42 U.S.C. § 1395w–104 — Beneficiary protections for qualified prescription drug coverage

(a) Dissemination of information

(1) General information.

(A) Application of MA information. A PDP sponsor^* must give each person^* enrolled in its prescription drug plan^*, when the person enrolls and at least once each year afterward, clear, accurate, and standardized information described in 42 U.S.C. § 1395w–22(c)(1) about that plan, to the extent the Secretary^* decides it is appropriate for benefits under this part. Subject to subparagraph (C), this information must also include the information in subparagraph (B).

(B) Drug^*-specific information. The information must cover:

(i) How to get particular covered Part D drugs, including through pharmacy networks.

(ii) How the sponsor’s formulary works, including any tiers, and how a Part D-eligible person can get formulary information under paragraph (3). This section does not define “formulary.”

(iii) The enrollee’s cost-sharing^* requirements and how a Part D-eligible person can get that information, including the copayment level or other payment level for each drug or drug class, including tiered levels, under paragraph (3).

(iv) The medication therapy management program required by subsection (c).

(v) The drug-management program for at-risk beneficiaries under subsection (c)(5).

(vi) For plan year 2021 and every later plan year, information about treating pain, including (I) the risks of prolonged opioid use and (II) coverage of non-drug therapies, devices, and nonopioid medicines. For an MA–PD plan^* under part C, the information concerns coverage under that plan. For a prescription drug plan, it concerns coverage under that plan and under parts A and B.

(C) Targeted information. Instead of giving the pain-treatment^* information in subparagraph (B)(vi) to every enrollee, a PDP sponsor may send it by mail or electronic communication to a subset of enrollees, such as people who were prescribed an opioid during the previous two years.

(2) Information on request. If a Part D-eligible person who may enroll in a prescription drug plan asks for information, the sponsor offering the plan must provide information similar, as the Secretary decides, to the information described in 42 U.S.C. § 1395w–22(c)(2)(A), (B), and (C).

(3) Specific information.

(A) Answers to enrollee questions. Each PDP sponsor must have a way to give enrollees requested specific information promptly. The way must include access through a toll-free telephone number and, if requested, the information in writing.

(B) Formulary changes online. A sponsor must promptly make information available on an Internet website about specific formulary changes, including changes to the tier or preferred status of covered Part D drugs.

(4) Claims information. A sponsor must give each enrollee information in an easily understandable form. It must include (A) an explanation of benefits, following 42 U.S.C. § 1395b–7(a) or a comparable method; and (B), when prescription drug benefits are provided under this part, a notice about (i) the current year’s initial coverage limit^*, for a year before 2025, and (ii) the current year’s annual out-of-pocket threshold. The Secretary decides how often the notices under subparagraph (B) must be sent, and they need not be sent more often than the Secretary specifies. Notices under subparagraph (B)(ii) must take into account, as far as practicable and as the Secretary specifies, the application of 42 U.S.C. § 1395w–102(b)(4)(C).

(b) Access to covered Part D drugs

(1) Assuring pharmacy access.

(A) General rules.

(i) Any willing pharmacy. A PDP sponsor must allow any pharmacy that meets the plan’s standard contract terms and conditions to participate as a network pharmacy.

(ii) Contract terms and conditions. (I) For plan years beginning on or after January 1, 2029, and subject to clause (i), the sponsor’s contract terms and conditions must be reasonable and relevant under standards established by the Secretary under subclause (II), notwithstanding any other law. (II) By the first Monday in April 2028, the Secretary must establish standards for reasonable and relevant terms and conditions. (III) By April 1, 2027, to help establish those standards, the Secretary must issue a request for information seeking input about trends and current practices^* in plan and network-pharmacy contracts; whether reimbursement and dispensing fees cover pharmacies’ ingredient and operating costs; pharmacy quality measures; sponsor restrictions on dispensing covered Part D drugs; sponsor auditing practices; regulations^* or guidance needing clarification; factors for judging whether terms are reasonable and relevant; and other issues the Secretary considers appropriate.

(B) Network-pharmacy discounts. For a covered Part D drug^* dispensed by an in-network pharmacy, a plan may reduce an enrollee’s coinsurance or copayment below the otherwise required amount, despite subparagraph (A). The reduction may not increase the Secretary’s payments to the plan under 42 U.S.C. § 1395w–115.

(C) Convenient access. (i) The sponsor must include enough pharmacies that dispense drugs directly to patients, rather than by mail order, to provide convenient access under the Secretary’s rules. (ii) The Secretary’s access rules may not be less favorable to enrollees than the TRICARE Retail Pharmacy rules in the Department of Defense solicitation statement of work identified as #MDA906–03–R–0002, as of March 13, 2003. (iii) The rules must provide adequate emergency access. (iv) They may include access standards for enrollees living in long-term-care facilities and for pharmacies operated by the Indian Health Service, Indian tribes or tribal organizations, and urban Indian organizations as defined in 25 U.S.C. § 1603.

