‘‘(2) ASSUMPTION OF FINANCIAL RISK FOR UN-
SUBSIDIZED COVERAGE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B) and section 1860D–5(d)(2), the enti-
ty assumes full financial risk on a prospective 
basis for qualified prescription drug coverage 
that it offers under a prescription drug plan 
and that is not covered under section 1860D–
8. 
‘‘(B) REINSURANCE PERMITTED.—The en-
tity may obtain insurance or make other ar-
rangements for the cost of coverage provided to 
any enrollee. 
‘‘(3) SOLVENCY FOR UNLICENSED SPONSORS.—
In the case of a sponsor that is not described in 
paragraph (1), the sponsor shall meet solvency 
standards established by the Administrator under 
subsection (d).
‘‘(b) CONTRACT REQUIREMENTS.—
‘‘(1) IN
GENERAL.—The Administrator shall 
not permit the election under section 1860D–1 of a 
prescription drug plan offered by a PDP sponsor 
under this part, and the sponsor shall not be eligible 
for payments under section 1860D–7 or 1860D–8, 
unless the Administrator 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 spon-
sor agrees to comply with the applicable require-
ments and standards of this part and the terms and 
conditions of payment as provided for in this part. 
‘‘(2) NEGOTIATION
REGARDING
TERMS
AND 
CONDITIONS.—The Administrator shall have the 
same authority to negotiate the terms and conditions 
of prescription drug plans under this part as the Di-
rector of the Office of Personnel Management has 
with respect to health benefits plans under chapter 
89 of title 5, United States Code. In negotiating the 
terms and conditions regarding premiums for which 
information is submitted under section 1860D–
6(a)(2), the Administrator shall take into account 
the subsidy payments under section 1860D–8. 
‘‘(3) INCORPORATION
OF
CERTAIN
MEDICARE 
ADVANTAGE
CONTRACT
REQUIREMENTS.—The fol-
lowing provisions of section 1857 shall apply, subject 
to subsection (c)(5), to contracts under this section 
in the same manner as they apply to contracts under 
section 1857(a):
‘‘(A) 
MINIMUM
ENROLLMENT.—Para-
graphs (1) and (3) of section 1857(b), except 
that 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 EFFECTIVE-
NESS.—Paragraphs (1) through (3) and (5) of 
section 1857(c). 
‘‘(C) PROTECTIONS AGAINST FRAUD AND 
BENEFICIARY PROTECTIONS.—Section 1857(d). 
‘‘(D) ADDITIONAL
CONTRACT
TERMS.—
Section 1857(e); except that in applying section 
1857(e)(2) under this part—
‘‘(i) such section shall be applied sepa-
rately to costs relating to this part (from 
costs under part C and part E); 
‘‘(ii) in no case shall the amount of 
the fee established under this subpara-
graph for a plan exceed 20 percent of the 
maximum amount of the fee that may be 
established under subparagraph (B) of 
such section; and 
‘‘(iii) no fees shall be applied under 
this subparagraph with respect to MA-
EFFS Rx plans.
‘‘(E) INTERMEDIATE SANCTIONS.—Section 
1857(g). 
‘‘(F) PROCEDURES
FOR
TERMINATION.—
Section 1857(h). 
‘‘(4) RULES
OF
APPLICATION
FOR
INTER-
MEDIATE
SANCTIONS.—In 
applying 
paragraph 
(3)(E)—
‘‘(A) 
the 
reference 
in 
section 
1857(g)(1)(B) to section 1854 is deemed a ref-
erence to this part; and 
‘‘(B) 
the 
reference 
in 
section 
1857(g)(1)(F) to section 1852(k)(2)(A)(ii) shall 
not be applied. 
‘‘(5) SERVICE AREA REQUIREMENT.—For pur-
poses of this part, the Administrator shall designate 
at least 10 areas covering the entire United States 
and to the extent practicable shall be consistent with 
EFFS regions established under section 1860E–
1(a)(2). 
‘‘(c) WAIVER OF CERTAIN REQUIREMENTS TO EX-
PAND CHOICE.—
‘‘(1) IN GENERAL.—In the case of an entity 
that seeks to offer a prescription drug plan in a 
State, the Administrator shall waive the requirement 
of subsection (a)(1) that the entity be licensed in
that State if the Administrator determines, based on 
the application and other evidence presented to the 
Administrator, that any of the grounds for approval 
of the application described in paragraph (2) have 
been met. 
‘‘(2) GROUNDS FOR APPROVAL.—The grounds 
for approval under this paragraph are the grounds 
for approval described in subparagraph (B), (C), 
and (D) of section 1855(a)(2), and also include the 
application by a State of any grounds other than 
those required under Federal law. 
‘‘(3) APPLICATION OF WAIVER PROCEDURES.—
With respect to an application for a waiver (or a 
waiver granted) under this subsection, the provisions 
of subparagraphs (E), (F), and (G) of section 
1855(a)(2) shall apply. 
‘‘(4) LICENSURE DOES NOT SUBSTITUTE FOR 
OR CONSTITUTE CERTIFICATION.—The fact that an 
entity is licensed in accordance with subsection 
(a)(1) does not deem the entity to meet other re-
quirements imposed under this part for a PDP spon-
sor. 
‘‘(5) REFERENCES TO CERTAIN PROVISIONS.—
For purposes of this subsection, in applying provi-
‘‘(2) LIMITATION ON CHARGES.—In the case of 
an individual receiving cost-sharing subsidies under 
subsection (a)(1)(B), the PDP sponsor or entity of-
fering a MA-EFFS Rx plan may not charge more 
than $5 per prescription. 
‘‘(3) APPLICATION OF INDEXING RULES.—The 
provisions of subsection (a)(5) shall apply to the dol-
lar amount specified in paragraph (2) in the same 
manner as they apply to the dollar amounts specified 
in subsections (a)(1)(B). 
‘‘(d) ADMINISTRATION OF SUBSIDY PROGRAM.—The 
Administrator shall provide a process whereby, in the case 
of an individual who is determined to be a subsidy eligible 
individual and who is enrolled in prescription drug plan 
or is enrolled in a MA-EFFS Rx plan—
‘‘(1) the Administrator provides for a notifica-
tion of the PDP sponsor or the entity offering the 
MA-EFFS Rx plan involved that the individual is el-
igible for a subsidy and the amount of the subsidy 
under subsection (a); 
‘‘(2) the sponsor or entity involved reduces the 
premiums or cost-sharing otherwise imposed by the 
amount of the applicable subsidy and submits to the 
Administrator information on the amount of such 
reduction; and