- § 1395w-111. PDP regions; submission of bids; plan approval
- § 1395w-112. Requirements for and contracts with prescription drug plan (PDP) sponsors
- § 1395w-113. Premiums; late enrollment penalty
- § 1395w-114. Premium and cost-sharing subsidies for low-income individuals
- § 1395w-114a. Medicare coverage gap discount program
- § 1395w-114b. Manufacturer rebate for certain drugs with prices increasing faster than inflation
- § 1395w-114c. Manufacturer discount program
- § 1395w-114d. Selected drug subsidy program
- § 1395w-115. Subsidies for part D eligible individuals for qualified prescription drug coverage
- § 1395w-116. Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund
§ 1395w–111. PDP regions; submission of bids; plan approval
(a) Establishment of PDP regions; service areas
(1) Coverage of entire PDP region
(2) Establishment of PDP regions
(A) In general
(B) Relation to MA regions
(C) Authority for territories
(3) National plan
(b) Submission of bids, premiums, and related information
(1) In general
(2) Information described
The information described in this paragraph is information on the following:
(A) Coverage provided
(B) Actuarial value
(C) Bid
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.
(D) Service area
(E) Level of risk assumed
(i) In general
(ii) Risk levels described
A modification of risk level under this clause may consist of one or more of the following:
(I) Increase in Federal percentage assumed in initial risk corridor(II) Increase in Federal percentage assumed in second risk corridor(III) Decrease in size of risk corridors(F) Additional information
(3) Paperwork reduction for offering of prescription drug plans nationally or in multi-region areas
(c) Actuarial valuation
(1) Processes
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).
(2) Accounting for drug utilization
(3) Responsibilities
(A) Plan responsibilities
(B) Use of outside actuaries
(d) Review of information and negotiation
(1) Review of information
(2) Negotiation regarding terms and conditions
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.
(3) Rejection of bids
(e) Approval of proposed plans
(1) In general
(2) Requirements for approval
The Secretary may approve a prescription drug plan only if the following requirements are met:
(A) Compliance with requirements
(B) Actuarial determinations
(C) Application of FEHBP standard
(i) In general
(ii) Supplemental coverage
(D) Plan design
(i) In general
(ii) Use of categories and classes in formularies
(f) Application of limited risk plans
(1) Conditions for approval of limited risk plans
(2) Rules
The following rules shall apply with respect to the approval of a limited risk plan in a PDP region:
(A) Limited exercise of authority
(B) Maximizing assumption of risk
(C) No full underwriting for limited risk plans
(3) Acceptance of all full risk contracts
(4) Risk-plans defined
For purposes of this subsection:
(A) Limited risk plan
(B) Full risk plan
(g) Guaranteeing access to coverage
(1) Solicitation of bids
(A) In general
(B) Acceptance of bids
(i) In general
(ii) Limitation of 1 plan for all fallback service areas in a PDP region
(iii) Competitive procedures
(iv) Timing
(V)2
2 So in original. Probably should be “(v)”.
No national fallback plan(2) Eligible fallback entity
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.
(3) Fallback service area
(4) Fallback prescription drug plan
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.
(5) Payments under the contract
(A) In general
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.
(B) Performance measures
The performance measures established by the Secretary pursuant to subparagraph (A)(ii) shall include at least measures for each of the following:
(i) Costs
(ii) Quality programs
(iii) Customer service
(iv) Benefit administration and claims adjudication
(6) Monthly beneficiary premium
(7) General contract terms and conditions
(A) In general
(B) Period of contract
(i) In general
(ii) Limitation
(C) Entity not permitted to market or brand fallback prescription drug plans
(h) Annual report on use of limited risk plans and fallback plans
(i) Noninterference
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
4 So in original. Probably should be “(b)(3)(I)”.
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.
(j) Coordination of benefits
(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.)
§ 1395w–112. Requirements for and contracts with prescription drug plan (PDP) sponsors
(a) General requirements
Each PDP sponsor of a prescription drug plan shall meet the following requirements:
(1) Licensure
(2) Assumption of financial risk for unsubsidized coverage
(A) In general
(B) Reinsurance permitted
(3) Solvency for unlicensed sponsors
(b) Contract requirements
(1) In general
(2) Limitation on entities offering fallback prescription drug plans
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.
(3) Incorporation of certain medicare advantage contract requirements
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:
(A) Minimum enrollment
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.
