P. Burke III, CMS-10046
      and,
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Phone: (202) 395-4650, Fax Number: (202) 395-6974, Attn: Allison 
Eydt, CMS Desk Officer.

    Dated: July 17, 2001.
Julie Brown,
Acting CMS Reports Clearance Officer, CMS, Office of Information 
Services, Security and Standards Group, Division of CMS Enterprise 
Standards.

Medicare-Endorsed Rx Discount Card Initiative

Notice of Application

Table of Contents

1.0  INTRODUCTION
2.0  APPLICANT INSTRUCTIONS
    2.1  Intent to Respond and Pre-Application Conference
    2.2  Approach to Application, Qualifications, and Evaluation
    2.3  Application Format
    2.4  Important Dates
    2.5  Applicant Inquiries
    2.6  Withdrawal of an Application
    2.7  Information Available from CMS
    2.8  Protection of Confidential Commercial Information
    2.9  Certification Instructions
3.0  PROPOSED PROGRAM
    3.1  Your Organization
    3.1.1  Experience and Financial Soundness
    3.1.2  Business Volumes
    3.1.3  Participation In and Funding of Consortium
    3.1.4  Compliance with Federal and State Laws
    3.2  Customer Service

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    3.2.1  Enrollment and Eligibility
    3.2.2  Customer Service--Education and Information Services
    3.2.3  Reporting
    3.3  Access and Discounts
    3.3.1  Access
    3.3.2  Drugs Included
    3.3.3  Discounts
    3.4  Additional Services
4.0  APPROACH
5.0  ADMINISTRATIVE CAPABILITIES
6.0  CERTIFICATION
    6.1  Prohibitions Against Misuse of Medicare Name
    6.2  Penalties for False Claims Act Violations
    6.3  Certification Statement
7.0  MODEL AGREEMENT
    7.1  Beneficiary Information
    7.2  Consortium
    7.3  Enrollment System
    7.4  Marketing Strategy
    7.4.1  Marketing Material
    7.4.2  Marketing Material Review
    7.4.3  Marketing Activities
    7.5  Internal Performance Monitoring
    7.6  Confidentiality Requirements
    7.7  Term of Agreement

ATTACHMENTS

A.  Data Use Agreement
B  Prescription Drugs Commonly Used by Medicare Beneficiaries

1.0  Introduction

    The Centers for Medicare & Medicaid Services (CMS) is seeking 
applications from qualified entities interested in entering into a 
Medicare endorsement agreement. Applications are to be submitted 
according to the process described in this Notice under ``Applicant 
Instructions.''
    The general purpose of such agreements will be to publicize 
information that allows Medicare beneficiaries to compare prescription 
drug discount cards; assist Medicare beneficiaries in understanding and 
accessing private market methods for securing discounts on the purchase 
of prescription drugs; and to raise beneficiary awareness of 
prescription drug discount card programs available in the commercial 
market.
    Model language of the endorsement agreement can be found in Section 
7.0. Qualifying applicants will be required to sign such an agreement.
    Around 73% of Medicare beneficiaries have drug coverage at any 
given time--but only 45% have uninterrupted coverage for 2 consecutive 
years. We expect this initiative will help beneficiaries, particularly 
those who lack prescription drug coverage, understand how drug discount 
card programs can lower beneficiary out-of-pocket prescription drug 
expenses. This effort is not, in any way, an offer of a Medicare-
reimbursed drug benefit.

Objectives

    The objectives of this initiative are to:
     Provide a mechanism for Medicare beneficiaries to gain 
access to the effective tools widely used by prescription benefit 
managers in private health insurance plans to get lower drug prices and 
higher-quality pharmaceutical care.
     Publicize information (including drug-specific prices, 
formularies, and networks) that allows Medicare beneficiaries to 
compare prescription drug discount cards and choose the best card for 
them.
     Educate Medicare beneficiaries about private market 
methods for securing discounts on the purchase of prescription drugs.
     Enhance participation of seniors in discount systems, 
increasing the leverage and ability of these plans to negotiate 
discounts for seniors.
     Endorse qualified private sector prescription drug 
discount cards based on experience, customer service, discounts and 
access, and permit endorsed organizations to market their programs as 
Medicare-endorsed.
     Provide Medicare beneficiaries a low ($25 maximum) or no-
cost opportunity to enroll in a Medicare-endorsed prescription drug 
discount program.
    To meet these objectives, CMS plans to endorse prescription drug 
discount card programs that meet qualification criteria, and to permit 
successful applicants to market and label their programs as ``Medicare-
endorsed.'' Medicare's endorsement will be based on meeting 
qualifications related to experience, customer service, discounts and 
access. The endorsement will be for 14 months. Announcements of the 
Medicare-endorsed discount card programs will begin in the Fall of 
2001, with the first endorsement cycle being effective on November 1, 
2001 through December 31, 2002.
    CMS believes the Medicare endorsement will facilitate educating 
beneficiaries about discount card programs. ``Medicare'' is an 
extremely valuable and highly regarded program for nearly 40 million 
Medicare beneficiaries. Medicare focus groups indicate that virtually 
all seniors recognize the name ``Medicare''. Medicare's name 
recognition is so strong that it is unlikely to be duplicated in the 
commercial market.
    CMS is committed to educating Medicare beneficiaries about the 
endorsed discount card programs, at the time the endorsements are 
announced and as part of ongoing education efforts thereafter. CMS 
anticipates that there will be national media attention when the 
Medicare-endorsed discount card programs are announced in the Fall of 
2001. Throughout the Fall, CMS will provide information to the public 
about the discount card programs. On an ongoing basis, CMS plans to 
highlight the Medicare-endorsed discount card programs in Medicare 
publications and in the pre-enrollment package received by all 
beneficiaries upon eligibility for Medicare. CMS plans to provide 
descriptive information for each Medicare-endorsed prescription drug 
discount card program on the Medicare Web site (http://www.medicare.gov) beginning in October 2001. The information posted 
will include a basic card program description, the date on which 
Medicare beneficiaries may begin to enroll, the date the beneficiaries 
have access to discounts (if different from the beneficiaries' 
enrollment date), and the phone numbers of the endorsed card programs. 
In addition, general information will be available to Medicare 
beneficiaries through the toll-free information line (1-800-MEDICARE). 
CMS plans to educate beneficiary and consumer groups, health care 
providers, States and other interested groups about the discount 
programs.
    As a result of the CMS endorsement, Medicare name recognition, and 
plans to educate Medicare beneficiaries about these discount card 
programs, we anticipate that successful applicants will have increased 
visibility for their discount drug card programs, which will lead to 
greater enrollment by Medicare beneficiaries. We expect that the 
formulary/network/education attributes of the program, coupled with 
exclusive enrollment, will provide card sponsors the necessary market 
leverage to negotiate significant and competitive drug manufacturer 
rebates. These rebates could be used to lower drug prices for program 
enrollees or shared with retail pharmacies.

