Medicare Program; Contract Year 2027 and Certain Contract Year 2026 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program

42 CFR Part 422

Administrative practice and procedure, Health facilities, Health maintenance organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.

42 CFR Part 423

Administrative practice and procedure, Health facilities, Health maintenance organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 422--MEDICARE ADVANTAGE PROGRAM

0 1. The authority for part 422 continues to read as follows:

Authority: 42 U.S.C. 1302, 1306, 1395w-21 through 1395w-28, and 1395hh.

0 2. Section 422.60 is amended by-- 0 a. Revising paragraphs (g)(2)(i) and (ii); and 0 b. In paragraph (g)(2)(vi), removing the phrase “capacity to passively” and adding in its place the phrase “capacity, including care coordinator staffing capacity, to passively”.

The revisions read as follows:

Sec. 422.60 Election process.

* * * * *

(g) * * *

(2) * * *

(i) Operate as an applicable integrated plan as defined at Sec. 422.561.

(ii) Provide continuity of care for all incoming enrollees that complies with Sec. 422.112(b)(8)(i)(B), with the exception that the minimum transition period is 120 days. * * * * *

0 3. Section 422.62 is amended by revising paragraphs (b)(3) introductory text, (b)(5) introductory text, (b)(20) introductory text, and (b)(27) to read as follows:

Sec. 422.62 Election of coverage under an MA plan.

(b) * * *

(3) This SEP requires CMS approval prior to use. The individual must use a CMS-operated election mechanism, in a form and manner specified by CMS, to make an election using this SEP. To be eligible, the individual must demonstrate to CMS that-- * * * * *

(5) The individual is enrolled in an MA plan offered by an MA organization that has been sanctioned by CMS and elects to disenroll from that plan in connection with the matter(s) that gave rise to that sanction. This SEP requires CMS approval prior to use. The individual must receive a notice, as described in paragraph (b)(5)(i) of this section, to make an election using this SEP. * * * * *

(20) The individual was not adequately informed of a loss of creditable prescription drug coverage, or that they never had creditable coverage. CMS determines eligibility for this SEP on a case- by-case basis, based on its determination that an entity offering prescription drug coverage failed to provide accurate and timely disclosure of the loss of creditable prescription drug coverage or whether the prescription drug coverage offered is creditable. This SEP requires CMS approval prior to use. The individual must use a CMS- operated election mechanism, in a form and manner specified by CMS, to make an election using this SEP. * * * * *

(27) The individual meets such other exceptional conditions as CMS may provide. This SEP requires CMS approval prior to use. The individual must use a CMS-operated mechanism, in a form and manner specified by CMS, to make an election using this SEP. * * * * *

0 4. Section 422.66 is amended by adding paragraph (g) to read as follows:

Sec. 422.66 Coordination of enrollment and disenrollment through MA organizations.

* * * * *

(g) Elections requiring prior CMS approval--(1) CMS approval. SEPs specified in paragraph (g)(2) of this section require CMS approval before an individual can use the SEP to make an election.

(i) CMS approval is provided for MA plan elections either through the use of a CMS-operated election mechanism or through the individual's receipt of a notice which explains eligibility for the SEP and election instructions.

(ii) MA plans may not transmit elections to CMS using the specified SEPs without prior CMS approval.

(2) Special election periods. All of the following SEPs require CMS approval prior to use:

(i) SEP for contract violation, Sec. 422.62(b)(3).

(ii) SEP for individuals who disenroll in connection with CMS sanction, Sec. 422.62(b)(5).

(iii) SEP for individuals who were not adequately informed of a loss of creditable prescription drug coverage, Sec. 422.62(b)(20).

(iv) SEP for other exceptional circumstances, Sec. 422.62(b)(27).

Sec. 422.101 [Amended]

0 5. Section 422.101 is amended by-- 0 a. In paragraph (f)(3)(iv)(B) removing the phrase “June 1st and November 30th of each calendar year” and adding in its place the phrase “January 1st and March 31st or October 1st and December 31st of each contract year”; and 0 b. In paragraph (f)(3)(iv)(G) removing the phrase “opportunity to submit a corrected off-cycle revision between June 1st and November 30th of each year.” and adding in its place the phrase “opportunity per contract year to submit a corrected off-cycle revision between January 1st and March 31st or October 1st and December 31st of each contract year”.

Sec. 422.102 [Amended]

0 6. Section 422.102 is amended by-- 0 a. Revising paragraph (f)(1)(i)(A); 0 b. Adding paragraph (f)(1)(i)(C); 0 c. Revising paragraphs (f)(1)(iii)(G) and (f)(4)(iii); and 0 d. Adding paragraph (g).

The revisions and additions read as follows:

Sec. 422.102 Supplemental benefits.

* * * * *

(f) * * *

(1) * * *

(i) * * *

(A) A chronically ill enrollee is an individual enrolled in the MA plan who meets all of the following:

(1) Has one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee.

(2) Has a high risk of hospitalization or other adverse health outcomes.

(3) Requires intensive care coordination. * * * * *

(C) An enrollee who has one or more comorbidities and medically complex chronic conditions alone is not sufficient to demonstrate that an enrollee meets all 3 criteria set forth in paragraph (f)(1)(i)(A) of this section. MA plans must, through health risk assessments, review of claims data, or other similar means, demonstrate that enrollees meet all 3 criteria set forth in paragraph (f)(1)(i)(A) of this section. * * * * *

(iii) * * *

(G) Cannabis products that are illegal under applicable State or Federal law. * * * * *

(4) * * *

(iii) Have objective criteria for SSBCI. Specifically:

(A) Have and apply written policies based on objective criteria for determining a chronically ill enrollee's eligibility to receive a particular SSBCI;

(B) Document the written policies specified in paragraph (f)(4)(iii)(A) of this section and the objective criteria on which the written policies are based; and

(C) For each SSBCI, list all the written policies and objective criteria on which the policies are based, as noted in paragraphs (f)(4)(i) and (f)(4)(iii)(A) of this section, on their public-facing website. * * * * *

(g) Administration of supplemental benefits--(1) General rule. MA organizations must have processes for delivering supplemental benefits to enrollees that ensure compliance with Sec. 422.100(c)(2) and paragraphs (a) through (f) of this section and appropriate access to all covered items and services, in accordance with Sec. 422.112(a).

(2) Provision of benefits through debit card. MA organizations that administer reductions in cost sharing or provide coverage of 100 percent of the cost of a mandatory supplemental benefit through use of a debit card must do all of the following:

(i) Provide debit cards that are electronically linked to plan covered items and services through a real-time identification mechanism to verify eligibility of plan covered benefits at the point of sale.

(ii) Provide instructions for debit card use and customer service support to enrollees.

(iii) Have an alternative process that allows for reimbursement of eligible expenses for plan covered benefits in circumstances where the debit card is unusable at the point of sale, including but not limited to debit card malfunction or when a beneficiary is entitled to obtain covered benefits out-of-network.

(iv) Ensure debit cards are limited to the specific plan year.

0 7. Section 422.107 is amended by adding paragraph (d)(1)(i) and reserved paragraph (d)(1)(ii) to read as follows:

Sec. 422.107 Requirements for dual eligible special needs plans.

* * * * *

(d) * * *

(1) * * *

(i) In conjunction with Sec. 422.514(h), where the State Medicaid agency does not mandate enrollment in Medicaid managed care for all full-benefit dually eligible individuals, and either the State Medicaid agency contract allows a dual eligible special needs plan established through this paragraph (d)(1) to enroll full-benefit dually eligible individuals or the plan is a highly integrated dual eligible special needs plan, the State Medicaid agency contract must stipulate that such full benefit dually eligible beneficiaries cannot be enrolled in a Medicaid managed care organization that is owned and controlled by an entity other than the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization.

(ii) [Reserved] * * * * *

0 8. Section 422.111 is amended by-- 0 a. Revising paragraph (b)(6); and 0 b. Removing paragraph (l).

The revision reads as follows:

Sec. 422.111 Disclosure requirements.

* * * * *

(b) * * *

(6) Supplemental benefits. Any mandatory supplemental benefits (including reductions in cost sharing) or optional supplemental benefits, the premium for optional supplemental benefits, and the applicable conditions and limitations associated with receipt or use of supplemental benefits. This includes both of the following:

(i) Disclosure of eligible over-the-counter items.

(ii) If providing supplemental benefits through a debit card, specifying which benefits may be accessed using the debit card.

0 9. Section 422.112 is amended by revising paragraph (a)(8) to read as follows:

Sec. 422.112 Access to services.

* * * * *

(a) * * *

(8) Cultural considerations. Ensure that services are provided in a culturally competent manner to all enrollees, including those with limited English proficiency or reading skills, and diverse cultural and ethnic backgrounds. * * * * *

Sec. 422.137 [Amended]

0 10. Section 422.137 is amended by removing paragraphs (c)(5) and (d)(6) and (7).

Sec. 422.152 [Amended]

0 11. Section 422.152 is amended by removing paragraph (a)(5).

0 12. Section 422.162 is amended by revising paragraphs (b)(3)(iv)(A)(2) and (b)(3)(iv)(B)(2) to read as follows:

Sec. 422.162 Medicare Advantage Quality Rating System.

* * * * *

(b) * * *

(3) * * *

(iv) * * *

(A) * * *

(2) For contract consolidations approved on or after January 1, 2022, if a measure score for a consumed or surviving contract is missing due to a data integrity issue as described in Sec. 422.164(g)(1)(i) and (ii), CMS assigns a score of zero for the missing measure score in the calculation of the enrollment-weighted measure score. If a measure score for a consumed or surviving contract is missing due to not having enough data to meet the measure technical specification or the reliability is less than 0.6 for a CAHPS measure, CMS treats this measure score as missing in the calculation of the enrollment-weighted measure score.

