[Code of Federal Regulations]
[Title 42, Volume 3]
[Revised as of October 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 42CFR423.279]

[Page 383-384]
 
                         TITLE 42--PUBLIC HEALTH
 
                    CHAPTER IV--CENTERS FOR MEDICARE
                          & MEDICAID SERVICES,
                        DEPARTMENT OF HEALTH AND
                             HUMAN SERVICES
 
PART 423_VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT--Table of Contents
 
  Subpart F_Submission of Bids and Monthly Beneficiary Premiums; Plan 
                                Approval
 
Sec.  423.279  National average monthly bid amount.

    (a) Bids included. For each year (beginning with 2006) CMS computes 
a national average monthly bid amount from approved bids submitted under 
Sec.  423.265 in order to calculate the base beneficiary premium, as 
provided in Sec.  423.286(c). The national average monthly bid amount is 
equal to a weighted average of the standardized bid amounts for each 
prescription drug plan (not including fallbacks) and for each MA-PD plan 
described in section 1851(a)(2)(A)(i) of the Act. The calculation does 
not include bids submitted by MSA plans, MA private fee-for-service 
plans, specialized MA plans for special needs individuals, PACE programs 
under section 1894, and contracts under reasonable cost reimbursement 
contracts under section 1876(h) of the Act.
    (b) Calculation of weighted average. (1) The national average 
monthly bid amount is a weighted average, with the weight for each plan 
equal to a percentage with the numerator equal to the number of Part D 
eligible individuals enrolled in the plan in the reference month (as 
defined in Sec.  422.258(c)(1) of this chapter) and the denominator 
equal to the total number of Part D eligible individuals enrolled in a 
reference month in all Part D plans except MSA plans, fallbacks, MA 
private fee-for-service plans, specialized MA plans for special needs 
individuals, PACE programs under section 1894, and contracts under 
reasonable cost reimbursement contracts under section 1876(h) of the 
Act.
    (2) For purposes of calculating the monthly national average monthly 
bid amount for 2006, CMS assigns equal weighting to PDP sponsors (other 
than fallback entities) and assigns MA-PD plans included in the national 
average bid a weight based on prior enrollment (new MA-PD plans are 
assigned zero weight).

[[Page 384]]

    (c) Geographic adjustment. (1) Upon the development of an 
appropriate methodology, the national average monthly bid amount for 
Part D plans will be adjusted to take into account differences in prices 
for Part D drugs among PDP regions.
    (2) CMS does not apply any geographic adjustments if CMS determines 
that price variations among PDP regions are negligible.
    (3) CMS applies any geographic adjustment in a budget neutral manner 
so as to not result in a change in the aggregate payments that may have 
been made if CMS had not applied an adjustment.
    (4) CMS does not apply any geographic adjustment until an 
appropriate methodology is developed.