The service area for a prescription drug plan shall consist of an entire PDP region established under paragraph (2).
The Secretary shall establish, and may revise, PDP regions in a manner that is consistent with the requirements for the establishment and revision of MA regions under subparagraphs (B) and (C) of section 1395w–27a(a)(2) of this title.
To the extent practicable, PDP regions shall be the same as MA regions under section 1395w–27a(a)(2) of this title. The Secretary may establish PDP regions which are not the same as MA regions if the Secretary determines that the establishment of different regions under this part would improve access to benefits under this part.
The Secretary shall establish, and may revise, PDP regions for areas in States that are not within the 50 States or the District of Columbia.
Nothing in this subsection shall be construed as preventing a prescription drug plan from being offered in more than one PDP region (including all PDP regions).
A PDP sponsor shall submit to the Secretary information described in paragraph (2) with respect to each prescription drug plan it offers. Such information shall be submitted at the same time and in a similar manner to the manner in which information described in paragraph (6) of section 1395w–24(a) of this title is submitted by an MA organization under paragraph (1) of such section.
The information described in this paragraph is information on the following:
The prescription drug coverage provided under the plan, including the deductible and other cost-sharing.
The actuarial value of the qualified prescription drug coverage in the region for a part D eligible individual with a national average risk profile for the factors described in section 1395w–115(c)(1)(A) of this title (as specified by the Secretary).
Information on the bid, including an actuarial certification of—
(i) the basis for the actuarial value described in subparagraph (B) assumed in such bid;
(ii) the portion of such bid attributable to basic prescription drug coverage and, if applicable, the portion of such bid attributable to supplemental benefits;
(iii) assumptions regarding the reinsurance subsidy payments provided under section 1395w–115(b) of this title subtracted from the actuarial value to produce such bid; and
(iv) administrative expenses assumed in the bid.
The service area for the plan.
Whether the PDP sponsor requires a modification of risk level under clause (ii) and, if so, the extent of such modification. Any such modification shall apply with respect to all prescription drug plans offered by a PDP sponsor in a PDP region. This subparagraph shall not apply to an MA–PD plan.
A modification of risk level under this clause may consist of one or more of the following:
An equal percentage point increase in the percents applied under subparagraphs (B)(i), (B)(ii)(I), (C)(i), and (C)(ii)(I) of section 1395w–115(e)(2) of this title. In no case shall the application of previous sentence prevent the application of a higher percentage under section 1395w–115(e)(2)(B)(iii) 1 of this title.
An equal percentage point increase in the percents applied under subparagraphs (B)(ii)(II) and (C)(ii)(II) of section 1395w–115(e)(2) of this title.
A decrease in the threshold risk percentages specified in section 1395w–115(e)(3)(C) of this title.
Such other information as the Secretary may require to carry out this part.
The Secretary shall establish requirements for information submission under this subsection in a manner that promotes the offering of such plans in more than one PDP region (including all regions) through the filing of consolidated information.
For purposes of this part, the Secretary shall establish processes and methods for determining the actuarial valuation of prescription drug coverage, including—
(A) an actuarial valuation of standard prescription drug coverage under section 1395w–102(b) of this title;
(B) actuarial valuations relating to alternative prescription drug coverage under section 1395w–102(c)(1) of this title;
(C) an actuarial valuation of the reinsurance subsidy payments under section 1395w–115(b) of this title;
(D) the use of generally accepted actuarial principles and methodologies; and
(E) applying the same methodology for determinations of actuarial valuations under subparagraphs (A) and (B).
Such processes and methods for determining actuarial valuation shall take into account the effect that providing alternative prescription drug coverage (rather than standard prescription drug coverage) has on drug utilization.
PDP sponsors and MA organizations are responsible for the preparation and submission of actuarial valuations required under this part for prescription drug plans and MA–PD plans they offer.
Under the processes and methods established under paragraph (1), PDP sponsors offering prescription drug plans and MA organizations offering MA–PD plans may use actuarial opinions certified by independent, qualified actuaries to establish actuarial values.
The Secretary shall review the information filed under subsection (b) for the purpose of conducting negotiations under paragraph (2).
Subject to subsection (i), in exercising the authority under paragraph (1), the Secretary—
(A) has the authority to negotiate the terms and conditions of the proposed bid submitted and other terms and conditions of a proposed plan; and
(B) has authority similar to the authority of the Director of the Office of Personnel Management with respect to health benefits plans under chapter 89 of title 5.
Paragraph (5)(C) of section 1395w–24(a) of this title shall apply with respect to bids submitted by a PDP sponsor under subsection (b) in the same manner as such paragraph applies to bids submitted by an MA organization under such section 1395w–24(a) of this title.
After review and negotiation under subsection (d), the Secretary shall approve or disapprove the prescription drug plan.
The Secretary may approve a prescription drug plan only if the following requirements are met:
The plan and the PDP sponsor offering the plan comply with the requirements under this part, including the provision of qualified prescription drug coverage.
The Secretary determines that the plan and PDP sponsor meet the requirements under this part relating to actuarial determinations, including such requirements under section 1395w–102(c) of this title.
The Secretary determines that the portion of the bid submitted under subsection (b) that is attributable to basic prescription drug coverage is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of section 300e–1(8)(C) of this title) for benefits provided under that plan, less the sum (determined on a monthly per capita basis) of the actuarial value of the reinsurance payments under section 1395w–115(b) of this title.
The Secretary determines that the portion of the bid submitted under subsection (b) that is attributable to supplemental prescription drug coverage pursuant to section 1395w–102(a)(2) of this title is supported by the actuarial bases provided under such subsection and reasonably and equitably reflects the revenue requirements (as used for purposes of section 300e–1(8)(C) of this title) for such coverage under the plan.
The Secretary does not find that the design of the plan and its benefits (including any formulary and tiered formulary structure) are likely to substantially discourage enrollment by certain part D eligible individuals under the plan.
The Secretary may not find that the design of categories and classes within a formulary violates clause (i) if such categories and classes are consistent with guidelines (if any) for such categories and classes established by the United States Pharmacopeia.
The Secretary may only approve a limited risk plan (as defined in paragraph (4)(A)) for a PDP region if the access requirements under section 1395w–103(a) of this title would not be met for the region but for the approval of such a plan (or a fallback prescription drug plan under subsection (g)).
The following rules shall apply with respect to the approval of a limited risk plan in a PDP region:
Only the minimum number of such plans may be approved in order to meet the access requirements under section 1395w–103(a) of this title.
The Secretary shall provide priority in approval for those plans bearing the highest level of risk (as computed by the Secretary), but the Secretary may take into account the level of the bids submitted by such plans.
In no case may the Secretary approve a limited risk plan under which the modification of risk level provides for no (or a de minimis) level of financial risk.
There shall be no limit on the number of full risk plans that are approved under subsection (e).
For purposes of this subsection:
The term "limited risk plan" means a prescription drug plan that provides basic prescription drug coverage and for which the PDP sponsor includes a modification of risk level described in subparagraph (E) of subsection (b)(2) in its bid submitted for the plan under such subsection. Such term does not include a fallback prescription drug plan.
The term "full risk plan" means a prescription drug plan that is not a limited risk plan or a fallback prescription drug plan.
Separate from the bidding process under subsection (b), the Secretary shall provide for a process for the solicitation of bids from eligible fallback entities (as defined in paragraph (2)) for the offering in all fallback service areas (as defined in paragraph (3)) in one or more PDP regions of a fallback prescription drug plan (as defined in paragraph (4)) during the contract period specified in paragraph (5).
Except as provided in this subparagraph, the provisions of subsection (e) shall apply with respect to the approval or disapproval of fallback prescription drug plans. The Secretary shall enter into contracts under this subsection with eligible fallback entities for the offering of fallback prescription drug plans so approved in fallback service areas.
With respect to all fallback service areas in any PDP region for a contract period, the Secretary shall approve the offering of only 1 fallback prescription drug plan.
Competitive procedures (as defined in section 132 of title 41) shall be used to enter into a contract under this subsection. The provisions of subsection (d) of section 1395kk–1 of this title shall apply to a contract under this section in the same manner as they apply to a contract under such section.
The Secretary shall approve a fallback prescription drug plan for a PDP region in a manner so that, if there are any fallback service areas in the region for a year, the fallback prescription drug plan is offered at the same time as prescription drug plans would otherwise be offered.
The Secretary shall not enter into a contract with a single fallback entity for the offering of fallback plans throughout the United States.
For purposes of this section, the term "eligible fallback entity" means, with respect to all fallback service areas in a PDP region for a contract period, an entity that—
(A) meets the requirements to be a PDP sponsor (or would meet such requirements but for the fact that the entity is not a risk-bearing entity); and
(B) does not submit a bid under subsection (b) for any prescription drug plan for any PDP region for the first year of such contract period.
For purposes of subparagraph (B), an entity shall be treated as submitting a bid with respect to a prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.
For purposes of this subsection, the term "fallback service area" means, for a PDP region with respect to a year, any area within such region for which the Secretary determines before the beginning of the year that the access requirements of the first sentence of section 1395w–103(a) of this title will not be met for part D eligible individuals residing in the area for the year.
For purposes of this part, the term "fallback prescription drug plan" means a prescription drug plan that—
(A) only offers the standard prescription drug coverage and access to negotiated prices described in section 1395w–102(a)(1)(A) of this title and does not include any supplemental prescription drug coverage; and
(B) meets such other requirements as the Secretary may specify.
A contract entered into under this subsection shall provide for—
(i) payment for the actual costs (taking into account negotiated price concessions described in section 1395w–102(d)(1)(B) of this title) of covered part D drugs provided to part D eligible individuals enrolled in a fallback prescription drug plan offered by the entity; and
(ii) payment of management fees that are tied to performance measures established by the Secretary for the management, administration, and delivery of the benefits under the contract.
The performance measures established by the Secretary pursuant to subparagraph (A)(ii) shall include at least measures for each of the following:
The entity contains costs to the Medicare Prescription Drug Account and to part D eligible individuals enrolled in a fallback prescription drug plan offered by the entity through mechanisms such as generic substitution and price discounts.
The entity provides such enrollees with quality programs that avoid adverse drug reactions and overutilization and reduce medical errors.
The entity provides timely and accurate delivery of services and pharmacy and beneficiary support services.
The entity provides efficient and effective benefit administration and claims adjudication.
Except as provided in section 1395w–113(b) of this title (relating to late enrollment penalty) and subject to section 1395w–114 of this title (relating to low-income assistance), the monthly beneficiary premium to be charged under a fallback prescription drug plan offered in all fallback service areas in a PDP region shall be uniform and shall be equal to 25.5 percent (or, for 2030 and each subsequent year, the percent specified under section 1395w–113(a)(9) of this title) of an amount equal to the Secretary's estimate of the average monthly per capita actuarial cost, including administrative expenses, under the fallback prescription drug plan of providing coverage in the region, as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services. In calculating such administrative expenses, the Chief Actuary shall use a factor that is based on similar expenses of prescription drug plans that are not fallback prescription drug plans.
Except as may be appropriate to carry out this section, the terms and conditions of contracts with eligible fallback entities offering fallback prescription drug plans under this subsection shall be the same as the terms and conditions of contracts under this part for prescription drug plans.
Subject to clause (ii), a contract approved for a fallback prescription drug plan for fallback service areas for a PDP region under this section shall be for a period of 3 years (except as may be renewed after a subsequent bidding process).
A fallback prescription drug plan may be offered under a contract in an area for a year only if that area is a fallback service area for that year.
An eligible fallback entity with a contract under this subsection may not engage in any marketing or branding of a fallback prescription drug plan.
The Secretary shall submit to Congress an annual report that describes instances in which limited risk plans and fallback prescription drug plans were offered under subsections (f) and (g). The Secretary shall include in such report such recommendations as may be appropriate to limit the need for the provision of such plans and to maximize the assumption of financial risk under section subsection 3 (f).
In order to promote competition under this part and in carrying out this part, the Secretary—
(1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors;
(2) may not require a particular formulary, except as provided under section 1395w–104(b)(3)(l) 4 of this title; and
(3) may not institute a price structure for the reimbursement of covered part D drugs, except as provided under part E of subchapter XI.
A PDP sponsor offering a prescription drug plan shall permit State Pharmaceutical Assistance Programs and Rx plans under sections 1395w–133 and 1395w–134 of this title to coordinate benefits with the plan and, in connection with such coordination with such a Program, not to impose fees that are unrelated to the cost of coordination.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–11, as added Pub. L. 108–173, title I, §101(a)(2), Dec. 8, 2003, 117 Stat. 2092; amended Pub. L. 111–148, title III, §3209(b), Mar. 23, 2010, 124 Stat. 460; Pub. L. 117–169, title I, §§11001(b)(1)(C), 11201(d)(3)(B), Aug. 16, 2022, 136 Stat. 1852, 1890.)
Section 1395w–115(e)(2)(B)(iii) of this title, referred to in subsec. (b)(2)(E)(ii)(I), was in the original "section 1869D–15(e)(2)(B)(iii)", and was translated as reading "section 1860D–15(e)(2)(B)(iii)", meaning 1860D–15(e)(2)(B)(iii) of the Social Security Act, to reflect the probable intent of Congress, because the Social Security Act does not contain a section 1869D–15 and section 1395w–115(e)(2)(B)(iii) of this title provides for an application of a higher percentage for years 2006 and 2007.
In subsec. (g)(1)(B)(iii), "section 132 of title 41" substituted for "section 4(5) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(5))" on authority of Pub. L. 111–350, §6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts.
2022—Subsec. (g)(6). Pub. L. 117–169, §11201(d)(3)(B), inserted "(or, for 2030 and each subsequent year, the percent specified under section 1395w–113(a)(9) of this title)" after "25.5 percent".
Subsec. (i)(1). Pub. L. 117–169, §11001(b)(1)(C)(i), struck out "and" at end.
Subsec. (i)(2). Pub. L. 117–169, §11001(b)(1)(C)(ii), substituted ", except as provided under section 1395w–104(b)(3)(l) of this title; and" for "or institute a price structure for the reimbursement of covered part D drugs."
Subsec. (i)(3). Pub. L. 117–169, §11001(b)(1)(C)(iii), added par. (3).
2010—Subsec. (d)(3). Pub. L. 111–148 added par. (3).
Amendment by Pub. L. 111–148 applicable to bids submitted for contract years beginning on or after Jan. 1, 2011, see section 3209(c) of Pub. L. 111–148, set out as a note under section 1395w–24 of this title.
Pub. L. 108–173, title I, §107(a), Dec. 8, 2003, 117 Stat. 2169, provided that:
"(1)
"(A) price variations (described in section 1860D–15(c)(2) of such Act [42 U.S.C. 1395w–115(c)(2)]); and
"(B) differences in per capita utilization that is not taken into account in the health status risk adjustment provided under section 1860D–15(c)(1) of such Act [42 U.S.C. 1395w–115(c)(1)].
"(2)
"(A) information regarding the extent of geographic variation described in paragraph (1)(B);
"(B) an analysis of the impact on direct subsidies under section 1860D–15(a)(1) of the Social Security Act [42 U.S.C. 1395w–115(a)(1)] in different PDP regions if such subsidies were adjusted to take into account the variation described in subparagraph (A); and
"(C) recommendations regarding the appropriateness of applying an additional geographic adjustment factor under section 1860D–15(c)(2) [42 U.S.C. 1395w–115(c)(2)] that reflects some or all of the variation described in subparagraph (A)."
1 See References in Text note below.
2 So in original. Probably should be "(v)".
4 So in original. Probably should be "(b)(3)(I)".
Each PDP sponsor of a prescription drug plan shall meet the following requirements:
Subject to subsection (c), the sponsor is organized and licensed under State law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each State in which it offers a prescription drug plan.