(B) * * *

(2) For contract consolidations approved on or after January 1, 2022, for all measures except HEDIS, CAHPS, and HOS, if a measure score for a consumed or surviving contract is missing due to a data integrity issue as described in Sec. 422.164(g)(1)(i) and (ii), CMS assigns a score of zero for the missing measure score in the calculation of the enrollment-weighted measure score. For all measures except HEDIS, CAHPS, HOS, and call center measures, if a measure score for a consumed or surviving contract is missing due to not having enough data to meet the measure technical specification, CMS treats this measure score as missing in the calculation of the enrollment-weighted measure score. * * * * *

0 13. Section 422.164 is amended by revising paragraph (e)(2) and adding paragraph (e)(3) to read as follows:

Sec. 422.164 Adding, updating, and removing measures.

* * * * *

(e) * * *

(2) CMS will announce the removal of a measure based upon its application of paragraph (e)(1) of this section through the process described for changes in and adoption of payment and risk adjustment policies in section 1853(b) of the Act in advance of the measurement period or will propose and finalize the removal of the measure through rulemaking in advance of the measurement period.

(3) CMS will propose and finalize the removal of a measure for any reason not stated in paragraph (e)(1) of this section through rulemaking in advance of the measurement period. * * * * *

0 14. Section 422.166 is amended by-- 0 a. In paragraph (f)(1) removing the phrase “Through the 2026 Star Ratings, this rating-specific” and adding in its place the phrase “This rating-specific”; 0 b. Removing paragraph (f)(3); and 0 c. Revising paragraph (h)(2).

The revision reads as follows:

Sec. 422.166 Calculation of Star Ratings.

* * * * *

(h) * * *

(2) Plan preview of the Star Ratings. CMS will have two plan preview periods before each Star Ratings release during which MA organizations can preview their preliminary Star Ratings data in HPMS prior to display on the Medicare Plan Finder. During the second plan preview, CMS will display de-identified contract-level sample data for one of each type of measure needed to replicate the cut point methodology, as determined by CMS. * * * * *

Sec. 422.308 [Amended]

0 15. Section 422.308 is amended in paragraph (c)(1) by removing the word “gender” and adding in its place the word “sex”.

0 16. Section 422.310 is amended by revising paragraph (f) to read as follows:

Sec. 422.310 Risk adjustment data.

* * * * *

(f) Use and release of data. Regarding the data described in paragraphs (a) through (d) of this section, CMS may use and release the minimum data it determines is necessary in accordance with CMS data sharing procedures and applicable Federal laws, subject to the aggregation of dollar amounts reported for the associated encounter to protect commercially sensitive data, unless authorized by other applicable laws. * * * * *

0 17. Section 422.510 is amended by adding paragraphs (a)(4)(xvii), (b)(2)(i)(D), and (c)(2)(iv) to read as follows:

Sec. 422.510 Termination of contract by CMS.

(a) * * *

(4) * * *

(xvii) Is no longer eligible to offer a dual eligible special needs plan because the MA organization does not hold a contract consistent with Sec. 422.107(b) with the State Medicaid agency.

(b) * * *

(2) * * *

(i) * * *

(D) The contract is being terminated based on paragraph (a)(4)(xvii) of this section.

(c) * * *

(2) * * *

(iv) The contract is being terminated based on paragraph (a)(4)(xvii) of this section. * * * * *

0 18. Section 422.514 is amended by adding paragraphs (h)(3)(iii) and (iv) to read as follows:

Sec. 422.514 Enrollment requirements.

* * * * *

(h) * * *

(3) * * *

(iii) If an MA organization subject to paragraph (h)(1) of this section holds a State Medicaid agency contract with a State that does not mandate enrollment in Medicaid managed care for all full-benefit dually eligible individuals and the State Medicaid agency contract allows, the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization may offer one or more additional D-SNPs for full-benefit dually eligible individuals who are enrolled in Medicaid fee-for-service. These D-SNPs may not enroll full-benefit dually eligible individuals who are enrolled in a Medicaid managed care organization that is owned and controlled by an entity other than the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization.

(iv) If a U.S. Territory has not adopted Medicare Savings Programs, as defined in 42 CFR 435.4, an MA organization operating in such U.S. Territory is exempt from the requirements in paragraph (h)(1)(i) of this section.

Sec. 422.752 [Amended]

0 19. Section 422.752 is amended by removing and reserving paragraph (d).

0 20. Section 422.2261 is amended by adding paragraph (a)(3) to read as follows:

Sec. 422.2261 Submission, review, and distribution of materials.

(a) * * *

(3)(i) MA organizations offering dual eligible special needs plans with exclusively aligned enrollment subject

to Sec. 422.107(e) must submit all materials for the contract in HPMS under the MA organization's contract number.

(ii) MA organizations may not submit materials for the contract under the organization's Multi-Contract Entity number and third-party marketing organizations may not submit materials under the Multi-Plan number as described in Sec. 422.2262(d)(2)(i). * * * * *

Sec. 422.2262 [Amended]

0 21. Section 422.2262 is amended by removing paragraphs (a)(1)(i) and (ii) and redesignating paragraphs (a)(1)(iii) through (xix) as paragraphs (a)(1)(i) through (xvii), respectively.

0 22. Section 422.2264 is amended by-- 0 a. In paragraph (c)(1)(ii)(D), removing the phrase “Cards, but not including Scope” and adding in its place “Cards and Scope”; and 0 b. Revising paragraphs (c)(2)(i), (c)(3) introductory text, and (c)(3)(i).

The revisions read as follows:

Sec. 422.2264 Beneficiary contact.

* * * * *

(c) * * *

(2) * * *

(i) If a marketing event directly follows an educational event, the beneficiary must be notified that the educational event is ending and a marketing event will begin shortly and be given a sufficient opportunity to leave the educational event prior to the start of the marketing event. * * * * *

(3) Personal marketing appointments are those appointments that are tailored to an individual or small group (for example, a married couple) for purposes of discussing marketing topics. Personal marketing appointments are not defined by the location.

(i) Prior to the personal marketing appointment, the MA plan (or agent or broker, as applicable) must agree upon and record the Scope of Appointment with the beneficiary(ies). The Scope of Appointment must be in writing for in-person personal marketing appointments. * * * * *

0 23. Section 422.2267 is amended by-- 0 a. Revising paragraphs (e)(5)(ii)(B)(1); 0 c. Removing and reserving paragraph (e)(31); 0 d. Revising paragraph (e)(41) introductory text and paragraph (e)(41)(ii); and 0 e. Removing paragraph (e)(42).

The revisions read as follows:

Sec. 422.2267 Required materials and content.

* * * * *

(e) * * *

(5) * * *

(ii) * * *

(B) * * *

(1) Deductible; the initial coverage phase; coverage gap for a year preceding 2025; and catastrophic coverage. * * * * *

(41) Third-party marketing organization disclaimer. This is standardized content. If a TPMO does not sell for all MA organizations in the service area the disclaimer consists of the statement: “We do not offer every plan available in your area. Currently we represent [insert number of organizations] organizations which offer [insert number of plans] products in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.” If the TPMO sells for all MA organizations in the service area the disclaimer consists of the statement: “Currently we represent [insert number of organizations] organizations which offer [insert number of plans] products in your area. You can always contact Medicare.gov or 1-800- MEDICARE for help with plan choices.” The MA organization must ensure that the disclaimer is as follows: * * * * *

(ii) Verbally conveyed during sales calls prior to the discussion of any benefits. * * * * *

0 24. Section 422.2274 is amended by-- 0 a. In paragraph (b)(3), removing the phrase “prior to meeting with potential enrollees” and adding in its place “prior to a personal marketing appointment”; and 0 b. Revising paragraphs (c)(9) and (g)(2)(ii).

The revisions read as follows:

Sec. 422.2274 Agent, broker, and other third-party requirements.

* * * * *

(c) * * *

(9) Establish and maintain a system for confirming all of the following:

(i) Beneficiaries enrolled by agents or brokers understand the product, including the rules applicable under the plan.

(ii) Agents and brokers appropriately complete Scope of Appointment records for all personal marketing appointments (including telephonic and walk-in). * * * * *

(g) * * *

(2) * * *

(ii) All marketing and sales calls, including the audio portion of calls conducted via web-based technology, must be recorded and retained in their entirety for a minimum period of 6 years. For the first 3 years of the retention period, records must be maintained in audio format. For years 4, 5, and 6, records may be maintained in either audio format or as complete and accurate transcript recordings.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0 25. The authority for part 423 continues to read as follows:

Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, and 1395hh.

0 26. Section 423.1 is amended by adding “1860D-14C. Manufacturer Discount Program.” in numerical order in paragraph (a)(1) to read as follows:

Sec. 423.1 Basis and scope.

(a) * * *

(1) * * *

1860D-14C. Manufacturer Discount Program. * * * * *

0 27. Section 423.4 is amended by adding the definitions of “Geographic area”, “Outlier prescriber of opioids”, “Persistent outlier prescriber of opioids”, and “Specialty” in alphabetical order to read as follows:

Sec. 423.4 Definitions.

* * * * *

Geographic area means the state in which a prescriber is practicing. * * * * *

Outlier prescriber of opioids means a prescriber who is a statistical outlier compared to their peers in a specialty and geographic area. * * * * *

Persistent outlier prescriber of opioids means an outlier prescriber identified by CMS in three consecutive outlier prescriber notifications. * * * * *

Specialty means the National Plan Provider Enumeration System (NPPES) taxonomy of a prescriber. * * * * *

0 28. Section 423.32 is amended by adding paragraph (k) to read as follows:

Sec. 423.32 Enrollment process.

* * * * *

(k) Enrollments requiring prior CMS approval--(1) CMS approval. Special Election Periods specified in paragraph (k)(2) of this section require CMS approval before an individual can use the SEP to make an enrollment election. CMS approval is provided for Part D enrollments either through the use of a CMS-operated election mechanism or through the individual's receipt of a notice which explains eligibility for the SEP and election instructions. Part D

plans may not transmit enrollment elections to CMS using the specified SEPs without prior CMS approval.

(2) Special election periods. All of the following SEPs require CMS approval prior to use:

(i) SEP for individuals who were not adequately informed of a loss of creditable prescription drug coverage, Sec. 423.38(c)(2).

(ii) SEP for contract violation, Sec. 423.38(c)(8).

(iii) SEP for individuals who disenroll in connection with CMS sanction, Sec. 423.38(c)(12).