(D) Level playing field. The sponsor must let enrollees receive benefits, which may include a 90-day supply of drugs or biological products, through a pharmacy other than a mail-order pharmacy, if the enrollee pays any difference in the charge.

(E) No insurance risk^* requirement. The contract terms may not require a participating pharmacy to accept insurance risk as a condition of participation.

(F) Enforcement of reasonable and relevant contract standards. (i) Allegation process. (I) By January 1, 2029, the Secretary must create a process for a pharmacy to allege that a PDP sponsor violated the reasonable-and-relevant contract standards in subparagraph (A)(ii), or violated item (VIII). (II)(aa) Except as provided in item (bb), the process must allow no more than one allegation per plan year for each pharmacy–sponsor contract. (bb) If the contract is modified after the pharmacy submits an allegation for that contract and plan year, the pharmacy may submit one additional allegation about the modifications for that contract and plan year. (III)(aa) A sponsor that is the subject of an allegation must give the Secretary documents or materials the Secretary specifies, including contract offers and related correspondence, at the time and in the form and manner specified. (bb) The sponsor may not stop or limit the pharmacy from giving those documents or materials to the Secretary as part of the allegation or its evidence. (IV) The Secretary must create a standard template. The pharmacy must certify that, to the best of its knowledge, information, and belief, its submission is accurate, complete, and true. (V) If the Secretary finds that a pharmacy routinely submits frivolous allegations, the Secretary may temporarily bar that pharmacy from using the process. (VI) Allegations submitted through this process are exempt from disclosure under 5 U.S.C. § 552. (VII) This process does not limit a pharmacy’s ability to pursue other legal actions or remedies allowed by Federal or State^* law for a possible violation of this subparagraph. (VIII) Consistent with Federal or State law, a sponsor may not retaliate against a pharmacy for submitting an allegation, or coerce, intimidate, threaten, or interfere with the pharmacy’s ability to submit one. (ii) The Secretary must investigate submitted allegations as the Secretary considers appropriate. (iii)(I) If the Secretary finds that a sponsor violated the reasonable-and-relevant contract standards or item (i)(VIII), the Secretary may use the authorities in 42 U.S.C. §§ 1395w–27(g) and 1395w–112(b)(3)(E) to impose civil money penalties or other intermediate sanctions. (II) Except for subsections (a) and (b), 42 U.S.C. § 1320a–7a applies to a penalty under this clause in the same way it applies to a penalty or proceeding under § 1320a–7a(a).

(2) Standardized technology.

(A) A prescription drug plan sponsor must issue, and reissue when appropriate, a card or other technology that an enrollee can use to obtain negotiated prices under 42 U.S.C. § 1395w–102(d).

(B)(i) The Secretary must provide for developing, adopting, or recognizing standards for the card or other technology’s standard format. The standards must be compatible with part C of subchapter XI and may be based on standards from an appropriate standards organization. (ii) In developing them, the Secretary must consult the National Council for Prescription Drug Programs and other organizations the Secretary considers appropriate. (iii) The Secretary must develop, adopt, or recognize them by a date sufficient to ensure sponsors use them beginning January 1, 2006.

(3) Formularies. If a sponsor uses a formulary, including tiered cost-sharing, it must meet these rules.

(A) P&T committee. (i) A pharmacy and therapeutics committee must develop and review the formulary. Most members must be practicing physicians or practicing pharmacists, or both. (ii) The committee must include at least one practicing physician^* and one practicing pharmacist who are each independent and free of conflicts involving the sponsor and plan and who each have expertise in caring for elderly or disabled people.

(B) Formulary development. In developing and reviewing the formulary, the committee must (i) base clinical decisions on scientific evidence and practice standards, including peer-reviewed medical literature such as randomized clinical trials, pharmacoeconomic studies, outcomes research, and other information it considers appropriate; and (ii) consider whether putting particular covered Part D drugs in the formulary or in a formulary tier provides therapeutic advantages in safety or effectiveness.

(C) Categories and classes. (i) Subject to subparagraph (G), the formulary must include drugs within every therapeutic category and class of covered Part D drugs, though it need not include every drug in each category or class. (ii) The Secretary must ask the United States^* Pharmacopeia to develop, in consultation with pharmacy benefit managers and other interested parties, a list of categories and classes plans may use and to revise the classification as therapeutic uses change and new covered Part D drugs are added. (iii) A sponsor may not change the therapeutic categories or classes in its formulary except at the beginning of a plan year, unless the Secretary permits a change to account for a new therapeutic use or a newly approved covered Part D drug.

(D) Education. The sponsor must establish policies and procedures to educate and inform health care providers and enrollees about the formulary.

(E) Notice of removal or tier change. Removing a covered Part D drug from a formulary, or changing its preferred or tiered cost-sharing status, may take effect only after appropriate notice is made available to the Secretary, affected enrollees, physicians, pharmacies, and pharmacists, such as notice under subsection (a)(3).

(F) Protocol review. The sponsor must periodically evaluate and analyze treatment protocols and procedures connected with the formulary.