Subject to subparagraph (B), to the extent that the entity is at risk the entity assumes financial risk on a prospective basis for benefits that it offers under a prescription drug plan and that is not covered under section 1395w–115(b) of this title.
The plan sponsor may obtain insurance or make other arrangements for the cost of coverage provided to any enrollee to the extent that the sponsor is at risk for providing such coverage.
In the case of a PDP sponsor that is not described in paragraph (1) and for which a waiver has been approved under subsection (c), such sponsor shall meet solvency standards established by the Secretary under subsection (d).
The Secretary shall not permit the enrollment under section 1395w–101 of this title in a prescription drug plan offered by a PDP sponsor under this part, and the sponsor shall not be eligible for payments under section 1395w–114 or 1395w–115 of this title, unless the Secretary has entered into a contract under this subsection with the sponsor with respect to the offering of such plan. Such a contract with a sponsor may cover more than one prescription drug plan. Such contract shall provide that the sponsor agrees to comply with the applicable requirements and standards of this part and the terms and conditions of payment as provided for in this part.
The Secretary shall not enter into a contract with a PDP sponsor for the offering of a prescription drug plan (other than a fallback prescription drug plan) in a PDP region for a year if the sponsor—
(A) submitted a bid under section 1395w–111(g) of this title for such year (as the first year of a contract period under such section) to offer a fallback prescription drug plan in any PDP region;
(B) offers a fallback prescription drug plan in any PDP region during the year; or
(C) offered a fallback prescription drug plan in that PDP region during the previous year.
For purposes of this paragraph, an entity shall be treated as submitting a bid with respect to a prescription drug plan or offering a fallback prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.
Except as otherwise provided, the following provisions of section 1395w–27 of this title shall apply to contracts under this section in the same manner as they apply to contracts under section 1395w–27(a) of this title:
Paragraphs (1) and (3) of section 1395w–27(b) of this title, except that—
(i) the Secretary may increase the minimum number of enrollees required under such paragraph (1) as the Secretary determines appropriate; and
(ii) the requirement of such paragraph (1) shall be waived during the first contract year with respect to an organization in a region.
Section 1395w–27(c) of this title, except that in applying paragraph (4)(B) of such section any reference to payment amounts under section 1395w–23 of this title shall be deemed payment amounts under section 1395w–115 of this title.
Section 1395w–27(d) of this title.
Section 1395w–27(e) of this title; except that section 1395w–27(e)(2) of this title shall apply as specified to PDP sponsors and payments under this part to an MA–PD plan shall be treated as expenditures made under part D. Notwithstanding any other provision of law, information provided to the Secretary under the application of section 1395w–27(e)(1) of this title to contracts under this section under the preceding sentence—
(i) may be used for the purposes of carrying out this part, improving public health through research on the utilization, safety, effectiveness, quality, and efficiency of health care services (as the Secretary determines appropriate), or carrying out part E of subchapter XI; and
(ii) shall be made available to Congressional 1 support agencies (in accordance with their obligations to support Congress as set out in their authorizing statutes) for the purposes of conducting Congressional 1 oversight, monitoring, making recommendations, and analysis of the program under this subchapter.
Section 1395w–27(g) of this title (other than paragraph (1)(F) of such section), except that in applying such section the reference in section 1395w–27(g)(1)(B) of this title to section 1395w–24 of this title is deemed a reference to this part.
Section 1395w–27(h) of this title.
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that payment shall be issued, mailed, or otherwise transmitted with respect to all clean claims submitted by pharmacies (other than pharmacies that dispense drugs by mail order only or are located in, or contract with, a long-term care facility) under this part within the applicable number of calendar days after the date on which the claim is received.
In this paragraph, the term "clean claim" means a claim that has no defect or impropriety (including any lack of any required substantiating documentation) or particular circumstance requiring special treatment that prevents timely payment from being made on the claim under this part.
In this paragraph, a claim is considered to have been received—
(I) with respect to claims submitted electronically, on the date on which the claim is transferred; and
(II) with respect to claims submitted otherwise, on the 5th day after the postmark date of the claim or the date specified in the time stamp of the transmission.
In this paragraph, the term "applicable number of calendar days" means—
(i) with respect to claims submitted electronically, 14 days; and
(ii) with respect to claims submitted otherwise, 30 days.
Subject to clause (ii), if payment is not issued, mailed, or otherwise transmitted within the applicable number of calendar days (as defined in subparagraph (B)) after a clean claim is received, the PDP sponsor shall pay interest to the pharmacy that submitted the claim at a rate equal to the weighted average of interest on 3-month marketable Treasury securities determined for such period, increased by 0.1 percentage point for the period beginning on the day after the required payment date and ending on the date on which payment is made (as determined under subparagraph (D)(iv)). Interest amounts paid under this subparagraph shall not be counted against the administrative costs of a prescription drug plan or treated as allowable risk corridor costs under section 1395w–115(e) of this title.
The Secretary may provide that a PDP sponsor is not charged interest under clause (i) in the case where there are exigent circumstances, including natural disasters and other unique and unexpected events, that prevent the timely processing of claims.
A claim is deemed to be a clean claim if the PDP sponsor involved does not provide notice to the claimant of any deficiency in the claim—
(I) with respect to claims submitted electronically, within 10 days after the date on which the claim is received; and
(II) with respect to claims submitted otherwise, within 15 days after the date on which the claim is received.
If a PDP sponsor determines that a submitted claim is not a clean claim, the PDP sponsor shall, not later than the end of the period described in clause (i), notify the claimant of such determination. Such notification shall specify all defects or improprieties in the claim and shall list all additional information or documents necessary for the proper processing and payment of the claim.
A claim is deemed to be a clean claim under this paragraph if the PDP sponsor involved does not provide notice to the claimant of any defect or impropriety in the claim within 10 days of the date on which additional information is received under subclause (I).
A claim submitted to a PDP sponsor that is not paid or contested by the sponsor within the applicable number of days (as defined in subparagraph (B)) after the date on which the claim is received shall be deemed to be a clean claim and shall be paid by the PDP sponsor in accordance with subparagraph (A).
Payment of a clean claim under such subparagraph is considered to have been made on the date on which—
(I) with respect to claims paid electronically, the payment is transferred; and
(II) with respect to claims paid otherwise, the payment is submitted to the United States Postal Service or common carrier for delivery.
A PDP sponsor shall pay all clean claims submitted electronically by electronic transfer of funds if the pharmacy so requests or has so requested previously. In the case where such payment is made electronically, remittance may be made by the PDP sponsor electronically as well.
Nothing in this paragraph shall be construed to prohibit or limit a claim or action not covered by the subject matter of this section that any individual or organization has against a provider or a PDP sponsor.
Consistent with applicable Federal or State law, a PDP sponsor shall not retaliate against an individual or provider for exercising a right of action under this subparagraph.
A determination under this paragraph that a claim submitted by a pharmacy is a clean claim shall not be construed as a positive determination regarding eligibility for payment under this subchapter, nor is it an indication of government approval of, or acquiescence regarding, the claim submitted. The determination shall not relieve any party of civil or criminal liability with respect to the claim, nor does it offer a defense to any administrative, civil, or criminal action with respect to the claim.
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall provide that a pharmacy located in, or having a contract with, a long-term care facility shall have not less than 30 days (but not more than 90 days) to submit claims to the sponsor for reimbursement under the plan.
If the PDP sponsor of a prescription drug plan uses a standard for reimbursement of pharmacies based on the cost of a drug, each contract entered into with such sponsor under this part with respect to the plan shall provide that the sponsor shall update such standard not less frequently than once every 7 days, beginning with an initial update on January 1 of each year, to accurately reflect the market price of acquiring the drug.
Section 1395y(o)(1) of this title shall apply with respect to a PDP sponsor with a contract under this part, a pharmacy, and payments to such pharmacy under this part in the same manner as such section applies with respect to the Secretary, a provider of services or supplier, and payments to such provider of services or supplier under this subchapter. A PDP sponsor shall notify the Secretary regarding the imposition of any payment suspension pursuant to the previous sentence, such as through the secure internet website portal (or other successor technology) established under section 1395w–28(i) of this title.
Nothing in this paragraph shall be construed as limiting the authority of a PDP sponsor to conduct postpayment review.
Each contract entered into with a PDP sponsor under this part with respect to a prescription drug plan offered by such sponsor shall require the sponsor to provide information to the Secretary as requested by the Secretary for purposes of carrying out section 1320f–3 of this title.
In the case of an entity that seeks to offer a prescription drug plan in a State, the Secretary shall waive the requirement of subsection (a)(1) that the entity be licensed in that State if the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in paragraph (2) have been met.
In addition to the waiver available under subparagraph (A), the provisions of section 1395w–27a(d) of this title shall apply to PDP sponsors under this part in a manner similar to the manner in which such provisions apply to MA organizations under part C, except that no application shall be required under paragraph (1)(B) of such section in the case of a State that does not provide a licensing process for such a sponsor.
The grounds for approval under this paragraph are—
(i) subject to subparagraph (B), the grounds for approval described in subparagraphs (B), (C), and (D) of section 1395w–25(a)(2) of this title; and
(ii) the application by a State of any grounds other than those required under Federal law.
In applying subparagraph (A)(i)—
(i) the ground of approval described in section 1395w–25(a)(2)(B) of this title is deemed to have been met if the State does not have a licensing process in effect with respect to the PDP sponsor; and
(ii) for plan years beginning before January 1, 2008, if the State does have such a licensing process in effect, such ground for approval described in such section is deemed to have been met upon submission of an application described in such section.
With respect to an application for a waiver (or a waiver granted) under paragraph (1)(A) of this subsection, the provisions of subparagraphs (E), (F), and (G) of section 1395w–25(a)(2) of this title shall apply, except that clauses (i) and (ii) of such subparagraph (E) shall not apply in the case of a State that does not have a licensing process described in paragraph (2)(B)(i) in effect.
In applying provisions of section 1395w–25(a)(2) of this title under paragraphs (2) and (3) of this subsection to prescription drug plans and PDP sponsors—
(A) any reference to a waiver application under section 1395w–25 of this title shall be treated as a reference to a waiver application under paragraph (1)(A) of this subsection; and
(B) any reference to solvency standards shall be treated as a reference to solvency standards established under subsection (d) of this section.
The Secretary, in consultation with the National Association of Insurance Commissioners, shall establish and publish, by not later than January 1, 2005, financial solvency and capital adequacy standards for entities described in paragraph (2).
A PDP sponsor that is not licensed by a State under subsection (a)(1) and for which a waiver application has been approved under subsection (c) shall meet solvency and capital adequacy standards established under paragraph (1). The Secretary shall establish certification procedures for such sponsors with respect to such solvency standards in the manner described in section 1395w–25(c)(2) of this title.
The fact that a PDP sponsor is licensed in accordance with subsection (a)(1) or has a waiver application approved under subsection (c) does not deem the sponsor to meet other requirements imposed under this part for a sponsor.
Subject to paragraph (2), the Secretary may periodically review the standards established under this section and, based on such review, may revise such standards if the Secretary determines such revision to be appropriate.
The Secretary may not implement, other than at the beginning of a calendar year, regulations under this section that impose new, significant regulatory requirements on a PDP sponsor or a prescription drug plan.
The provisions of sections 1395w–24(g) and 1395w–26(b)(3) of this title shall apply with respect to PDP sponsors and prescription drug plans under this part in the same manner as such sections apply to MA organizations and MA plans under part C.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–12, as added Pub. L. 108–173, title I, §101(a)(2), Dec. 8, 2003, 117 Stat. 2099; amended Pub. L. 110–275, title I, §§171(a), 172(a)(1), 173(a), 181, July 15, 2008, 122 Stat. 2578, 2580–2582; Pub. L. 115–271, title II, §2008(a), Oct. 24, 2018, 132 Stat. 3931; Pub. L. 117–169, title I, §11001(b)(1)(F)(i), (H)(i), Aug. 16, 2022, 136 Stat. 1852, 1853.)
2022—Subsec. (b)(3)(D)(i). Pub. L. 117–169, §11001(b)(1)(H)(i), inserted ", or carrying out part E of subchapter XI" after "appropriate)".
Subsec. (b)(8). Pub. L. 117–169, §11001(b)(1)(F)(i), added par. (8).
2018—Subsec. (b)(7). Pub. L. 115–271 added par. (7).
2008—Subsec. (b)(3)(D). Pub. L. 110–275, §181, inserted at end "Notwithstanding any other provision of law, information provided to the Secretary under the application of section 1395w–27(e)(1) of this title to contracts under this section under the preceding sentence—" and added cls. (i) and (ii).
Subsec. (b)(4). Pub. L. 110–275, §171(a), added par. (4).
Subsec. (b)(5). Pub. L. 110–275, §172(a)(1), added par. (5).
Subsec. (b)(6). Pub. L. 110–275, §173(a), added par. (6).
Amendment by section 2008(a) of Pub. L. 115–271 applicable with respect to plan years beginning on or after Jan. 1, 2020, see section 2008(e) of Pub. L. 115–271, set out as a note under section 1395w–27 of this title.
Amendment by section 171(a) of Pub. L. 110–275 applicable to plan years beginning on or after Jan. 1, 2010, see section 171(c) of Pub. L. 110–275, set out as a note under section 1395w–27 of this title.
Amendment by section 172(a)(1) of Pub. L. 110–275 applicable to plan years beginning on or after Jan. 1, 2010, see section 172(b) of Pub. L. 110–275, set out as a note under section 1395w–27 of this title.
Amendment by section 173(a) of Pub. L. 110–275 applicable to plan years beginning on or after Jan. 1, 2009, see section 173(c) of Pub. L. 110–275, set out as a note under section 1395w–27 of this title.
1 So in original. Probably should not be capitalized.
The monthly beneficiary premium for a prescription drug plan is the base beneficiary premium computed under paragraph (2) or (8) (as applicable) as adjusted under this paragraph.
If for a month the amount of the standardized bid amount (as defined in paragraph (5)) exceeds the amount of the adjusted national average monthly bid amount (as defined in clause (iii)), the base beneficiary premium for the month shall be increased by the amount of such excess.
If for a month the amount of the adjusted national average monthly bid amount for the month exceeds the standardized bid amount, the base beneficiary premium for the month shall be decreased by the amount of such excess.
For purposes of this subparagraph, the term "adjusted national average monthly bid amount" means the national average monthly bid amount computed under paragraph (4), as adjusted under section 1395w–115(c)(2) of this title.
The base beneficiary premium shall be increased by the portion of the PDP approved bid that is attributable to supplemental prescription drug benefits.
The base beneficiary premium shall be increased by the amount of any late enrollment penalty under subsection (b).
The monthly beneficiary premium is subject to decrease in the case of a subsidy eligible individual under section 1395w–114 of this title.
The monthly beneficiary premium shall be increased pursuant to paragraph (7).
Except as provided in subparagraphs (D), (E), and (F), the monthly beneficiary premium for a prescription drug plan in a PDP region is the same for all part D eligible individuals enrolled in the plan.
Subject to paragraph (8), the base beneficiary premium under this paragraph for a prescription drug plan for a month is equal to the product 1 —
(A) the beneficiary premium percentage (as specified in paragraph (3)); and
(B) the national average monthly bid amount (computed under paragraph (4)) for the month.
For purposes of this subsection, the beneficiary premium percentage for any year is the percentage equal to a fraction—
(A) the numerator of which is 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); and
(B) the denominator of which is 100 percent minus a percentage equal to—
(i) the total reinsurance payments which the Secretary estimates are payable under section 1395w–115(b) of this title with respect to the coverage year; divided by
(ii) the sum of—
(I) the amount estimated under clause (i) for the year; and
(II) the total payments which the Secretary estimates will be paid to prescription drug plans and MA–PD plans that are attributable to the standardized bid amount during the year, taking into account amounts paid by the Secretary and enrollees.