(iv) SEP for other exceptional circumstances, Sec. 423.38(c)(36).

0 29. Section 423.36 is amended by adding paragraph (g) to read as follows:

Sec. 423.36 Disenrollment process.

* * * * *

(g) Disenrollments requiring prior CMS approval--(1) CMS approval. Special Election Periods specified in paragraph (g)(2) of this section require CMS approval before an individual can use the SEP to make a disenrollment election. CMS approval is provided for Part D disenrollments either through the use of a CMS-operated election mechanism or through the individual's receipt of a notice which explains eligibility for the SEP and election instructions. Part D plans may not transmit disenrollment elections to CMS using the specified SEPs without prior CMS approval.

(2) Special election periods. All of the following SEPs require CMS approval prior to use:

(i) SEP for individuals who were not adequately informed of a loss of creditable prescription drug coverage, Sec. 423.38(c)(2).

(ii) SEP for contract violation, Sec. 423.38(c)(8).

(iii) SEP for individuals who disenroll in connection with CMS sanction, Sec. 423.38(c)(12).

(iv) SEP for other exceptional circumstances, Sec. 423.38(c)(36). * * * * *

0 30. Section 423.38 is amended by revising paragraphs (c)(2), (c)(8) introductory text, (c)(12) introductory text, and (c)(36) to read as follows:

Sec. 423.38 Enrollment periods.

* * * * *

(c) * * *

(2) The individual was not adequately informed, as required by standards established by CMS under Sec. 423.56, that he or she has lost his or her creditable prescription drug coverage, that he or she never had credible prescription drug coverage, or the coverage is involuntarily reduced so that it is no longer creditable prescription drug coverage. This SEP requires CMS approval prior to use. The individual must use a CMS-operated election mechanism, in a form and manner specified by CMS, to make an election using this SEP. * * * * *

(8) This SEP requires CMS approval prior to use. The individual must use a CMS-operated election mechanism, in a form and manner specified by CMS, to make an election using this SEP. The individual must demonstrate to CMS, in accordance with guidelines issued by CMS, that the PDP sponsor offering the PDP substantially violated a material provision of its contract under this part in relation to the individual, including, but not limited to any of the following: * * * * *

(12) The individual is enrolled in a Part D plan offered by a Part D plan sponsor that has been sanctioned by CMS and elects to disenroll from that plan in connection with the matter(s) that gave rise to that sanction. This SEP requires CMS approval prior to use. The individual must receive a notice, as described in paragraph (c)(12)(i) of this section, to make an election using this SEP. * * * * *

(36) The individual meets other exceptional circumstances as CMS may provide. This SEP requires CMS approval prior to use. The individual must use a CMS-operated election mechanism, in a form and manner specified by CMS, to make an election using this SEP. * * * * *

0 31. Section 423.56 is amended by revising paragraphs (a) and (b)(3) to read as follows:

Sec. 423.56 Procedures to determine and document creditable status of prescription drug coverage.

(a) Definition. Creditable prescription drug coverage means any of the following types of coverage listed in paragraph (b) of this section only if the actuarial value of the coverage equals or exceeds the actuarial value of defined standard prescription drug coverage under Part D in effect at the start of such plan year, not taking into account the value of any discount provided under section 1860D-14C of the Act or of any selected drug subsidy under section 1860D-14D of the Act, and demonstrated through--

(1) The use of generally accepted actuarial principles and in accordance with CMS guidelines; or

(2) For group health plans not receiving a retiree drug subsidy, meeting the following requirements under the simplified creditable coverage determination methodology:

(i) Provision of reasonable coverage for brand name and generic prescription drugs and biological products.

(ii) Provision of reasonable access to retail pharmacies.

(iii) Is designed to pay on average a minimum percent of participants' prescription drug expenses, with the percent value at 73 percent for 2027 and percent values for subsequent years to be updated by CMS in subregulatory guidance in a time and manner determined by CMS to reflect the actuarial value of defined standard prescription drug coverage under Part D.

(b) * * *

(3) Coverage under a group health plan (other than an account-based medical plan as defined at Sec. 423.882 (paragraph (4) of the definition of Group health plans)) including the Federal employees health benefits program, and qualified retiree prescription drug plans as defined in section 1860D-22(a)(2) of the Act. * * * * *

0 32. Section 423.100 is amended by-- 0 a. Revising and republishing the definition of “Applicable beneficiary”; 0 b. Adding the definition of “Applicable discount” in alphabetical order; 0 c. Revising and republishing the definition of “Applicable drug”; 0 d. Adding the definition of “Applicable number of calendar days” in alphabetical order; 0 e. Revising and republishing the definition of “Coverage gap”; 0 f. Adding the definition of “Date of dispensing” in alphabetical order; 0 g. Revising and republishing the definition of “Incurred costs”; 0 f. Adding definitions for “Labeler code”, “Manufacturer”, “Manufacturer Discount Program”, “Manufacturer Discount Program agreement”, “Medicare Coverage Gap Discount Program”, “Medicare Coverage Gap Discount Program agreement”, “National Drug Code (NDC)”, “Non-applicable drug”, “Price applicability period”, “Selected drug”, and “Third Party Administrator (TPA)” in alphabetical order.

The additions and revisions read as follows:

Sec. 423.100 Definitions.

* * * * *

Applicable beneficiary means an individual who, on the date of dispensing a covered Part D drug--

(1) Is enrolled in a prescription drug plan or an MA-PD plan;

(2) Is not enrolled in a qualified retiree prescription drug plan;

(3)(i) For the purposes of the Coverage Gap Discount Program--

(A) Is not entitled to an income-related subsidy under section 1860D-14(a) of the Act;

(B) Has reached or exceeded the initial coverage limit under section 1860D-2(b)(3) of the Act during the year;

(C) Has not incurred costs for covered Part D drugs in the year equal to the annual out-of-pocket threshold specified in section 1860D- 2(b)(4)(B) of the Act; and

(D) Has a claim that--

(1) Is within the coverage gap;

(2) Straddles the initial coverage period and the coverage gap;

(3) Straddles the coverage gap and the annual out-of-pocket threshold; or

(4) Spans the coverage gap from the initial coverage period and exceeds the annual out-of-pocket threshold; and

(ii) For the purposes of the Manufacturer Discount Program, has incurred costs, as determined in accordance with section 1860D- 2(b)(4)(C) of the Act, for covered Part D drugs in the year that exceed the annual deductible specified in section 1860D-2(b)(1) of the Act.

Applicable discount, for purposes of the--

(1) Coverage Gap Discount Program, has the meaning set forth at Sec. 423.2305; and

(2) Manufacturer Discount Program, has the meaning set forth at Sec. 423.2712.

Applicable drug means a Part D drug that is--

(1)(i) Approved under a new drug application under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA); or

(ii) In the case of a biological product, licensed under section 351 of the Public Health Service Act (other than, with respect to a plan year before 2019, a product licensed under subsection (k) of such section 351).

(2)(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;

(iii) Is provided to a particular applicable beneficiary through an exception or appeal for that particular applicable beneficiary; or

(iv) For the purposes of the Manufacturer Discount Program, is provided to a particular applicable beneficiary as a transition fill under Sec. 423.120(b)(3) or as an emergency supply as may be required for an applicable beneficiary who is a long-term care resident.

(3) Not a compounded drug product (as described in Sec. 423.120(d)) that contains an applicable drug; and

(4) For the purposes of the Manufacturer Discount Program, not a selected drug during a price applicability period with respect to such drug.

Applicable number of calendar days means, with respect to claims for reimbursement submitted electronically, 14 days, and otherwise, 30 days. * * * * *

Coverage gap means the period in prescription drug coverage that occurs between the initial coverage limit and the out-of-pocket threshold during the years 2006 through 2024. For purposes of applying the initial coverage limit, Part D sponsors must apply their plan specific initial coverage limit under basic alternative, enhanced alternative or actuarially equivalent Part D benefit designs. * * * * *

Date of dispensing means the date of service. For long-term care and home infusion pharmacies, the date of dispensing can be interpreted as the date the pharmacy submits the discounted claim for reimbursement. * * * * *

Incurred costs means costs incurred by a Part D enrollee--

(1) For--

(i) Covered Part D drugs that are not paid for under the Part D plan as a result of application of any annual deductible or other cost- sharing rules for covered Part D drugs prior to the Part D enrollee satisfying the out-of-pocket threshold under Sec. 423.104(d)(5)(iii), including any price differential for which the Part D enrollee is responsible under Sec. 423.124(b); or

(ii) Nominal cost-sharing paid by or on behalf of an enrollee, which is associated with drugs that would otherwise be covered Part D drugs, as defined in Sec. 423.100, but are instead paid for, with the exception of said nominal cost-sharing, by a patient assistance program providing assistance outside the Part D benefit, provided that documentation of such nominal cost-sharing has been submitted to the Part D plan consistent with the plan processes and instructions for the submission of such information; and

(2) That are paid for--

(i) By the Part D enrollee or on behalf of the Part D enrollee by another person, and the Part D enrollee (or person paying on behalf of the Part D enrollee) is not reimbursed through insurance or otherwise, a group health plan, or other third party payment arrangement, or the person paying on behalf of the Part D enrollee is not paying under insurance or otherwise, a group health plan, or third party payment arrangement;

(ii) Under State Pharmaceutical Assistance Program (as defined in Sec. 423.464); by the Indian Health Service, an Indian tribe or tribal organization, or urban Indian organization (as defined in section 4 of the Indian Health Care Improvement Act) or under an AIDS Drug Assistance Program (as defined in part B of title XXVI of the Public Health Service); or by a manufacturer as payment for an applicable discount (as defined in Sec. 423.2305) under the Medicare Coverage Gap Discount Program (as defined in Sec. 423.2305); or

(iii) Under Sec. 423.782.

