[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: 42CFR423.315]

[Page 386-387]
 
                         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 G_Payments to Part D Plan Sponsors For Qualified Prescription 
                              Drug Coverage
 
Sec.  423.315  General payment provisions.

    (a) Source of payments. CMS payments under this section are made 
from the Medicare Prescription Drug Account.
    (b) Monthly payments. CMS provides a direct subsidy in the form of 
advance monthly payments equal to the Part D plan's standardized bid, 
risk adjusted for health status as provided in Sec.  423.329(b), minus 
the monthly beneficiary premium as determined in Sec.  423.286.
    (c) Reinsurance subsidies. CMS provides reinsurance subsidy payments 
described in Sec.  423.329(c) on a monthly basis during a year based on 
either estimated or incurred allowable reinsurance costs as provided 
under Sec.  423.329(c)(2)(i), and final reconciliation to actual 
allowable reinsurance costs as provided in Sec.  423.343(c).
    (d) Low-income subsidies. CMS makes payments for premium and cost 
sharing subsidies, including additional coverage above the initial 
coverage limit, on behalf of certain subsidy-eligible individuals as 
provided in Sec.  423.780 and Sec.  423.782. CMS provides low-income

[[Page 387]]

cost-sharing subsidy payments described in Sec.  423.782 through interim 
payments of amounts as provided under Sec.  423.329(d)(2)(i) and 
reconciliation to actual allowable reinsurance costs as provided in 
Sec.  423.343(d).
    (e) Risk-sharing arrangements. CMS may issue lump-sum payments or 
adjust monthly payments in the following payment year based on the 
relationship of the Part D plan's adjusted allowable risk corridor costs 
to predetermined risk corridor thresholds in the coverage year as 
provided in Sec.  423.336.
    (f) Retroactive adjustments and reconciliations. CMS reconciles 
payment year disbursements with updated enrollment and health status 
data, actual low-income cost-sharing costs and actual allowable 
reinsurance costs as provided in Sec.  423.343.
    (g) Special rules for private fee-for-service plans--(1) Application 
of reinsurance. For private fee-for-service plans (as defined by Sec.  
422.4(a)(3) of this chapter) offering qualified prescription drug 
coverage, CMS determines the amount of reinsurance payments as provided 
under Sec.  423.329(c)(3).
    (2) Exemption from risk corridor provisions. The provisions of Sec.  
423.336 regarding risk sharing do not apply.