For each year (beginning with 2006) the Secretary shall compute a national average monthly bid amount equal to the average of the standardized bid amounts (as defined in paragraph (5)) for each prescription drug plan and for each MA–PD plan described in section 1395w–21(a)(2)(A)(i) of this title. Such average does not take into account the bids submitted for MSA plans, MA private fee-for-service plan, and specialized MA plans for special needs individuals, PACE programs under section 1395eee of this title (pursuant to section 1395w–131(f) of this title), and under reasonable cost reimbursement contracts under section 1395mm(h) of this title (pursuant to section 1395w–131(e) of this title).
The monthly national average monthly bid amount computed under subparagraph (A) for a year shall be a weighted average, with the weight for each plan being equal to the average number of part D eligible individuals enrolled in such plan in the reference month (as defined in section 1395w–27a(f)(4) of this title).
For purposes of applying this paragraph for 2006, the Secretary shall establish procedures for determining the weighted average under clause (i) for 2005.
For purposes of this subsection, the term "standardized bid amount" means the following:
In the case of a prescription drug plan that provides basic prescription drug coverage, the PDP approved bid (as defined in paragraph (6)).
In the case of a prescription drug plan that provides supplemental prescription drug coverage, the portion of the PDP approved bid that is attributable to basic prescription drug coverage.
In the case of an MA–PD plan, the portion of the accepted bid amount that is attributable to basic prescription drug coverage.
For purposes of this part, the term "PDP approved bid" means, with respect to a prescription drug plan, the bid amount approved for the plan under this part.
In the case of an individual whose modified adjusted gross income exceeds the threshold amount applicable under paragraph (2) of section 1395r(i) of this title (including application of paragraph (5) of such section) for the calendar year, the monthly amount of the beneficiary premium applicable under this section for a month after December 2010 shall be increased by the monthly adjustment amount specified in subparagraph (B).
The monthly adjustment amount specified in this subparagraph for an individual for a month in a year is equal to the product of—
(i) the quotient obtained by dividing—
(I) the applicable percentage determined under paragraph (3)(C) of section 1395r(i) of this title (including application of paragraph (5) of such section) for the individual for the calendar year reduced by 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); by
(II) 25.5 percent (or, for 2030 and each subsequent year, the percent specified under paragraph (9)); and
(ii) the base beneficiary premium (as computed under paragraph (2) or (8) (as applicable)).
For purposes of this paragraph, the term "modified adjusted gross income" has the meaning given such term in subparagraph (A) of section 1395r(i)(4) of this title, determined for the taxable year applicable under subparagraphs (B) and (C) of such section.
The Commissioner of Social Security shall make any determination necessary to carry out the income-related increase in the base beneficiary premium under this paragraph.
Not later than September 15 of each year beginning with 2010, the Secretary shall disclose to the Commissioner of Social Security the amount of the base beneficiary premium (as computed under paragraph (2) or (8) (as applicable)) for the purpose of carrying out the income-related increase in the base beneficiary premium under this paragraph with respect to the following year.
Not later than October 15 of each year beginning with 2010, the Secretary shall disclose to the Commissioner of Social Security the following information for the purpose of carrying out the income-related increase in the base beneficiary premium under this paragraph with respect to the following year:
(I) The modified adjusted gross income threshold applicable under paragraph (2) of section 1395r(i) of this title (including application of paragraph (5) of such section).
(II) The applicable percentage determined under paragraph (3)(C) of section 1395r(i) of this title (including application of paragraph (5) of such section).
(III) The monthly adjustment amount specified in subparagraph (B).
(IV) Any other information the Commissioner of Social Security determines necessary to carry out the income-related increase in the base beneficiary premium under this paragraph.
The formula used to determine the monthly adjustment amount specified under subparagraph (B) shall only be used for the purpose of determining such monthly adjustment amount under such subparagraph.
The base beneficiary premium under this paragraph for a prescription drug plan for a month in 2024 through 2029 shall be computed as follows:
The base beneficiary premium for a month in 2024 shall be equal to the lesser of—
(I) the base beneficiary premium computed under paragraph (2) for a month in 2023 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2024 that would have applied if this paragraph had not been enacted.
The base beneficiary premium for a month in 2025 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (i) for a month in 2024 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2025 that would have applied if this paragraph had not been enacted.
The base beneficiary premium for a month in 2026 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (ii) for a month in 2025 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2026 that would have applied if this paragraph had not been enacted.
The base beneficiary premium for a month in 2027 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (iii) for a month in 2026 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2027 that would have applied if this paragraph had not been enacted.
The base beneficiary premium for a month in 2028 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (iv) for a month in 2027 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2028 that would have applied if this paragraph had not been enacted.
The base beneficiary premium for a month in 2029 shall be equal to the lesser of—
(I) the base beneficiary premium computed under clause (v) for a month in 2028 increased by 6 percent; or
(II) the base beneficiary premium computed under paragraph (2) for a month in 2029 that would have applied if this paragraph had not been enacted.
The base beneficiary premium for a month in 2030 or a subsequent year shall be computed under paragraph (2) without regard to this paragraph.
Subject to subparagraph (B), for purposes of paragraph (3)(A), the percent specified under this paragraph for 2030 and each subsequent year is the percent that the Secretary determines is necessary to ensure that the base beneficiary premium computed under paragraph (2) for a month in 2030 is equal to the lesser of—
(i) the base beneficiary premium computed under paragraph (8)(A)(vi) for a month in 2029 increased by 6 percent; or
(ii) the base beneficiary premium computed under paragraph (2) for a month in 2030 that would have applied if this paragraph had not been enacted.
The percent specified under subparagraph (A) may not be less than 20 percent.
Subject to the succeeding provisions of this subsection, in the case of a part D eligible individual described in paragraph (2) with respect to a continuous period of eligibility, there shall be an increase in the monthly beneficiary premium established under subsection (a) in an amount determined under paragraph (3).
A part D eligible individual described in this paragraph is, with respect to a continuous period of eligibility, an individual for whom there is a continuous period of 63 days or longer (all of which in such continuous period of eligibility) beginning on the day after the last date of the individual's initial enrollment period under section 1395w–101(b)(2) of this title and ending on the date of enrollment under a prescription drug plan or MA–PD plan during all of which the individual was not covered under any creditable prescription drug coverage.
The amount determined under this paragraph for a part D eligible individual for a continuous period of eligibility is the greater of—
(i) an amount that the Secretary determines is actuarially sound for each uncovered month (as defined in subparagraph (B)) in the same continuous period of eligibility; or
(ii) 1 percent of the base beneficiary premium (computed under paragraph (2) or (8) of subsection (a) (as applicable)) for each such uncovered month in such period.
For purposes of this subsection, the term "uncovered month" means, with respect to a part D eligible individual, any month beginning after the end of the initial enrollment period under section 1395w–101(b)(2) of this title unless the individual can demonstrate that the individual had creditable prescription drug coverage (as defined in paragraph (4)) for any portion of such month.
For purposes of this part, the term "creditable prescription drug coverage" means any of the following coverage, but only if the coverage meets the requirement of paragraph (5):
Coverage under a prescription drug plan or under an MA–PD plan.
Coverage under a medicaid plan under subchapter XIX or under a waiver under section 1315 of this title.
Coverage under a group health plan, including a health benefits plan under chapter 89 of title 5 (commonly known as the Federal employees health benefits program), and a qualified retiree prescription drug plan (as defined in section 1395w–132(a)(2) of this title).
Coverage under a State pharmaceutical assistance program described in section 1395w–133(b)(1) of this title.
Coverage for veterans, and survivors and dependents of veterans, under chapter 17 of title 38.
Coverage under a medicare supplemental policy under section 1395ss of this title that provides benefits for prescription drugs (whether or not such coverage conforms to the standards for packages of benefits under section 1395ss(p)(1) of this title).
Coverage under chapter 55 of title 10.
Such other coverage as the Secretary determines appropriate.
Coverage meets the requirement of this paragraph only if the coverage is determined (in a manner specified by the Secretary) to provide coverage of the cost of prescription drugs the actuarial value of which (as defined by the Secretary) to the individual equals or exceeds the actuarial value of standard prescription drug coverage (as determined under section 1395w–111(c) of this title).
The Secretary shall establish procedures (including the form, manner, and time) for the documentation of creditable prescription drug coverage, including procedures to assist in determining whether coverage meets the requirement of paragraph (5).
Each entity that offers prescription drug coverage of the type described in subparagraphs (B) through (H) of paragraph (4) shall provide for disclosure, in a form, manner, and time consistent with standards established by the Secretary, to the Secretary and part D eligible individuals of whether the coverage meets the requirement of paragraph (5) or whether such coverage is changed so it no longer meets such requirement.
In the case of such coverage that does not meet such requirement, the disclosure to part D eligible individuals under this subparagraph shall include information regarding the fact that because such coverage does not meet such requirement there are limitations on the periods in a year in which the individuals may enroll under a prescription drug plan or an MA–PD plan and that any such enrollment is subject to a late enrollment penalty under this subsection.
In the case of a part D eligible individual who was enrolled in prescription drug coverage of the type described in subparagraphs (B) through (H) of paragraph (4) which is not creditable prescription drug coverage because it does not meet the requirement of paragraph (5), the individual may apply to the Secretary to have such coverage treated as creditable prescription drug coverage if the individual establishes that the individual was not adequately informed that such coverage did not meet such requirement.
Subject to subparagraph (B), for purposes of this subsection, the term "continuous period of eligibility" means, with respect to a part D eligible individual, the period that begins with the first day on which the individual is eligible to enroll in a prescription drug plan under this part and ends with the individual's death.
Any period during all of which a part D eligible individual is entitled to hospital insurance benefits under part A and—
(i) which terminated in or before the month preceding the month in which the individual attained age 65; or
(ii) for which the basis for eligibility for such entitlement changed between section 426(b) of this title and section 426(a) of this title, between 426(b) 2 of this title and section 426–1 of this title, or between section 426–1 of this title and section 426(a) of this title,
shall be a separate continuous period of eligibility with respect to the individual (and each such period which terminates shall be deemed not to have existed for purposes of subsequently applying this paragraph).
In no case shall a part D eligible individual who is determined to be a subsidy eligible individual (as defined in section 1395w–114(a)(3) of this title) be subject to an increase in the monthly beneficiary premium established under subsection (a).
Subject to paragraphs (2), (3), and (4), the provisions of section 1395w–24(d) of this title shall apply to PDP sponsors and premiums (and any late enrollment penalty) under this part in the same manner as they apply to MA organizations and beneficiary premiums under part C, except that any reference to a Trust Fund is deemed for this purpose a reference to the Medicare Prescription Drug Account.
With respect to late enrollment penalties imposed under subsection (b), the Secretary shall specify the portion of such a penalty that the Secretary estimates is attributable to increased actuarial costs assumed by the PDP sponsor or MA organization (and not taken into account through risk adjustment provided under section 1395w–115(c)(1) of this title or through reinsurance payments under section 1395w–115(b) of this title) as a result of such late enrollment.
In the case of a late enrollment penalty that is collected from a part D eligible individual in the manner described in section 1395w–24(d)(2)(A) of this title, the Secretary shall provide that only the portion of such penalty estimated under subparagraph (A) shall be paid to the PDP sponsor or MA organization offering the part D plan in which the individual is enrolled.
In the case of a late enrollment penalty that is collected from a part D eligible individual in a manner other than the manner described in section 1395w–24(d)(2)(A) of this title, the Secretary shall establish procedures for reducing payments otherwise made to the PDP sponsor or MA organization by an amount equal to the amount of such penalty less the portion of such penalty estimated under subparagraph (A).
In applying this subsection in the case of a fallback prescription drug plan, paragraph (2) shall not apply and the monthly beneficiary premium shall be collected in the manner specified in section 1395w–24(d)(2)(A) of this title (or such other manner as may be provided under section 1395s of this title in the case of monthly premiums under section 1395r of this title).
Notwithstanding any provision of this subsection or section 1395w–24(d)(2) of this title, subject to subparagraph (B), the amount of the income-related increase in the base beneficiary premium for an individual for a month (as determined under subsection (a)(7)) shall be paid through withholding from benefit payments in the manner provided under section 1395s of this title.
In the case where the monthly benefit payments of an individual that are withheld under subparagraph (A) are insufficient to pay the amount described in such subparagraph, the Commissioner of Social Security shall enter into agreements with the Secretary, the Director of the Office of Personnel Management, and the Railroad Retirement Board as necessary in order to allow other agencies to collect the amount described in subparagraph (A) that was not withheld under such subparagraph.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–13, as added Pub. L. 108–173, title I, §101(a)(2), Dec. 8, 2003, 117 Stat. 2102; amended Pub. L. 110–275, title I, §114(a)(1), July 15, 2008, 122 Stat. 2506; Pub. L. 111–148, title III, §3308(a), (b)(1), Mar. 23, 2010, 124 Stat. 472, 474; Pub. L. 117–169, title I, §11201(d)(1), (2), (3)(C), Aug. 16, 2022, 136 Stat. 1888, 1890.)
2022—Subsec. (a)(1)(A). Pub. L. 117–169, §11201(d)(1)(A)(i), inserted "or (8) (as applicable)" after "paragraph (2)".
Subsec. (a)(2). Pub. L. 117–169, §11201(d)(1)(A)(ii), substituted "Subject to paragraph (8), the base" for "The base" in introductory provisions.
Subsec. (a)(3)(A). Pub. L. 117–169, §11201(d)(2)(A), inserted "(or, for 2030 and each subsequent year, the percent specified under paragraph (9))" after "25.5 percent".
Subsec. (a)(7)(B)(i). Pub. L. 117–169, §11201(d)(3)(C), inserted "(or, for 2030 and each subsequent year, the percent specified under paragraph (9))" after "25.5 percent" in subcls. (I) and (II).
Subsec. (a)(7)(B)(ii). Pub. L. 117–169, §11201(d)(1)(A)(iii)(I), inserted "or (8) (as applicable)" after "paragraph (2)".
Subsec. (a)(7)(E)(i). Pub. L. 117–169, §11201(d)(1)(A)(iii)(II), inserted "or (8) (as applicable)" after "paragraph (2)".
Subsec. (a)(8). Pub. L. 117–169, §11201(d)(1)(A)(iv), added par. (8).
Subsec. (a)(9). Pub. L. 117–169, §11201(d)(2)(B), added par. (9).
Subsec. (b)(3)(A)(ii). Pub. L. 117–169, §11201(d)(1)(B), substituted "paragraph (2) or (8) of subsection (a) (as applicable)" for "subsection (a)(2)".
2010—Subsec. (a)(1)(F), (G). Pub. L. 111–148, §3308(b)(1), added subpar. (F), redesignated former subpar. (F) as (G), and substituted "(D), (E), and (F)" for "(D) and (E)" in subpar. (G).
Subsec. (a)(7). Pub. L. 111–148, §3308(a)(1), added par. (7).
Subsec. (c)(1). Pub. L. 111–148, §3308(a)(2)(A), substituted "(2), (3), and (4)" for "(2) and (3)".
Subsec. (c)(4). Pub. L. 111–148, §3308(a)(2)(B), added par. (4).
2008—Subsec. (b)(8). Pub. L. 110–275 added par. (8).
Pub. L. 110–275, title I, §114(b), July 15, 2008, 122 Stat. 2507, provided that: "The amendments made by this section [amending this section and section 1395w–114 of this title] shall apply to subsidies for months beginning with January 2009."