(3) For 2025 and subsequent years, that are reimbursed through insurance, a group health plan, or certain other third party payment arrangements, but not including the coverage provided by a prescription drug plan or an MA-PD plan that is basic prescription drug coverage or any payments by a manufacturer under the Manufacturer Discount Program under subpart AA of this part. * * * * *

Labeler code means the first segment of the National Drug Code (NDC) that identifies a particular manufacturer. * * * * *

Manufacturer means any entity which is engaged in the production, preparation, propagation, compounding, conversion or processing of prescription drug products, either directly or indirectly, by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis. For purposes of the Coverage Gap Discount Program and the Manufacturer Discount Program, such term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law, but includes entities otherwise engaged in repackaging or changing the container, wrapper, or labeling of any applicable drug product in furtherance of the distribution of the applicable drug from the original place of manufacture to the

person who makes the final delivery or sale to the ultimate consumer or user.

Manufacturer Discount Program means the Medicare Part D Manufacturer Discount Program established under section 1860D-14C of the Act.

Manufacturer Discount Program agreement means the agreement described at section 1860D-14C(b) of the Act.

Medicare Coverage Gap Discount Program (or Coverage Gap Discount Program) means the Medicare Coverage Gap Discount Program established under section 1860D-14A of the Act.

Medicare Coverage Gap Discount Program agreement (or Coverage Gap Discount Program agreement) means the agreement described in section 1860D-14A(b) of the Act.

National Drug Code (NDC) means the unique identifying prescription drug product number that is listed with the Food and Drug Administration (FDA) identifying the product's manufacturer, product and package size and type. * * * * *

Non-applicable drug means any Part D drug that is not an applicable drug and not a selected drug during a price applicability period with respect to such drug. * * * * *

Price applicability period has the meaning given such term in section 1191(b)(2) of the Act and any applicable regulations and guidance. * * * * *

Selected drug has the meaning given such term in section 1192(c) of the Act and any applicable regulations and guidance. * * * * *

Third Party Administrator (TPA) means the CMS contractor responsible for administering the requirements established by CMS to carry out sections 1860D-14A and 1860D-14C of the Act. * * * * *

0 33. Section 423.104 is amended by-- 0 a. Revising paragraphs (d)(1) introductory text, (d)(2) heading, (d)(2)(i) introductory text, (d)(2)(iv)(A)(4), (d)(2)(iv)(B), and (d)(2)(iv)(D)(3); 0 b. Revising and republishing paragraph (d)(3); 0 c. Revising paragraphs (d)(4) introductory text, (d)(4)(iii)(C), and (d)(4)(iv)(E). 0 d. Removing paragraph (d)(4)(iv)(F); 0 e. Adding paragraph (d)(4)(v); 0 f. Revising paragraphs (d)(5)(i) introductory text, (d)(5)(i)(A)(2), and (d)(5)(iii)(F); 0 g. Adding paragraphs (d)(5)(iii)(G) and (H), and (d)(5)(iv); 0 h. Revising paragraphs (e)(5) introductory text, (e)(5)(i), and (f)(1)(ii)(B)(3); and 0 i. Adding paragraph (j).

The revisions and additions read as follows:

Sec. 423.104 Requirements related to qualified prescription drug coverage.

* * * * *

(d) * * *

(1) Deductible. Subject to Sec. 423.120(g) and (h), an annual deductible equal to-- * * * * *

(2) Cost-sharing under prescription drug plans. (i) Subject to paragraph (d)(4) of this section, coinsurance for actual costs for covered Part D drugs covered under the Part D plan above the annual deductible specified in paragraph (d)(1) of this section, and for each year preceding 2025, up to the initial coverage limit under paragraph (d)(3) of this section, and for 2025 and each subsequent year, up to the annual out-of-pocket threshold specified in paragraph (d)(5)(iii) of this section, that is-- * * * * *

(iv) * * *

(A) * * *

(4) Determination. Except as provided in paragraph (d)(2)(iv)(B) of this section, the amount determined in paragraph (d)(2)(iv)(A)(3) of this section is the specialty-tier cost threshold for the plan year. * * * * *

(B) Limit on specialty-tier cost threshold adjustment. (1) CMS modifies the specialty-tier cost threshold for a plan year only if the amount determined in paragraph (d)(2)(iv)(A)(3) of this section for a plan year is at least 10 percent above or below the specialty tier cost threshold for the prior plan year.

(2) If a modification is made in accordance with this paragraph (d)(2)(iv)(B), CMS rounds the amount determined in paragraph (d)(2)(iv)(A)(3) of this section to the nearest $10, and the resulting dollar amount is the specialty-tier cost threshold for the plan year. * * * * *

(D) * * *

(3) For Part D plans with a deductible that is greater than $0 and less than the deductible provided under the Defined Standard benefit, the maximum coinsurance percentage is determined as follows:

(i) For years preceding 2025, subtracting the plan's deductible from 33 percent of the initial coverage limit (ICL) under section 1860D-2(b)(3) of the Act, dividing this difference by the difference between the ICL and the plan's deductible, and rounding to the nearest 1 percent.

(ii) For 2025 and each subsequent year, dividing the annual out-of- pocket (OOP) threshold, described in paragraph (d)(5)(iii) of this section, by total drug costs (represented by subtracting the plan deductible from the annual OOP threshold then dividing by the intended specialty-tier coinsurance percentage and adding the plan deductible) such that the result is 33 percent. Using the following equation solved for the deductible, each maximum allowable specialty-tier coinsurance percentage point can be inserted to determine the maximum allowable deductible corresponding to that coinsurance. Equation 1 to Paragraph (d)(2)(iv)(D)(3)(ii) [GRAPHIC] [TIFF OMITTED] TR06AP26.054

(3) Initial coverage limit. The initial coverage limit is equal to one of the following:

(i) For 2006. $2,250.

(ii) For years 2007 through 2024. The amount specified in this paragraph (d)(3) for the previous year, increased by the annual percentage increase specified in paragraph (d)(5)(iv) of this section, and rounded to the nearest multiple of $10.

(iii) For year 2025 and each subsequent year. There is no initial coverage limit.

(4) Cost-sharing in the coverage gap for applicable beneficiaries. For a year preceding 2025, cost-sharing in the coverage gap for applicable beneficiaries is as follows: * * * * *

(iii) * * *

(C) For 2020 through 2024, 25 percent.

(iv) * * *

(E) For 2019 through 2024, 75 percent.

(v) For 2025 and each subsequent year, there is no coverage gap.

(5) * * *

(i) After an enrollee's incurred costs exceed the annual out-of- pocket threshold described in paragraph (d)(5)(iii) of this section, for 2024 and each subsequent year, cost-sharing equal to $0, and for each year preceding 2024, cost-sharing equal to the greater of--

(A) * * *

(2) For subsequent years through 2023, the copayment amounts specified in this paragraph (d)(5)(i)(A) for the previous year increased by the annual percentage increase described in paragraph (d)(5)(iv) of this section and rounded to the nearest multiple of 5 cents; or * * * * *

(iii) * * *

(F) For 2021 through 2024. The amount specified in this paragraph (d)(5)(iii) for the previous year, increased by the annual percentage increase specified in paragraph (d)(5)(iv) of this section, and rounded to the nearest $50.

(G) For 2025. $2,000.

(H) For 2026 and each subsequent year. The amount specified in this paragraph (d)(5)(iii) for the previous year, increased by the annual percentage increase specified in paragraph (d)(5)(iv) of this section, and rounded to the nearest $50. * * * * *

(iv) Annual percentage increase in Part D drug expenditures--(A) General. The annual percentage increase for each year is equal to the annual percentage increase in average per capita aggregate expenditures for Part D drugs in the United States for Part D eligible individuals and is based on data for the 12-month period ending in July of the previous year.

(B) Calculating the annual percentage increase. The annual percentage increase is the product of the annual percentage trend (as defined in paragraph (d)(5)(iv)(C) of this section) and a multiplicative update (as defined in paragraph (d)(5)(iv)(D) of this section).

(C) Annual percentage trend. The annual percentage trend for a given year is the ratio of total Part D drug expenditures in the previous year (numerator) to the total Part D drug expenditures 2 years prior to the given year (denominator).

(D) Multiplicative update. The multiplicative update for a given year is the ratio of the product of the annual percentage trends for all prior recorded years as revised and updated with the most recently available data (numerator) to the product of annual percentage trends in prior recorded years as published in the previous year's rate announcement (denominator). * * * * *

(e) * * *

(5) Provides coverage that is designed, based upon an actuarially representative pattern of utilization, to provide for the payment, for costs incurred for covered Part D drugs, that are equal to the initial coverage limit under paragraph (d)(3) of this section for a year preceding 2025, or the annual out-of-pocket threshold specified in paragraph (d)(5)(iii) for the year for 2025 and each subsequent year, of an amount equal to at least the product of the following:

(i) The amount by which the initial coverage limit described in paragraph (d)(3) of this section for the year, for a year preceding 2025, or the annual out-of-pocket threshold described in paragraph (d)(5)(iii) for the year for 2025 and each subsequent year, exceeds the deductible described in paragraph (d)(1) of this section. * * * * *

(f) * * *

(1) * * *

(ii) * * *

(B) * * *

(3) For a year preceding 2025, an increase in the initial coverage limit described in paragraph (d)(3) of this section. * * * * *

(j) Drugs not subject to the defined standard deductible. (1) If a beneficiary has not satisfied their plan deductible but has accumulated sufficient incurred costs, as defined at Sec. 423.100, to satisfy the deductible provided under the Defined Standard benefit, then they will be both an applicable beneficiary under the Manufacturer Discount Program, as defined at Sec. 423.100, and be deemed to have satisfied their plan deductible.

(2) If a plan offers a deductible other than the deductible provided under the Defined Standard benefit and a beneficiary accumulates sufficient incurred costs, as defined at Sec. 423.100, to satisfy the plan deductible but has not accumulated incurred costs across all drugs at or above the deductible provided under the Defined Standard benefit, then applicable discounts, as defined at Sec. 423.2712, under the Manufacturer Discount Program are not available for that beneficiary and the plan must cover the portion of the costs that would be covered by the applicable discount if the beneficiary were an applicable beneficiary until the beneficiary's incurred costs exceed the deductible provided under the Defined Standard benefit and they become an applicable beneficiary.

