[Code of Federal Regulations] [Title 42, Volume 3] [Revised as of October 1, 2007] From the U.S. Government Printing Office via GPO Access [CITE: 42CFR423.100] [Page 387-390] TITLE 42--PUBLIC HEALTH HUMAN SERVICES PART 423_VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT--Table of Contents Subpart C_Benefits and Beneficiary Protections Sec. 423.100 Definitions. As used in this part, unless otherwise specified- Actual cost means the negotiated price for a covered Part D drug when the drug is purchased at a network pharmacy, and the usual and customary price when a beneficiary purchases the drug at an out-of- network pharmacy consistent with Sec. 423.124(a). Affected enrollee means a Part D enrollee who is currently taking a covered Part D drug that is either being removed from a Part D plan's formulary, or whose preferred or tiered cost-sharing status is changing. Alternative prescription drug coverage means coverage of Part D drugs, other than standard prescription drug coverage that meets the requirements of Sec. 423.104(e). The term alternative prescription drug coverage must be either-- (1) Basic alternative coverage (alternative coverage that is actuarially equivalent to defined standard coverage, as determined through processes and methods established under Sec. 423.265(d)(2)); or (2) Enhanced alternative coverage (alternative coverage that meets the requirements of Sec. 423.104(f)(1)). Basic prescription drug coverage means coverage of Part D drugs that is either standard prescription drug coverage or basic alternative coverage. Bioequivalent has the meaning given such term in section 505(j)(8) of the Food, Drug, and Cosmetic Act. Contracted pharmacy network means pharmacies, including retail, mail-order, and institutional pharmacies, under contract with a Part D sponsor to provide covered Part D drugs at negotiated prices to Part D enrollees. Covered Part D drug means a Part D drug that is included in a Part D plan's formulary, or treated as being included in a Part D plan's formulary as a result of a coverage determination or appeal under Sec. 423.566, Sec. 423.580, and Sec. 423.600, Sec. 423.610, Sec. 423,620, and Sec. 423.630, and obtained at a network pharmacy or an out-of- network pharmacy in accordance with Sec. 423.124. Dispensing fees means costs that- (1) Are incurred at the point of sale and pay for costs in excess of the ingredient cost of a covered Part D drug each time a covered Part D drug is dispensed; (2) Include only pharmacy costs associated with ensuring that possession of the appropriate covered Part D drug is transferred to a Part D enrollee. Pharmacy costs include, but are not limited to, any reasonable costs associated with a pharmacist's time in checking the computer for information about an individual's coverage, performing quality assurance activities consistent with Sec. 423.153(c)(2), measurement or mixing of the covered Part D drug, filling the [[Page 388]] container, physically providing the completed prescription to the Part D enrollee, delivery, special packaging, and overhead associated with maintaining the facility and equipment necessary to operate the pharmacy. In the case of pharmacies owned and operated by a Part D plan itself, notwithstanding number (3) of this definition, dispensing fees are understood to be the equivalent of all reasonable costs discussed in the previous sentence, including the salaries of pharmacists and other pharmacy workers as well as the costs associated with maintaining the pharmacy facility and equipment necessary to operate the pharmacy; and (3) Do not include administrative costs incurred by the Part D plan in the operation of the Part D benefit, including systems costs for interfacing with pharmacies. Government-funded health program means any program established, maintained, or funded, in whole or in part, by the Government of the United States, by the government of any State or political subdivision of a State, or by any agency or instrumentality of any of the foregoing, which uses public funds, in whole or in part, to provide to, or pay on behalf of, an individual the cost of Part D drugs, including any of the following: (1) An approved State child health plan under title XXI of the Act providing benefits for child health assistance that meets the requirements of section 2103 of the Act; (2) The Medicaid program under title XIX of the Act or a waiver under section 1115 of the Act; (3) The veterans' health care program under Chapter 17 of title 38 of the United States Code; (4) The Indian Health Service program under the Indian Health Care Improvement Act under Chapter 18 of title 25 of the United States Code; and (5) Any other government-funded program whose principal activity is the direct provision of health care to persons. Group health plan, for purposes of applying the definition of incurred costs in Sec. 423.100, has the meaning given such term in 29 U.S.C. 1167(1), but specifically excludes a personal health savings vehicle, as used in this subpart. Incurred costs means costs incurred by a Part D enrollee for covered Part D drugs-- (1) 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); 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 a State Pharmaceutical Assistance Program (as defined in Sec. 423.454); or (iii) Under Sec. 423.782. Insurance means a health plan that provides, or pays the cost of Part D drugs, including, but not limited to, any of the following: (1) Health insurance coverage (as defined in 42 U.S.C. 300gg- 91(b)(1)); (2) A Medicare Advantage plan (as described under section 1851(a)(2) of the Act); and (3) A PACE organization (as defined under sections 1894(a)(3) and 1934(a)(13) of the Act) but specifically excluding a personal health savings vehicle. I/T/U pharmacy means a pharmacy operated by the Indian Health Service, an Indian tribe or tribal organization, or an urban Indian organization, all of which are defined in section 4 of the Indian Health Care Improvement Act, 25 U.S.C. 1603. Long-term care facility means a skilled nursing facility as defined in section 1819(a) of the Act, or a medical institution or nursing facility for which payment is made for an institutionalized individual under section 1902(q)(1)(B) of the Act. [[Page 389]] Long-term care pharmacy means a pharmacy owned by or under contract with a long-term care facility to provide prescription drugs to the facility's residents. Long-term care network