1 So in original. The word "of" probably should appear after "product".
2 So in original. Probably should be "section 426(b)".
In the case of a subsidy eligible individual (as defined in paragraph (3)) who is determined to have income that is below 135 percent (or, with respect to a plan year beginning on or after January 1, 2024, 150 percent) of the poverty line applicable to a family of the size involved and who meets the resources requirement described in paragraph (3)(D) (or, with respect to a plan year beginning on or after January 1, 2024, paragraph (3)(E)) or who is covered under this paragraph under paragraph (3)(B)(i), the individual is entitled under this section to the following:
An income-related premium subsidy equal to 100 percent of the amount described in subsection (b)(1), but not to exceed the premium amount specified in subsection (b)(2)(B).
A reduction in the annual deductible applicable under section 1395w–102(b)(1) of this title to $0.
For a year preceding 2025, the continuation of coverage from the initial coverage limit (under paragraph (3) of section 1395w–102(b) of this title) for expenditures incurred through the total amount of expenditures at which benefits are available under paragraph (4) of such section, subject to the reduced cost-sharing described in subparagraph (D).
In the case of an individual who is a full-benefit dual eligible individual and who is an institutionalized individual or couple (as defined in section 1396a(q)(1)(B) of this title) or, effective on a date specified by the Secretary (but in no case earlier than January 1, 2012), who would be such an institutionalized individual or couple, if the full-benefit dual eligible individual were not receiving services under a home and community-based waiver authorized for a State under section 1315 of this title or subsection (c) or (d) of section 1396n of this title or under a State plan amendment under subsection (i) of such section or services provided through enrollment in a medicaid managed care organization with a contract under section 1396b(m) of this title or under section 1396u–2 of this title, the elimination of any beneficiary coinsurance described in section 1395w–102(b)(2) of this title (for all amounts through the total amount of expenditures at which benefits are available under section 1395w–102(b)(4) of this title).
Subject to paragraph (6), in the case of an individual not described in clause (i) who is a full-benefit dual eligible individual and whose income does not exceed 100 percent of the poverty line applicable to a family of the size involved, the substitution for the beneficiary coinsurance described in section 1395w–102(b)(2) of this title (for all amounts through the total amount of expenditures at which benefits are available under section 1395w–102(b)(4) of this title) of a copayment amount that does not exceed $1 for a generic drug or a preferred drug that is a multiple source drug (as defined in section 1396r–8(k)(7)(A)(i) of this title) and $3 for any other drug, or, if less, the copayment amount applicable to an individual under clause (iii).
Subject to paragraph (6), in the case of an individual not described in clause (i) or (ii), the substitution for the beneficiary coinsurance described in section 1395w–102(b)(2) of this title (for all amounts through the total amount of expenditures at which benefits are available under section 1395w–102(b)(4) of this title) of a copayment amount that does not exceed the copayment amount specified under section 1395w–102(b)(4)(A)(i)(I)(aa) of this title for the drug and year involved. For plan year 2023 and subsequent plan years, the copayment amount applicable under the preceding sentence to a month's supply of a covered insulin product (as defined in section 1395w–102(b)(9)(C) of this title) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled.
For a year preceding 2024, the elimination of any cost-sharing imposed under section 1395w–102(b)(4)(A) of this title or under section 1395w–102(b)(9) of this title in the case of a covered insulin product (as defined in subparagraph (C) of such section).
With respect to a plan year beginning before January 1, 2024, in the case of a subsidy eligible individual who is not described in paragraph (1), the individual is entitled under this section to the following:
An income-related premium subsidy determined on a linear sliding scale ranging from 100 percent of the amount described in paragraph (1)(A) for individuals with incomes at or below 135 percent of such level to 0 percent of such amount for individuals with incomes at 150 percent of such level.
Subject to paragraphs (8) and (9) of section 1395w–102(b) of this title, a reduction in the annual deductible applicable under section 1395w–102(b)(1) of this title to $50.
The continuation of coverage from the initial coverage limit (under paragraph (3) of section 1395w–102(b) of this title) for expenditures incurred through the total amount of expenditures at which benefits are available under paragraph (4) of such section, subject to the reduced coinsurance described in subparagraph (D).
Subject to paragraph (6), the substitution for the beneficiary coinsurance described in section 1395w–102(b)(2) of this title (for all amounts above the deductible under subparagraph (B) through the total amount of expenditures at which benefits are available under section 1395w–102(b)(4) of this title) of coinsurance of "15 percent" instead of coinsurance of "25 percent" in section 1395w–102(b)(2) of this title. For plan year 2023, the amount of the coinsurance applicable under the preceding sentence to a month's supply of a covered insulin product (as defined in section 1395w–102(b)(9)(C) of this title) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled.
Subject to paragraph (6) of this subsection and subsection (c), the substitution for the cost-sharing imposed under section 1395w–102(b)(4)(A) of this title of a copayment or coinsurance not to exceed the copayment or coinsurance amount specified under section 1395w–102(b)(4)(A)(i)(I)(aa) of this title for the drug and year involved. For plan year 2023, the amount of the copayment or coinsurance applicable under the preceding sentence to a month's supply of a covered insulin product (as defined in section 1395w–102(b)(9)(C) of this title) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled.
For purposes of this part, subject to subparagraph (F), the term "subsidy eligible individual" means a part D eligible individual who—
(i) is enrolled in a prescription drug plan or MA–PD plan;
(ii) has income below 150 percent of the poverty line applicable to a family of the size involved; and
(iii) meets the resources requirement described in subparagraph (D) or (E).
The determination of whether a part D eligible individual residing in a State is a subsidy eligible individual and whether the individual is described in paragraph (1) shall be determined under the State plan under subchapter XIX for the State under section 1396u–5(a) of this title or by the Commissioner of Social Security. There are authorized to be appropriated to the Social Security Administration such sums as may be necessary for the determination of eligibility under this subparagraph.
Determinations under this subparagraph shall be effective beginning with the month in which the individual applies for a determination that the individual is a subsidy eligible individual and shall remain in effect for a period specified by the Secretary, but not to exceed 1 year.
Redeterminations and appeals, with respect to eligibility determinations under clause (i) made under a State plan under subchapter XIX, shall be made in accordance with the frequency of, and manner in which, redeterminations and appeals of eligibility are made under such plan for purposes of medical assistance under such subchapter.
With respect to eligibility determinations under clause (i) made by the Commissioner of Social Security—
(I) redeterminations shall be made at such time or times as may be provided by the Commissioner;
(II) the Commissioner shall establish procedures for appeals of such determinations that are similar to the procedures described in the third sentence of section 1383(c)(1)(A) of this title; and
(III) judicial review of the final decision of the Commissioner made after a hearing shall be available to the same extent, and with the same limitations, as provided in subsections (g) and (h) of section 405 of this title.
Subject to subparagraph (F), the Secretary—
(I) shall provide that part D eligible individuals who are full-benefit dual eligible individuals (as defined in section 1396u–5(c)(6) of this title) or who are recipients of supplemental security income benefits under subchapter XVI shall be treated as subsidy eligible individuals described in paragraph (1); and
(II) may provide that part D eligible individuals not described in subclause (I) who are determined for purposes of the State plan under subchapter XIX to be eligible for medical assistance under clause (i), (iii), or (iv) of section 1396a(a)(10)(E) of this title are treated as being determined to be subsidy eligible individuals described in paragraph (1).
Insofar as the Secretary determines that the eligibility requirements under the State plan for medical assistance referred to in subclause (II) are substantially the same as the requirements for being treated as a subsidy eligible individual described in paragraph (1), the Secretary shall provide for the treatment described in such subclause.
Notwithstanding the preceding provisions of this subparagraph, in the case of an individual whose spouse dies during the effective period for a determination or redetermination that has been made under this subparagraph, such effective period shall be extended through the date that is 1 year after the date on which the determination or redetermination would (but for the application of this clause) otherwise cease to be effective.
For purposes of applying this section—
(i) in the case of a part D eligible individual who is not treated as a subsidy eligible individual under subparagraph (B)(v), income shall be determined in the manner described in section 1396d(p)(1)(B) of this title, without regard to the application of section 1396a(r)(2) of this title and except that support and maintenance furnished in kind shall not be counted as income; and
(ii) the term "poverty line" has the meaning given such term in section 9902(2) of this title, including any revision required by such section.
Nothing in clause (i) shall be construed to affect the application of section 1396a(r)(2) of this title for the determination of eligibility for medical assistance under subchapter XIX.
The resources requirement of this subparagraph is that an individual's resources (as determined under section 1382b of this title for purposes of the supplemental security income program subject to the life insurance policy exclusion provided under subparagraph (G)) do not exceed—
(i) for 2006 three times the maximum amount of resources that an individual may have and obtain benefits under that program; and
(ii) for a subsequent year the resource limitation established under this clause for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any resource limitation established under clause (ii) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
The resources requirement of this subparagraph is that an individual's resources (as determined under section 1382b of this title for purposes of the supplemental security income program subject to the life insurance policy exclusion provided under subparagraph (G)) do not exceed—
(I) for 2006, $10,000 (or $20,000 in the case of the combined value of the individual's assets or resources and the assets or resources of the individual's spouse); and
(II) for a subsequent year the dollar amounts specified in this subclause (or subclause (I)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any dollar amount established under subclause (II) that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
The Secretary, jointly with the Commissioner of Social Security, shall—
(I) develop a model, simplified application form and process consistent with clause (iii) for the determination and verification of a part D eligible individual's assets or resources under this subparagraph; and
(II) provide such form to States.
Under such process—
(I) the application form shall consist of an attestation under penalty of perjury regarding the level of assets or resources (or combined assets and resources in the case of a married part D eligible individual) and valuations of general classes of assets or resources;
(II) such form shall be accompanied by copies of recent statements (if any) from financial institutions in support of the application; and
(III) matters attested to in the application shall be subject to appropriate methods of verification.
The Secretary may permit a State in making eligibility determinations for premium and cost-sharing subsidies under this section to use the same asset or resource methodologies that are used with respect to eligibility for medical assistance for medicare cost-sharing described in section 1396d(p) of this title so long as the Secretary determines that the use of such methodologies will not result in any significant differences in the number of individuals determined to be subsidy eligible individuals.
In the case of a part D eligible individual who is not a resident of the 50 States or the District of Columbia, the individual is not eligible to be a subsidy eligible individual under this section but may be eligible for financial assistance with prescription drug expenses under section 1396u–5(e) of this title.
In determining the resources of an individual (and the eligible spouse of the individual, if any) under section 1382b of this title for purposes of subparagraphs (D) and (E) no part of the value of any life insurance policy shall be taken into account.
The dollar amounts applied under paragraph (1)(D)(ii)—
(i) for 2007 shall be the dollar amounts specified in such paragraph increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year; or
(ii) for a subsequent year shall be the dollar amounts specified in this clause (or clause (i)) for the previous year increased by the annual percentage increase in the consumer price index (all items; U.S. city average) as of September of such previous year.
Any amount established under clause (i) or (ii), that is based on an increase of $1 or $3, that is not a multiple of 5 cents or 10 cents, respectively, shall be rounded to the nearest multiple of 5 cents or 10 cents, respectively.
The dollar amount applied under paragraph (2)(B)—
(i) for 2007 shall be the dollar amount specified in such paragraph increased by the annual percentage increase described in section 1395w–102(b)(6) of this title for 2007; or
(ii) for a subsequent year shall be the dollar amount specified in this clause (or clause (i)) for the previous year increased by the annual percentage increase described in section 1395w–102(b)(6) of this title for the year involved.
Any amount established under clause (i) or (ii) that is not a multiple of $1 shall be rounded to the nearest multiple of $1.
The Secretary shall, under procedures established by the Secretary, permit a prescription drug plan or an MA–PD plan to waive the monthly beneficiary premium for a subsidy eligible individual if the amount of such premium is de minimis. If such premium is waived under the plan, the Secretary shall not reassign subsidy eligible individuals enrolled in the plan to other plans based on the fact that the monthly beneficiary premium under the plan was greater than the low-income benchmark premium amount.
For plan years beginning on or after January 1, 2023, with respect to an adult vaccine recommended by the Advisory Committee on Immunization Practices (as defined in section 1395w–102(b)(8)(B) of this title)—
(A) the deductible under section 1395w–102(b)(1) of this title shall not apply; and
(B) there shall be no cost-sharing under this section with respect to such vaccine.
The premium subsidy amount described in this subsection for a subsidy eligible individual residing in a PDP region and enrolled in a prescription drug plan or MA–PD plan is the low-income benchmark premium amount (as defined in paragraph (2)) for the PDP region in which the individual resides or, if greater, the amount specified in paragraph (3).
For purposes of this subsection, the term "low-income benchmark premium amount" means, with respect to a PDP region in which—
(i) all prescription drug plans are offered by the same PDP sponsor, the weighted average of the amounts described in subparagraph (B)(i) for such plans; or
(ii) there are prescription drug plans offered by more than one PDP sponsor, the weighted average of amounts described in subparagraph (B) for prescription drug plans and MA–PD plans described in section 1395w–21(a)(2)(A)(i) of this title offered in such region.
The premium amounts described in this subparagraph are, in the case of—
(i) a prescription drug plan that is a basic prescription drug plan, the monthly beneficiary premium for such plan;
(ii) a prescription drug plan that provides alternative prescription drug coverage the actuarial value of which is greater than that of standard prescription drug coverage, the portion of the monthly beneficiary premium that is attributable to basic prescription drug coverage; and
(iii) an MA–PD plan, the portion of the MA monthly prescription drug beneficiary premium that is attributable to basic prescription drug benefits (described in section 1395w–22(a)(6)(B)(ii) 1 of this title) and determined before the application of the monthly rebate computed under section 1395w–24(b)(1)(C)(i) of this title for that plan and year involved and, in the case of a qualifying plan, before the application of the increase under section 1395w–23(o) of this title for that plan and year involved.
The premium amounts described in this subparagraph do not include any amounts attributable to late enrollment penalties under section 1395w–113(b) of this title.
In no case shall the premium subsidy amount under this subsection for a PDP region be less than the lowest monthly beneficiary premium for a prescription drug plan that offers basic prescription drug coverage in the region.
The Secretary shall provide a process whereby, in the case of a part D eligible individual who is determined to be a subsidy eligible individual and who is enrolled in a prescription drug plan or is enrolled in an MA–PD plan—
(A) the Secretary provides for a notification of the PDP sponsor or the MA organization offering the plan involved that the individual is eligible for a subsidy and the amount of the subsidy under subsection (a);
(B) the sponsor or organization involved reduces the premiums or cost-sharing otherwise imposed by the amount of the applicable subsidy and submits to the Secretary information on the amount of such reduction;
(C) the Secretary periodically and on a timely basis reimburses the sponsor or organization for the amount of such reductions; and
(D) the Secretary ensures the confidentiality of individually identifiable information.
In applying subparagraph (C), the Secretary shall compute reductions based upon imposition under subsections (a)(1)(D) and (a)(2)(E) of unreduced copayment amounts applied under such subsections.
The reimbursement under this section with respect to cost-sharing subsidies may be computed on a capitated basis, taking into account the actuarial value of the subsidies and with appropriate adjustments to reflect differences in the risks actually involved.
Beginning not later than January 1, 2011, the Secretary shall, in the case of a subsidy eligible individual who is enrolled in one prescription drug plan and is subsequently reassigned by the Secretary to a new prescription drug plan, provide the individual, within 30 days of such reassignment, with—
(1) information on formulary differences between the individual's former plan and the plan to which the individual is reassigned with respect to the individual's drug regimens; and
(2) a description of the individual's right to request a coverage determination, exception, or reconsideration under section 1395w–104(g) of this title, bring an appeal under section 1395w–104(h) of this title, or resolve a grievance under section 1395w–104(f) of this title.
Beginning not later than January 1, 2024, the Secretary shall carry out a program to provide transitional coverage for covered part D drugs for LI NET eligible individuals in accordance with this subsection.