(G) Certain categories and classes. (i)(I) Subject to subclause (II), a sponsor must include every covered Part D drug in categories and classes the Secretary identifies under clause (ii)(I). (II) The Secretary may create exceptions allowing a sponsor to exclude a particular drug that otherwise must be included, or to limit access to it through prior authorization or utilization management. (ii)(I) Subject to clause (iv), the Secretary must identify, as appropriate, categories and classes the Secretary finds to be of clinical concern. (II) The Secretary must use criteria established by the Secretary for that decision. (iii) The Secretary must establish the criteria and exceptions by regulation with public notice and an opportunity for comment. (iv) Until the criteria are established, the identified categories and classes are: anticonvulsants; antidepressants; antineoplastics; antipsychotics; antiretrovirals; and immunosuppressants for treating transplant rejection.

(H) One exceptions and appeals process. Despite other provisions of this part, each sponsor must use one uniform exceptions and appeals process for deciding prescription-drug coverage for an enrollee, including one uniform model form if the Secretary finds that feasible. The sponsor must give enrollees immediate access through a toll-free telephone number and an Internet website.

(I) Selected drugs. (i) For 2026 and every later year, a sponsor must include each covered Part D drug that is a selected drug under 42 U.S.C. § 1320f–1 and for which a maximum fair price, as defined in § 1320f(c)(3), is in effect for that year. (ii) This does not prevent removal of the selected drug when removal is allowed by 42 C.F.R. § 423.120(b)(5)(iv), or a successor regulation.

(4) Access during the COVID–19 public-health emergency. (A) During the emergency period described in 42 U.S.C. § 1320b–5(g)(1)(B), and subject to subparagraph (B), a prescription drug plan or MA–PD plan must allow an enrolled Part D-eligible person, despite cost, utilization-management, medication-therapy-management, or similar programs, to obtain in one fill or refill, at the person’s choice, the entire prescribed supply of a covered Part D drug, up to 90 days. (B) The plan may not allow a fill or refill that conflicts with an applicable safety edit.

(c) Cost and utilization management; quality assurance; medication therapy management program

(1) General requirements. For covered Part D drugs, the PDP sponsor must directly or through suitable arrangements have: (A) a cost-effective drug-utilization-management program, including medically appropriate incentives to reduce costs, such as use of multiple-source drugs as defined in 42 U.S.C. § 1396r–8(k)(7)(A)(i); (B) quality-assurance measures and systems to reduce medication errors and harmful drug interactions and improve medication use; (C) the medication therapy management program in paragraph (2); (D) a program to control fraud, abuse, and waste; (E) a utilization-management tool to prevent drug abuse described in paragraph (6)(A); and (F), for plan years beginning on or after January 1, 2022, a drug-management program for at-risk beneficiaries described in paragraph (5). This section does not prevent a sponsor from using cost-management tools, including different payments, under all methods of operation.

(2) Medication therapy management.

(A) Description. (i) This is a drug-therapy-management program that a pharmacist may provide. It must be designed for the targeted beneficiaries in clause (ii) to ensure that covered Part D drugs are used appropriately, improve therapeutic results through better medication use, and reduce adverse events, including harmful drug interactions. It may distinguish between outpatient and institutional services. (ii) Targeted beneficiaries are (I) Part D-eligible people who (aa) have several chronic diseases, such as diabetes, asthma, hypertension, high cholesterol, or congestive heart failure, (bb) take multiple covered Part D drugs, and (cc) are likely to have annual covered Part D drug costs above a level set by the Secretary; and (II), beginning January 1, 2021, at-risk beneficiaries for prescription drug abuse as defined in paragraph (5)(C).

(B) Program elements. (i) The program may promote (I) better enrollee understanding and appropriate medication use, and reduce possible medication-related adverse events, through education, counseling, and other suitable methods; (II) adherence to prescription regimens through refill reminders, special packaging, compliance programs, and other suitable methods; and (III) detection of adverse drug events and patterns of overuse or underuse. (ii) For plan years beginning on or after January 1, 2021, it must provide (I) information on safely disposing of controlled prescription drugs, meeting the criteria under 42 U.S.C. § 1395w–22(n)(2), including appropriate drug-takeback programs and in-home disposal; and (II) cost-effective ways for an enrollee to dispose of those drugs safely.

(C) Required services. For plan years beginning on or after the date two years after March 23, 2010, sponsors must offer targeted beneficiaries services that include, at minimum, services to increase medication adherence or other goals the Secretary considers necessary: (i) an annual comprehensive medication review, in person or through telehealth as the Secretary defines, by a licensed pharmacist or another qualified provider. The review must examine the person’s medicines; may lead to a recommended medication action plan or other action in consultation with the person and, when necessary and practicable, the prescriber; and must give the person a written or printed summary. In consultation with relevant stakeholders, the Secretary must create standard formats for the action plan and summary. (ii) Follow-up interventions must be provided when warranted by the annual review or targeted enrollment, in person or through telehealth as the Secretary defines.