(3) If a plan offers a deductible other than the deductible provided under the Defined Standard benefit and a beneficiary accumulates sufficient incurred costs, as defined at Sec. 423.100, to satisfy the plan deductible but has not accumulated incurred costs across all drugs at or above the deductible provided under the Defined Standard benefit, then the selected drug subsidy is not available for that beneficiary and the plan must cover the portion of the costs that would be covered by the selected drug subsidy, as described at Sec. 423.329(e), if the beneficiary were an applicable beneficiary until the beneficiary's incurred costs exceed the deductible provided under the Defined Standard benefit and they become an applicable beneficiary.

0 34. Section 423.128 is amended by revising paragraphs (e)(3)(ii) and (e)(7) to read as follows:

Sec. 423.128 Dissemination of Part D plan information.

* * * * *

(e) * * *

(3) * * *

(ii) For a year preceding 2025, the initial coverage limit for the current year. * * * * *

(7) Be provided no later than the end of the month following any month when prescription drug benefits are provided under this part, including, for a year preceding 2025, the covered Part D spending between the initial coverage limit described in Sec. 423.104(d)(3) and the out-of-pocket threshold described in Sec. 423.104(d)(5)(iii). * * * * *

0 35. Section 423.182 is amended by revising paragraphs (b)(3)(ii)(A)(2) and (b)(3)(ii)(B)(2) to read as follows:

Sec. 423.182 Part D Prescription Drug Plan Quality Rating System.

* * * * *

(b) * * *

(3) * * *

(ii) * * *

(A) * * *

(2) For contract consolidations approved on or after January 1, 2022, if a measure score for a consumed or surviving contract is missing due to a data integrity issue as described in Sec. 423.184(g)(1)(i), CMS assigns a score of zero for the missing measure score in the calculation of the enrollment-weighted measure score. If a measure

score for a consumed or surviving contract is missing due to not having enough data to meet the measure technical specification or the reliability is less than 0.6 for a CAHPS measure, CMS treats this measure score as missing in the calculation of the enrollment-weighted measure score.

(B) * * *

(2) For contract consolidations approved on or after January 1, 2022, for all measures except CAHPS, if a measure score for a consumed or surviving contract is missing due to a data integrity issue as described in Sec. 423.184(g)(1)(i), CMS assigns a score of zero for the missing measure score in the calculation of the enrollment-weighted measure score. For all measures except CAHPS and call center measures, if a measure score for a consumed or surviving contract is missing due to not having enough data to meet the measure technical specification, CMS treats this measure score as missing in the calculation of the enrollment-weighted measure score. * * * * *

0 36. Section 423.184 is amended by revising paragraph (e)(2) and adding paragraph (e)(3) to read as follows:

Sec. 423.184 Adding, updating, and removing measures.

* * * * *

(e) * * *

(2) CMS will announce the removal of a measure based upon its application of paragraph (e)(1) of this section through the process described for changes in and adoption of payment and risk adjustment policies in section 1853(b) of the Act in advance of the measurement period or will propose and finalize the removal of the measure through rulemaking in advance of the measurement period.

(3) CMS will propose and finalize the removal of a measure for any reason not stated in paragraph (e)(1) of this section through rulemaking in advance of the measurement period. * * * * *

Sec. 423.186 [Amended]

0 37. Section 423.186 is amended by-- 0 a. In paragraph (f)(1), removing the phrase “Through the 2026 Star Ratings, this rating-specific” and adding in its place the phrase “This rating-specific”; 0 b. Removing paragraph (f)(3); and 0 c. Revising paragraph (h)(2).

The revision reads as follows:

Sec. 423.186 Calculation of Star Ratings.

* * * * *

(h) * * *

(2) Plan preview of the Star Ratings. CMS will have two plan preview periods before each Star Ratings release during which Part D plan sponsors can preview their preliminary Star Ratings data in HPMS prior to display on the Medicare Plan Finder. During the second plan preview, CMS will display de-identified contract-level sample data for one of each type of measure needed to replicate the cut point methodology, as determined by CMS. * * * * *

0 38. Section 423.265 is amended by adding paragraph (d)(2)(vi) to read as follows:

Sec. 423.265 Submission of bids and related information.

* * * * *

(d) * * *

(2) * * *

(vi) The assumptions regarding the selected drug subsidy under Sec. 423.329(e) used in calculating the bid. * * * * *

0 39. Section 423.286 is amended by revising and republishing paragraph (b) to read as follows:

Sec. 423.286 Rules regarding premiums.

* * * * *

(b) Base beneficiary premium percentage. (1) The beneficiary premium percentage for any year, except for years 2024 through 2029, is a fraction, the--

(i) Numerator of which is 25.5 percent; and

(ii) Denominator of which is as follows:

(A) 100 percent minus the percentage established in paragraph (b)(1)(ii)(B) of this section.

(B) The percentage established in this paragraph (b) equals--

(1) The total reinsurance payment that CMS estimates will be paid under Sec. 423.329(c) for the coverage year divided by--

(2) The amount estimated under paragraph (b)(2)(ii)(A) of this section for the year plus total payments that CMS estimates will be paid to Part D plans that are attributable to the standardized bid amount during the year, taking into account amounts paid by both CMS and enrollees.

(2) The beneficiary premium percentage for the years 2024 through 2029 is the lesser of the beneficiary premium percentage--

(i) For the immediately preceding year increased by 6 percent; or

(ii) Calculated under the formula computed under paragraph (b)(1) of this section. * * * * *

0 40. Section 423.308 is amended by-- 0 a. Revising the definitions for “Allowable reinsurance costs” and “Gross covered prescription drug costs”; and 0 b. Adding the definition of “Inflation Reduction Act Subsidy Amount (IRASA)” in alphabetical order.

The revisions and addition read as follows:

Sec. 423.308 Definitions and terminology.

* * * * *

Allowable reinsurance costs means the subset of gross covered prescription drug costs actually paid that are attributable to basic prescription drug coverage for covered Part D drugs only and that are actually paid by the Part D sponsor or by (or on behalf of) an enrollee under the Part D plan and the portion of the negotiated price (as defined in section 1860D-14C(g)(6) of the Act) of an applicable drug (as defined at Sec. 423.100) paid by manufacturers under the Manufacturer Discount Program (as defined at Sec. 423.100). The costs for any Part D plan offering enhanced alternative coverage must be adjusted not only to exclude any costs attributable to benefits beyond basic prescription drug coverage, but also to exclude any costs determined to be attributable to increased utilization over the standard prescription drug coverage as the result of the insurance effect of enhanced alternative coverage in accordance with CMS guidelines on actuarial valuation. * * * * *

Gross covered prescription drug costs means those costs incurred under a Part D plan, excluding administrative costs, but including dispensing fees, during the coverage year. They equal the sum of the following:

(1) The share of actual costs (as defined at Sec. 423.100) paid by the Part D plan that is received as reimbursement by the pharmacy, or other dispensing entity, reimbursement paid to indemnify an enrollee when the reimbursement is associated with an enrollee obtaining covered Part D drugs under the Part D plan, or payments made by the Part D sponsor to other parties listed in Sec. 423.464(f)(1) with which the Part D sponsor must coordinate benefits, including other Part D plans, or as the result of any reconciliation process developed by CMS under Sec. 423.464.

(2) Nominal cost-sharing paid by or on behalf of an enrollee which is associated with drugs that would otherwise be covered Part D drugs, as defined at Sec. 423.100, but are instead paid for, with the exception of said nominal cost-sharing, by a patient assistance program providing assistance outside the Part D benefit, provided that documentation of such nominal cost-

sharing has been submitted to the Part D plan consistent with the plan processes and instructions for the submission of such information.

(3) All amounts paid under the Part D plan by or on behalf of an enrollee (such as the deductible, coinsurance, cost sharing, or, for years prior to 2025, amounts between the initial coverage limit and the out-of-pocket threshold) in order to obtain Part D drugs that are covered under the Part D plan. If an enrollee who is paying 100 percent cost sharing (as a result of paying a deductible or, for years prior to 2025, because the enrollee is between the initial coverage limit and the out-of-pocket threshold) obtains a covered Part D drug at a lower cost than is available under the Part D plan, such cost-sharing will be considered an amount paid under the plan by or on behalf of an enrollee under the previous sentence of this definition, if the enrollee's costs are incurred costs as defined at Sec. 423.100 and documentation of the incurred costs has been submitted to the Part D plan consistent with plan processes and instructions for the submission of such information. These costs are determined regardless of whether the coverage under the plan exceeds basic prescription drug coverage.

(4) All amounts paid by manufacturers under the Manufacturer Discount Program (as defined at Sec. 423.100). * * * * *

Inflation Reduction Act Subsidy Amount (IRASA) means a temporary retrospective subsidy paid to Part D plan sponsors for contract year 2023 for the statutory reduction in cost-sharing and deductible for covered insulin products or for ACIP-recommended adult vaccines, as defined in Sec. 423.100, and is equal to the difference between the following:

(1) The beneficiary cost-sharing for a covered insulin product or an ACIP-recommended adult vaccine under the plan's approved bids submitted under Sec. 423.265 for contract year 2023; and

(2) The applicable statutory maximum cost-sharing for the covered insulin product or for the ACIP-recommended adult vaccine for contract year 2023. * * * * *

0 41. Section 423.315 is amended by adding paragraph (h) to read as follows:

Sec. 423.315 General payment provisions.

* * * * *

(h) Selected drug subsidy. CMS provides selected drug subsidy payments described in Sec. 423.329(e) on a monthly basis during a year based on either estimated or incurred allowable reinsurance costs as provided under Sec. 423.329(e)(2)(i), and final reconciliation to actual allowable reinsurance costs as provided in Sec. 423.343(e).

0 42. Section 423.325 is amended by revising paragraph (a)(3) to read as follows:

Sec. 423.325 PDE submission timeliness requirements.

(a) * * *

(3) A PDE record for a paid claim transaction associated with a PDE record that was previously rejected by CMS at least once every 90 calendar days from receipt of a rejection until the PDE record is accepted unless the claim associated with the rejected PDE record is reversed or deleted, or the PDE record that was rejected is otherwise found to have been submitted in error. * * * * *

0 43. Section 423.329 is amended by revising paragraph (c)(1) and adding paragraph (e) to read as follows:

Sec. 423.329 Determination of payments.