For purposes of this subsection, the term "LI NET eligible individual" means a part D eligible individual who—
(A) meets the requirements of clauses (ii) and (iii) of subsection (a)(3)(A); and
(B) has not yet enrolled in a prescription drug plan or an MA–PD plan, or, who has so enrolled, but with respect to whom coverage under such plan has not yet taken effect.
For purposes of this subsection, the term "transitional coverage" means with respect to an LI NET eligible individual—
(A) immediate access to covered part D drugs at the point of sale during the period that begins on the first day of the month such individual is determined to meet the requirements of clauses (ii) and (iii) of subsection (a)(3)(A) and ends on the date that coverage under a prescription drug plan or MA–PD plan takes effect with respect to such individual; and
(B) in the case of an LI NET eligible individual who is a full-benefit dual eligible individual (as defined in section 1396u–5(c)(6) of this title) or a recipient of supplemental security income benefits under subchapter XVI, retroactive coverage (in the form of reimbursement of the amounts that would have been paid under this part had such individual been enrolled in a prescription drug plan or MA–PD plan) of covered part D drugs purchased by such individual during the period that begins on the date that is the later of—
(i) the date that such individual was first eligible for a low-income subsidy under this part; or
(ii) the date that is 36 months prior to the date such individual enrolls in a prescription drug plan or MA–PD plan,
and ends on the date that coverage under such plan takes effect.
The Secretary shall, as determined appropriate by the Secretary, administer the program under this subsection through a contract with a single program administrator.
The Secretary shall ensure that the transitional coverage provided to LI NET eligible individuals under this subsection—
(i) provides access to all covered part D drugs under an open formulary;
(ii) permits all pharmacies determined by the Secretary to be in good standing to process claims under the program;
(iii) is consistent with such requirements as the Secretary considers necessary to improve patient safety and ensure appropriate dispensing of medication; and
(iv) meets such other requirements as the Secretary may establish.
The following provisions shall not apply with respect to the program under this subsection:
(i) Paragraphs (1) and (3)(B) of section 1395w–104(a) of this title (relating to dissemination of general information; availability of information on changes in formulary through the internet).
(ii) Subparagraphs (A) and (B) of section 1395w–104(b)(3) of this title (relating to requirements on development and application of formularies; formulary development).
(iii) Paragraphs (1)(C) and (2) of section 1395w–104(c) of this title (relating to medication therapy management program).
The Secretary may waive such other requirements of subchapter XI and this subchapter as may be necessary to carry out the purposes of the program established under this subsection.
The authority vested in the Secretary by this subsection may be performed without regard to such provisions of law or regulations relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the furtherance of the purpose of this subchapter.
For special provisions under the medicaid program relating to medicare prescription drug benefits, see section 1396u–5 of this title.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14, as added Pub. L. 108–173, title I, §101(a)(2), Dec. 8, 2003, 117 Stat. 2107; amended Pub. L. 110–275, title I, §§114(a)(2), 116(a), 117(a), July 15, 2008, 122 Stat. 2506, 2507; Pub. L. 111–148, title III, §§3302(a), 3303(a), 3304(a), 3305, 3309, Mar. 23, 2010, 124 Stat. 468–470, 475; Pub. L. 111–152, title I, §1102(c)(4), Mar. 30, 2010, 124 Stat. 1045; Pub. L. 116–260, div. CC, title I, §118, Dec. 27, 2020, 134 Stat. 2950; Pub. L. 117–169, title I, §§11201(e)(3), 11401(b), 11404, 11406(b), Aug. 16, 2022, 136 Stat. 1891, 1897, 1899, 1903.)
2022—Subsec. (a). Pub. L. 117–169, §11404(1), substituted "certain individuals" for "individuals with income up to 150 percent of poverty line" in heading.
Subsec. (a)(1). Pub. L. 117–169, §11404(2), substituted "Individuals with certain low incomes" for "Individuals with income below 135 percent of poverty line" in heading and, in introductory provisions, inserted "(or, with respect to a plan year beginning on or after January 1, 2024, 150 percent)" after "135 percent" and "(or, with respect to a plan year beginning on or after January 1, 2024, paragraph (3)(E))" after "the resources requirement described in paragraph (3)(D)".
Subsec. (a)(1)(C). Pub. L. 117–169, §11201(e)(3)(A)(i), substituted "For a year preceding 2025, the continuation" for "The continuation".
Subsec. (a)(1)(D)(ii). Pub. L. 117–169, §11401(b)(1), substituted "Subject to paragraph (6), in the case" for "In the case".
Subsec. (a)(1)(D)(iii). Pub. L. 117–169, §11406(b)(1)(A), inserted at end "For plan year 2023 and subsequent plan years, the copayment amount applicable under the preceding sentence to a month's supply of a covered insulin product (as defined in section 1395w–102(b)(9)(C) of this title) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled."
Pub. L. 117–169, §11401(b)(1), substituted "Subject to paragraph (6), in the case" for "In the case".
Pub. L. 117–169, §11201(e)(3)(A)(ii), substituted "1395w–102(b)(4)(A)(i)(I)(aa)" for "1395w–102(b)(4)(A)(i)(I)".
Subsec. (a)(1)(E). Pub. L. 117–169, §11406(b)(1)(B), inserted before period at end "or under section 1395w–102(b)(9) of this title in the case of a covered insulin product (as defined in subparagraph (C) of such section)".
Pub. L. 117–169, §11201(e)(3)(A)(iii), substituted "For a year preceding 2024, the elimination" for "The elimination".
Subsec. (a)(2). Pub. L. 117–169, §11404(3), substituted "Other low-income individuals" for "Other individuals with income below 150 percent of poverty line" in heading and "With respect to a plan year beginning before January 1, 2024, in the case of a subsidy" for "In the case of a subsidy" in introductory provisions.
Subsec. (a)(2)(B). Pub. L. 117–169, §11406(b)(2)(A), substituted "paragraphs (8) and (9) of section 1395w–102(b)" for "section 1395w–102(b)(8)".
Pub. L. 117–169, §11401(b)(2)(A), substituted "Subject to section 1395w–102(b)(8) of this title, a reduction" for "A reduction".
Subsec. (a)(2)(D). Pub. L. 117–169, §11406(b)(2)(B), inserted at end "For plan year 2023, the amount of the coinsurance applicable under the preceding sentence to a month's supply of a covered insulin product (as defined in section 1395w–102(b)(9)(C) of this title) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled."
Pub. L. 117–169, §11401(b)(2)(B), substituted "Subject to paragraph (6), the substitution" for "The substitution".
Subsec. (a)(2)(E). Pub. L. 117–169, §11406(b)(2)(C), inserted at end "For plan year 2023, the amount of the copayment or coinsurance applicable under the preceding sentence to a month's supply of a covered insulin product (as defined in section 1395w–102(b)(9)(C) of this title) dispensed to the individual may not exceed the applicable copayment amount for the product under the prescription drug plan or MA–PD plan in which the individual is enrolled."
Pub. L. 117–169, §11401(b)(2)(C), substituted "paragraph (6) of this subsection and subsection (c)" for "subsection (c)".
Pub. L. 117–169, §11201(e)(3)(B), substituted "1395w–102(b)(4)(A)(i)(I)(aa)" for "1395w–102(b)(4)(A)(i)(I)".
Subsec. (a)(6). Pub. L. 117–169, §11401(b)(3), added par. (6).
2020—Subsecs. (e), (f). Pub. L. 116–260 added subsec. (e) and redesignated former subsec. (e) as (f).
2010—Subsec. (a)(1)(D)(i). Pub. L. 111–148, §3309, inserted "or, effective on a date specified by the Secretary (but in no case earlier than January 1, 2012), who would be such an institutionalized individual or couple, if the full-benefit dual eligible individual were not receiving services under a home and community-based waiver authorized for a State under section 1315 of this title or subsection (c) or (d) of section 1396n of this title or under a State plan amendment under subsection (i) of such section or services provided through enrollment in a medicaid managed care organization with a contract under section 1396b(m) of this title or under section 1396u–2 of this title" after "1396a(q)(1)(B) of this title)".
Subsec. (a)(3)(B)(vi). Pub. L. 111–148, §3304(a), added cl. (vi).
Subsec. (a)(5). Pub. L. 111–148, §3303(a), added par. (5).
Subsec. (b)(2)(B)(iii). Pub. L. 111–152 substituted "and determined before the application of the monthly rebate computed under section 1395w–24(b)(1)(C)(i) of this title for that plan and year involved and, in the case of a qualifying plan, before the application of the increase under section 1395w–23(o) of this title for that plan and year involved" for ", determined without regard to any reduction in such premium as a result of any beneficiary rebate under section 1395w–24(b)(1)(C) of this title or bonus payment under section 1395w–23(n) of this title".
Pub. L. 111–148, §3302(a), inserted ", determined without regard to any reduction in such premium as a result of any beneficiary rebate under section 1854(b)(1)(C) or bonus payment under section 1395w–23(n) of this title" before period at end.
Subsecs. (d), (e). Pub. L. 111–148, §3305, added subsec. (d) and redesignated former subsec. (d) as (e).
2008—Subsec. (a)(1)(A). Pub. L. 110–275, §114(a)(2), substituted "equal to 100 percent of the amount described in subsection (b)(1), but not to exceed the premium amount specified in subsection (b)(2)(B)." for "equal to—
"(i) 100 percent of the amount described in subsection (b)(1) of this section, but not to exceed the premium amount specified in subsection (b)(2)(B) of this section; plus
"(ii) 80 percent of any late enrollment penalties imposed under section 1395w–113(b) of this title for the first 60 months in which such penalties are imposed for that individual, and 100 percent of any such penalties for any subsequent month."
Subsec. (a)(3)(B)(iv)(III). Pub. L. 110–275, §117(a), added subcl. (III).
Subsec. (a)(3)(C)(i). Pub. L. 110–275, §116(a)(1), inserted "and except that support and maintenance furnished in kind shall not be counted as income" after "section 1396a(r)(2) of this title".
Subsec. (a)(3)(D), (E)(i). Pub. L. 110–275, §116(a)(2), (3), inserted "subject to the life insurance policy exclusion provided under subparagraph (G)" after "program" in introductory provisions.
Subsec. (a)(3)(G). Pub. L. 110–275, §116(a)(4), added subpar. (G).
Pub. L. 111–148, title III, §3302(b), Mar. 23, 2010, 124 Stat. 468, provided that: "The amendment made by subsection (a) [amending this section] shall apply to premiums for months beginning on or after January 1, 2011."
Amendment by section 3303(a) of Pub. L. 111–148 applicable to premiums for months, and enrollments for plan years, beginning on or after January 1, 2011, see section 3303(c) of Pub. L. 111–148, set out as a note under section 1395w–101 of this title.
Pub. L. 111–148, title III, §3304(b), Mar. 23, 2010, 124 Stat. 470, provided that: "The amendment made by subsection (a) [amending this section] shall take effect on January 1, 2011."
Amendment by section 114(a)(2) of Pub. L. 110–275 applicable to subsidies for months beginning with Jan. 2009, see section 114(b) of Pub. L. 110–275, set out as a note under section 1395w–113 of this title.
Pub. L. 110–275, title I, §116(b), July 15, 2008, 122 Stat. 2507, provided that: "The amendments made by this section [amending this section] shall take effect with respect to applications filed on or after January 1, 2010."
Pub. L. 110–275, title I, §117(b), July 15, 2008, 122 Stat. 2507, provided that: "The amendments made by subsection (a) [amending this section] shall take effect as if included in the enactment of section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 [Pub. L. 108–173]."
Nothing in amendment by section 11401(b) of Pub. L. 117–169 to be construed as limiting coverage under this part for vaccines that are not recommended by the Advisory Committee on Immunization Practices, see section 11401(d) of Pub. L. 117–169, set out as a note under section 1395w–102 of this title.
Pub. L. 108–173, title I, §107(e), Dec. 8, 2003, 117 Stat. 2171, provided that:
"(1)
"(2)
1 So in original. Section 1395w–22(a)(6) of this title does not contain a subpar. (B).
Subject to subsection (h), the Secretary shall establish a Medicare coverage gap discount program (in this section referred to as the "program") by not later than January 1, 2011. 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)(1). The Secretary shall establish a model agreement for use under the program by not later than 180 days after March 23, 2010, in consultation with manufacturers, and allow for comment on such model agreement.
An agreement under this section shall require the manufacturer to provide applicable beneficiaries access to discounted prices for applicable drugs of the manufacturer.
Except as provided in subsection (c)(1)(A)(iii), such discounted prices 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.
In order for an agreement with a manufacturer to be in effect under this section with respect to the period beginning on January 1, 2011, and ending on December 31, 2011, the manufacturer shall enter into such agreement not later than not later than 1 30 days after the date of the establishment of a model agreement under subsection (a).
In order for an agreement with a manufacturer to be in effect under this section with respect to plan year 2012 or a subsequent plan year, the manufacturer shall enter into such agreement (or such agreement shall be renewed under paragraph (4)(A)) not later than January 30 of the preceding year.
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.
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 clause (i) of subsection (c)(1)(A) or procedures established under such subsection (c)(1)(A).
An agreement under this section shall be effective for an initial period of not less than 18 months and shall be automatically renewed for a period of not less than 1 year unless terminated under subparagraph (B).
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.
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.
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.
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.
The duties described in this subsection are the following:
Administering the program, including—
(i) the determination of the amount of the discounted price of an applicable drug of a manufacturer;
(ii) except as provided in clause (iii), 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;
(iii) in the case where, during the period beginning on January 1, 2011, and ending on December 31, 2011, it is not practicable to provide such discounted prices at the point-of-sale (as described in clause (ii)), the establishment of procedures to provide such discounted prices as soon as practicable after the point-of-sale;
(iv) 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;
(v) 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;
(vi) the establishment of procedures to implement the special rule for supplemental benefits under paragraph (2); and
(vii) providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, applicable beneficiaries, and the third party with a contract under subsection (d)(3).
The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.
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).
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.
For plan year 2011 and each subsequent plan year, in the case where an applicable beneficiary has supplemental benefits with respect to applicable drugs under the prescription drug plan or MA–PD plan that the applicable beneficiary is enrolled in, the applicable beneficiary shall not be provided a discounted price for an applicable drug under this section until after such supplemental benefits have been applied with respect to the applicable drug.
Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c)(1).
Subject to subparagraph (B), in providing for such implementation, the Secretary shall not receive or distribute any funds of a manufacturer under the program.
The limitation under subparagraph (A) shall not apply to the Secretary with respect to drugs dispensed during the period beginning on January 1, 2011, and ending on December 31, 2011, but only if the Secretary determines that the exception to such limitation under this subparagraph is necessary in order for the Secretary to begin implementation of this section and provide applicable beneficiaries timely access to discounted prices during such period.
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.
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.
The Secretary may implement the program under this section by program instruction or otherwise.
Chapter 35 of title 44 shall not apply to the program under this section.
Each manufacturer with an agreement in effect under this section shall be subject to periodic audit by the Secretary.
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.
The provisions of section 1320a–7a of this title (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 1320a–7a(a) of this title.
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).
In this section:
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;
(C) is not entitled to an income-related subsidy under section 1395w–114(a) of this title; and
(D) who—
(i) has reached or exceeded the initial coverage limit under section 1395w–102(b)(3) of this title during the year; and
(ii) has not incurred costs for covered part D drugs in the year equal to the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B) of this title.
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 355(b) of title 21 or, in the case of a biologic product, licensed under section 262 of this title (other than, with respect to a plan year before 2019, a product licensed under subsection (k) of such section 262); 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.
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.
The term "discounted price" means 50 percent (or, with respect to a plan year after plan year 2018, 30 percent) of the negotiated price of the applicable drug of a manufacturer.
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.