pharmacy means a long-term care pharmacy that is a network pharmacy. Negotiated prices means prices for covered Part D drugs that- (1) Are available to beneficiaries at the point of sale at network pharmacies; (2) Are reduced by those discounts, direct or indirect subsidies, rebates, other price concessions, and direct or indirect remunerations that the Part D sponsor has elected to pass through to Part D enrollees at the point of sale; and (3) Includes any dispensing fees. Network pharmacy means a licensed pharmacy that is under contract with a Part D sponsor to provide covered Part D drugs at negotiated prices to its Part D plan enrollees. Non-preferred pharmacy means a network pharmacy that offers covered Part D drugs at negotiated prices to Part D enrollees at higher cost- sharing levels than apply at a preferred pharmacy. Or otherwise means through a government-funded health program. Out-of-network pharmacy means a licensed pharmacy that is not under contract with a Part D sponsor to provide negotiated prices to Part D plan enrollees. Part D drug means-- (1) Unless excluded under number (2) of this definition, any of the following if used for a medically accepted indication (as defined in section 1927(k)(6) of the Act)-- (i) A drug that may be dispensed only upon a prescription and that is described in sections 1927(k)(2)(A)(i) through (iii) of the Act; (ii) A biological product described in sections 1927(k)(2)(B)(i) through (iii) of the Act; (iii) Insulin described in section 1927(k)(2)(C) of the Act; (iv) Medical supplies associated with the injection of insulin, including syringes, needles, alcohol swabs, and gauze; or (v) A vaccine licensed under section 351 of the Public Health Service Act. (2) Does not include-- (i) Drugs for which payment as so prescribed and dispensed or administered to an individual is available for that individual under Part A or Part B (even though a deductible may apply, or even though the individual is eligible for coverage under Part A or Part B but has declined to enroll in Part A or Part B); and (ii) Drugs or classes of drugs, or their medical uses, which may be excluded from coverage or otherwise restricted under Medicaid under sections 1927(d)(2) or (d)(3) of the Act, except for smoking cessation agents. Person means a natural person, corporation, mutual company, unincorporated association, partnership, joint venture, limited liability company, trust, estate, foundation, not-for-profit corporation, unincorporated organization, government or governmental subdivision or agency. Personal health savings vehicle means a vehicle through which individuals can set aside their own funds to pay for health care expenses, including covered Part D drugs, on a tax-free basis including any of the following-- (1) A Health Savings Account (as defined under section 220 of the Internal Revenue Code); (2) A Flexible Spending Account (as defined in section 106(c)(2) of the Internal Revenue Code) offered in conjunction with a cafeteria plan under section 125 of the Internal Revenue Code; and (3) An Archer Medical Savings Account (as defined under section 223 of the Internal Revenue Code); but specifically excluding a Health Reimbursement Arrangement (as described under Internal Revenue Ruling 2002-41 and Internal Revenue Notice 2002-45) Plan allowance means the amount Part D plans that offer coverage other than defined standard coverage may use to determine their payment and Part D enrollees' cost-sharing for covered Part D drugs purchased at an out-of-network pharmacy or in a physician's office in accordance with the requirements of Sec. 423.124(b). Preferred drug means a covered Part D drug on a Part D plan's formulary for [[Page 390]] which beneficiary cost-sharing is lower than for a non-preferred drug in the plan's formulary. Preferred pharmacy means a network pharmacy that offers covered Part D drugs at negotiated prices to Part D enrollees at lower levels of cost-sharing than apply at a non-preferred pharmacy under its pharmacy network contract with a Part D plan. Qualified prescription drug coverage means any standard prescription drug coverage or alternative prescription drug coverage Retail pharmacy means any licensed pharmacy that is not a mail order pharmacy from which Part D enrollees could purchase a covered Part D drug without being required to receive medical services from a provider or institution affiliated with that pharmacy. Required prescription drug coverage means coverage of Part D drugs under an MA-PD plan that consists of either-- (1) Basic prescription drug coverage; or (2) Enhanced alternative coverage, provided there is no MA monthly supplemental beneficiary premium (as defined under section 1854(b)(2)(C) of the Act) applied under the plan due to the application of a credit against the premium of a rebate under Sec. 422.266(b) of this chapter. Rural means a five-digit ZIP code in which the population density is less than 1,000 individuals per square mile. Standard prescription drug coverage means coverage of Part D drugs that meets the requirements of Sec. 423.104(d). The term standard prescription drug coverage must be either-- (1) Defined standard coverage (standard prescription drug coverage that provides for cost-sharing as described in Sec. 423.104(d)(2)(i)(A) and (d)(5)(i)); or (2) Actuarially equivalent standard coverage (standard prescription drug coverage that provides for cost-sharing as described in Sec. 423.104(d)(2)(i)(B) or cost-sharing as described in Sec. 423.104(d)(5)(ii), or both). Suburban means a five-digit ZIP code in which the population density is between 1,000 and 3,000 individuals per square mile. Supplemental benefits means benefits that meet the requirements of Sec. 423.104(f)(1)(ii). Therapeutically equivalent refers to drugs that are rated as therapeutic equivalents under the Food and Drug Administration's most recent publication of ``Approved Drug Products with Therapeutic Equivalence Evaluations.'' Third party payment arrangement means any contractual or similar arrangement under which a person has a legal obligation to pay for covered Part D drugs. Urban means a five-digit ZIP code in which the population density is greater than 3,000 individuals per square mile. Usual and customary (U&C) price means the price that an out-of- network pharmacy or a physician's office charges a customer who does not have any form of prescription drug coverage for a covered Part D drug.