(D) Assessment. At least quarterly, the sponsor must have a process to assess medication use by people who are at risk but not enrolled in the medication-therapy-management program, including people who have experienced a transition in care, if the sponsor has that information.

(E) Automatic enrollment and opting out. The sponsor must have a process to automatically enroll targeted beneficiaries, including those identified under subparagraph (D), subject to clause (ii), and must let those beneficiaries opt out.

(E) Development. The program must be developed with licensed practicing pharmacists and physicians.

(F) Coordination. The Secretary must issue guidelines for coordinating a medication-therapy-management program for a targeted beneficiary with any care-management plan for that beneficiary under a chronic-care-improvement program under 42 U.S.C. § 1395b–8.

(G) Pharmacy fees. When setting fees for pharmacists and others who provide services under the plan, the sponsor must consider the resources and time needed to carry out this program. On request, the sponsor must tell the Secretary the amount of management or dispensing fees. 42 U.S.C. § 1396r–8(b)(3)(D) applies to information disclosed under this subparagraph.

(3) Reducing wasteful dispensing in long-term-care facilities. The Secretary must require sponsors to use specific, uniform dispensing methods chosen by the Secretary after consulting relevant stakeholders, including nursing facilities and residents, pharmacists and the pharmacy industry, plans, MA–PD plans, and other stakeholders the Secretary considers appropriate. Examples include weekly, daily, or automated-dose dispensing. The methods must be used when dispensing covered Part D drugs to enrollees living in long-term-care facilities, to reduce waste from 30-day fills.

(4) Valid prescriber National Provider Identifiers on claims. (A) For plan year 2016 and later years, the Secretary must require a claim for a covered Part D drug for an enrolled Part D-eligible person to include a prescriber National Provider Identifier found valid under subparagraph (B)(i). This applies to prescription drug plans and MA–PD plans. (B)(i) After consulting appropriate stakeholders, the Secretary must create procedures for deciding whether a prescriber National Provider Identifier is valid. (ii) The Secretary must ensure that when a claim is denied because it fails this paragraph, the person is properly told at the point of service why it was denied. (C) By January 1, 2018, the HHS Inspector General must report to Congress on how effective the procedures under subparagraph (B)(i) are.

(D) Opioid outlier prescribers. (i) By January 1, 2021, subject to clause (iv), the Secretary must annually notify a prescriber identified under clause (ii) as an opioid outlier. The notice must say that the prescriber was identified and include proper-prescribing resources and other information under clause (iii). (ii)(I) Using valid prescriber identifiers on claims and thresholds under subclause (II), the Secretary must identify, for a period the Secretary specifies, prescribers who are opioid outliers. (II) After consulting stakeholders, the Secretary must set thresholds based on specialty and geographic area for comparing a prescriber with other opioid prescribers in the same specialty and area. (III) The analysis must exclude claims for people receiving hospice care^*, claims for people receiving oncology services, and prescribers under investigation by CMS or the HHS Inspector General. (iii) Notices must include (I) how the prescriber compares with others in the same specialty and area; (II) opioid-prescribing guidelines based on stakeholder input, which may include CDC chronic-pain guidelines and physician-organization guidelines; and (III) other information the Secretary considers appropriate. (iv)(I) Beginning five years after October 24, 2018, the Secretary may change notice frequency based on stakeholder input and opioid-use trends. (II) The Secretary may expand notices to identify and notify prescribers about concurrent covered Part D drugs that have adverse effects when used with opioids, as the Secretary determines. (v)(I) If a prescriber is persistently identified as an opioid outlier, the prescriber may be required to enroll in the program under 42 U.S.C. § 1395cc(j), if not already required, but only after other suitable remedies, such as education funded under section 6052 of the SUPPORT for Patients and Communities Act, have been provided for a period the Secretary finds sufficient to correct the prescribing pattern. The Secretary must set the shortest period necessary to correct that pattern for which enrollment must continue. (II) At least annually, and in a form and manner the Secretary chooses, the Secretary must give information about such prescribers to prescription drug plan sponsors and MA organizations offering MA–PD plans, consistent with clause (iv)(I). (vi) The Secretary must publish aggregate information under this subparagraph on the CMS website in a form and manner chosen by the Secretary. It may not identify a particular prescriber, and the Secretary must consult interested stakeholders. (vii) “Opioids” has the meaning the Secretary specifies. (viii) This subparagraph does not stop the Secretary from giving prescribers additional comparisons with other prescribers, including activities conducted as of October 24, 2018.

(5) Drug-management program for at-risk beneficiaries. (A) Authority. A sponsor may establish such a program. For plan years beginning on or after January 1, 2022, it must establish one. Subject to subparagraph (B), the sponsor may limit an enrolled at-risk beneficiary’s coverage for frequently abused drugs to drugs prescribed by one or more prescribers and dispensed by one or more pharmacies selected under subparagraph (D).