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall at or above the initial coverage limit under section 1395w–102(b)(3) of this title and below the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B) of this title for the year, the manufacturer of the applicable drug shall provide the discounted price under this section on only the portion of the negotiated price of the applicable drug that falls at or above such initial coverage limit and below such annual out-of-pocket threshold.
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.
The term "negotiated price" has the meaning given such term in section 423.100 of title 42, Code of Federal Regulations (as in effect on March 23, 2010), except that such negotiated price shall not include any dispensing fee for the applicable drug.
The term "qualified retiree prescription drug plan" has the meaning given such term in section 1395w–132(a)(2) of this title.
The program shall not apply with respect to applicable drugs dispensed on or after January 1, 2025, and, subject to paragraph (2), agreements under this section shall be terminated as of such date.
The provisions of this section (including all responsibilities and duties) shall continue to apply on and after January 1, 2025, with respect to applicable drugs dispensed prior to such date.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14A, as added Pub. L. 111–148, title III, §3301(b), Mar. 23, 2010, 124 Stat. 462; amended Pub. L. 111–152, title I, §1101(b)(2), Mar. 30, 2010, 124 Stat. 1037; Pub. L. 115–123, div. E, title XII, §§53113, 53116(b), Feb. 9, 2018, 132 Stat. 305, 307; Pub. L. 117–169, title I, §11201(c)(2), Aug. 16, 2022, 136 Stat. 1888.)
2022—Subsec. (a). Pub. L. 117–169, §11201(c)(2)(A), substituted "Subject to subsection (h), the Secretary" for "The Secretary".
Subsec. (h). Pub. L. 117–169, §11201(c)(2)(B), added subsec. (h).
2018—Subsec. (g)(2)(A). Pub. L. 115–123, §53113, inserted ", with respect to a plan year before 2019," after "other than".
Subsec. (g)(4)(A). Pub. L. 115–123, §53116(b), inserted "(or, with respect to a plan year after plan year 2018, 30 percent)" after "50 percent".
2010—Subsec. (a). Pub. L. 111–152, §1101(b)(2)(A), substituted "January 1, 2011" for "July 1, 2010" and "180 days after March 23, 2010" for "April 1, 2010".
Subsec. (b)(1)(C)(i). Pub. L. 111–152, §1101(b)(2)(B)(i), which directed the amendment of subpar. (C) by striking out "2010 and" in the heading, was executed by striking "2010 and" before "2011" in cl. (i) heading to reflect the probable intent of Congress.
Pub. L. 111–152, §1101(b)(2)(B)(ii), (iii), substituted "January 1, 2011" for "July 1, 2010" and "not later than 30 days after the date of the establishment of a model agreement under subsection (a)" for "May 1, 2010".
Subsec. (c)(1)(A)(iii). Pub. L. 111–152, §1101(b)(2)(C)(i), substituted "January 1, 2011, and ending on December 31, 2011" for "July 1, 2010, and ending on December 31, 2011".
Subsec. (c)(2). Pub. L. 111–152, §1101(b)(2)(C)(ii), substituted "2011" for "2010".
Subsec. (d)(2)(B). Pub. L. 111–152, §1101(b)(2)(D), substituted "January 1, 2011, and ending on December 31, 2011" for "July 1, 2010, and ending on December 31, 2010".
Subsec. (g)(1). Pub. L. 111–152, §1101(b)(2)(E)(i), substituted "a covered part D drug" for "an applicable drug" in introductory provisions.
Subsec. (g)(1)(C) to (E). Pub. L. 111–152, §1101(b)(2)(E)(ii)–(iv), inserted "and" at end of subpar. (C), redesignated subpar. (E) as (D), and struck out former subpar. (D) which read as follows: "is not subject to a reduction in premium subsidy under section 1395r(i) of this title; and".
1 So in original. Second "not later than" probably should not appear.
Not later than 9 months after the end of each applicable period (as defined in subsection (g)(7)), subject to paragraph (3), the Secretary shall, for each part D rebatable drug, report to each manufacturer of such part D rebatable drug the following for such period:
(A) The amount (if any) of the excess annual manufacturer price increase described in subsection (b)(1)(A)(ii) for each dosage form and strength with respect to such drug and period.
(B) The rebate amount specified under subsection (b) for each dosage form and strength with respect to such drug and period.
For each applicable period, the manufacturer of a part D rebatable drug, for each dosage form and strength with respect to such drug, not later than 30 days after the date of receipt from the Secretary of the information described in paragraph (1) for such period, shall provide to the Secretary a rebate that is equal to the amount specified in subsection (b) for such dosage form and strength with respect to such drug for such period.
The Secretary may, for each rebatable covered part D drug, delay the timeframe for reporting the information and rebate amount described in subparagraphs (A) and (B) of such paragraph for the applicable periods beginning October 1, 2022, and October 1, 2023, until not later than December 31, 2025.
For purposes of this section, the amount specified in this subsection for a dosage form and strength with respect to a part D rebatable drug and applicable period is, subject to subparagraph (C), paragraph (5)(B), and paragraph (6), the estimated amount equal to the product of—
(i) subject to subparagraph (B) of this paragraph, the total number of units of such dosage form and strength for each rebatable covered part D drug dispensed under this part during the applicable period; and
(ii) the amount (if any) by which—
(I) the annual manufacturer price (as determined in paragraph (2)) paid for such dosage form and strength with respect to such part D rebatable drug for the period; exceeds
(II) the inflation-adjusted payment amount determined under paragraph (3) for such dosage form and strength with respect to such part D rebatable drug for the period.
For purposes of subparagraph (A)(i), beginning with plan year 2026, the Secretary shall exclude from the total number of units for a dosage form and strength with respect to a part D rebatable drug, with respect to an applicable period, units of each dosage form and strength of such part D rebatable drug for which the manufacturer provides a discount under the program under section 256b of this title.
The Secretary shall reduce or waive the amount under subparagraph (A) with respect to a part D rebatable drug and an applicable period—
(i) in the case of a part D rebatable drug that is described as currently in shortage on the shortage list in effect under section 356e of title 21 at any point during the applicable period;
(ii) in the case of a generic part D rebatable drug (described in subsection (g)(1)(C)(ii)) or a biosimilar (defined as a biological product licensed under section 262(k) of this title), when the Secretary determines there is a severe supply chain disruption during the applicable period, such as that caused by a natural disaster or other unique or unexpected event; and
(iii) in the case of a generic Part 1 D rebatable drug (as so described), if the Secretary determines that without such reduction or waiver, the drug is likely to be described as in shortage on such shortage list during a subsequent applicable period.
The annual manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—
(A) the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of such period; and
(B) the ratio of—
(i) the total number of units of such dosage form and strength reported under section 1396r–8 of this title with respect to each such calendar quarter of such period; to
(ii) the total number of units of such dosage form and strength reported under section 1396r–8 of this title with respect to such period, as determined by the Secretary.
The inflation-adjusted payment amount determined under this paragraph for a dosage form and strength with respect to a part D rebatable drug for an applicable period, subject to paragraph (5), is—
(A) the benchmark period manufacturer price determined under paragraph (4) for such dosage form and strength with respect to such drug and period; increased by
(B) the percentage by which the applicable period CPI–U (as defined in subsection (g)(5)) for the period exceeds the benchmark period CPI–U (as defined in subsection (g)(4)).
The benchmark period manufacturer price determined under this paragraph for a dosage form and strength, with respect to a part D rebatable drug and an applicable period, is the sum of the products of—
(A) the average manufacturer price (as defined in subsection (g)(6)) of such dosage form and strength, as calculated for a unit of such drug, with respect to each of the calendar quarters of the payment amount benchmark period (as defined in subsection (g)(3)); and
(B) the ratio of—
(i) the total number of units reported under section 1396r–8 of this title of such dosage form and strength with respect to each such calendar quarter of such payment amount benchmark period; to
(ii) the total number of units reported under section 1396r–8 of this title of such dosage form and strength with respect to such payment amount benchmark period.
In the case of a part D rebatable drug first approved or licensed by the Food and Drug Administration after October 1, 2021, subparagraphs (A) and (B) of paragraph (4) shall be applied as if the term "payment amount benchmark period" were defined under subsection (g)(3) as the first calendar year beginning after the day on which the drug was first marketed and subparagraph (B) of paragraph (3) shall be applied as if the term "benchmark period CPI–U" were defined under subsection (g)(4) as if the reference to "January 2021" under such subsection were a reference to "January of the first year beginning after the date on which the drug was first marketed".
In the case of a part D rebatable drug that is a line extension of a part D rebatable drug that is an oral solid dosage form, the Secretary shall establish a formula for determining the rebate amount under paragraph (1) and the inflation adjusted payment amount under paragraph (3) with respect to such part D rebatable drug and an applicable period, consistent with the formula applied under subsection (c)(2)(C) of section 1396r–8 of this title for determining a rebate obligation for a rebate period under such section.
In this subparagraph, the term "line extension" means, with respect to a part D rebatable drug, a new formulation of the drug, such as an extended release formulation, but does not include an abuse-deterrent formulation of the drug (as determined by the Secretary), regardless of whether such abuse-deterrent formulation is an extended release formulation.
In the case of a part D rebatable drug that is a selected drug (as defined in section 1320f–1(c) of this title) with respect to a price applicability period (as defined in section 1320f(b)(2) of this title), in the case such drug is no longer considered to be a selected drug under section 1320f–1(c) of this title, for each applicable period (as defined under subsection (g)(7)) beginning after the price applicability period with respect to such drug, subparagraphs (A) and (B) of paragraph (4) shall be applied as if the term "payment amount benchmark period" were defined under subsection (g)(3) as the last year beginning during such price applicability period with respect to such selected drug and subparagraph (B) of paragraph (3) shall be applied as if the term "benchmark period CPI–U" were defined under subsection (g)(4) as if the reference to "January 2021" under such subsection were a reference to "January of the last year beginning during such price applicability period with respect to such drug".
The Secretary shall provide for a method and process under which, in the case where a PDP sponsor of a prescription drug plan or an MA organization offering an MA–PD plan submits revisions to the number of units of a rebatable covered part D drug dispensed, the Secretary determines, pursuant to such revisions, adjustments, if any, to the calculation of the amount specified in this subsection for a dosage form and strength with respect to such part D rebatable drug and an applicable period and reconciles any overpayments or underpayments in amounts paid as rebates under this subsection. Any identified underpayment shall be rectified by the manufacturer not later than 30 days after the date of receipt from the Secretary of information on such underpayment.
Amounts paid as rebates under subsection (b) shall be deposited into the Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund established under section 1395t of this title.
For purposes of carrying out this section, the Secretary shall use information submitted by—
(1) manufacturers under section 1396r–8(b)(3) of this title;
(2) States under section 1396r–8(b)(2)(A) of this title; and
(3) PDP sponsors of prescription drug plans and MA organization offering MA–PD plans under this part.
If a manufacturer of a part D rebatable drug has failed to comply with the requirement under subsection (a)(2) with respect to such drug for an applicable period, the manufacturer shall be subject to a civil money penalty in an amount equal to 125 percent of the amount specified in subsection (b) for such drug for such period. The provisions of section 1320a–7a of this title (other than subsections (a) (with respect to amounts of penalties or additional assessments) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under section 1320a–7a(a) of this title.
There shall be no administrative or judicial review of any of the following:
(1) The determination of units under this section.
(2) The determination of whether a drug is a part D rebatable drug under this section.
(3) The calculation of the rebate amount under this section.
In this section:
Except as provided in subparagraph (B), the term "part D rebatable drug" means, with respect to an applicable period, a drug or biological described in subparagraph (C) that is a covered part D drug (as such term is defined under section 1395w–102(e) of this title).
Such term shall, with respect to an applicable period, not include a drug or biological if the average annual total cost under this part for such period per individual who uses such a drug or biological, as determined by the Secretary, is less than, subject to clause (ii), $100, as determined by the Secretary using the most recent data available or, if data is not available, as estimated by the Secretary.
The dollar amount applied under clause (i)—
(I) for the applicable period beginning October 1, 2023, shall be the dollar amount specified under such clause for the applicable period beginning October 1, 2022, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of 2023; and
(II) for a subsequent applicable period, shall be the dollar amount specified in this clause for the previous applicable period, increased by the percentage increase in the consumer price index for all urban consumers (United States city average) for the 12-month period beginning with October of the previous period.
Any dollar amount specified under this clause that is not a multiple of $10 shall be rounded to the nearest multiple of $10.
A drug or biological described in this subparagraph is a drug or biological that, as of the first day of the applicable period involved, is—
(i) a drug approved under a new drug application under section 355(c) of title 21;
(ii) a drug approved under an abbreviated new drug application under section 355(j) of title 21, in the case where—
(I) the reference listed drug approved under section 355(c) of title 21, including any "authorized generic drug" (as that term is defined in section 355(t)(3) of title 21), is not being marketed, as identified in the Food and Drug Administration's National Drug Code Directory;
(II) there is no other drug approved under section 355(j) of title 21 that is rated as therapeutically equivalent (under the Food and Drug Administration's most recent publication of "Approved Drug Products with Therapeutic Equivalence Evaluations") and that is being marketed, as identified in the Food and Drug Administration's National Drug Code Directory;
(III) the manufacturer is not a "first applicant" during the "180-day exclusivity period", as those terms are defined in section 355(j)(5)(B)(iv) of title 21; and
(IV) the manufacturer is not a "first approved applicant" for a competitive generic therapy, as that term is defined in section 355(j)(5)(B)(v) of title 21; or
(iii) a biological licensed under section 262 of this title.
The term "unit" means, with respect to a part D rebatable drug, the lowest dispensable amount (such as a capsule or tablet, milligram of molecules, or grams) of the part D rebatable drug, as reported under section 1396r–8 of this title.
The term "payment amount benchmark period" means the period beginning January 1, 2021, and ending in the month immediately prior to October 1, 2021.
The term "benchmark period CPI–U" means the consumer price index for all urban consumers (United States city average) for January 2021.
The term "applicable period CPI–U" means, with respect to an applicable period, the consumer price index for all urban consumers (United States city average) for the first month of such applicable period.
The term "average manufacturer price" has the meaning, with respect to a part D rebatable drug of a manufacturer, given such term in section 1396r–8(k)(1) of this title, with respect to a covered outpatient drug of a manufacturer for a rebate period under section 1396r–8 of this title.
The term "applicable period" means a 12-month period beginning with October 1 of a year (beginning with October 1, 2022).
The Secretary shall implement this section for 2022, 2023, and 2024 by program instruction or other forms of program guidance.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14B, as added Pub. L. 117–169, title I, §11102(a), Aug. 16, 2022, 136 Stat. 1871.)
1 So in original. Probably should not be capitalized.
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).
An agreement under this section shall require the manufacturer to provide, in accordance with this section, discounted prices for applicable drugs of the manufacturer that are dispensed to applicable beneficiaries on or after January 1, 2025.
Nothing in this section shall be construed as affecting—
(i) the application of a coinsurance of 25 percent of the negotiated price, as applied under paragraph (2)(A) of section 1395w–102(b) of this title, for costs described in such paragraph; or
(ii) the application of the copayment amount described in paragraph (4)(A) of such section, with respect to costs described in such paragraph.
In order for an agreement with a manufacturer to be in effect under this section with respect to the period beginning on January 1, 2025, and ending on December 31, 2025, the manufacturer shall enter into such agreement not later than March 1, 2024.
In order for an agreement with a manufacturer to be in effect under this section with respect to plan year 2026 or a subsequent plan year, the manufacturer shall enter into such agreement not later than a calendar quarter or semi-annual deadline established by the Secretary.
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.
Each manufacturer with an agreement in effect under this section shall comply with requirements imposed by the Secretary, 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).
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).
The Secretary shall 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.
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 31 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 31 of a plan year, as of the day after the end of the succeeding plan year.