Program Overview

    CMS has established a set of qualifications commonly used in the 
marketplace that are more fully explained in Section 3.0 of this 
Notice. All applicants that meet or exceed these qualifications will be 
Medicare-endorsed. These qualifications are intended to provide 
Medicare beneficiaries with access to discount card programs with 
national or regional capabilities and discounts on at least one brand 
and/or generic prescription drug in each therapeutic class. In 
addition, the Applicant's organization must be a non-governmental 
entity and must demonstrate relevant experience, a

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high level of customer service, and size sufficient to handle the 
anticipated volume. Key aspects of each Medicare-endorsed discount card 
program shall include the ability to:
     Enroll all Medicare beneficiaries wishing to participate, 
recognizing that the discount card programs do not supplant drug 
coverage under an insured product. CMS' educational materials will 
address the differences between discount programs and insured products;
     Provide a discount on at least one brand and/or generic 
prescription drug in each therapeutic class;
     Offer a national or regional pharmacy network, providing 
strong retail access. CMS also strongly encourages applicants to 
include a mail-order service as part of their program;
     Charge no fees to CMS;
     Charge an enrollment fee of no more than $25 per 
beneficiary to fund enrollment administration expenses. The enrollment 
fee, if any, is assessed on initial enrollment in a particular card 
program only. No additional (e.g., annual) fees may be required for 
beneficiaries to maintain their enrollment in that card program;
     Provide customer service to participating beneficiaries, 
including enrollment and toll-free telephone customer service help;
     Verify (through consortium described below) that enrolled 
applicants are not already participating in another Medicare-endorsed 
drug discount card program. Beneficiaries will be permitted to enroll 
in only one Medicare-endorsed drug discount program at a time. Allowing 
enrollment in only one program better pools beneficiary market power to 
secure deeper discounts. Beneficiaries may disenroll from an 
organization and enroll in another program on a semi-annual basis; and
     Agree to participate in, fund, and abide by the guidelines 
of a private consortium with other Medicare-endorsed discount card 
programs to perform administrative functions, as defined in Section 
7.2. The consortium's activities will include the operation of a system 
to verify enrollment exclusivity and the review of marketing materials 
used by each program.
    The consortium will also make available comparative information on 
each Medicare-endorsed drug discount card program. Information will be 
available on the consortium's Web site and in hard copy.
     Beginning no later than November 1, 2002, the comparative 
information will include drug/dose-specific prices (inclusive of 
discount and dispensing fee) for a sufficient number of drugs to allow 
beneficiaries to make an informed choice.
     Prior to November 1, 2002, the comparative information 
will include average discounts (expressed as a percentage off Average 
Wholesale Price, or AWP) for the most commonly used drugs, as 
determined by the consortium, for each Medicare-endorsed program.
    Applicants are required to limit participation in their Medicare-
endorsed discount card program to Medicare beneficiaries. CMS will not 
provide data or assistance to verify Medicare eligibility. Successful 
applicants will be responsible for verifying Medicare beneficiary 
eligibility.
    Discount card programs may choose to enroll groups of beneficiaries 
(including Medicare+Choice plan members, Medigap enrollees, and 
beneficiaries with employer-sponsored retiree health insurance).
    Applicants are expected to fund the cost of administering the 
discount card program. Consortium members will decide how to assess 
fees on member organizations for start-up and ongoing operations of the 
consortium. The Federal government shall not be charged for enrollment, 
administration, participation, or any other cost associated with a 
discount program.
    Applicants are encouraged to negotiate with drug manufacturers for 
rebates. Applicants may retain any manufacturer rebates or other fees 
associated with the discount program, but are encouraged to pass a 
portion of these on to enrollees or retail pharmacies. Discount 
programs will not be expected to share rebates with Medicare, nor 
disclose this revenue information to CMS.
    Successful applicants will be expected to administer and market 
their discount card program, and educate Medicare beneficiaries about 
the program. In order to secure deeper discounts for beneficiaries, 
Medicare-endorsed discount card programs could use formularies, patient 
education, pharmacy networks, mail order, and other commonly used 
tools.
    Programs are expected to begin accepting enrollment as of November 
1, 2001, and must begin providing discounts no later than January 1, 
2002.
    CMS encourages applicants and the consortium to develop features 
that could further add value through improved discounts to Medicare 
beneficiaries, customer service, reporting/analysis, educational or 
other efforts (e.g., drug interaction analysis).
    Discount card programs must have in place a mechanism to ensure 
that beneficiaries may elect not to receive non-prescription drug 
related marketing material from Medicare-endorsed programs (e.g., 
material related to other services provided by the same organization). 
The sharing of beneficiary information must comply with applicable 
State and Federal privacy laws, as well as the privacy regulations 
established under the authority of the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA).
    Organizations that offer discounts on items or services other than 
prescription drugs may continue to offer them; however, Medicare's 
endorsement will not extend to such items and services. Organizations 
must disclose these features to beneficiaries, and provide them an 
opportunity to decline participation related to them.
    Although this notice refers to the initiative's requirements to be 
implemented after the first year of operation, the Medicare 
endorsements granted under this notice will be valid only from November 
1, 2001 through December 31, 2002. Thereafter, CMS will review 
organizations' qualifications for endorsement annually.

2.0  Applicant Instructions

2.1  Intent to Respond and Pre-Application Conference
     CMS will hold a Pre-application Conference on July 23, 
2001 for all interested Applicants. The purpose of this conference is 
to give Applicants an opportunity to ask questions and to provide 
individual comments concerning this Notice. Based on the results of 
this conference, CMS may provide additional clarification in 
consideration of the individual suggestions of potential applicants. 
CMS may also modify the qualifications in Section 2.2 below after the 
pre-application conference.
     Any modifications made to the scope of the initiative as a 
result of comments received during the pre-application conference will 
be published on the CMS Web site www.hcfa.gov on or about July 27, 
2001.
     In order to receive additional information about the Pre-
Application Conference and for future correspondence, potential 
Applicants are asked to indicate their intention to respond to this 
Notice by July 20, 2001.
     Your intent to respond should indicate your primary 
contact, and include your contact's:

--Direct telephone number;
--Fax number;
--E-mail address; and,
--Mailing address.


[[Page 37567]]


     The intent to respond should be in writing and sent to: 
Ron Deacon, Email: [email protected], Phone: (410) 786-6622, Fax: 
(410) 786-1048.
2.2  Approach to Application, Qualifications, and Evaluation
     Applicants are expected to submit sufficiently 
comprehensive information to support their application. The application 
should be prepared in four parts:
    Part I: Proposed Prescription Drug Discount Card Program. Provide a 
description of how you meet the qualifications described in Section 
3.0.
    Part II: Implementation Approach. Describe your implementation 
approach as requested in Section 4.0.
    Part III: Administrative Capabilities. Describe your administrative 
capabilities as requested in Section 5.0.
    Part IV: Certification. Submit the signed certification found in 
Section 6.0.
     Incomplete applications will not be evaluated.
     CMS reserves the right to request clarifications or 
corrections to a submitted application and to reject any and all 
applications.
     Applicants are advised that their application will become 
part of the official agreement file.
     This Notice does not commit CMS to pay any cost for the 
preparation and submission of an application.
     CMS reserves the right to amend or cancel this Notice.