(B) Notices. (i) A sponsor may not limit access until it has sent the initial notice in clause (ii), sent the second notice in clause (iii), and verified with the beneficiary’s providers that the beneficiary is at risk. (ii) The initial notice must say the sponsor has potentially identified the beneficiary as at risk; describe all accessible State and Federal public-health resources for prescription-drug abuse, including mental-health and counseling services; explain the right to appeal under subsection (h) and that an adverse reconsideration is automatically sent to the independent outside entity contracted with the Secretary; ask for the beneficiary’s preferred prescribers and pharmacies; explain the meaning and consequences of the possible identification and the program; give clear contact instructions; and provide contact information for organizations that can help with the program, similar to information in other standardized notices. (iii) The second notice must say the sponsor identified the person as at risk; the person is subject to the program; identify the selected prescriber or prescribers and pharmacy or pharmacies; explain the appeal right and automatic outside review after an adverse reconsideration; say the person may submit preferences if not already submitted; and give clear contact instructions. (iv)(I) The second notice generally must be sent at least 30 days after the initial notice. (II) If the sponsor and Secretary decide, under concerns identified through the Secretary’s rulemaking about the person’s health or safety or significant drug diversion, that an earlier notice is needed, the sponsor may send it earlier.

(C) At-risk beneficiary. (i) Except as provided in clause (v), an “at-risk beneficiary for prescription drug abuse” is a Part D-eligible person who is not exempt under clause (ii) and who either (I) is identified using clinical guidelines developed by the Secretary with PDP sponsors and stakeholders, including beneficiaries, advocates, physicians, pharmacists, clinicians, pharmacies, plan sponsors, delegated entities, and biopharmaceutical manufacturers, where the guidelines indicate misuse or abuse of drugs in subparagraph (G), or (II) was identified under this paragraph in the person’s most recent prior plan and that identification has not ended under subparagraph (F). (ii) An exempt person is someone who receives hospice care; lives in a long-term-care facility, a facility described in 42 U.S.C. § 1396d(d), or another facility where one pharmacy dispenses frequently abused drugs under a contract for residents; or whom the Secretary chooses to treat as exempt. (iii) The Secretary must establish policies, including the guidelines and exemptions, so that plans can effectively manage the program’s enrollee population. (iv) For each at-risk enrollee, the sponsor must contact providers who prescribed frequently abused drugs to ask whether the medicines are appropriate for the person’s medical conditions. (v)(I) For plan years beginning on or after January 1, 2021, a nonexempt person identified under this clause as having a history of opioid-related overdose, as the Secretary defines it, must be included as a potentially at-risk beneficiary. (II) The Secretary must identify such people and notify their plan sponsors.

(D) Selecting prescribers and pharmacies. (i) For each at-risk enrollee, based on the person’s submitted preferences except as otherwise provided here, the sponsor must select one prescriber, or more if reasonably necessary for reasonable access, who may prescribe frequently abused drugs for the person, and one pharmacy, or more if reasonably necessary for reasonable access, that may dispense them. All locations of a pharmacy that share real-time electronic data count as one pharmacy. (ii) The sponsor must preserve reasonable access, considering location, preference, cost-sharing effects, and reasonable travel time. It must also preserve access, including to prescribers and pharmacies, for people with multiple residences, during natural disasters and similar situations, and when emergency services are provided. (iii) If the person submits preferred in-network prescribers or pharmacies in response to a notice, the sponsor must review the preferences, select or change selections based on them, and tell the person the selection or change. (iv) If the sponsor decides a requested change contributes or would contribute to abuse or diversion, it may change the selection without following the person’s preferences, but must give at least 30 days’ written notice and a reason. (v) Before selecting a prescriber or pharmacy, the sponsor must notify that prescriber and pharmacy that the person was identified for the program and that they were selected as the designated prescriber and pharmacy.

(E) Termination and appeals. Identification as at risk, a coverage decision under the program, selection of a prescriber or pharmacy, and information shared under subparagraph (I) are subject to reconsideration and appeal under subsection (h). If the sponsor affirms a denial in whole or part on reconsideration, the case automatically goes to the independent outside entity contracted with the Secretary.

(F) Ending identification. (i) The Secretary must set standards for ending a person’s identification. Identification ends on the earlier of the date the person shows that, without these restrictions, the person is no longer likely to be at risk under subparagraph (C)(i), or the end of the maximum identification period set by the Secretary. (ii) Ending identification does not stop a plan from identifying the person again based on additional drug-use information from after the notice of termination.

(G) Frequently abused drug. For this subsection, it means a controlled substance^* that the Secretary determines is frequently abused or diverted.

(H) Data disclosure. (i) The Secretary must require a sponsor to disclose, in the form and manner specified, data about decisions to limit coverage and the limits imposed for an at-risk or potentially at-risk person, including necessary individually identifiable health information. (ii) The Secretary must require sponsors with these programs to provide data the Secretary considers appropriate to identify unusual enrollee prescription-use patterns that may show fraudulent, medically unnecessary, or unsafe use.

(I) Later enrollment. The Secretary must create procedures for sponsors to share information about at-risk or potentially at-risk people who leave one plan and enroll in another plan offered by another sponsor.