(B) Contract period and effectiveness
(C) Protections against fraud and beneficiary protections
(D) Additional contract terms
(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
1 So in original. Probably should not be capitalized.
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.(E) Intermediate sanctions
(F) Procedures for termination
(4) Prompt payment of clean claims
(A) Prompt payment
(i) In general
(ii) Clean claim defined
(iii) Date of receipt of claim
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.(B) Applicable number of calendar days defined
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.
(C) Interest payment
(i) In general
(ii) Authority not to charge interest
(D) Procedures involving claims
(i) Claim deemed to be clean
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.(ii) Claim determined to not be a clean claim(I) In general(II) Determination after submission of additional information
(iii) Obligation to pay
(iv) Date of payment of claim
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.(E) Electronic transfer of funds
(F) Protecting the rights of claimants
(i) In general
(ii) Anti-retaliation
(G) Rule of construction
(5) Submission of claims by pharmacies located in or contracting with long-term care facilities
(6) Regular update of prescription drug pricing standard
(7) Suspension of payments pending investigation of credible allegations of fraud by pharmacies
(A) In general
(B) Rule of construction
(8) Provision of information related to maximum fair prices
(c) Waiver of certain requirements to expand choice
(1) Authorizing waiver
(A) In general
(B) Application of regional plan waiver rule
(2) Grounds for approval
(A) In general
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.
(B) Special rules
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.
(3) Application of waiver procedures
(4) References to certain provisions
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.
(d) Solvency standards for non-licensed entities
(1) Establishment and publication
(2) Compliance with standards
(e) Licensure does not substitute for or constitute certification
(f) Periodic review and revision of standards
(1) In general
(2) Prohibition of midyear implementation of significant new regulatory requirements
(g) Prohibition of State imposition of premium taxes; relation to State laws
(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.)
§ 1395w–113. Premiums; late enrollment penalty
(a) Monthly beneficiary premium
(1) Computation
(A) In general
(B) Adjustment to reflect difference between bid and national average bid
(i) Above average bid
(ii) Below average bid
(iii) Adjusted national average monthly bid amount defined
(C) Increase for supplemental prescription drug benefits
(D) Increase for late enrollment penalty
(E) Decrease for low-income assistance
(F) Increase based on income
(G) Uniform premium
(2) Base beneficiary premiumSubject to paragraph (8), the base beneficiary premium under this paragraph for a prescription drug plan for a month is equal to the product 1
1 So in original. The word “of” probably should appear after “product”.
—(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.
(3) Beneficiary premium percentageFor 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.
(4) Computation of national average monthly bid amount
(A) In general
(B) Weighted average
(i) In general
(ii) Special rule for 2006
(5) Standardized bid amount definedFor purposes of this subsection, the term “standardized bid amount” means the following:
(A) Prescription drug plans
(i) Basic coverage
(ii) Supplemental coverage
(B) MA–PD plans
(6) PDP approved bid defined
(7) Increase in base beneficiary premium based on income
(A) In general
(B) Monthly adjustment amountThe 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)).
(C) Modified adjusted gross income
(D) Determination by Commissioner of Social Security
(E) Procedures to assure correct income-related increase in base beneficiary premium
(i) Disclosure of base beneficiary premium
(ii) Additional disclosureNot 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.
(F) Rule of construction
(8) Premium stabilization
(A) In generalThe base beneficiary premium under this paragraph for a prescription drug plan for a month in 2024 through 2029 shall be computed as follows:
(i) 2024The 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.
(ii) 2025The 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.
(iii) 2026The 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.
(iv) 2027The 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.
(v) 2028The 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.
(vi) 2029The 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.
(B) Clarification regarding 2030 and subsequent years
(9) Percent specified
(A) In generalSubject 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.
(B) Floor
(b) Late enrollment penalty
(1) In general
(2) Individuals subject to penalty
(3) Amount of penalty
(A) In generalThe 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.
(B) Uncovered month defined
(4) Creditable prescription drug coverage definedFor 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):
(A) Coverage under prescription drug plan or MA–PD plan
(B) Medicaid
(C) Group health plan
(D) State pharmaceutical assistance program
(E) Veterans’ coverage of prescription drugs
(F) Prescription drug coverage under medigap policies
(G) Military coverage (including TRICARE)
(H) Other coverage
(5) Actuarial equivalence requirement
(6) Procedures to document creditable prescription drug coverage
(A) In general
(B) Disclosure by entities offering creditable prescription drug coverage
(i) In general
(ii) Disclosure of non-creditable coverage
(C) Waiver of requirement
(7) Continuous period of eligibility
(A) In general
(B) Separate periodAny 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
2 So in original. Probably should be “section 426(b)”.
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).
