[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: 42CFR423.4]

[Page 377-378]
 
                         TITLE 42--PUBLIC HEALTH
 
                             HUMAN SERVICES
 
PART 423_VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT--Table of Contents
 
                      Subpart A_General Provisions
 
Sec.  423.4  Definitions.

    The following definitions apply to this part, unless the context 
indicates otherwise:
    Actuarial equivalence means a state of equivalent value demonstrated 
through the use of generally accepted actuarial principles and in 
accordance with section 1860D-11(c) of the Act and with CMS actuarial 
guidelines.
    Brand name drug means a drug for which an application is approved 
under section 505(c) of the Federal Food, Drug, and Cosmetic Act (21 USC 
355(c)), including an application referred to in section 505(b)(2) of 
the Federal Food, Drug and Cosmetic Act (21 USC 355(b)(2)).
    Cost plan means a plan operated by a Health Maintenance Organization 
(HMO) or Competitive Medical Plan (CMP) in accordance with a cost-
reimbursement contract under section 1876(h) of the Act.
    Eligible fallback entity or fallback entity is defined at Sec.  
423.855.
    Fallback prescription drug plan is defined at Sec.  423.855.
    Formulary means the entire list of Part D drugs covered by a Part D 
plan.
    Full-benefit dual eligible individual has the meaning given the term 
at Sec.  423.772, except where otherwise provided.
    Generic drug means a drug for which an application under section 
505(j) of the Federal Food, Drug, and Cosmetic Act (21 USC 355(j)) is 
approved.
    Group health plan is defined at Sec.  423.882.
    Insurance risk means, for a participating pharmacy, risk of the type 
commonly assumed only by insurers licensed by a State and does not 
include payment variations designed to reflect performance-based 
measures of activities within the control of the pharmacy, such as 
formulary compliance and generic drug substitutions, nor does it include 
elements potentially in the control of the pharmacy (for example, labor 
costs or productivity).
    MA stands for Medicare Advantage, which refers to the program 
authorized under Part C of title XVIII of the Act.
    MA plan has the meaning given the term in Sec.  422.2 of this 
chapter.
    MA-PD plan means an MA plan that provides qualified prescription 
drug coverage.
    Medicare prescription drug account means the account created within 
the Federal Supplementary Medical Insurance Trust Fund for purposes of 
Medicare Part D.
    Monthly beneficiary premium means the amount calculated under Sec.  
423.286 for Part D plans other than fallback prescription drug plans, 
and Sec.  423.867(a) for fallback prescription drug plans.
    PACE Plan means a plan offered by a PACE organization.
    PACE organization is defined in Sec.  460.6 of this chapter.
    Part D eligible individual means an individual who meets the 
requirements at Sec.  423.30(a).
    Part D plan (or Medicare Part D plan) means a prescription drug 
plan, an MA-PD plan, a PACE Plan offering qualified prescription drug 
coverage, or a cost plan offering qualified prescription drug coverage.
    Part D plan sponsor or Part D sponsor refers to a PDP sponsor, MA 
organization offering a MA-PD plan, a PACE organization offering a PACE 
plan including qualified prescription drug coverage, and a cost plan 
offering qualified prescription drug coverage.
    PDP region means a prescription drug plan region as determined by 
CMS under Sec.  423.112.
    PDP sponsor means a nongovernmental entity that is certified under 
this part as meeting the requirements and standards of this part that 
apply to entities that offer prescription drug plans. This includes 
fallback entities.
    Prescription drug plan or PDP means prescription drug coverage that 
is offered under a policy, contract, or plan that has been approved as 
specified in Sec.  423.272 and that is offered by a PDP sponsor that has 
a contract with CMS that meets the contract requirements under subpart K 
of this part. This includes fallback prescription drug plans.

[[Page 378]]

    Service area (Service area does not include facilities in which 
individuals are incarcerated.) means for--
    (1) A prescription drug plan, an area established in Sec.  
423.112(a) within which access standards under Sec.  423.120(a) are met;
    (2) An MA-PD plan, an area that meets the definition of MA service 
area as described in Sec.  422.2 of this chapter, and within which 
access standards under Sec.  423.120(a) are met;
    (3) A fallback prescription drug plan, the service area described in 
Sec.  423.859(b);
    (4) A PACE plan offering qualified prescription drug coverage, the 
service area described in Sec.  460.22 of this chapter; and
    (5) A cost plan offering qualified prescription drug coverage, the 
service area defined in Sec.  417.1 of this chapter.
    Subsidy-eligible individual means a full subsidy eligible individual 
(as defined at Sec.  423.772) or other subsidy eligible individual (as 
defined at Sec.  423.772).
    Tiered cost-sharing means a process of grouping Part D drugs into 
different cost sharing levels within a Part D sponsor's formulary.