Evaluation

    Part I of the application will contain the information necessary 
for CMS to determine whether the proposed discount card program meets 
the qualifications outlined in the table below. This Part will also 
contain the responses to the questions raised in Section 3.0. These 
responses will be the basis of a Pass/Fail evaluation of whether each 
of the qualifications is met. A proposed discount card program that 
successfully meets all qualifications will be endorsed.

Summary of Qualifications

------------------------------------------------------------------------
                   Category                          Qualifications
------------------------------------------------------------------------
Organization..................................  --At least 5 years
                                                 United States private
                                                 sector experience in
                                                 pharmacy benefit
                                                 management or discount
                                                 card industries, with
                                                 demonstrated financial
                                                 soundness (see section
                                                 3.1.1).
                                                --National Program:
                                                 Currently manages at
                                                 least 2 million covered
                                                 lives in an insured
                                                 pharmacy benefit or a
                                                 drug discount program.
                                                 Covered lives are
                                                 discrete individuals
                                                 who have signed
                                                 enrollment agreements
                                                 or paid an enrollment
                                                 fee or insurance
                                                 premiums (see section
                                                 3.1.2).
                                                --Regional Program:
                                                 Currently manages at
                                                 least 1 million covered
                                                 lives in an insured
                                                 pharmacy benefit or a
                                                 drug discount program
                                                 and serves a
                                                 contiguous, multi-state
                                                 area similar to CMS
                                                 regions (see section
                                                 3.1.2).
                                                --Agrees to participate
                                                 in, abide by the
                                                 guidelines of, and fund
                                                 a private consortium
                                                 with other Medicare-
                                                 endorsed discount cards
                                                 for (1) reviewing
                                                 marketing materials,
                                                 (2) assuring enrollment
                                                 exclusivity, and (3)
                                                 making available via
                                                 Web site and hard copy
                                                 (for each Medicare-
                                                 endorsed discount card
                                                 program) prices of the
                                                 most common drugs in
                                                 each therapeutic class
                                                 included in the
                                                 discount card program
                                                 (see section 3.1.3).
                                                --Has written privacy
                                                 policies that comply
                                                 with all consumer
                                                 protection and State
                                                 and Federal privacy
                                                 laws (including
                                                 applicable privacy
                                                 regulations promulgated
                                                 under HIPAA) (see
                                                 section 3.1.4).
                                                --Complies with all
                                                 other applicable
                                                 Federal and State laws
                                                 (see section 3.1.4).
Customer Service..............................  --Charges an enrollment
                                                 fee of no more than $25
                                                 to beneficiaries (see
                                                 section 3.2.1).
                                                --Discloses in customer
                                                 appropriate printed
                                                 material (may
                                                 additionally make
                                                 electronic disclosure)
                                                 to interested Medicare
                                                 beneficiaries (prior to
                                                 enrollment and after
                                                 enrollment upon
                                                 request) a detailed
                                                 description of the
                                                 program that includes
                                                 participating
                                                 pharmacies, enrollment
                                                 fees (if any), drugs
                                                 included, and their
                                                 discounts (see section
                                                 3.2.1).
                                                --Enrolls all Medicare
                                                 beneficiaries wishing
                                                 to participate. Provide
                                                 beneficiaries the
                                                 option of enrolling by
                                                 paper, telephone, fax
                                                 or Internet (see
                                                 section 3.2.1).
                                                --Provides a mechanism
                                                 for beneficiaries to
                                                 decline receiving
                                                 marketing material
                                                 (e.g., material related
                                                 to other services
                                                 offered by the
                                                 organization) (see
                                                 section 3.2.1).
                                                --Provides customer
                                                 appropriate beneficiary
                                                 and pharmacy services
                                                 consistent with
                                                 industry standards,
                                                 including toll-free
                                                 telephone help during
                                                 normal business hours
                                                 (see section 3.2.2).
                                                --Reports to CMS twice
                                                 annually the number of
                                                 Medicare beneficiaries
                                                 enrolled in and
                                                 disenrolled from the
                                                 Medicare-endorsed
                                                 Discount Card Program
                                                 (see section 3.2.3).
Discounts and Access..........................  --No later than January
                                                 1, 2002, provides a
                                                 discount on at least
                                                 one brand and/or
                                                 generic prescription
                                                 drug in each
                                                 therapeutic class (see
                                                 sections 3.3.2 and
                                                 3.3.3).
                                                --Guarantees
                                                 participating Medicare
                                                 beneficiaries receive
                                                 (at the point of sale)
                                                 the lower of the
                                                 discounted price
                                                 available through the
                                                 program or price the
                                                 pharmacy would charge a
                                                 ``cash'' paying
                                                 customer (commonly
                                                 called the Usual &
                                                 Customary price) (see
                                                 section 3.3.3).
                                                --Agrees to make
                                                 available to the
                                                 consortium information
                                                 on discounts offered.
                                                 In the first year, the
                                                 information will
                                                 include the average
                                                 discount off the AWP
                                                 for the most commonly
                                                 used drugs, as
                                                 determined by the
                                                 consortium. In the
                                                 second year and beyond,
                                                 the information will
                                                 include prices to the
                                                 consumer of commonly
                                                 prescribed drugs (see
                                                 sections 3.1.3, 3.3.2,
                                                 and 3.3.3).
                                                --Maintains a national
                                                 or regional contracted
                                                 pharmacy network
                                                 consistent with
                                                 industry practice in
                                                 member travel distance
                                                 and access to network
                                                 pharmacies. Applicants
                                                 are strongly encouraged
                                                 to offer a mail order
                                                 option in addition to
                                                 their contracted
                                                 pharmacy network (see
                                                 section 3.3.1).
------------------------------------------------------------------------

2.3  Application Format
     In preparing your application, please repeat each question 
followed by your response. Provide complete answers, and detail the 
opportunities and value your organization and discount card program 
offer to Medicare beneficiaries, in a clear, concise manner. All 
information requested is important and will be considered. If you have 
additional information you would like to provide, please include it as 
an appendix to your application, and cross reference its relation to 
the information requested.
     Applicants should deliver one (1) original and nine (9) 
copies of the written application with one (1) diskette copy of the 
application in Microsoft Office format to the following address

[[Page 37568]]

by 5:00 EDT, August 27, 2001. Centers for Medicare & Medicaid Services 
(CMS), Center for Beneficiary Choices, Attn: Ron Deacon, 410-786-6622, 
7500 Security Boulevard, Mail Stop C4-17-27, Baltimore, Maryland 21244-
1850.
     All copies and the original application should be in 3-
ring binders. Tab indexing should be used to identify all major 
sections of the application.
     Page size should be 8\1/2\ by 11 inches and the pages 
should be numbered. Type size should not be less than 12 point with a 
space and a half between lines.
2.4  Important Dates