* * * * *

(c) * * *

(1) General rule--(i) General rule for years preceding 2025. The reinsurance payment amount for a Part D eligible individual enrolled in a Part D plan for a coverage year is an amount equal to 80 percent of the allowable reinsurance costs attributable to that portion of gross covered prescription drug costs incurred in the coverage year after the individual has incurred true-out-of-pocket costs that exceed the annual out-of-pocket threshold specified in Sec. 423.104(d)(5)(iii).

(ii) General rule for 2026 and subsequent years. The reinsurance payment amount for a Part D eligible individual enrolled in a Part D plan for a coverage year is an amount equal to 20 percent for applicable drugs or 40 percent for drugs that are not applicable drugs of the allowable reinsurance costs attributable to that portion of gross covered prescription drug costs incurred in the coverage year after the individual has incurred true-out-of-pocket costs that exceed the annual out-of-pocket threshold specified in Sec. 423.104(d)(5)(iii). * * * * *

(e) Selected drug subsidy amount--(1) General rule. The selected drug subsidy amount is equal to 10 percent of the negotiated price to a covered Part D drug that would otherwise meet the definition of an applicable drug but for being a selected drug during a price applicability period.

(2) Payment method. Payments under this section are based on a method that CMS determines.

(i) Interim payments. CMS establishes a payment method by which interim payments of amounts under this section are made during a year based on the selected drug subsidy amount assumptions submitted with plan bids under Sec. 423.265(d)(2)(vi) and negotiated and approved under Sec. 423.272 or by an alternative method that CMS determines.

(ii) Final payments. CMS reconciles the interim payments to actual incurred selected drug subsidy amounts as provided in Sec. 423.343(e).

0 44. Section 423.336 is amended by revising paragraph (c) to read as follows:

Sec. 423.336 Risk-sharing arrangements.

* * * * *

(c) Payment methods. CMS makes payments after a coverage year after obtaining all of the cost data information in paragraph (c)(1) of this section necessary to determine the amount of payment. CMS does not make payments under this section if the Part D sponsor fails to provide the cost data information in paragraph (c)(1) of this section.

(1) Submission of cost data. Within 6 months of the end of a coverage year, the Part D sponsor must provide the information that CMS requires.

(2) Lump sum and adjusted monthly payments. CMS at its discretion makes either lump-sum payments or adjusts monthly payments in the following payment year based on the relationship of the plan's adjusted allowable risk corridor costs to the predetermined risk corridor thresholds in the coverage year, as determined under this section. In the event adequate data is not provided for risk corridor costs, CMS assumes that the Part D plan's adjusted allowable risk corridor costs are 50 percent of the target amount. * * * * *

0 45. Section 423.343 is amended by revising paragraph (d) and adding paragraph (e) to read as follows:

Sec. 423.343 Retroactive adjustments and reconciliations.

* * * * *

(d) Low-income cost-sharing subsidy. CMS makes final payment for low-income cost-sharing subsidies after a coverage year after obtaining all of the information necessary to determine the amount of payment.

(1) Submission of cost data. Within 6 months of the end of a coverage year, the Part D sponsor must provide the information that CMS requires.

(2) Payments. CMS at its discretion either makes lump-sum payments or adjusts monthly payments throughout the remainder of the payment year following the coverage year based on the difference between interim low-income cost-sharing subsidy payments and total low-income cost-sharing subsidy costs eligible for subsidy under Sec. 423.782 submitted by the plan for the coverage year. CMS may recover payments made through a lump sum recovery or by adjusting monthly payments throughout the remainder of the coverage year if interim low-income cost-sharing subsidy payments exceed the amount payable under Sec. 423.782 or if the Part D sponsor does not provide the data in paragraph (d)(1) of this section.

(e) Selected drug subsidy. CMS makes final payment for selected drug subsidies after a coverage year after obtaining all of the information necessary to determine the amount of payment.

(1) Submission of cost data. Within 6 months of the end of a coverage year, the Part D sponsor must provide the information that CMS requires.

(2) Payments. CMS at its discretion either makes lump-sum payments or adjusts monthly payments throughout the remainder of the payment year following the coverage year based on the difference between interim selected drug subsidy payments and total selected drug subsidy costs eligible for subsidy under Sec. 423.329(e) submitted by the plan for the coverage year. CMS may recover payments made through a lump sum recovery or by adjusting monthly payments throughout the remainder of the coverage year if the interim selected drug subsidy payments exceed the amount payable under Sec. 423.329(e) of if the Part D sponsor does not provide the data in paragraph (e)(1) of this section.

0 46. Section 423.346 is amended by revising paragraph (a) introductory text to read as follows:

Sec. 423.346 Reopening.

(a) CMS may conduct a global or targeted reopening to reopen and revise an initial or reconsidered final payment determination, including the following: a determination of the final amount of direct subsidy described at Sec. 423.329(a)(1), final reinsurance payments described at Sec. 423.329(c), final amount of the low income subsidy described at Sec. 423.329(d), final risk corridor payments as described at Sec. 423.336, reconciled Coverage Gap Discount Program payment described at Sec. 423.2320(b), reconciled Inflation Reduction Act Subsidy Amount (IRASA) payment for contract year 2023 described at Sec. 423.308, reconciled Manufacturer Discount Program payment described at Sec. 423.2744(c), and reconciled selected drug subsidy payment described at Sec. 423.343(e)-- * * * * *

0 47. Section 423.350 is amended by-- 0 a. Adding paragraphs (a)(1)(vi) through (viii); and 0 b. Revising paragraphs (a)(2) and (b)(1).

The additions and revisions read as follows:

Sec. 423.350 Payment appeals.

(a) * * *

(1) * * *

(vi) The reconciled Inflation Reduction Act Subsidy Amount (IRASA) payment for contract year 2023 described at Sec. 423.308.

(vii) The reconciled Manufacturer Discount Program payment under Sec. 423.2744(c).

(viii) The reconciled selected drug subsidy payment under Sec. 423.343(e).

(2) Payment information not subject to appeal. Payment information submitted to CMS under Sec. 423.322 and reconciled or used in the payment calculations for the reconciled IRASA payment for contract year 2023 described at Sec. 423.308 or under Sec. 423.336, Sec. 423.343, Sec. 423.2320(b), or Sec. 423.2744(c) is final and may not be appealed, nor may the appeals process be used to submit new information after the submission of information necessary for CMS to determine retroactive adjustments and reconciliations, including the calculation of risk corridor costs.

(b) * * *

(1) Time for filing a request. The request for reconsideration must be filed within 15 calendar days from the date CMS issues the payment reconciliation report for the payment determination that is being appealed under this section by the Part D plan sponsor. * * * * *

0 48. Section 423.464 is amended by revising paragraph (f)(2)(i)(C) to read as follows:

Sec. 423.464 Coordination of benefits with other providers of prescription drug coverage.

* * * * *

(f) * * *

(2) * * *

(i) * * *

(C) Exclude expenditures for covered Part D drugs made by government-funded health programs or the coverage provided by a prescription drug plan or an MA-PD plan that is basic prescription drug coverage or any payments by a manufacturer under the Manufacturer Discount Program. * * * * *

0 49. Section 423.504 is amended by adding paragraph (f) to read as follows:

Sec. 423.504 General provisions.

* * * * *

(f) Outlier prescribers of opioids. (1) CMS will identify and send notifications to outlier prescribers of opioids, which includes information about how the prescriber compares to other specified prescribers and resources on proper prescribing methods.

(2) At least annually, CMS will communicate information about persistent outlier prescribers of opioids to all Part D plan sponsors.

0 50. Section 423.505 is amended by-- 0 a. Revising paragraph (b)(24); 0 b. Adding paragraphs (d)(1)(vi) and (d)(2)(xiii); and 0 c. In paragraph (e)(2), removing the phrase “under the contract, or” and adding in its place the phrase “under the contract, which includes the records containing information identified in paragraph (d) of this section, or “.

The revisions and additions read as follows:

Sec. 423.505 Contract provisions.

* * * * *

(b) * * *

(24) Provide applicable discounts on applicable drugs when dispensed to applicable beneficiaries in accordance with the requirements in subpart W of part for the Coverage Gap Discount Program and the requirements in subpart AA of part for the Manufacturer Discount Program. * * * * *

(d) * * *

(1) * * *

(vi) Enable CMS to review original format documentation or information utilized from all written, electronic, and verbal communications between the plan sponsor and the pharmacist, prescriber, enrollee, or other relevant stakeholders, in addition to what is included on the pharmacy claim, that is relied upon by the Part D plan sponsor to make a coverage determination or otherwise permit a point- of-sale claim adjudication that determine a drug's coverage under the Part D benefit. In instances when a coverage determination is extended, the original coverage determination must be maintained as documentation. The documentation covered by these standards must be made available to CMS during Part D program integrity prescription drug event (PDE) record review audits. Failure to produce sufficient documentation to support Part D coverage will result in an improper Part D audit determination and will be

subject to PDE record deletion in accordance with Sec. 423.325(a)(2).

(2) * * *

(xiii) Documentation or information from all written, electronic, and verbal communications between the plan sponsor and the pharmacist, prescriber, enrollee, or other relevant stakeholders, in addition to what is included on the pharmacy claim, that is relied upon when Part D plan sponsors make coverage determinations or otherwise permit a point- of-sale claim adjudication that determines coverage of a drug under the Part D benefit, consistent with paragraph (d)(1)(vi) of this section. This includes:

(A) Date and time the request for a coverage determination or point-of-sale claim adjudication was received and, when available, the identity of the individual or entity who submitted the request.

(B) Name and title, as applicable if additional outreach is made, of the individual the Part D plan contacted to obtain the information needed to complete the request (for example, pharmacist, prescriber, enrollee, or enrollee representative).

(C) Information obtained, including the questions asked and responses received, and the final decision rendered.

(D) Diagnosis for a coverage determination or point-of-sale claim adjudication when used to determine Part D coverage for a medically accepted indication.