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.
An agreement under this section shall take effect at the start of a calendar quarter or another date specified by the Secretary.
The duties described in this subsection are the following:
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 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;
(C) 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 specified by the Secretary; and
(D) providing a reasonable dispute resolution mechanism to resolve disagreements between manufacturers, prescription drug plans and MA–PD plans, and the Secretary.
The Secretary shall monitor compliance by a manufacturer with the terms of an agreement under this section.
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.
Subject to paragraph (2), the Secretary shall provide for the implementation of this section, including the performance of the duties described in subsection (c).
In providing for the implementation of this section, the Secretary shall not receive or distribute any funds of a manufacturer under the program.
A manufacturer that fails to provide discounted prices for applicable drugs of the manufacturer dispensed to applicable beneficiaries in accordance with an agreement in effect under this section shall be subject to a civil money penalty for each such failure in an amount the Secretary determines is equal to the sum of—
(A) 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
(B) 25 percent of such amount.
The provisions of section 1320a–7a of this title (other than subsections (a) and (b)) shall apply to a civil money penalty under this subsection in the same manner as such provisions apply to a penalty or proceeding under section 1320a–7a(a) of this title.
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).
In this section:
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, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that exceed the annual deductible specified in section 1395w–102(b)(1) of this title.
The term "applicable drug", with respect to an applicable beneficiary—
(A) means a covered part D drug—
(i) approved under a new drug application under section 355(c) of title 21 or, in the case of a biologic product, licensed under section 262 of this title; and
(ii)(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; and
(B) does not include a selected drug (as referred to under section 1320f–1(c) of this title) during a price applicability period (as defined in section 1320f(b)(2) of this title) with respect to such drug.
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.
The term "discounted price" means, subject to subparagraphs (B) and (C), with respect to an applicable drug of a manufacturer dispensed during a year to an applicable beneficiary—
(i) who has not incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year, 90 percent of the negotiated price of such drug; and
(ii) who has incurred such costs, as so determined, in the year that are equal to or exceed such threshold for the year, 80 percent of the negotiated price of such drug.
In the case of an applicable drug of a specified manufacturer (as defined in clause (ii)) that is marketed as of August 16, 2022, and dispensed for an applicable beneficiary who is a subsidy eligible individual (as defined in section 1395w–114(a)(3) of this title), 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.
In this subparagraph, subject to subclause (II), the term "specified manufacturer" means a manufacturer of an applicable drug for which, in 2021—
(aa) the manufacturer had a coverage gap discount agreement under section 1395w–114a of this title;
(bb) the total expenditures for all of the specified drugs of the manufacturer covered by such agreement or agreements for such year and covered under this part during such year represented less than 1.0 percent of the total expenditures under this part for all covered Part 1 D drugs during such year; and
(cc) the total expenditures for all of the specified drugs of the manufacturer that are single source drugs and biological products for which payment may be made under part B during such year represented less than 1.0 percent of the total expenditures under part B for all drugs or biological products for which payment may be made under such part during such year.
For purposes of this clause, the term "specified drug" means, with respect to a specified manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.
The term "specified manufacturer" shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025.
In this subparagraph, the "specified LIS percent" means, with respect to a year—
(I) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has not incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent; and
(ee) for 2029 and each subsequent year, 90 percent; and
(II) for an applicable drug dispensed for an applicable beneficiary described in clause (i) who has incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent;
(ee) for 2029, 90 percent;
(ff) for 2030, 85 percent; and
(gg) for 2031 and each subsequent year, 80 percent.
In the case of an applicable drug of a specified small manufacturer (as defined in clause (ii)) that is marketed as of August 16, 2022, and dispensed for an applicable beneficiary, the term "discounted price" means the specified small manufacturer percent (as defined in clause (iii)) of the negotiated price of the applicable drug of the manufacturer.
In this subparagraph, subject to subclause (III), the term "specified small manufacturer" means a manufacturer of an applicable drug for which, in 2021—
(aa) the manufacturer is a specified manufacturer (as defined in subparagraph (B)(ii)); and
(bb) the total expenditures under part D for any one of the specified small manufacturer drugs of the manufacturer that are covered by the agreement or agreements under section 1395w–114a of this title of such manufacturer for such year and covered under this part during such year are equal to or more than 80 percent of the total expenditures under this part for all specified small manufacturer drugs of the manufacturer that are covered by such agreement or agreements for such year and covered under this part during such year.
For purposes of this clause, the term "specified small manufacturer drugs" means, with respect to a specified small manufacturer, for 2021, an applicable drug that is produced, prepared, propagated, compounded, converted, or processed by the manufacturer.
All persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 shall be treated as one manufacturer for purposes of this subparagraph. For purposes of making a determination pursuant to the previous sentence, an agreement under this section shall require that a manufacturer provide and attest to such information as specified by the Secretary as necessary.
The term "specified small manufacturer" shall not include a manufacturer described in subclause (I) if such manufacturer is acquired after 2021 by another manufacturer that is not a specified small manufacturer, effective at the beginning of the plan year immediately following such acquisition or, in the case of an acquisition before 2025, effective January 1, 2025.
In this subparagraph, the term "specified small manufacturer percent" means, with respect to a year—
(I) for an applicable drug dispensed for an applicable beneficiary who has not incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent; and
(ee) for 2029 and each subsequent year, 90 percent; and
(II) for an applicable drug dispensed for an applicable beneficiary who has incurred costs, as determined in accordance with section 1395w–102(b)(4)(C) of this title, for covered part D drugs in the year that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year—
(aa) for 2025, 99 percent;
(bb) for 2026, 98 percent;
(cc) for 2027, 95 percent;
(dd) for 2028, 92 percent;
(ee) for 2029, 90 percent;
(ff) for 2030, 85 percent; and
(gg) for 2031 and each subsequent year, 80 percent.
For purposes of this paragraph, the term "total expenditures" includes, in the case of expenditures with respect to part D, the total gross covered prescription drug costs as defined in section 1395w–115(b)(3) of this title. The term "total expenditures" excludes, in the case of expenditures with respect to part B, expenditures for a drug or biological that are bundled or packaged into the payment for another service.
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall above the annual deductible specified in section 1395w–102(b)(1) of this title for the year, the manufacturer of the applicable drug shall provide the discounted price under this section on only the portion of the negotiated price of the applicable drug that falls above such annual deductible.
In the case where the entire amount of the negotiated price of an individual claim for an applicable drug with respect to an applicable beneficiary does not fall entirely below or entirely above the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title for the year, the manufacturer of the applicable drug shall provide the discounted price—
(I) in accordance with subparagraph (A)(i) on the portion of the negotiated price of the applicable drug that falls below such threshold; and
(II) in accordance with subparagraph (A)(ii) on the portion of such price of such drug that falls at or above such threshold.
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.
The term "negotiated price" has the meaning given such term for purposes of section 1395w–102(d)(1)(B) of this title, and, with respect to an applicable drug, such negotiated price shall include any dispensing fee and, if applicable, any vaccine administration fee for the applicable drug.
The term "qualified retiree prescription drug plan" has the meaning given such term in section 1395w–132(a)(2) of this title.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14C, as added Pub. L. 117–169, title I, §11201(c)(1), Aug. 16, 2022, 136 Stat. 1880.)
Section 52 of the Internal Revenue Code of 1986, referred to in subsec. (g)(4)(B)(ii)(II)(bb), (C)(ii)(II)(bb), is classified to section 52 of Title 26, Internal Revenue Code.
1 So in original. Probably should not be capitalized.
With respect to covered part D drugs that would be applicable drugs (as defined in section 1395w–114c(g)(2) of this title) but for the application of subparagraph (B) of such section, the Secretary shall provide a process whereby, in the case of an applicable beneficiary (as defined in section 1395w–114c(g)(1) of this title) who, with respect to a year, is enrolled in a prescription drug plan or is enrolled in an MA–PD plan, has not incurred costs that are equal to or exceed the annual out-of-pocket threshold specified in section 1395w–102(b)(4)(B)(i) of this title, and is dispensed such a drug, the Secretary (periodically and on a timely basis) provides the PDP sponsor or the MA organization offering the plan, a subsidy with respect to such drug that is equal to 10 percent of the negotiated price (as defined in section 1395w–114c(g)(6) of this title) of such drug.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–14D, as added Pub. L. 117–169, title I, §11201(c)(1), Aug. 16, 2022, 136 Stat. 1888.)
In order to reduce premium levels applicable to qualified prescription drug coverage for part D eligible individuals consistent with an overall subsidy level of 74.5 percent (or, for each of 2024 through 2029, the percent applicable as a result of the application of section 1395w–113(a)(8) of this title, or, for 2030 and each subsequent year, 100 percent minus the percent specified under section 1395w–113(a)(9) of this title) for basic prescription drug coverage, to reduce adverse selection among prescription drug plans and MA–PD plans, and to promote the participation of PDP sponsors under this part and MA organizations under part C, the Secretary shall provide for payment to a PDP sponsor that offers a prescription drug plan and an MA organization that offers an MA–PD plan of the following subsidies in accordance with this section:
A direct subsidy for each part D eligible individual enrolled in a prescription drug plan or MA–PD plan for a month equal to—
(A) the amount of the plan's standardized bid amount (as defined in section 1395w–113(a)(5) of this title), adjusted under subsection (c)(1), reduced by
(B) the base beneficiary premium (as computed under paragraph (2) or (8) of section 1395w–113(a) of this title (as applicable) and as adjusted under paragraph (1)(B) of such section).
The reinsurance payment amount (as defined in subsection (b)).
This section constitutes budget authority in advance of appropriations Acts and represents the obligation of the Secretary to provide for the payment of amounts provided under this section.
The reinsurance payment amount under this subsection for a part D eligible individual enrolled in a prescription drug plan or MA–PD plan for a coverage year is an amount equal to—
(A) for a year preceding 2025, 80 percent of the allowable reinsurance costs (as specified in paragraph (2)) attributable to that portion of gross covered 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 1395w–102(b)(4)(B) of this title; and
(B) for 2025 and each subsequent year, the sum of—
(i) with respect to applicable drugs (as defined in section 1395w–114c(g)(2) of this title), an amount equal to 20 percent of such allowable reinsurance costs attributable to that portion of gross covered 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 1395w–102(b)(4)(B) of this title; and
(ii) with respect to covered part D drugs that are not applicable drugs (as so defined), an amount equal to 40 percent of such allowable reinsurance costs attributable to that portion of gross covered 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 1395w–102(b)(4)(B) of this title.
Subject to subparagraph (B), for purposes of this section, the term "allowable reinsurance costs" means, with respect to gross covered prescription drug costs under a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization, the part of such costs that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization or by (or on behalf of) an enrollee under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription drug coverage under the plan were basic prescription drug coverage, or, in the case of a plan providing supplemental prescription drug coverage, if such coverage were standard prescription drug coverage.
For purposes of applying subparagraph (A), the term "allowable reinsurance costs" shall include the portion of the negotiated price (as defined in section 1395w–114c(g)(6) of this title) of an applicable drug (as defined in section 1395w–114c(g)(2) of this title) that was paid by a manufacturer under the manufacturer discount program under section 1395w–114c of this title.
Subject to paragraph (2)(B), for purposes of this section, the term "gross covered prescription drug costs" means, with respect to a part D eligible individual enrolled in a prescription drug plan or MA–PD plan during a coverage year, the costs incurred under the plan, not including administrative costs, but including costs directly related to the dispensing of covered part D drugs during the year and costs relating to the deductible. Such costs shall be determined whether they are paid by the individual or under the plan (or, with respect to 2025 and subsequent years, in the case of an applicable drug, as defined in section 1395w–114c(g)(2) of this title, by a manufacturer), regardless of whether the coverage under the plan exceeds basic prescription drug coverage.
For purposes of this section, the term "coverage year" means a calendar year in which covered part D drugs are dispensed if the claim for such drugs (and payment on such claim) is made not later than such period after the end of such year as the Secretary specifies.
The Secretary shall establish an appropriate methodology for adjusting the standardized bid amount under subsection (a)(1)(A) to take into account variation in costs for basic prescription drug coverage among prescription drug plans and MA–PD plans based on the differences in actuarial risk of different enrollees being served. Any such risk adjustment shall be designed in a manner so as not to result in a change in the aggregate amounts payable to such plans under subsection (a)(1) and through that portion of the monthly beneficiary prescription drug premiums described in subsection (a)(1)(B) and MA monthly prescription drug beneficiary premiums.
In establishing the methodology under subparagraph (A), the Secretary may take into account the similar methodologies used under section 1395w–23(a)(3) of this title to adjust payments to MA organizations for benefits under the original medicare fee-for-service program option.
In order to carry out this paragraph, the Secretary shall require—
(i) PDP sponsors to submit data regarding drug claims that can be linked at the individual level to part A and part B data and such other information as the Secretary determines necessary; and
(ii) MA organizations that offer MA–PD plans to submit data regarding drug claims that can be linked at the individual level to other data that such organizations are required to submit to the Secretary and such other information as the Secretary determines necessary.
At the time of publication of risk adjustment factors under section 1395w–23(b)(1)(B)(i)(II) of this title, the Secretary shall publish the risk adjusters established under this paragraph for the succeeding year.
Subject to subparagraph (B), for purposes of section 1395w–113(a)(1)(B)(iii) of this title, the Secretary shall establish an appropriate methodology for adjusting the national average monthly bid amount (computed under section 1395w–113(a)(4) of this title) to take into account differences in prices for covered part D drugs among PDP regions.
If the Secretary determines that the price variations described in subparagraph (A) among PDP regions are de minimis, the Secretary shall not provide for adjustment under this paragraph.
Any adjustment under this paragraph shall be applied in a manner so as to not result in a change in the aggregate payments made under this part that would have been made if the Secretary had not applied such adjustment.
Payments under this section shall be based on such a method as the Secretary determines. The Secretary may establish a payment method by which interim payments of amounts under this section are made during a year based on the Secretary's best estimate of amounts that will be payable after obtaining all of the information.
Payments under this section to a PDP sponsor or MA organization are conditioned upon the furnishing to the Secretary, in a form and manner specified by the Secretary, of such information as may be required to carry out this section.
Information disclosed or obtained pursuant to subparagraph (A) may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this section.
Payments under this section shall be made from the Medicare Prescription Drug Account.
The provisions of section 1395w–23(a)(2) of this title shall apply to payments to PDP sponsors under this section in the same manner as they apply to payments to MA organizations under section 1395w–23(a) of this title.
For purposes of this subsection, the term "adjusted allowable risk corridor costs" means, for a plan for a coverage year (as defined in subsection (b)(4))—
(i) the allowable risk corridor costs (as defined in subparagraph (B)) for the plan for the year, reduced by
(ii) the sum of (I) the total reinsurance payments made under subsection (b) to the sponsor of the plan for the year, and (II) the total subsidy payments made under section 1395w–114 of this title to the sponsor of the plan for the year.
For purposes of this subsection, the term "allowable risk corridor costs" means, with respect to a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization, the part of costs (not including administrative costs, but including costs directly related to the dispensing of covered part D drugs during the year) incurred by the sponsor or organization under the plan that are actually paid (net of discounts, chargebacks, and average percentage rebates) by the sponsor or organization under the plan, but in no case more than the part of such costs that would have been paid under the plan if the prescription drug coverage under the plan were basic prescription drug coverage, or, in the case of a plan providing supplemental prescription drug coverage, if such coverage were basic prescription drug coverage taking into account the adjustment under section 1395w–111(c)(2) of this title. In computing allowable costs under this paragraph, the Secretary shall compute such costs based upon imposition under paragraphs (1)(D) and (2)(E) of section 1395w–114(a) of this title of the maximum amount of copayments permitted under such paragraphs.