(8) Waiver of penalty for subsidy-eligible individuals
(c) Collection of monthly beneficiary premiums
(1) In general
(2) Crediting of late enrollment penalty
(A) Portion attributable to increased actuarial costs
(B) Collection through withholding
(C) Collection by plan
(3) Fallback plans
(4) Collection of monthly adjustment amount
(A) In general
(B) Agreements
(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.)
§ 1395w–114. Premium and cost-sharing subsidies for low-income individuals
(a) Income-related subsidies for certain individuals
(1) Individuals with certain low incomesIn 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:
(A) Full premium subsidy
(B) Elimination of deductible
(C) Continuation of coverage above the initial coverage limit
(D) Reduction in cost-sharing below out-of-pocket threshold
(i) Institutionalized individuals
(ii) Lowest income dual eligible individuals
(iii) Other individuals
(E) Elimination of cost-sharing above annual out-of-pocket threshold
(2) Other low-income individualsWith 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:
(A) Sliding scale premium subsidy
(B) Reduction of deductible
(C) Continuation of coverage above the initial coverage limit
(D) Reduction in cost-sharing below out-of-pocket threshold
(E) Reduction of cost-sharing above annual out-of-pocket threshold
(3) Determination of eligibility
(A) Subsidy eligible individual definedFor 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).
(B) Determinations
(i) In general
(ii) Effective period
(iii) Redeterminations and appeals through medicaid
(iv) Redeterminations and appeals through CommissionerWith 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.
(v) Treatment of medicaid beneficiariesSubject 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.
(vi) Special rule for widows and widowers
(C) Income determinationsFor 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.
(D) Resource standard applied to full low-income subsidy to be based on three times SSI resource standardThe 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.
(E) Alternative resource standard
(i) In generalThe 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.
(ii) Use of simplified application form and processThe 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.
(iii) Documentation and safeguardsUnder 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.
(iv) Methodology flexibility
(F) Treatment of territorial residents
(G) Life insurance policy exclusion
(4) Indexing dollar amounts
(A) Copayment for lowest income dual eligible individualsThe 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.
(B) Reduced deductibleThe 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.
(5) Waiver of de minimis premiums
(6) No application of cost-sharing or deductible for adult vaccines recommended by the Advisory Committee on Immunization PracticesFor 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.
(b) Premium subsidy amount
(1) In general
(2) Low-income benchmark premium amount defined
(A) In generalFor 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.
(B) Premium amounts describedThe 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
1 So in original. Section 1395w–22(a)(6) of this title does not contain a subpar. (B).
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.
(3) Access to 0 premium plan
(c) Administration of subsidy program
(1) In generalThe 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.
(2) Use of capitated form of payment
(d) Facilitation of reassignmentsBeginning 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.
(e) Limited income newly eligible transition program
(1) In general
(2) LI NET eligible individual definedFor 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.
(3) Transitional coverageFor 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.
(4) Program administration
(A) Point of contact
(B) Benefit designThe 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.
(5) Relationship to other provisions of this subchapter; waiver authority
(A) In generalThe 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).
(B) Waiver authority
(6) Contracting authority
(f) Relation to medicaid program
(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.)
§ 1395w–114a. Medicare coverage gap discount program
(a) Establishment
(b) Terms of agreement
(1) In general
(A) Agreement
(B) Provision of discounted prices at the point-of-sale
(C) Timing of agreement
(i) Special rule for 2011
(ii) 2012 and subsequent years
(2) Provision of appropriate data
(3) Compliance with requirements for administration of program
(4) Length of agreement
(A) In general
(B) Termination
(i) By the Secretary
(ii) By a manufacturerA manufacturer may terminate an agreement under this section for any reason. Any such termination shall be effective, with respect to a plan year—(I) if the termination occurs before January 30 of a plan year, as of the day after the end of the plan year; and(II) if the termination occurs on or after January 30 of a plan year, as of the day after the end of the succeeding plan year.
(iii) Effectiveness of termination
(iv) Notice to third party
(c) Duties described and special rule for supplemental benefits
(1) Duties describedThe duties described in this subsection are the following:
(A) Administration of programAdministering 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).