(J) Privacy. Before implementing these rules, the Secretary must clarify privacy requirements, including requirements under regulations issued under section 264(c) of HIPAA, for sponsors’ sharing under subparagraphs (H) and (I). The clarification must say that the shared data is protected health information under those regulations.

(K) Education. The Secretary must educate plan enrollees and providers about the program, including through Medicare administrative contractors’ improper-payment outreach and education program under 42 U.S.C. § 1395kk–1(h), current education efforts such as State Health Insurance Assistance Programs described in 42 U.S.C. § 1395b–3 note, and materials directed to enrollees.

(L) MA–PD plans. Under 42 U.S.C. § 1395w–131(c)(1), this paragraph applies under part D to MA organizations offering MA–PD plans in the same way it applies to a PDP sponsor offering a prescription drug plan to a Part D-eligible person.

(M) CMS review. The Secretary must ensure that existing sponsor compliance reviews and audits cover these programs, including their appeals processes.

(6) Utilization tool to prevent drug abuse. (A) A tool may be (i) a utilization tool to prevent people from abusing frequently abused drugs and prevent pharmacies from diverting them; (ii) retrospective utilization review to identify people receiving such drugs too often or in amounts that are not clinically appropriate and providers or suppliers that may enable abuse or diversion; or (iii) consultation with the contractor in subparagraph (B) to check whether a new enrollee was previously identified by another sponsor as such a person. (B) A sponsor, and an MA organization offering an MA–PD plan, must report monthly to the Secretary and the Medicare drug-integrity contractor for the State information about providers or suppliers identified during the prior 30 days and the names and prescription records of people described in paragraph (5)(C). (C) The Secretary must ensure that sponsor compliance reviews and program audits every two years certify that these tools meet their requirements.

(6) Providing Part A and B claims data. (A) Beginning in plan year 2020, the Secretary must create a process under which a sponsor may request periodic electronic data described in subparagraph (D) about its enrollees. The data must be provided whether or not the enrollees are targeted beneficiaries under paragraph (2)(A)(ii). (B) A sponsor may use the data to improve therapeutic outcomes through medication use, improve care coordination to prevent adverse outcomes such as preventable emergency visits and readmissions, or for another purpose the Secretary approves. (C) It may not use the data to make coverage decisions; conduct retroactive reviews of medically accepted indications; help move a person to another plan or MA–PD plan offered by the same parent organization; inform benefit marketing; or for another purpose the Secretary finds necessary to protect beneficiaries’ identity or personal-health-information security. (D) The data consists of standardized extracts, as the Secretary determines, of Part A and B claims for items and services, for periods the Secretary specifies, and must be as current as practicable.

(d) Consumer satisfaction surveys. To provide comparative information under 42 U.S.C. § 1395w–101(c)(3)(A)(v), the Secretary must conduct consumer-satisfaction surveys of PDP sponsors and prescription drug plans in a way similar to surveys of MA organizations and MA plans under part C.

(e) Electronic prescription program

(1) Applying standards. By a date the Secretary specifies, but no later than one year after final standards are issued under paragraph (4)(D), electronic prescriptions and other information described in paragraph (2)(A) for covered Part D drugs prescribed to Part D-eligible people may be transmitted electronically only under an electronic prescription program meeting paragraph (2) and using those standards.

(2) Program requirements. Consistent with paragraph (3)’s uniform standards, the program must provide: (A) electronic transmission to the prescriber and dispensing pharmacy and pharmacist of the prescription; eligibility and benefit information, including formulary drugs, tiers, and prior-authorization requirements; and (i) information about the prescribed or dispensed drug and other medicines in the medication history, including drug interactions, warnings, cautions, and, when indicated, dosage changes; and (ii) information about lower-cost, therapeutically suitable alternatives, if any. (B) On a date the Secretary specifies, after suitable standards are established, the program must, on request of the prescriber or pharmacist, electronically transmit in a similar way information about the person’s medical history related to the covered Part D drug. (C) Information may be disclosed under (A) or (B) only when permitted by Federal privacy regulations issued under HIPAA section 264(c). (D) The exchange should be interactive and real time when feasible. (E)(i) By January 1, 2021, the program must securely transmit a prescriber’s prior-authorization request for a covered Part D drug to the PDP sponsor or MA organization and that sponsor’s or organization’s response. (ii)(I) A fax, a proprietary payer portal that does not meet the Secretary’s standards, and an electronic form are not an electronic transmission for this purpose. (II) A transmission must meet technical standards adopted by the Secretary after consultation with the National Council for Prescription Drug Programs, other appropriate standards organizations, and stakeholders including sponsors, MA organizations, health care professionals, and health-information-technology vendors. (III) The Secretary may require those standards instead of other applicable standards for such transmissions.