------------------------------------------------------------------------
                 Date                               Milestone
------------------------------------------------------------------------
July 20, 2001.........................  Notification of Intent to Apply.
July 23, 2001.........................  Pre-Application Conference.
On or about July 27, 2001.............  Any clarifications about the
                                         scope of the initiative
                                         published on CMS Web site
                                         (www.hcfa.gov).
Aug. 27, 2001.........................  Applications Due.
Sept. 14, 2001........................  Begin Announcements of
                                         Endorsements
Sept. 21, 2001........................  Begin submission of marketing
                                         material for review.
Nov. 1, 2001..........................  Successful Applicants Permitted
                                         to Begin Marketing and
                                         Enrolling Participants in
                                         ``Medicare-Endorsed'' Discount
                                         Card program(s).
------------------------------------------------------------------------

2.5  Applicant Inquiries
     It would be helpful if questions regarding this Notice or 
requests for additional information were submitted prior to the Pre-
Application Conference to be held on July 23, 2001. Any modifications 
or clarifications made to the scope of the initiative as a result of 
comments received during the pre-application conference will be 
published on the CMS Web site http://www.hcfa.gov on or about July 27, 
2001.
     Contact the following to submit your questions and 
requests via e-mail or fax before the conference: Centers for Medicare 
& Medicaid Services, Center for Beneficiary Choices, Attn: Ron Deacon, 
Phone: 410-786-6622, Fax: 410-786-1048, E-mail: [email protected].
2.6  Withdrawal of an Application
     An applicant may withdraw an application at anytime before 
the agreement (Section 7.0) becomes effective, by submitting a written 
notification for its withdrawal to the CMS contact noted above.
     For the purpose of selecting applicants for Medicare 
endorsement, CMS will not accept any amendments, revisions, or 
alterations to applications after the due date of August 27, 2001 
unless requested by CMS.
2.7  Information Available From CMS
     In order for Applicants to prepare their applications, CMS 
will provide the following information upon request:
    CMS will provide aggregate data on counts of Medicare beneficiaries 
by zip code. The ``Annual Zip Code Enrollment File'' is a public use 
file and contains aggregated aged and disabled enrollment data by age 
range, race, and gender within zip code. The file is usually produced 
in April and reflects enrollment as of July 1 of the previous year. 
This file has been edited to protect the privacy of beneficiaries. For 
purposes of the new privacy regulations, Applicants will also be 
required to complete a Data Use Agreement (DUA) which is appended as 
Attachment A to this Notice. There is an expedited process in place to 
review and approve DUAs for enrollment data and information should be 
available within 1 week after request. The data will be on a cartridge.
    Upon request, CMS will also provide drug utilization data from the 
Medicare Current Beneficiary Survey. The data will be on a CD in ASCII 
format. The file will include a random sample of unnamed, non-
identifiable, non-institutionalized Medicare beneficiaries. For each 
unidentified individual, the file includes: prescription drug 
utilization information (e.g., drug name, dosage, number of 
prescriptions), date of birth, gender and prescription drug insurance 
coverage status (e.g., no drug coverage, or covered through a payer 
such as Medicaid, a Medicare+Choice organization, Medigap, or employer-
sponsored retiree plan). The data is self-reported by beneficiaries. 
The attached DUA can also be used for this information.
     To obtain the above information, please submit a signed 
and completed DUA to: Ron Deacon, Centers for Medicare & Medicaid 
Services (CMS), Center for Beneficiary Choices, 7500 Security 
Boulevard, Mail Stop C4-17-27, Baltimore, Maryland 21244-1850, Phone: 
410-786-6622, Fax: 410-786-1048. (Original document must also be mailed 
to CMS.)
     Please call the above contact if you have any questions 
concerning the data.
2.8  Protection of Confidential Commercial Information
     If any information within a submitted application (or 
attachments thereto) is labeled by the applicant as a trade secret or 
privileged or confidential information, and constitutes a trade secret 
or privileged or confidential information (as such terms are 
interpreted under the Freedom of Information Act and applicable case 
law), then such information will be protected from release by CMS under 
5 U.S.C. Sec. 552(b)(4).
2.9  Certification Instructions
    Pursuant to the Certification Statement in Section 6.0, any changes 
to the information furnished in this application must be reported to:
    Prior to Endorsement Announcement: Centers for Medicare & Medicaid 
Services (CMS), Center for Beneficiary Choices, Attention: Ron Deacon, 
7500 Security Boulevard, Mail Stop C4-17-27, Baltimore, Maryland 21244-
1850.
    After Endorsement Announcement: Centers for Medicare & Medicaid 
Services (CMS), Center for Beneficiary Choices, Attention: Christopher 
Eisenberg, 7500 Security Boulevard, Mail Stop C4-23-07, Baltimore, 
Maryland 21244-1850.

3.0  Proposed Prescription Drug Discount Card Program

     Please respond to the following questions regarding your 
qualifications. You may submit additional information that demonstrates 
your ability to meet and/or exceed the summary of qualifications found 
in Section 2.0.
3.1  Your Organization
3.1.1  Experience and Financial Soundness
     Provide a brief summary of the history, structure, and 
ownership of your organization. Include a chart showing the structure 
of the organization's ownership, subsidiaries and business 
affiliations.
     Provide the most recent audited financial statements 
(including auditor's opinions and related footnotes) for your 
organization or its parent firm (if applicable).
     Report financial ratings given to your organization for 
the past five years.
     List past or pending investigations and legal actions 
brought against your organization (and the parent firm if applicable) 
by any financial institution, government agency (local, State, or 
Federal) or private organization over the past five years. If directly 
related to prescription drug services, provide a brief explanation 
including the following: (1) Circumstances; (2) Status (pending or 
closed); and (3) If closed, provide details as to resolution and any 
monetary damages.

[[Page 37569]]

3.1.2  Business Volumes
     Complete the following table. If your organization 
underwent significant change in 2000, or you expect 2001 to have 
substantially different business volumes please comment and provide 
your 2001 projected business volumes (in addition to your business 
volumes for 2000).

                                              2000 Business Volumes
----------------------------------------------------------------------------------------------------------------
                                                   Insured pharmacy benefits\*\     Drug discount card programs
                     Metric                      ---------------------------------------------------------------
                                                      Retail           Mail           Retail           Mail
----------------------------------------------------------------------------------------------------------------
Covered lives\**\...............................  ..............  ..............  ..............  ..............
Senior lives (if available).....................  ..............  ..............  ..............  ..............
Claims processed or number of discounted          ..............  ..............  ..............  ..............
 prescriptions..................................
Drug spending managed...........................  ..............  ..............             N/A            N/A
----------------------------------------------------------------------------------------------------------------
\*\ Exclusive of any drug discount card programs.
\**\ Covered lives are discrete individuals who have signed enrollment agreements or paid an enrollment fee or
  an insurance premium.