(E) Any other information that the Part D plan sponsor utilized to determine the final outcome of the coverage determination or point-of- sale claim adjudication request. * * * * *

0 51. Section 423.782 is amended by--

a. Revising paragraphs (a)(2) introductory text and (a)(2)(i)(B); 0 b. In paragraph (a)(2)(iii)(A), removing the phrase “Index, rounded” and adding in its place the phrase “Index specified in paragraph (d) of this section, rounded”; 0 c. In paragraph (b)(1), removing the phrase “Part D drugs, rounded to” and adding in its place the phrase “Part D drugs, rounded as specified under Sec. 423.104(d)(5)(iv) to”; 0 d. In paragraph (b)(3), removing the phrase “in this paragraph (b)(3) for the previous years increased by the annual percentage increase in average per capita aggregate expenditures for covered Part D drugs, rounded” and adding in its place the phrase “in Sec. 423.104(d)(5)(i)(A)(2), rounded”; and 0 e. Adding paragraph (d).

The revisions and addition reads as follows:

Sec. 423.782 Cost-sharing subsidy.

* * * * *

(a) * * *

(2) Reduction in cost-sharing for all covered Part D drugs covered under the PDP or MA-PD plan below the out-of-pocket limit (under Sec. 423.104), including for years preceding 2025, Part D drugs covered under the PDP or MA-PD plan obtained after the initial coverage limit (under Sec. 423.104(d)(4)), as follows:

(i) * * *

(B) Those individuals who have income for years prior to 2024 under 135 percent, and for 2024 and subsequent years, under 150 percent of the Federal poverty line applicable to the individual's family size who meet the resources test described at Sec. 423.773(b)(2). * * * * *

(d) Annual percentage increase in consumer price index (CPI)--(1) General. The annual percentage increase in consumer price index (CPI) for each year is equal to the annual percentage increase in the CPI in the United States for all items per a U.S. city average and is based on data for the 12-month period ending in September of the previous year.

(2) Calculating the annual percentage increase in CPI. The annual percentage increase is the product of the annual percentage trend (as defined in subparagraph (d)(3) of this section) and a multiplicative update (as defined in subparagraph (d)(4) of this section).

(3) Annual percentage trend. The annual percentage trend for a given year is the ratio of the CPI in the previous year (numerator) to the CPI 2 years prior to the given year (denominator).

(4) Multiplicative update. The multiplicative update for a given year is the ratio of the product of the annual percentage trends for all prior recorded years, as revised and updated with the most recent available data (numerator) to the product of the annual percentage trends in prior recorded years as published in the previous year's rate announcement (denominator).

0 52. Section 423.882 is amended by revising the definition of “Allowable retiree costs” and “Gross covered retiree pan-related prescription drug costs and allowable retiree costs” to read as follows:

Sec. 423.882 Definitions.

* * * * *

Allowable retiree costs means the subset of gross covered retiree plan-related prescription drug costs actually paid by the sponsor of the qualified retiree prescription drug plan or by (or on behalf of) a qualifying covered retiree under the plan and the portion of the negotiated price (as defined in section 1860D-14C(g)(6) of the Act) of an applicable drug (as defined by Sec. 423.100) paid by manufacturers under the Manufacturer Discount Program (as defined by Sec. 423.100). * * * * *

Gross covered retiree plan-related prescription drug costs, or gross retiree costs, means those Part D drug costs incurred under a qualified retiree prescription drug plan, excluding administrative costs, but including dispensing fees, during the coverage year. They equal the sum of the following:

(1) The share of prices paid by the qualified retiree prescription drug plan that is received as reimbursement by the pharmacy or by an intermediary contracting organization, and reimbursement paid to indemnify a qualifying covered retiree when the reimbursement is associated with a qualifying covered retiree obtaining Part D drugs under the qualified retiree prescription drug plan.

(2) All amounts paid under the qualified retiree prescription drug plan by or on behalf of a qualified covered retiree (such as the deductible, coinsurance, cost sharing, or, for years prior to 2025, amounts between the initial coverage limit and the out-of-pocket threshold) in order to obtain Part D drugs that are covered under the qualified retiree prescription drug plan.

(3) All amounts paid by manufacturers under the Manufacturer Discount Program (as defined at Sec. 423.100). * * * * *

Sec. 423.884 [Amended]

0 53. Section 423.884 is amended by-- 0 a. In paragraph (c)(2)(v)(D) by removing the word “Gender” and adding in its place the word “Sex.” 0 b. In paragraphs (d) introductory text, (d)(1)(i) and (ii), and (d)(5)(iii)(C) by removing the phrase “not taking into account the value of any discount or coverage provided during the coverage gap” and replacing it with the phrase “for years prior to 2025, not taking into account the value of any discount or coverage provided during the coverage gap and for 2025 and subsequent years, not taking into account the value of any discount provided under the Manufacturer Discount Program.”

0 54. Section 423.1000 is amended by revising paragraph (a)(3) to read as follows:

Sec. 423.1000 Basis and scope.

(a) * * *

(3)(i) CMS must impose a civil money penalty on a manufacturer that fails to provide applicable discounts for applicable drugs of the manufacturer dispensed to applicable beneficiaries in accordance with the terms of such manufacturer's--

(A) Coverage Gap Discount Program agreement, in accordance with section 1860D-14A(e)(2) of the Act; and

(B) Manufacturer Discount Program agreement, in accordance with section 1860D-14C(e) of the Act.

(ii) The provisions of section 1128A (other than subsections (a) and (b)) of the Act apply to a civil money penalty under paragraph (a)(3)(i) of this section. 0 55. Section 423.1002 is amended by revising the definition of “Affected party” to read as follows:

Sec. 423.1002 Definitions.

* * * * *

Affected party means any Part D sponsor or, for purposes of the Coverage Gap Discount Program, any manufacturer (as defined in Sec. 423.100), or, for purposes of the Manufacturer Discount Program, any manufacturer that is an agreement holder (as defined in Sec. 423.2704), impacted by an initial determination or, if applicable, by a subsequent determination or decision issued under this part, and “party” means the affected party or CMS, as appropriate. * * * * *

0 56. Section 423.2261 is amended by adding paragraph (a)(3) to read as follows:

Sec. 423.2261 Submission, review, and distribution of materials.

(a) * * *

(3)(i) Part D sponsors offering dual eligible special needs plans with exclusively aligned enrollment subject to Sec. 422.107(e) must submit all materials for the contract in HPMS under the Part D sponsor's contract number.

(ii) Part D sponsors may not submit materials for the contract under the organization's Multi-Contract Entity number and third-party marketing organizations may not submit materials under the Multi-Plan number as described in Sec. 423.2262(d)(2)(i). * * * * *

Sec. 423.2262 [Amended]

0 57. Section 423.2262 is amended by removing paragraphs (a)(1)(i) and (ii) and redesignating paragraphs (a)(1)(iii) through (xviii) as paragraphs (a)(1)(i) through (xvi), respectively.

0 58. Section 423.2264 is amended by-- 0 a. In paragraph (c)(1)(ii)(D), removing the phrase “Cards, but not including Scope” and adding in its place “Cards and Scope”; and 0 b. Revising paragraphs (c)(2)(i), (c)(3) introductory text, and (c)(3)(i).

The revisions read as follows:

Sec. 423.2264 Beneficiary contact.

* * * * *

(c) * * *

(2) * * *

(i) If a marketing event directly follows an educational event, the beneficiary must be notified that the educational event is ending and a marketing event will begin shortly and be given a sufficient opportunity to leave the educational event prior to the start of the marketing event. * * * * *

(3) Personal marketing appointments are those appointments that are tailored to an individual or small group (for example, a married couple) for purposes of discussing marketing topics. Personal marketing appointments are not defined by the location.

(i) Prior to the personal marketing appointment, the Part D plan (or agent or broker, as applicable) must agree upon and record the Scope of Appointment with the beneficiary(ies). The Scope of Appointment must be in writing for in-person personal marketing appointments. * * * * *

0 59. Section 423.2267 is amended by-- 0 a. Revising paragraph (e)(5)(ii)(A)(2); 0 b. Removing and reserving paragraph (e)(33); and 0 c. Revising paragraphs (e)(41) introductory text and (e)(41)(ii).

The revisions read as follows:

Sec. 423.2267 Required materials and content.

* * * * *

(e) * * *

(5) * * *

(ii) * * *

(A) * * *

(2) Deductible; the initial coverage phase; coverage gap for a year preceding 2025; and catastrophic coverage. * * * * *

(41) Third-party marketing organization disclaimer. This is standardized content. If a TPMO does not sell for all Part D sponsors in the service area the disclaimer consists of the statement: “We do not offer every plan available in your area. Currently we represent [insert number of organizations] organizations which offer [insert number of plans] products in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.” If the TPMO sells for all Part D sponsors in the service area the disclaimer consists of the statement: “Currently we represent [insert number of organizations] organizations which offer [insert number of plans] products in your area. You can always contact Medicare.gov or 1-800- MEDICARE for help with plan choices.” The Part D sponsor must ensure that the disclaimer is as follows: * * * * *

(ii) Verbally conveyed during sales calls prior to the discussion of any benefits. * * * * *

0 60. Section 423.2274 is amended by-- 0 a. In paragraph (b)(3), removing the phrase “prior to meeting with potential enrollees” and adding in its place “prior to a personal marketing appointment”; and 0 b. Revising paragraphs (c)(9) and (g)(2)(ii).

The revisions read as follows:

Sec. 423.2274 Agent, broker, and other third-party requirements.

* * * * *

(c) * * *

(9) Establish and maintain a system for confirming all of the following:

(i) Beneficiaries enrolled by agents or brokers understand the product, including the rules applicable under the plan.

(ii) Agents and brokers appropriately complete Scope of Appointment records for all personal marketing appointments (including telephonic and walk-in). * * * * *

(g) * * *

(2) * * *

(ii) All marketing and sales calls, including the audio portion of calls conducted via web-based technology, must be recorded and retained in their entirety for a minimum period of 6 years. For the first 3 years of the retention period, records must be maintained in audio format. For years 4, 5, and 6, records may be maintained in either audio format or as complete and accurate transcript recordings.

0 61. Revise and republish Sec. 423.2300 to read as follows:

Sec. 423.2300 Scope.