(3) Standards. (A) The Secretary must provide for uniform standards for the paragraph (2) program. (B) They must seek to improve patient safety, quality of care, and delivery efficiency, including cost savings. (C) As far as practicable, they must not impose an undue administrative burden on prescribers, pharmacies, or pharmacists; must be compatible with part C of subchapter XI, the standards under subsection (b)(2)(B)(i), and general health-information-technology standards; and must permit electronic exchange of FDA and National Library of Medicine drug-labeling and drug-listing information. (D) They may allow messages only when related to appropriate prescribing, including the quality-assurance measures and systems in subsection (c)(1)(B). (E)(i) Subject to clause (ii), they must let a Part D-eligible person designate a particular dispensing pharmacy. (ii) This does not change the pharmacy access a plan must provide or the application of differences in benefits or payments based on the pharmacy dispensing the drug.

(4) Developing standards. (A) By September 1, 2005, the Secretary must develop, adopt, recognize, or modify initial uniform standards, considering any recommendations under subparagraph (B). (B) The National Committee on Vital and Health Statistics must recommend uniform standards after consulting standards organizations as defined in 42 U.S.C. § 1320d(8), practicing physicians, hospitals, pharmacies, practicing pharmacists, pharmacy benefit managers, State pharmacy boards, State medical boards, electronic-prescribing experts, and other appropriate Federal agencies. (C)(i) During the one-year period beginning January 1, 2006, the Secretary must test the initial standards before issuing final standards, to support efficient implementation. (ii) Testing is not required where the Secretary, after consulting standards organizations and industry users, finds adequate industry experience. (iii) For the pilot, the Secretary must make agreements with physicians, physician groups, pharmacies, hospitals, PDP sponsors, MA organizations, and other suitable entities so professionals electronically transmit prescriptions under the standards. (iv) The Secretary must evaluate the pilot and, by April 1, 2007, report the evaluation to Congress. (D) Based on the evaluation, and by April 1, 2008, the Secretary must issue final uniform standards for paragraph (2).

(5) State laws. These standards supersede a State law or regulation that conflicts with the standards or restricts carrying out this part and concerns electronic transmission of medication history or of eligibility, benefits, and prescriptions for covered Part D drugs.

(6) Safe harbor. After consulting the Attorney General, the Secretary must issue regulations creating a safe harbor from sanctions under 42 U.S.C. § 1320a–7b(b)(1) and (2), and an exception to 42 U.S.C. § 1395nn(a)(1), for nonmoney compensation consisting of hardware, software, information technology, or training services that is necessary and used only to receive and transmit electronic prescription information under these standards: (A) a hospital may provide it to its medical staff; (B) a group practice, as defined in 42 U.S.C. § 1395nn(h)(4), may provide it to prescribing professionals who belong to the practice; and (C) a PDP sponsor or MA organization may provide it to network pharmacists and pharmacies and to prescribing professionals.

(7) Electronic prescribing for controlled substances. (A) Subject to (B), a prescription under a prescription drug plan or MA–PD plan for a covered Part D schedule II, III, IV, or V controlled substance must be transmitted electronically by the practitioner through a paragraph (2) program. (B) By rule, the Secretary must specify when and how this may be waived, including: (i) when the practitioner and dispensing pharmacy are the same entity; (ii) when the prescription cannot be transmitted under the latest NCPDP SCRIPT Standard; (iii) when the practitioner receives a waiver or renewal for up to one year because of demonstrated economic hardship, technological limits outside the practitioner’s reasonable control, or another demonstrated exceptional circumstance; (iv) when the practitioner reasonably decides that electronic prescribing would make timely access impractical and the delay would harm the person’s medical condition; (v) a research-protocol prescription; (vi) a drug whose FDA-required prescription elements cannot be included electronically, such as a drug with risk-evaluation and mitigation strategies requiring safe-use elements; (vii) a prescription for a hospice patient that is not covered by the hospice benefit; or (viii) a prescription for a nursing-facility resident, as defined in 42 U.S.C. § 1396r(a), who is eligible for both this subchapter and subchapter XIX. (C)(i) A plan sponsor, MA organization, or pharmacist need not verify that a practitioner has a waiver or exemption. (ii) This paragraph does not prevent a plan from covering, or a pharmacist from dispensing, a covered Part D drug from an otherwise valid written, oral, or fax prescription consistent with law. (iii) It does not prevent a person from designating a pharmacy when consistent with subsection (b)(1) and this paragraph. (D) By rule, the Secretary may enforce this requirement and set appropriate penalties for noncompliance.

(f) Grievance mechanism. Each sponsor must provide meaningful procedures to hear and resolve grievances between the sponsor, including entities or people through which it provides covered benefits, and its prescription-drug-plan enrollees, in accordance with 42 U.S.C. § 1395w–22(f).

(g) Coverage determinations and reconsiderations

(1) A sponsor must meet paragraphs (1) through (3) of 42 U.S.C. § 1395w–22(g) for covered benefits under its prescription drug plan in the same way those requirements apply to an MA organization’s benefits under a part C MA plan^*.