     Please provide a description of your current clients 
including the number of covered lives and percentage who are seniors. 
Covered lives are discrete individuals who have signed enrollment 
agreements or paid an enrollment fee or paid insurance premiums.
     Please indicate if your proposed discount card program is 
a retail store only program or a retail store and mail order program.
     Please indicate if your program is national or regional. 
The CMS Web site where discount card program information will be posted 
searches by zip code and State. Provide enough information to clearly 
identify areas that you serve among the following: Each of the 50 
States, Washington, D.C., Guam, and each of the U.S. territories.
3.1.3  Participation in and Funding of Consortium
     Describe how your organization anticipates working with 
the consortium (described in Sections 1 and 2, and in section 7.2) to 
ensure that the functions of the consortium are performed.
     Describe your organization's ideas for the development, 
implementation, and financing of the consortium. Assuming it is 
responsible for marketing review, enrollment exclusivity, and 
dissemination of comparative pricing data, discuss the level and extent 
of your organization's financial contribution to the initial and 
ongoing operation of the consortium.
     Describe your organization's capability and process for 
supporting the activities of the consortium and providing information 
on discounts offered. In the first year, the information will include 
the average discount off the AWP for the most commonly used drugs. In 
the second year and beyond, the information will include prices to the 
consumer of commonly prescribed drugs.
3.1.4  Compliance With Federal and State Laws
     Indicate compliance with Federal and State laws applicable 
to the conduct of your proposed discount card program (e.g., applicable 
regulations under HIPAA, State privacy laws, State licensure, and 
consumer protection laws).
3.2  Customer Service
3.2.1  Enrollment and Eligibility
     Describe the information about your discount card program 
that will be provided to Medicare beneficiaries prior to enrolling.
     Indicate whether your organization will charge an 
enrollment fee, and if so, the fee amount to offset enrollment 
administration costs.
     Programs are expected to begin accepting enrollment as of 
November 1, 2001. Describe your organization's abilities (e.g., paper, 
fax, phone, Internet) and process for enrolling Medicare beneficiaries 
in your proposed discount card program, and for maintaining this 
information (e.g., address changes, participant withdrawals).
     Will Medicare beneficiaries be able to enroll in your 
discount card program at the point-of-service (e.g., retail pharmacy)?
     What information would be collected from Medicare 
beneficiaries at the time of enrollment in your discount card program? 
What of this information would be required for enrollment? (See Section 
7.6. for confidentiality requirements.)
     Upon your receipt of enrollment information, how long is 
required before a Medicare beneficiary can use the discount card 
program? Is this guaranteed? If so, what mechanisms do you have to 
monitor and enforce this guarantee?
     What mechanisms do you have to monitor and enforce the 
restriction that enrollment is limited to Medicare beneficiaries?
     Explain the information members receive after enrolling in 
your discount card program, including program updates (e.g., listing of 
participating pharmacies, drugs included, discount amounts, how to 
obtain discounts, etc.)

--How soon after enrollment will they receive this information? How is 
the information provided (Applicant must have a system to provide 
notification by mail, but may provide option to beneficiaries for 
electronic notification.)?

     Describe how you will ensure that beneficiaries may 
decline receiving marketing material regarding your program or 
regarding additional services offered by your organization.
     Describe whether it will service Guam and the U.S. 
territories.
3.2.2  Customer Service--Education and Information Services
    In all of the following areas please describe how your organization 
meets or exceeds industry standards:
     The capabilities of your call center, including:

--Peak and average call volumes, per week, and number of customer 
service representatives.

     Your ability and experience providing customer service and 
call center support to seniors, people with disabilities, and non-
English-speaking beneficiaries.
     The level of toll-free support you will provide Medicare 
beneficiaries and pharmacies participating in your discount card 
program. Include your:

--Forecast call volume and handle time for Medicare beneficiaries;
--Hours of operation;
--Average speed of answer; and
--Abandonment rate.

     Explain in detail how your customer service function would 
respond to the following:


[[Page 37570]]


--Questions concerning differences between the Medicare-endorsed 
discount card program, other discount programs and prescription drug 
insurance;
--Discount card program inquiries, prior to enrollment;
--Problems in the enrollment process;
--Questions concerning drug costs;
--Lost or stolen ID cards;
--Mail service questions, issues and concerns (if applicable);
--Pharmacy questions.

     Describe your organization's experience and processes for 
managing customer complaints and grievances, and the processes your 
organization expects to have in place for Medicare beneficiaries under 
your discount card program.
3.2.3  Reporting
     Describe the standard report your organization will submit 
twice a year on the number of Medicare beneficiaries enrolled and 
disenrolled. Provide sample report format.
     Describe any additional standard reports your organization 
will provide CMS, at no charge. Provide sample report formats.
3.3  Access and Discounts
3.3.1  Pharmacy Access

Retail Pharmacy

     Using GeoAccess or a similar methodology, demonstrate that 
the contracted pharmacies participating in your proposed Medicare-
endorsed discount card program meet standards consistent with industry 
practice for member travel distance and access to contracted network 
pharmacies. Provide the total number of pharmacies participating in 
your discount card program's network. A zip code data file is available 
on cartridge from CMS upon request and acceptance by CMS of the 
attached DUA (Attachment A).
     For the geographic area you propose to serve, please 
provide the number of Medicare beneficiaries within varying travel 
distances to contracted network pharmacies (i.e., within 5 and 10 
miles).
     Please describe the nature of your network pharmacy 
contracts. Do your network pharmacy contracts explicitly cover discount 
card programs? Are they in compliance with all applicable state laws?

Mail Order (If Applicable)

     If your discount card program includes mail service, 
please provide a detailed description of this service, including:

--Turnaround time;
--Process for Medicare beneficiaries to use the mail service, including 
paperwork to be completed, any Internet and payment methods, and 
average processing time;
--Process for resolving the problems commonly found with mail 
pharmacies (e.g., lost prescription, lost medication);
3.3.2  Drugs Included
     Comment on the drugs your discount card program includes 
(including at least one drug in each therapeutic class). Please 
indicate which, if any, of the attached list of drugs commonly used by 
Medicare beneficiaries (Attachment B), your program will include.
3.3.3  Discounts
     Describe the discount you will provide to Medicare 
beneficiaries participating in your discount card program (a discount 
must be provided on at least one brand and/or generic prescription drug 
in each therapeutic class). Please indicate the average discount level 
(by brand and generic, by retail and mail order), and the maximum range 
for each category.
     Your discount should reflect network discounts, 
manufacturer rebates, dispensing fees and any revenue sources available 
to you net of your need to fund your administrative costs from these 
sources.

--Your pricing should be reported as a discount off average wholesale 
price (AWP), as reported by FirstDatabank, and be consistent with 
industry standards for reimbursing network pharmacies dispensing 
covered drugs to qualified members.
--Your discount must include all dispensing fees and other fees (if 
applicable).