If the adjusted allowable risk corridor costs (as defined in paragraph (1)) for the plan for the year are at least equal to the first threshold lower limit of the risk corridor (specified in paragraph (3)(A)(i)), but not greater than the first threshold upper limit of the risk corridor (specified in paragraph (3)(A)(iii)) for the plan for the year, then no payment adjustment shall be made under this subsection.
If the adjusted allowable risk corridor costs for the plan for the year are greater than the first threshold upper limit, but not greater than the second threshold upper limit, of the risk corridor for the plan for the year, the Secretary shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to 50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in clause (iii) are met for the year) of the difference between such adjusted allowable risk corridor costs and the first threshold upper limit of the risk corridor.
If the adjusted allowable risk corridor costs for the plan for the year are greater than the second threshold upper limit of the risk corridor for the plan for the year, the Secretary shall increase the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount equal to the sum of—
(I) 50 percent (or, for 2006 and 2007, 75 percent or 90 percent if the conditions described in clause (iii) are met for the year) of the difference between the second threshold upper limit and the first threshold upper limit; and
(II) 80 percent of the difference between such adjusted allowable risk corridor costs and the second threshold upper limit of the risk corridor.
The conditions described in this clause are met for 2006 or 2007 if the Secretary determines with respect to such year that—
(I) at least 60 percent of prescription drug plans and MA–PD plans to which this subsection applies have adjusted allowable risk corridor costs for the plan for the year that are more than the first threshold upper limit of the risk corridor for the plan for the year; and
(II) such plans represent at least 60 percent of part D eligible individuals enrolled in any prescription drug plan or MA–PD plan.
If the adjusted allowable risk corridor costs for the plan for the year are less than the first threshold lower limit, but not less than the second threshold lower limit, of the risk corridor for the plan for the year, the Secretary shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to 50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit of the risk corridor and such adjusted allowable risk corridor costs.
If the adjusted allowable risk corridor costs for the plan for the year are less the second threshold lower limit of the risk corridor for the plan for the year, the Secretary shall reduce the total of the payments made to the sponsor or organization offering the plan for the year under this section by an amount (or otherwise recover from the sponsor or organization an amount) equal to the sum of—
(I) 50 percent (or, for 2006 and 2007, 75 percent) of the difference between the first threshold lower limit and the second threshold lower limit; and
(II) 80 percent of the difference between the second threshold upper limit of the risk corridor and such adjusted allowable risk corridor costs.
For each plan year the Secretary shall establish a risk corridor for each prescription drug plan and each MA–PD plan. The risk corridor for a plan for a year shall be equal to a range as follows:
The first threshold lower limit of such corridor shall be equal to—
(I) the target amount described in subparagraph (B) for the plan; minus
(II) an amount equal to the first threshold risk percentage for the plan (as determined under subparagraph (C)(i)) of such target amount.
The second threshold lower limit of such corridor shall be equal to—
(I) the target amount described in subparagraph (B) for the plan; minus
(II) an amount equal to the second threshold risk percentage for the plan (as determined under subparagraph (C)(ii)) of such target amount.
The first threshold upper limit of such corridor shall be equal to the sum of—
(I) such target amount; and
(II) the amount described in clause (i)(II).
The second threshold upper limit of such corridor shall be equal to the sum of—
(I) such target amount; and
(II) the amount described in clause (ii)(II).
The target amount described in this paragraph is, with respect to a prescription drug plan or an MA–PD plan in a year, the total amount of payments paid to the PDP sponsor or MA–PD organization for the plan for the year, taking into account amounts paid by the Secretary and enrollees, based upon the standardized bid amount (as defined in section 1395w–113(a)(5) of this title and as risk adjusted under subsection (c)(1)), reduced by the total amount of administrative expenses for the year assumed in such standardized bid.
Subject to clause (iii), for purposes of this section, the first threshold risk percentage is—
(I) for 2006 and 2007, and 1 2.5 percent;
(II) for 2008 through 2011, 5 percent; and
(III) for 2012 and subsequent years, a percentage established by the Secretary, but in no case less than 5 percent.
Subject to clause (iii), for purposes of this section, the second threshold risk percentage is—
(I) for 2006 and 2007, 5 percent;
(II) for 2008 through 2011, 10 percent; and
(III) for 2012 and subsequent years, a percentage established by the Secretary that is greater than the percent established for the year under clause (i)(III), but in no case less than 10 percent.
Pursuant to section 1395w–111(b)(2)(E)(ii) of this title, a PDP sponsor may submit a bid that requests a decrease in the applicable first or second threshold risk percentages or an increase in the percents applied under paragraph (2).
A PDP sponsor and MA organization that offers a plan that provides supplemental prescription drug benefits shall be at full financial risk for the provision of such supplemental benefits.
No adjustment in payments made by reason of this subsection shall affect the monthly beneficiary premium or the MA monthly prescription drug beneficiary premium.
Each contract under this part and under part C shall provide that—
(A) the PDP sponsor offering a prescription drug plan or an MA organization offering an MA–PD plan shall provide the Secretary with such information as the Secretary determines is necessary to carry out this section; and
(B) the Secretary shall have the right in accordance with section 1395w–27(d)(2)(B) of this title (as applied under section 1395w–112(b)(3)(C) of this title) to inspect and audit any books and records of a PDP sponsor or MA organization that pertain to the information regarding costs provided to the Secretary under subparagraph (A).
Information disclosed or obtained pursuant to the provisions of this section may be used—
(A) by officers, employees, and contractors of the Department of Health and Human Services for the purposes of, and to the extent necessary in—
(i) carrying out this section or part E of subchapter XI; and
(ii) conducting oversight, evaluation, and enforcement under this subchapter;
(B) by the Attorney General and the Comptroller General of the United States for the purposes of, and to the extent necessary in, carrying out health oversight activities;
(C) by the Executive Director of the Medicare Payment Advisory Commission for purposes of monitoring, making recommendations for, and analysis of the program under this subchapter and by the Executive Director of the Medicaid and CHIP Payment and Access Commission for purposes of monitoring, making recommendations for, and analysis of the Medicaid program established under subchapter XIX and the Children's Health Insurance Program under subchapter XXI; and
(D) by the Director of the Congressional Budget Office for the purposes of analysis of programs authorized under this chapter, as applicable, and the fulfilment of such Director's duties under the Congressional Budget and Impoundment Control Act of 1974.
The Executive Directors described in paragraph (2)(C) shall not disclose any of the following information disclosed to such Executive Directors or obtained by such Executive Directors pursuant to such paragraph, with respect to a prescription drug plan offered by a PDP sponsor or an MA–PD plan offered by an MA organization:
(i) The specific amounts or the identity of the source of any rebates, discounts, price concessions, or other forms of direct or indirect remuneration under such prescription drug plan or such MA–PD plan.
(ii) Information submitted with the bid submitted under section 1395w–111(b) of this title by such PDP sponsor or under section 1395w–24(a) of this title by such MA organization.
(iii) In the case of such information from prescription drug event records, information in a form that would not be permitted under section 423.505(m) of title 42, Code of Federal Regulations, or any successor regulation, if released by the Centers for Medicare & Medicaid Services.
The restrictions on disclosures described in subparagraph (A) shall also apply to disclosures to individual Commissioners of the Medicare Payment Advisory Commission or of the Medicaid and CHIP Payment and Access Commission.
In lieu of the amounts otherwise payable under this section to a PDP sponsor offering a fallback prescription drug plan (as defined in section 1395w–111(g)(4) of this title 2), the amount payable shall be the amounts determined under the contract for such plan pursuant to section 1395w–111(g)(5) of this title.
In addition to amounts otherwise payable under this section to a PDP sponsor of a prescription drug plan or an MA organization offering an MA–PD plan, for plan year 2023, the Secretary shall provide the PDP sponsor or MA organization offering the plan subsidies in an amount equal to the aggregate reduction in cost-sharing and deductible by reason of the application of paragraph (8) or (9) of section 1395w–102(b) of this title for individuals under the plan during the year.
The Secretary shall provide a subsidy under paragraph (1), as applicable, not later than 18 months following the end of the applicable plan year.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–15, as added Pub. L. 108–173, title I, §101(a)(2), Dec. 8, 2003, 117 Stat. 2113; amended Pub. L. 111–148, title VI, §6402(b)(1), Mar. 23, 2010, 124 Stat. 756; Pub. L. 116–260, div. CC, title I, §112(a), Dec. 27, 2020, 134 Stat. 2946; Pub. L. 117–169, title I, §§11001(b)(1)(H)(ii), 11201(b), (d)(3)(D), 11401(c)(1), 11406(c), Aug. 16, 2022, 136 Stat. 1853, 1879, 1891, 1897, 1904; Pub. L. 117–328, div. FF, title IV, §4132, Dec. 29, 2022, 136 Stat. 5918.)
This chapter, referred to in subsec. (f)(2)(D), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, was in the original "the Social Security Act", which is classified generally to this chapter. For complete classification of the Social Security Act to the Code, see section 1305 of this title and Tables.
The Congressional Budget and Impoundment Control Act of 1974, referred to in subsec. (f)(2)(D), is Pub. L. 93–344, July 12, 1974, 88 Stat. 297. For complete classification of this Act to the Code, see Short Title note set out under section 621 of Title 2, The Congress, and Tables.
Section 1395w–111(g)(4) of this title, referred to in subsec. (g), was in the original "section 1860D–3(c)(4)", and was translated as reading "section 1860D–11(g)(4)", meaning section 1860D–11(g)(4) of the Social Security Act, to reflect the probable intent of Congress, because section 1860D–3, which is classified to section 1395w–103 of this title, does not contain a subsec. (c), and section 1395w–111(g)(4) of this title defines "fallback prescription drug plan" for purposes of this part.
2022—Subsec. (a). Pub. L. 117–169, §11201(d)(3)(D)(i), inserted "(or, for each of 2024 through 2029, the percent applicable as a result of the application of section 1395w–113(a)(8) of this title, or, for 2030 and each subsequent year, 100 percent minus the percent specified under section 1395w–113(a)(9) of this title)" after "74.5 percent" in introductory provisions.
Subsec. (a)(1)(B). Pub. L. 117–169, §11201(d)(3)(D)(ii), substituted "paragraph (2) or (8) of section 1395w–113(a) of this title (as applicable)" for "paragraph (2) of section 1395w–113(a) of this title".
Subsec. (b)(1). Pub. L. 117–169, §11201(b)(1), inserted dash after "equal to", designated remainder of existing provisions as subpar. (A), substituted "for a year preceding 2025, 80 percent" for "80 percent", and added subpar. (B).
Subsec. (b)(2). Pub. L. 117–169, §11201(b)(2), designated existing provisions as subpar. (A) and inserted heading, substituted "Subject to subparagraph (B), for purposes" for "For purposes", and added subpar. (B).
Subsec. (b)(3). Pub. L. 117–169, §11201(b)(3), substituted "Subject to paragraph (2)(B), for purposes" for "For purposes" and inserted "(or, with respect to 2025 and subsequent years, in the case of an applicable drug, as defined in section 1395w–114c(g)(2) of this title, by a manufacturer)" after "by the individual or under the plan".
Subsec. (f)(2)(A)(i). Pub. L. 117–169, §11001(b)(1)(H)(ii), inserted "or part E of subchapter XI" after "this section".
Subsec. (f)(2)(D). Pub. L. 117–328 added subpar. (D).
Subsec. (h). Pub. L. 117–169, §11406(c)(1), inserted "and Insulin" after "Practices" in heading.
Pub. L. 117–169, §11401(c)(1), added subsec. (h).
Subsec. (h)(1). Pub. L. 117–169, §11406(c)(2), substituted "paragraph (8) or (9) of section 1395w–102(b) of this title" for "section 1395w–102(b)(8) of this title".
2020—Subsec. (f)(2)(C). Pub. L. 116–260, §112(a)(1), added subpar. (C).
Subsec. (f)(3). Pub. L. 116–260, §112(a)(2), added par. (3).
2010—Subsec. (f)(2). Pub. L. 111–148 substituted "may be used—" for "may be used by officers, employees, and contractors of the Department of Health and Human Services only for the purposes of, and to the extent necessary in, carrying out this section." in introductory provisions and added subpars. (A) and (B).
Nothing in amendment by section 11401(c)(1) of Pub. L. 117–169 to be construed as limiting coverage under this part for vaccines that are not recommended by the Advisory Committee on Immunization Practices, see section 11401(d) of Pub. L. 117–169, set out as a note under section 1395w–102 of this title.
1 So in original. The word "and" probably should not appear.
2 See References in Text note below.
There is created within the Federal Supplementary Medical Insurance Trust Fund established by section 1395t of this title an account to be known as the "Medicare Prescription Drug Account" (in this section referred to as the "Account").
The Account shall consist of such gifts and bequests as may be made as provided in section 401(i)(1) of this title, accrued interest on balances in the Account, and such amounts as may be deposited in, or appropriated to, such Account as provided in this part.
Funds provided under this part to the Account shall be kept separate from all other funds within the Federal Supplementary Medical Insurance Trust Fund, but shall be invested, and such investments redeemed, in the same manner as all other funds and investments within such Trust Fund.
The Managing Trustee shall pay from time to time from the Account such amounts as the Secretary certifies are necessary to make payments to operate the program under this part, including—
(A) payments under section 1395w–114 of this title (relating to low-income subsidy payments);
(B) payments under section 1395w–115 of this title (relating to subsidy payments and payments for fallback plans);
(C) payments to sponsors of qualified retiree prescription drug plans under section 1395w–132(a) of this title;
(D) payments with respect to administrative expenses under this part in accordance with section 401(g) of this title; and
(E) payments under section 1395w–114 of this title (relating to selected drug subsidy payments).
The Managing Trustee shall transfer from time to time from the Account to the Grants to States for Medicaid account amounts the Secretary certifies are attributable to increases in payment resulting from the application of section 1396u–5(b) of this title.
The Managing Trustee shall make payment to the PDP sponsor or MA organization involved of the premiums (and the portion of late enrollment penalties) that are collected in the manner described in section 1395w–24(d)(2)(A) of this title and that are payable under a prescription drug plan or MA–PD plan offered by such sponsor or organization.
Amounts payable from the Account shall not be taken into account in computing actuarial rates or premium amounts under section 1395r of this title.
Amounts paid under section 1396u–5(c) of this title (and any amounts collected or offset under paragraph (1)(C) of such section) are deposited into the Account.
Pursuant to sections 1395w–113(c) and 1395w–24(d) of this title (as applied under this part), amounts that are withheld (and allocated) to the Account are deposited into the Account.
There are authorized to be appropriated from time to time, out of any moneys in the Treasury not otherwise appropriated, to the Account, an amount equivalent to the amount of payments made from the Account under subsection (b) plus such amounts as the Managing Trustee certifies is necessary to maintain an appropriate contingency margin, reduced by the amounts deposited under paragraph (1) or subsection (a)(2).
In order to assure prompt payment of benefits provided under this part and the administrative expenses thereunder during the early months of the program established by this part and to provide an initial contingency reserve, there are authorized to be appropriated to the Account, out of any moneys in the Treasury not otherwise appropriated, such amount as the Secretary certifies are required, but not to exceed 10 percent of the estimated total expenditures from such Account in 2006.
Any balance in the Transitional Assistance Account that is transferred under section 1395w–141(k)(5) of this title shall be deposited into the Account.
(Aug. 14, 1935, ch. 531, title XVIII, §1860D–16, as added Pub. L. 108–173, title I, §101(a)(2), Dec. 8, 2003, 117 Stat. 2120; amended Pub. L. 117–169, title I, §11201(c)(3), Aug. 16, 2022, 136 Stat. 1888.)
2022—Subsec. (b)(1)(E). Pub. L. 117–169 added subpar. (E).