(a) Scope. This subpart sets forth the requirements for the Medicare coverage gap discount program based on provisions included in sections 1860D-14A and 1860D-43 of the Act, as follows:

(1) Condition for coverage of applicable drugs under Part D.

(2) The Medicare Coverage Gap Discount Program Agreement.

(3) Coverage gap discount payment processes for Part D sponsors.

(4) Provision of applicable discounts on applicable drugs for applicable beneficiaries.

(5) Manufacturer audit and dispute resolution processes.

(6) Resolution of beneficiary disputes involving coverage gap discounts.

(7) Compliance monitoring and civil money penalties.

(8) The termination of the Medicare Coverage Gap Discount Program Agreement.

(b) Applicability. The requirements of this subpart apply before January 1, 2025, and, with respect to applicable drugs dispensed prior to such date, continue to apply on and after January 1, 2025.

0 62. Section 423.2305 is amended by-- 0 a. Revising and republishing the introductory text and the definition of “Applicable discount”; 0 c. Removing the definitions of “Applicable number of calendar days”; “Date of dispensing”; “Labeler code”; “Manufacturer”; “Medicare Coverage Gap Discount Program”; “Medicare Coverage Gap Discount Program Agreement”; and “National Drug Code”; 0 d. Revising and republishing the definition of “Negotiated price”; and 0 e. Removing the definition of “Third Party Administrator”.

The revisions read as follows:

Sec. 423.2305 Definitions.

As used in this subpart and for purposes of the Coverage Gap Discount Program, unless otherwise specified--

Applicable discount means, with respect to a plan year before 2019, 50 percent or, with respect to plan year 2019 through plan year 2024, 70 percent of the portion of the negotiated price (as defined in this section) of the applicable drug of a manufacturer that falls within the coverage gap and that remains after such negotiated price is reduced by any supplemental benefits that are available. * * * * *

Negotiated price for purposes of the Coverage Gap Discount Program, means the price for a covered Part D drug that--

(1) The Part D sponsor (or other intermediary contracting organization) and the network dispensing pharmacy or other network dispensing provider have negotiated as the lowest possible reimbursement such network entity will receive, in total, for a particular drug;

(i) Includes all price concessions (as defined in Sec. 423.100) from network pharmacies or other network providers; and

(ii) Excludes additional contingent amounts, such as incentive fees, if these amounts increase prices;

(2) Is reduced by those discounts, direct or indirect subsidies, rebates, non-pharmacy price concessions, and direct or indirect remuneration that the Part D sponsor has elected to pass through to Part D enrollees at the point-of-sale; and

(3) Excludes any dispensing fee or vaccine administration fee for the applicable drug.

(4) In connection with applicable drugs dispensed by an out-of- network provider in accordance with the applicable beneficiary's Part D plan out-of-network policies, the negotiated price means the plan allowance as set forth in Sec. 423.124, less any dispensing fee or vaccine administration fee.

Sec. 423.2310 [Amended]

0 63. Section 423.2310 is amended in paragraph (a)(1) by removing the phrase “Discount Program” and adding in its place the phrase “Coverage Gap Discount Program”.

0 64. Section 423.2315 is amended by-- 0 a. In paragraph (a), removing the phrase “Program Agreement (or Discount Program Agreement)” and adding in its place the phrase “Program Agreement”; 0 b. In paragraphs (b)(5) and (11), removing the phrase “Discount Program” and adding in its place the phrase “Coverage Gap Discount Program”; 0 c. In paragraph (c)(1), removing the phrase “Discount Program Agreement” and adding in its place the phrase “Coverage Gap Discount Program Agreement” each time it appears; 0 d. Revising paragraph (c)(2); and 0 e. In paragraph (c)(3), removing the phrase “Discount Program Agreement” and adding in its place the phrase “Coverage Gap Discount Program Agreement”.

The revision reads as follows:

Sec. 423.2315 Medicare Coverage Gap Discount Program Agreement.

* * * * *

(c) * * *

(2) For 2012 and subsequent years prior to 2025, for a Coverage Gap Discount Program Agreement to be effective for a year, a manufacturer must enter into such Agreement not later than January 30th of the preceding year. * * * * *

Sec. 423.2320 [Amended]

0 65. Section 423.2320 is amended in paragraph (b) by removing the phrase “Discount Program” and adding in its place the phrase “Coverage Gap Discount Program”.

Sec. 423.2330 [Amended]

0 66. Section 423.2330 is amended in paragraphs (a)(1) and (b)(3) by removing the phrase “Discount Program” and adding in its place the phrase “Coverage Gap Discount Program”.

Sec. 423.2335 [Amended]

0 67. Section 423.2335 is amended by removing the phrase “Discount Program” and adding in its place the phrase “Coverage Gap Discount Program”.

Sec. 423.2340 [Amended]

0 68. Section 423.2340 is amended in paragraphs (a), (b), (c) introductory text, and (c)(1) by removing the phrase “Discount Program Agreement” and adding in its place the phrase “Coverage Gap Discount Program Agreement”.

0 69. Section 423.2345 is amended by-- 0 a. Revising the section heading; 0 b. In paragraph (a)(1)-- 0 i. Removing the phrase “Discount Program Agreement” and adding in its place the phrase “Coverage Gap Discount Program Agreement”; and 0 ii. Removing the phrase “Discount Program” and adding in its place the phrase “Coverage Gap Discount Program”; 0 c. In paragraphs (a)(3)(i), (b)(1), (d), and (e), removing the phrase “Discount Program Agreement” and adding in its place the phrase “Coverage Gap Discount Program Agreement”; and 0 d. Adding paragraph (f).

The addition reads as follows:

Sec. 423.2345 Termination of Coverage Gap Discount Program Agreement.

* * * * *

(f) Subject to Sec. 423.2300(b), all Coverage Gap Discount Program Agreements under this subpart are terminated as of January 1, 2025.

0 70. Section 423.2420 is amended by adding paragraphs (b)(4)(iii) through (v) to read as follows:

Sec. 423.2420 Calculation of medical loss ratio.

* * * * *

(b) * * *

(4) * * *

(iii) Prospective Manufacturer Discount Program Payments.

(iv) Selected Drug Subsidy Program Payments.

(v) Inflation Reduction Act Subsidy Amounts. * * * * *

0 71. Section 423.2536 is amended by adding paragraph (m) to read as follows:

Sec. 423.2536 Waiver of Part D program requirements.

* * * * *

(m) Provision of specific information. Section 423.128(d)(1)(i)(A).

0 71. The heading for subpart Z is revised to read as follows:

Subpart Z--Appeals Process for Part D Program Integrity Prescription Drug Event Record Review Audits

* * * * *

0 72. Section 423.2600 is revised to read as follows:

Sec. 423.2600 Payment appeals.

Medicare Part D plan sponsors may appeal program integrity prescription drug event record review audit determinations.

(a) Issues eligible for appeal. (1) CMS's application of Part D policy(ies).

(2) Factual or data errors.

(b) Issues ineligible for appeal. (1) The Part D plan sponsor's failure to submit documentation in the timeframes specified by CMS during the audit.

(2) The program integrity prescription drug event record review audit methodology.

0 73. Section 423.2605 is amended by-- 0 a. In paragraph (a), removing the phrase “demand letter” and adding in its place the phrase “close out letter”; and 0 b. Revising paragraph (e).

The revision reads as follows:

Sec. 423.2605 Request for reconsideration.

* * * * *

(e) Notification of decision. The independent reviewer decides the reconsideration within 60 calendar days after the timeframe for filing a rebuttal has expired, and sends a written decision to the Part D plan sponsor and CMS, explaining the basis for the decision. * * * * *

0 74. Section 423.2610 is amended by-- 0 a. In paragraph (d)(2)(i), removing the phrase “The Part D RAC” and adding in its place the phrase “The CMS”; 0 b. In paragraph (d)(3), removing the phrase “nor CMS may submit” and adding in its place the phrase “nor CMS is permitted to submit”; 0 c. In paragraph (e), removing the phrase “60 days” and adding in its place the phrase “60 calendar days after the timeframe for filing a rebuttal has expired”; and 0 d. Revising paragraph (f).

The revision reads as follows:

Sec. 423.2610 Hearing official review.

* * * * *

(f) Effect of hearing official decision. The hearing official's decision is final and binding, unless the decision is reversed or modified by the CMS Administrator in accordance with Sec. 423.2615. * * * * *

0 75. Section 423.2615 is amended by-- 0 a. In paragraph (b)(2), removing the phrase “nor CMS may submit” and adding in its place the phrase “nor CMS is permitted to submit”; 0 b. In paragraph (d), removing the phase “45 days” and adding in its place “30 calendar days”; and 0 c. Revising paragraph (e).

The revision reads as follows:

Sec. 423.2615 Review by the Administrator.

* * * * *

(e) Administrator Review. If the CMS Administrator agrees to review the hearing official's decision, he or she determines, after reviewing the hearing record, and any arguments submitted by the Part D plan sponsor or CMS in accordance with this section, whether the determination should be upheld, reversed, or modified. The CMS Administrator furnishes a written decision, which is final and binding, to the Part D plan sponsor and to CMS within 45 calendar days after the timeframe for filing a rebuttal has expired.

0 76. Add subpart AA to read as follows: Subpart AA--Medicare Part D Manufacturer Discount Program Sec. 423.2700 Basis and scope. 423.2704 Definitions. 423.2708 Conditions for coverage of drugs under Part D. 423.2712 Applicable discounts. 423.2716 Phase-in of applicable discount for certain manufacturers. 423.2720 Determination of phase-in eligibility. 423.2724 Effect of manufacturer acquisition on phase-in eligibility. 423.2728 Recalculation of phase-in eligibility determination. 423.2732 Use of third party administrator. 423.2736 Requirement for point-of-sale discounts. 423.2740 Negative invoice payment process for Part D sponsors. 423.2744 Prospective payments to Part D sponsors. 423.2748 Requirement to use the Health Plan Management System. 423.2752 Manufacturer Discount Program agreement. 423.2756 Manufacturer requirements. 423.2760 Audits. 423.2764 Dispute resolution. 423.2768 Civil money penalties.