     Describe any dispensing or other fees (if applicable).
     If your discount card program features maximum allowable 
cost (MAC) pricing, provide the AWP discount equivalent. For those 
drugs not receiving MAC pricing, provide the AWP discount.
     How does your program guarantee that Medicare 
beneficiaries will receive (at point of sale) the lower of the 
discounted price available through the program or the price the 
pharmacy would charge a cash paying customer?
     Explain how your organization enforces and monitors the 
pricing discount.
3.4  Additional Discounts and Services
     CMS encourages applicants to offer better pricing to those 
Medicare beneficiaries willing to restrict drug choice to preferred 
brands or generics, fill prescriptions through a narrower pharmacy 
network, or use mail order pharmacy service. Organizations are 
encouraged to negotiate rebates with drug manufacturers. Medicare-
endorsed organizations are not expected to share rebates or other 
revenues received with Medicare, but are encouraged to share the 
rebates with beneficiaries or retail pharmacies. Provide a description 
of your program's features in these areas including drugs included, 
discounts offered, scope of contracted pharmacy network, mechanism for 
sharing rebates with enrollees and pharmacies, and other features.
     Describe additional services that your organization offers 
with its proposed discount card program that significantly increases 
its value. Areas for consideration include:

--Approach to marketing and promoting your card program;
--Clinical services such as drug utilization review (DUR) that would 
help minimize inappropriate dosing, drug-drug interaction, drug-allergy 
interaction or similar situations;
--Educational material provided to participating Medicare beneficiaries 
that address medications, diseases, or wellness;
--Value added reporting to CMS or Medicare beneficiaries that could 
include the cost savings realized by Medicare beneficiaries 
participating in your card program.

     Describe discounts on other services (e.g., dental, 
vision) that will be offered to Medicare beneficiaries, if any.

--Describe how Medicare beneficiaries could decline to receive these 
additional services or marketing related to them.
--Would there be an additional fee related to these services? What is 
the annual fee for these services, if any, for 2001 and 2002?
--How will you assure that use of the Medicare name is not applied to 
these additional services?

4.0  Approach

     Please describe your approach to implementing your 
proposed discount card program:

  Include a work plan and schedule in Microsoft Office format or 
similar software.

5.0  Administrative Capabilities

     The Medicare endorsement is effective on November 1, 2001. 
Specify the date on which Medicare beneficiaries may enroll in your 
discount card program, (should it be

[[Page 37571]]

endorsed); what date potential enrollees may call the organization for 
more information about the Medicare-endorsed discount card program; 
what phone number beneficiaries should call for more information about 
your program; and on what date Medicare beneficiaries can expect to 
begin receiving discounts on prescription drugs, if earlier than 
January 1, 2002;
     Provide the number of Medicare beneficiaries you expect to 
enroll in your discount card program at 1 month, 6 months, and 12 
months.
     Describe how your operations and service levels will 
change to accommodate Medicare beneficiary volume and to meet your 
proposed service levels. Include in your description the expected 
impact on your customer service functions (e.g., enrollment call center 
support, participant communications, etc.)
     Include a list of names and proposed duties of the key 
personnel that will be assigned to this program, including but not 
limited to, the account manager and customer service manager. Provide 
resumes for these people that include work history, education, 
background, and industry accomplishments.
     Provide contact information for 3 of your largest clients 
including reference name, title, phone and fax, company name and 
address, years as a client, and a brief description of the services you 
have provided.

6.0  Certification

6.1  Prohibition of Misuse of Symbols, Emblems, or Names in Reference 
to Social Security or Medicare
    42 U.S.C. 1320b-10 prohibits the misuse of the Medicare name or 
emblem. In general, it authorizes the Inspector General of the 
Department of Health and Human Services to impose penalties on any 
person who misuses the term Medicare, the symbols, emblems, or names of 
Social Security, the Centers for Medicare & Medicaid Services, Health 
and Human Services, Medicare (or other similar government entities), or 
the letters CMS, HHS, HCFA, DHHS or other similar letters in a manner 
which the person knows or should know gives the false impression that 
it is approved, endorsed, or authorized by CMS.
    Offenders are subject to fines of up to $5,000 per violation or in 
the case of a broadcast or telecast violation, $25,000.
6.2  Penalties for Falsifying Information on the Medicare-Endorsed Rx 
Discount Card Initiative Application
    18 U.S.C. 1001 authorizes criminal penalties against an individual 
who in any matter within the jurisdiction of the United States 
knowingly and willfully falsifies, conceals or covers up by any trick, 
scheme or device a material fact, or makes any false, fictitious or 
fraudulent statements or representations, or makes any false writing or 
document knowing the same to contain any false, fictitious or 
fraudulent statement or entry.
    Individual offenders are subject to fines of up to $250,000 and 
imprisonment for up to five years. Offenders that are organizations are 
subject to fines of up to $500,000. 18 U.S.C. 3571. Section 3571(d) 
also authorizes fines of up to twice the gross gain derived by the 
offender if it is greater than the amount specifically authorized by 
the sentencing statute.
6.3  Certification Statement
    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).
    (2.) I authorize CMS to verify the information contained herein. I 
agree to notify CMS in writing of any changes in this application prior 
to such change or within 30 days of the effective date of such change. 
I understand that a change CMS deems to be major may require a new 
application and may result in termination of endorsement.
    (3.) I agree that if my program meets the minimum qualifications 
and is Medicare-endorsed, I will abide by the requirements contained in 
Section 7.0 of this Notice and provide the services outlined in my 
application.
    (4.) Neither I, nor owner, director, officer, or employee of the 
company or other organization on whose behalf I am signing this 
certification statement, or any contractor retained by the company or 
any of the aforementioned persons, currently is subject to sanction 
under the Medicare or Medicaid program, or debarred, suspended or 
excluded under any other Federal agency or program, or otherwise 
prohibited from providing services to CMS or other Federal Agency.
    (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 endorsement, 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 the endorsement.

----------------------------------------------------------------------
Authorized Representative Name (printed)

----------------------------------------------------------------------
Title

----------------------------------------------------------------------
Authorized Representative Signature


----------------------------------------------------------------------
Date (MM/DD/YY)

7.0  Model Agreement

    [Qualified Applicant] agrees that, if Medicare-endorsed, the 
Applicant meets the requirements listed herein. [Qualified Applicant] 
agrees to implement a prescription drug discount card program as 
described in its application and as approved by CMS. Further, 
[Qualified Applicant] agrees to implement a prescription drug discount 
card program in accordance with the Objectives and Program Overview 
described in Section 1.0 (Introduction) of the Notice of Application 
entitled ``Medicare-Endorsed Rx Discount Card Initiative''.
7.1  Beneficiary Information
    [Qualified Applicant] agrees to develop marketing materials and 
customer service strategies that incorporate educational information 
appropriate for a Medicare population regarding accessing market-based 
strategies (e.g., role of formularies, network pharmacies, and mail 
order pharmacy, if applicable) for purchasing prescription drugs.
7.2  Consortium
     [Qualified Applicant] agrees to participate in, abide by 
the guidelines of, and fund a HIPAA-compliant consortium with other 
Medicare-endorsed discount card programs. The consortium must comply 
with the privacy regulations promulgated under HIPAA upon the date of 
compliance specified in those regulations, as well as any applicable 
State privacy laws. The [Qualified Applicant] agrees to collaborate 
with other qualifying applicants to design and implement the consortium 
so that it can perform the administrative functions identified below.
     Provide a system to ensure that Medicare beneficiaries are 
enrolled in only one Medicare-endorsed discount card program at a time 
(actual enrollment will be conducted by