(B) Monitoring compliance
(i) In general
(ii) Notification
(C) Collection of data from prescription drug plans and MA–PD plans
(2) Special rule for supplemental benefits
(d) Administration
(1) In general
(2) Limitation
(A) In general
(B) Exception
(3) Contract with third partiesThe Secretary shall enter into a contract with 1 or more third parties to administer the requirements established by the Secretary in order to carry out this section. At a minimum, the contract with a third party under the preceding sentence shall require that the third party—
(A) receive and transmit information between the Secretary, manufacturers, and other individuals or entities the Secretary determines appropriate;
(B) receive, distribute, or facilitate the distribution of funds of manufacturers to appropriate individuals or entities in order to meet the obligations of manufacturers under agreements under this section;
(C) provide adequate and timely information to manufacturers, consistent with the agreement with the manufacturer under this section, as necessary for the manufacturer to fulfill its obligations under this section; and
(D) permit manufacturers to conduct periodic audits, directly or through contracts, of the data and information used by the third party to determine discounts for applicable drugs of the manufacturer under the program.
(4) Performance requirements
(5) Implementation
(6) Administration
(e) Enforcement
(1) Audits
(2) Civil money penalty
(A) In generalThe Secretary shall impose a civil money penalty on a manufacturer that fails to provide applicable beneficiaries discounts for applicable drugs of the manufacturer in accordance with such agreement for each such failure in an amount the Secretary determines is commensurate with the sum of—
(i) the amount that the manufacturer would have paid with respect to such discounts under the agreement, which will then be used to pay the discounts which the manufacturer had failed to provide; and
(ii) 25 percent of such amount.
(B) Application
(f) Clarification regarding availability of other covered part D drugs
(g) DefinitionsIn this section:
(1) Applicable beneficiaryThe 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.
(2) Applicable drugThe 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.
(3) Applicable number of calendar daysThe term “applicable number of calendar days” means—
(A) with respect to claims for reimbursement submitted electronically, 14 days; and
(B) with respect to claims for reimbursement submitted otherwise, 30 days.
(4) Discounted price
(A) In general
(B) Clarification
(C) Special case for certain claims
(5) Manufacturer
(6) Negotiated price
(7) Qualified retiree prescription drug plan
(h) Sunset of program
(1) In general
(2) Continued application for applicable drugs dispensed prior to sunset
(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.)
§ 1395w–114b. Manufacturer rebate for certain drugs with prices increasing faster than inflation
(a) Requirements
(1) Secretarial provision of informationNot 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.
(2) Manufacturer requirements
(3) Transition rule for reporting
(b) Rebate amount
(1) In general
(A) CalculationFor 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.
(B) Excluded units
(C) Reduction or waiver for shortages and severe supply chain disruptionsThe 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
1 So in original. Probably should not be capitalized.
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.(2) Determination of annual manufacturer priceThe 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.
(3) Determination of inflation-adjusted payment amountThe 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)).
(4) Determination of benchmark period manufacturer priceThe 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.
(5) Special treatment of certain drugs and exemption
(A) Subsequently approved drugs
(B) Treatment of new formulations
(i) In general
(ii) Line extension defined
(C) Selected drugs
(6) Reconciliation in case of revised information
(c) Rebate deposits
(d) InformationFor 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.
(e) Civil money penalty
(f) Limitation on administrative or judicial reviewThere 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.
(g) DefinitionsIn this section:
(1) Part D rebatable drug
(A) In general
(B) Exclusion
(i) In general
(ii) IncreaseThe 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.
(C) Drug or biological describedA 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.
(2) Unit
(3) Payment amount benchmark period
(4) Benchmark period CPI–U
(5) Applicable period CPI–U
(6) Average manufacturer price
(7) Applicable period
(h) Implementation for 2022, 2023, and 2024
(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.)
§ 1395w–114c. Manufacturer discount program
(a) Establishment
(b) Terms of agreement
(1) In general
(A) Agreement
(B) ClarificationNothing 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.
(C) Timing of agreement
(i) Special rule for 2025
(ii) 2026 and subsequent years
(2) Provision of appropriate data
(3) Compliance with requirements for administration of program
(4) Length of agreement
(A) In general
(B) Termination
(i) By the Secretary
(ii) By a manufacturerA 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.
(iii) Effectiveness of termination
(5) Effective date of agreement
(c) Duties describedThe duties described in this subsection are the following:
(1) Administration of programAdministering 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.
(2) Monitoring compliance
(3) Collection of data from prescription drug plans and MA–PD plans
(d) Administration
(1) In general
(2) Limitation
(e) Civil money penalty
(1) In generalA 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.
(2) Application
(f) Clarification regarding availability of other covered part D drugs
(g) DefinitionsIn this section:
(1) Applicable beneficiaryThe 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.
(2) Applicable drugThe 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 ) during a price applicability period (as defined in
(3) Applicable number of calendar daysThe term “applicable number of calendar days” means—
(A) with respect to claims for reimbursement submitted electronically, 14 days; and
(B) with respect to claims for reimbursement submitted otherwise, 30 days.
