(a) General requirements Each PDP sponsor of a prescription drug plan shall meet the following requirements:
(1) Licensure
Subject to subsection (c) of this section, the sponsor is organized and licensed under State law as a risk-bearing entity eligible to offer health insurance or health benefits coverage in each State in which it offers a prescription drug plan.
(2) Assumption of financial risk for unsubsidized coverage
(A) In general Subject to subparagraph (B), to the extent that the entity is at risk the entity assumes financial risk on a prospective basis for benefits that it offers under a prescription drug plan and that is not covered under section
1395w–115 (b) of this title.
(B) Reinsurance permitted
The plan sponsor may obtain insurance or make other arrangements for the cost of coverage provided to any enrollee to the extent that the sponsor is at risk for providing such coverage.
(3) Solvency for unlicensed sponsors
In the case of a PDP sponsor that is not described in paragraph (1) and for which a waiver has been approved under subsection (c) of this section, such sponsor shall meet solvency standards established by the Secretary under subsection (d) of this section.
(b) Contract requirements
(1) In general The Secretary shall not permit the enrollment under section
1395w–101 of this title in a prescription drug plan offered by a PDP sponsor under this part, and the sponsor shall not be eligible for payments under section
1395w–114 or
1395w–115 of this title, unless the Secretary has entered into a contract under this subsection with the sponsor with respect to the offering of such plan. Such a contract with a sponsor may cover more than one prescription drug plan. Such contract shall provide that the sponsor agrees to comply with the applicable requirements and standards of this part and the terms and conditions of payment as provided for in this part.
(2) Limitation on entities offering fallback prescription drug plans The Secretary shall not enter into a contract with a PDP sponsor for the offering of a prescription drug plan (other than a fallback prescription drug plan) in a PDP region for a year if the sponsor
(A) submitted a bid under section
1395w–111 (g) of this title for such year (as the first year of a contract period under such section) to offer a fallback prescription drug plan in any PDP region;
(B) offers a fallback prescription drug plan in any PDP region during the year; or
(C) offered a fallback prescription drug plan in that PDP region during the previous year.
For purposes of this paragraph, an entity shall be treated as submitting a bid with respect to a prescription drug plan or offering a fallback prescription drug plan if the entity is acting as a subcontractor of a PDP sponsor that is offering such a plan. The previous sentence shall not apply to entities that are subcontractors of an MA organization except insofar as such organization is acting as a PDP sponsor with respect to a prescription drug plan.
(3) Incorporation of certain medicare advantage contract requirements Except as otherwise provided, the following provisions of section
1395w–27 of this title shall apply to contracts under this section in the same manner as they apply to contracts under section
1395w–27 (a) of this title:
(A) Minimum enrollment Paragraphs (1) and (3) of section
1395w–27 (b) of this title, except that
(i) the Secretary may increase the minimum number of enrollees required under such paragraph (1) as the Secretary determines appropriate; and
(ii) the requirement of such paragraph (1) shall be waived during the first contract year with respect to an organization in a region.
(B) Contract period and effectiveness Section
1395w–27 (c) of this title, except that in applying paragraph (4)(B) of such section any reference to payment amounts under section
1395w–23 of this title shall be deemed payment amounts under section
1395w–115 of this title.
(C) Protections against fraud and beneficiary protections Section
1395w–27 (d) of this title.
(D) Additional contract terms Section
1395w–27 (e) of this title; except that section
1395w–27 (e)(2) of this title shall apply as specified to PDP sponsors and payments under this part to an MAPD plan shall be treated as expenditures made under part D.
(E) Intermediate sanctions Section
1395w–27 (g) of this title (other than paragraph (1)(F) of such section), except that in applying such section the reference in section
1395w–27 (g)(1)(B) of this title to section
1395w–24 of this title is deemed a reference to this part.
(F) Procedures for termination Section
1395w–27 (h) of this title.
(c) Waiver of certain requirements to expand choice
(1) Authorizing waiver
(A) In general
In the case of an entity that seeks to offer a prescription drug plan in a State, the Secretary shall waive the requirement of subsection (a)(1) of this section that the entity be licensed in that State if the Secretary determines, based on the application and other evidence presented to the Secretary, that any of the grounds for approval of the application described in paragraph (2) have been met.
(B) Application of regional plan waiver rule In addition to the waiver available under subparagraph (A), the provisions of section
1395w–27a (d) of this title shall apply to PDP sponsors under this part in a manner similar to the manner in which such provisions apply to MA organizations under part C of this subchapter, except that no application shall be required under paragraph (1)(B) of such section in the case of a State that does not provide a licensing process for such a sponsor.
(2) Grounds for approval
(A) In general The grounds for approval under this paragraph are
(i) subject to subparagraph (B), the grounds for approval described in subparagraphs (B), (C), and (D) of section
1395w–25 (a)(2) of this title; and
(ii) the application by a State of any grounds other than those required under Federal law.
(B) Special rules In applying subparagraph (A)(i)
(i) the ground of approval described in section
1395w–25 (a)(2)(B) of this title is deemed to have been met if the State does not have a licensing process in effect with respect to the PDP sponsor; and
(ii) for plan years beginning before January 1, 2008, if the State does have such a licensing process in effect, such ground for approval described in such section is deemed to have been met upon submission of an application described in such section.
(3) Application of waiver procedures With respect to an application for a waiver (or a waiver granted) under paragraph (1)(A) of this subsection, the provisions of subparagraphs (E), (F), and (G) of section
1395w–25 (a)(2) of this title shall apply, except that clauses (i) and (ii) of such subparagraph (E) shall not apply in the case of a State that does not have a licensing process described in paragraph (2)(B)(i) in effect.
(4) References to certain provisions In applying provisions of section
1395w–25 (a)(2) of this title under paragraphs (2) and (3) of this subsection to prescription drug plans and PDP sponsors
(A) any reference to a waiver application under section
1395w–25 of this title shall be treated as a reference to a waiver application under paragraph (1)(A) of this subsection; and
(B) any reference to solvency standards shall be treated as a reference to solvency standards established under subsection (d) of this section.
(d) Solvency standards for non-licensed entities
(1) Establishment and publication
The Secretary, in consultation with the National Association of Insurance Commissioners, shall establish and publish, by not later than January 1, 2005, financial solvency and capital adequacy standards for entities described in paragraph (2).
(2) Compliance with standards A PDP sponsor that is not licensed by a State under subsection (a)(1) of this section and for which a waiver application has been approved under subsection (c) of this section shall meet solvency and capital adequacy standards established under paragraph (1). The Secretary shall establish certification procedures for such sponsors with respect to such solvency standards in the manner described in section
1395w–25 (c)(2) of this title.
(e) Licensure does not substitute for or constitute certification
The fact that a PDP sponsor is licensed in accordance with subsection (a)(1) of this section or has a waiver application approved under subsection (c) of this section does not deem the sponsor to meet other requirements imposed under this part for a sponsor.
(f) Periodic review and revision of standards
(1) In general
Subject to paragraph (2), the Secretary may periodically review the standards established under this section and, based on such review, may revise such standards if the Secretary determines such revision to be appropriate.
(2) Prohibition of midyear implementation of significant new regulatory requirements
The Secretary may not implement, other than at the beginning of a calendar year, regulations under this section that impose new, significant regulatory requirements on a PDP sponsor or a prescription drug plan.
(g) Prohibition of State imposition of premium taxes; relation to State laws The provisions of sections
1395w–24 (g) and
1395w–26 (b)(3) of this title shall apply with respect to PDP sponsors and prescription drug plans under this part in the same manner as such sections apply to MA organizations and MA plans under part C of this subchapter.