[[Page 37572]]

individual discount card programs). The consortium must assure 
enrollment exclusivity no later than December 31, 2001. The system 
could be enhanced after that date to more efficiently perform this 
function.
     Make available information regarding average discounts 
(expressed as a percentage off Average Wholesale Price or AWP) for the 
most commonly-used drugs as designated by the consortium for each 
Medicare-endorsed discount card program as close to November 1, 2001 as 
possible. (A CMS-produced list of commonly-used drugs is provided as 
Attachment B for reference only.) The consortium will publish this 
discount information on the Web site of the consortium and make 
available hardcopies to beneficiaries, upon request.
     Beginning no later than November 1, 2002, make available 
comparative information on each Medicare-endorsed drug discount card 
program that will include drug/dose-specific prices (inclusive of 
discount and dispensing fee) for a sufficient number of drugs to allow 
beneficiaries to make an informed choice, formularies, and networks. 
The prices to be made available are the prices the beneficiary would 
pay at a retail store and/or mail order program, including the discount 
and dispensing fee. [Qualified Applicant] agrees to provide all the 
necessary information regarding its discount card program, for 
comparison purposes, to the consortium no later than September 1, 2002.
     Review marketing material used by Medicare-endorsed 
discount card programs based on guidance provided by CMS. The 
consortium agrees to work with CMS to assure adherence to CMS marketing 
material review guidance. The consortium should be prepared to assume 
review of all marketing materials from CMS beginning September 1, 2002. 
Marketing materials will be reviewed to ensure that they convey 
accurate information, and are delivering pharmacy benefit management 
services (e.g., drug/drug interactions) promised, consistent with 
guidelines established by the CMS. [Qualified Applicant] agrees to 
provide all marketing materials to the consortium for review no later 
than September 1, 2002.
7.3  Enrollment System
    [Qualified Applicant] shall assure that any Medicare beneficiary 
wishing to enroll is permitted to do so consistent with any eligibility 
criteria specified in [Qualified Applicant's] application and approved 
by CMS.
    A beneficiary who enrolls in an Rx discount card program shall not 
enroll in another Medicare-endorsed card programs while enrolled. 
Beneficiaries who provide no disenrollment notice to the Applicant 
shall have their enrollment renewed following rules established by the 
Medicare-endorsed card program in its CMS approved application for 
endorsement, provided the Rx discount card program continues to be 
endorsed. Medicare beneficiaries may enroll in an alternative Medicare-
endorsed discount card program if they are disenrolled or their card 
program withdraws or is terminated.
    [Qualified Applicant] may charge an enrollment fee (not to exceed 
$25 per beneficiary) only upon enrollment. [Qualified Applicant] shall 
not require its Rx discount card program enrollees to pay annual or 
other fees to maintain their enrollment.
    A beneficiary who enrolls in an Rx discount card program shall have 
the opportunity to select another card only twice a year, with a new 
election to be effective January 1 or July 1 of each year, whichever 
date immediately follows a beneficiary's provision of notice of a new 
election. A beneficiary enrolling in a second card program during the 
year must pay any enrollment fee charged by the second program. 
Beneficiaries who are not enrolled in a card program may enroll at any 
time.
    [Qualified Applicant] shall notify Medicare beneficiaries enrolled 
in its card program, if they are disenrolled from the discount card 
program according to the rules established in its CMS approved 
application. The notification shall indicate that the beneficiary may 
enroll in an alternative Medicare-endorsed discount card program.
7.4  Marketing Strategy
7.4.1  Marketing Material
    Marketing material includes any informational materials targeted to 
Medicare beneficiaries that promote a Medicare-endorsed Rx discount 
card program, inform Medicare beneficiaries that they may enroll or 
remain enrolled in a Medicare-endorsed prescription discount card 
program, and explain the features of the program, including rules that 
apply to enrollees. Examples of marketing materials include, but are 
not limited to, general audience materials, membership communication 
materials, communications to enrollees announcing changes in discount 
rates, and information relating to withdrawal and termination.
7.4.2  Marketing Material Review
    Through August 31, 2002, [Qualified Applicant] shall submit 
Medicare-endorsed Rx discount card program materials to CMS for review 
30 days prior to distribution to beneficiaries. CMS shall review 
marketing materials, communicate any required revisions in writing, and 
approve a final version during the thirty day period. [Qualified 
Applicant] may distribute marketing materials to Medicare beneficiaries 
after they have been approved. [Qualified Applicant's] use of the 
``Medicare'' name shall be restricted to inclusion in those marketing 
materials that [Qualified Applicant] has submitted to CMS for review.
    [Qualified Applicant] shall ensure that its Medicare-endorsed Rx 
discount card program marketing materials provide Medicare 
beneficiaries an adequate description of the rules for participation in 
the card program, including discounts and restrictions, if any, on 
enrollees' access to contracted network pharmacies through the program, 
and any other information necessary for Medicare beneficiaries to make 
a decision about enrollment. All marketing materials shall include a 
statement that the discount card program is endorsed by Medicare but is 
not a Medicare benefit and that [Qualified Applicant] is not a Medicare 
contractor. All marketing materials shall also include a statement that 
the discount card program is not intended to replace prescription drug 
benefits obtained through participation in any insurance plan, 
including a Medicare+Choice plan, Medigap policy, Medicaid, or employer 
retiree group plan. The text of all written marketing materials must be 
printed with a 12-point font size or larger.
7.4.3  Marketing Activities
    [Qualified Applicant] shall not engage in activities that could 
mislead Medicare beneficiaries, or intentionally misrepresent the 
[Qualified Applicant] or the Medicare-endorsed Rx discount card program 
it offers. [Qualified Applicant] shall not solicit door-to-door to 
Medicare beneficiaries.
    [Qualified Applicant] shall ensure that its marketing activities 
include marketing to beneficiaries with disabilities, beneficiaries 
with End-Stage Renal Disease (ESRD), and beneficiaries age 65 and over. 
The Applicant shall not employ discount card program names that suggest 
that it is not available to all Medicare beneficiaries (e.g., both 
beneficiaries who qualify based on disability status and those who are 
65 and over).
7.5  Internal Performance Monitoring
    [Qualified Applicant] shall establish internal performance 
monitoring for

[[Page 37573]]

verification of the discount, enrollment operations, customer service, 
network pharmacy and mail order operations (if applicable), as 
specified in the approved application for endorsement.
7.6  Confidentiality Requirements
    [Qualified Applicant] shall abide by all Federal and State laws 
regarding confidentiality and disclosure of medical records, or other 
health and enrollment information, including applicable privacy 
regulations promulgated under HIPAA. The [Qualified Applicant] shall 
safeguard the privacy of any information that identifies a particular 
enrollee and shall ensure that medical information is released only in 
accordance with applicable Federal or State law or regulations, or 
pursuant to court orders or subpoenas, including [Qualified Applicants] 
work with the consortium. Further, [Qualified Applicant] shall put in 
place a mechanism to ensure that beneficiaries may elect not to receive 
non-prescription drug related marketing material from Medicare-endorsed 
programs (e.g., material related to other services provided by the same 
organization).
7.7  Term of Agreement
    Qualified applicants awarded Medicare endorsement under this Notice 
shall offer a Medicare-endorsed Rx discount card program for up to 14 
months (November 1, 2001 to December 31, 2002), effective the date 
stated in the selection notification letter CMS sends to successful 
applicants.
    CMS may terminate the endorsement at any time.
    In the event of termination of the endorsement, [Qualified 
Applicant] shall notify its Medicare beneficiary enrollees that they 
may enroll in an alternative Medicare-endorsed discount card program 
within 10 days of receiving notice of termination.