(4) Discounted price
(A) In generalThe 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.
(B) Phase-in for certain drugs dispensed to LIS beneficiaries
(i) In general
(ii) Specified manufacturer(I) In generalIn 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
1 So in original. Probably should not be capitalized.
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.(II) Specified drugs(aa) In general(bb) Aggregation rule(III) Limitation(iii) Specified LIS percentIn 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.
(C) Phase-in for specified small manufacturers
(i) In general
(ii) Specified small manufacturer(I) In generalIn 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.(II) Specified small manufacturer drugs(aa) In general(bb) Aggregation rule(III) Limitation
(iii) Specified small manufacturer percentIn 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.
(D) Total expenditures
(E) Special case for certain claims
(i) Claims spanning deductible
(ii) Claims spanning out-of-pocket thresholdIn 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.
(5) Manufacturer
(6) Negotiated price
(7) Qualified retiree prescription drug plan
(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.)
§ 1395w–114d. Selected drug subsidy program
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.)
§ 1395w–115. Subsidies for part D eligible individuals for qualified prescription drug coverage
(a) Subsidy paymentIn 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:
(1) Direct subsidyA 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).
(2) Subsidy through reinsurance
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.
(b) Reinsurance payment amount
(1) In generalThe 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.
(2) Allowable reinsurance costs
(A) In general
(B) Inclusion of manufacturer discounts on applicable drugs
(3) Gross covered prescription drug costs
(4) Coverage year defined
(c) Adjustments relating to bids
(1) Health status risk adjustment
(A) Establishment of risk adjustors
(B) Considerations
(C) Data collectionIn 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.
(D) Publication
(2) Geographic adjustment
(A) In general
(B) De minimis rule
(C) Budget neutral adjustment
(d) Payment methods
(1) In general
(2) Requirement for provision of information
(A) Requirement
(B) Restriction on use of information
(3) Source of payments
(4) Application of enrollee adjustment
(e) Portion of total payments to a sponsor or organization subject to risk (application of risk corridors)
(1) Computation of adjusted allowable risk corridor costs
(A) In generalFor 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.
(B) Allowable risk corridor costs
(2) Adjustment of payment
(A) No adjustment if adjusted allowable risk corridor costs within risk corridor
(B) Increase in payment if adjusted allowable risk corridor costs above upper limit of risk corridor
(i) Costs between first and second threshold upper limits
(ii) Costs above second threshold upper limitsIf 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.
(iii) Conditions for application of higher percentage for 2006 and 2007The 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.
(C) Reduction in payment if adjusted allowable risk corridor costs below lower limit of risk corridor
(i) Costs between first and second threshold lower limits
(ii) Costs below second threshold lower limitIf 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.
(3) Establishment of risk corridors
(A) In generalFor 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:
(i) First threshold lower limitThe 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.
(ii) Second threshold lower limitThe 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.
(iii) First threshold upper limitThe 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).
(iv) Second threshold upper limitThe 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).
(B) Target amount described
(C) First and second threshold risk percentage defined
(i) First threshold risk percentageSubject to clause (iii), for purposes of this section, the first threshold risk percentage is—(I) for 2006 and 2007, and 1
1 So in original. The word “and” probably should not appear.
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.(ii) Second threshold risk percentageSubject 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.
(iii) Reduction of risk percentage to ensure 2 plans in an area
(4) Plans at risk for entire amount of supplemental prescription drug coverage
(5) No effect on monthly premium
(f) Disclosure of information
(1) In generalEach 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).
(2) Restriction on use of informationInformation 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.
(3) Additional restrictions on disclosure of information
(A) In generalThe 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.
(B) Clarification
(g) Payment for fallback prescription drug plans
(h) Temporary retrospective subsidy for reduction in cost-sharing and deductible for adult vaccines recommended by the Advisory Committee on Immunization Practices and Insulin During 2023
(1) In general
(2) Timing
(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.)
§ 1395w–116. Medicare Prescription Drug Account in the Federal Supplementary Medical Insurance Trust Fund
(a) Establishment and operation of Account
(1) Establishment
(2) Funding
(3) Separate from rest of Trust Fund
(b) Payments from Account
(1) In general
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).
(2) Transfers to Medicaid account for increased administrative costs
(3) Payments of premiums withheld
(4) Treatment in relation to part B premium
(c) Deposits into Account
(1) Low-income transfer
(2) Amounts withheld
(3) Appropriations to cover Government contributions
(4) Initial funding and reserve
(5) Transfer of any remaining balance from Transitional Assistance 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.)