View all text of Subpart 2 [§ 1395w-111 - § 1395w-116]
§ 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.)