Attachment A--Agreement for Use of Centers for Medicare & Medicaid 
Services (CMS) Beneficiary Encrypted Files

    In order to ensure the confidence of the American public 
regarding the confidentiality of information collected and 
maintained by the Federal government, CMS expects the requestors and 
recipients of its data to agree to observe the following conditions 
and to comply with these requirements. These requirements apply to 
the use of the file(s) released or any data derived from such 
file(s).
    This agreement pertains to the release of the following CMS 
data:

Filename(s)

Annual Zip Code Enrollment File (latest available)
Medicare Current Beneficiary Survey Prescription Drug Utilization

----------------------------------------------------------------------
(Requestor Name--First and Last)

----------------------------------------------------------------------
(Company/Organization)

----------------------------------------------------------------------
(Street Address)

----------------------------------------------------------------------
(City, State, and ZIP Code)

----------------------------------------------------------------------
(Phone Number--Including Area Code)

    The User represents and warrants, and in furnishing the data 
file(s) specified. CMS relies upon such representation and warranty, 
that such data file(s) will be used for the following purpose(s).

Preparation of an Application for ``Medicare-Endorsed Rx Discount Card 
Program''

    The user represents and warrants further that the facts and 
statements made in any project plan submitted to CMS for each 
purpose are complete and accurate.
    A. The Requestor shall make no attempt to identify any specific 
individual whose record is included in the file(s). No attempt will 
be made to unencrypt any person-level data in the file(s).
    B. The parties mutually agree that the aforesaid file(s) (and/or 
any derivative file(s) may be retained by the User until December 
31, 2001, hereinafter known as the ``retention date.''
    C. The requestor shall not disclose, release, reveal, show, 
sell, rent, lease, loan, or otherwise grant access to the data 
covered by this Agreement.
    D. The requestor shall not disclose any aggregations of data 
from the file(s) covered by this agreement without express written 
authorization from CMS.
    E. Absent express written authorization from CMS, the Requestor 
shall make no attempt to link records included in the file(s) to any 
other beneficiary-specific source of information.
    F. The Requestor shall neither publish nor release any 
information that is derived from the file(s) and that could 
reasonably be expected to permit deduction of a beneficiary's 
identity.
    G. Appropriate administrative, technical, procedural, and 
physical safeguards shall be established by the Recipient to protect 
the confidentiality of the data and to prevent unauthorized access 
to it. The safeguards shall provide a level of security that is at 
least comparable to the level of security referred to in OMB 
Circular No. A-130, Appendix III--Security of Federal Automated 
Information Systems which sets forth guidelines for security plans 
for automated information systems in Federal agencies.
    H. In the event the Requestor makes an unauthorized disclosure 
of these data, CMS may impose any or all of the following measures: 
(1) request a formal response to an allegation of an unauthorized 
disclosure, (2) require the submission of a corrective action plan 
formulated to implement steps to be taken to alleviate the 
possibility of any future unauthorized disclosure; (3) require the 
return of the data; and/or (4) sanction against further release of 
CMS data to the organization/requestor in question.
    I. The Requestor acknowledges that criminal penalties under 
section 1106(a) of the Social Security Act (42 U.S.C. 1306(a)), 
including possible imprisonment, may apply with respect to any 
disclosure of information in the file(s) that is inconsistent with 
the terms of the agreement. The Requestor further acknowledges that 
criminal penalties under the Privacy Act (5 U.S.C. 552a(I)(3)) may 
apply if it is determined that the Requestor, or any individual 
employed or affiliated therewith, knowingly and willfully obtained 
the file(s) under false pretenses.
----------------------------------------------------------------------
1.
    (Requestor name and title--typed or printed)
----------------------------------------------------------------------
2.
    (Signature)       (Date)
----------------------------------------------------------------------
3.
    (Typed or printed name of custodian of files, if different)
----------------------------------------------------------------------
4.
    (Signature)      (Date)
----------------------------------------------------------------------
5.
    (Typed or printed name/agency/telephone number of Federal 
representative)
----------------------------------------------------------------------
6.
    (Signature)      (Date)

Attachment B--Prescription Drugs Commonly Used by Medicare 
Beneficiaries

    The following list of drugs is based on an analysis of the 1998 
Medicare Current Beneficiary Survey. Drugs are self-reported by 
beneficiary. List includes the top100 drugs based on utilization and 
spending, yielding a total of 129 drugs.

Accupril, Albuterol, Allopurinol, Alprazolam, Amitriptidine, 
Amoxicillan, Aricept, Atenolol, Atrovent, Axid, Azmacort, Biaxin, 
Buspar, Capoten, Captopril, Cardizem, Cardizem CD, Cardura, Casodex, 
Cephalexin, Cimetidine, Cipro, Claritin, Clozaril, Conjugated 
Estrogens, Cordarone, Coumadin, Cozaar, Darvocet-N, Daypro, 
Depakote, Diazepam, Digoxin, Dilacor XR, Dilantin

[[Page 37574]]

Diltiazem, Doxipin, Dyamide, Dypyridamole, Folic Acid, Fosamax, 
Furosemide, Gemfibrozil, Glucophage, Glucotrol, Glyburide, Hctz, 
Hydrocodone, Hydrocodone/APAP, Hytrin, Ibuprofen, Imdur, Indapamide, 
Ipratropium Bromide, Isosorbide DN, K-Dur, Klor-Con, Lanoxin, Lasix, 
Lescol, Lipitor, Lopressor, Lorazepam, Lotensin, Lotrel, Meclizine, 
Methotrexate, Metoprolol, Mevacor, Miacalcin, Monopril, Naproxen, 
Neoral, Neurontin, Nitro-Dur, Nitroglycerin, Nitrostat, Norvasc, 
Paxil, Pepcid
Potassium, Potassium Chloride, Pravachol, Prednisone, Premarin, 
Prevacid, Prilosec, Prinivil, Procardia, Procardia XL, Prograf, 
Propoxy-N/APAP, Propoxyphene, Propranolol, Propulsid, Proscar, 
Proventil, Prozac, Ranitidine, Relafen, Rezulin, Risperdal, 
Serevent, Sinemet, Synthroid, Tagamet, Tamoxifen, Tenormin, Theo-
Phylline, Ticlid, Timoptic, Tomazepam, Toprol XL, Tramodone, 
Trental, Triamterene/HCTZ, Ultram, Vasotec, Verapamil, Voltaren, 
Xalatan, Xanax, Zantac, Zestril, Ziac, Zithromax, Zocor, Zoloft, 
Zyprexa
[FR Doc. 01-18088 Filed 7-16-01; 3:02 pm]
BILLING CODE 4120-03-P