(2) If a plan uses tiered cost-sharing and charges less for preferred formulary drugs, an enrolled Part D-eligible person may ask for an exception to the tiers. A nonpreferred drug may be covered at the preferred-drug terms if the prescriber decides the preferred drug for the same condition would not work as well, would have adverse effects, or both. The sponsor must use an exceptions process consistent with the Secretary’s guidelines. Denying the exception counts as a coverage denial for subsection (h).

(h) Appeals

(1) Subject to paragraph (2), a sponsor must meet paragraphs (4) and (5) of 42 U.S.C. § 1395w–22(g) for benefits, including tiered-cost-sharing decisions under subsection (g)(2), in a way the Secretary determines is similar to the way those requirements apply to an MA organization’s original Medicare fee-for-service option under part C. Only the Part D-eligible person may bring the appeal.

(2) A person may appeal a decision not to cover a covered Part D drug absent from the formulary only if the prescriber decides that every covered Part D drug on every formulary tier for the same condition would not work as well as the nonformulary drug, would cause adverse effects, or both.

(3) If the sponsor decides to cover a covered Part D drug not on its formulary, the drug is treated as included on the formulary for 42 U.S.C. § 1395w–102(b)(4)(C)(i).

(i) Privacy, confidentiality, and accuracy of enrollee records. 42 U.S.C. § 1395w–22(h) applies to a PDP sponsor and prescription drug plan in the same way it applies to an MA organization and MA plan.

(j) Accreditation. Subparagraph (A) of 42 U.S.C. § 1395w–22(e)(4), concerning accreditation, applies to a PDP sponsor for these requirements in the same way it applies to an MA organization for the requirements in that section’s subparagraph (B), except clause (vii): (1) subsection (b), access to covered Part D drugs; (2) subsection (c), including quality assurance and medication therapy management; and (3) subsection (i), confidentiality and accuracy of enrollee records.

(k) Public disclosure of prices for equivalent drugs

(1) A sponsor must require each pharmacy dispensing a covered Part D drug to tell the enrollee the difference between the enrollee’s price and the price under the plan of the lowest-priced generic covered Part D drug that is therapeutically and bioequivalent, and available at that pharmacy. This section does not define “therapeutically equivalent” or “bioequivalent.”

(2)(A) Unless subparagraph (B) applies, the information must be given when the drug is bought, or, for mail order, when it is delivered. (B) The Secretary may waive this timing rule in circumstances the Secretary specifies.

(l) Sales and marketing. These rules apply to PDP sponsors and their agents, brokers, and other representatives in the same way they apply to Medicare Advantage organizations and their agents, brokers, and other representatives: (1) the prohibition in 42 U.S.C. § 1395w–21(h)(4)(C) on activities described in § 1395w–21(j)(1); (2) the requirement in § 1395w–21(h)(4)(D) to conduct activities described in § 1395w–21(j)(2) within that subsection’s limits; (3) including the plan type in the plan name under § 1395w–21(h)(6); and (4) the rules in § 1395w–21(h)(7)(A) and (B) about appointing agents and brokers and responding to State information requests.

(m) Drug-price information. A PDP sponsor and a Medicare Advantage organization must ensure that each prescription drug plan or MA–PD plan does not stop or penalize a pharmacy from telling an enrollee the difference between the plan’s negotiated price, copayment, or coinsurance for a drug or biological product and the lower price the person would pay without using health insurance.

(n) Program-integrity transparency. For transparency measures concerning prescription drug plans and MA plans, see 42 U.S.C. § 1395w–28(i).

(o) Real-time benefit information

(1) After the Secretary adopts a standard under paragraph (3), and at a time the Secretary decides is appropriate, a PDP sponsor must implement one or more electronic real-time benefit tools meeting paragraph (2).

(2) Such a tool must be able to (A) connect with prescribers’ electronic-prescribing and electronic-health-record systems to send formulary and benefit information to them in real time; and (B) for a covered Part D drug, send information specific to a person enrolled in the plan, including (i) clinically appropriate formulary alternatives; (ii) cost-sharing information and negotiated prices for the drug and alternatives at several pharmacy choices, including the person’s preferred pharmacy and, when applicable, other retail and mail-order pharmacies; and (iii) the formulary status of the drug and alternatives and any prior-authorization or other utilization-management requirements for them.

(3) To qualify as a real-time benefit tool for this subsection, a tool must comply with technical standards adopted by the Secretary, after notice and comment and consultation with the National Coordinator for Health Information Technology. A standards-development organization, such as the National Council for Prescription Drug Programs, must develop the standards while consulting PDP sponsors, Medicare Advantage organizations, beneficiary advocates, health care professionals, and health-information-technology software vendors.

(4) Nothing here prohibits applying 42 C.F.R. § 423.160(b)(7), as added under the final rule published May 23, 2019, titled “Modernizing Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-Pocket Expenses,” 84 Fed. Reg. 23832–23884. Nothing here permits a sponsor to use a real-time benefit tool, without the person’s consent, to steer the person to a particular pharmacy or pharmacy type instead of the person’s preferred pharmacy or type, or to stop the person from designating a preferred pharmacy through the tool.