Document:

EX-10.1

Exhibit 10.1

ADDENDUM TO CONTRACTS WITH MEDICARE PART D SPONSORS

PURSUANT TO SECTIONS 1860D-1 THROUGH 1860D-42 OF THE SOCIAL

SECURITY ACT FOR THE OPERATION OF A VOLUNTARY MEDICARE

PRESCRIPTION DRUG PLAN

The Centers for Medicare and Medicaid Services (hereinafter referred to as “CMS”) and
WellCare of Texas, Inc., an organization operating a Voluntary Medicare Prescription Drug
Plan (hereinafter referred to as “the Sponsor”) agree, pursuant to 42 C.F.R. § 423.508(a) to amend
the contract ( H1264) governing the Sponsor’s Part D operations described in Section 1860D-1
through 1860D-42(with the exception of 1860D-22(a) and 1860D-31) of the Social Security Act
(hereinafter referred to as “the Act”) to include the provisions stated below.

This addendum is made pursuant to Subpart L of 42 CFR Part 417, Subpart K of 42 CFR Part 422, and
Subpart K of 42 CFR Part 423.

NOTE: For the purposes of this addendum, “the Sponsor” includes the following: standalone
prescription drug plan (PDP) sponsors, Medicare managed care organizations offering Part D benefits
(MA-PD), and employer group/union-only organizations. For a PDP sponsor, this document amends its
contract with CMS. For MA-PD organizations and employer group/union-only benefit sponsors, this
document amends the Part D addendum to their Medicare managed care contracts with CMS.

 

 

Article I

Medicare Voluntary Prescription Drug Benefit

	A.	 	This addendum is in no way intended to supersede or modify 42 CFR, Parts 417, 422 or 423,
except as to any requirements set forth in 42 CFR Part 423 that are specifically waived or
modified for Sponsors offering a prescription drug benefit exclusively to Part D eligible
individuals enrolled in employment-based retiree prescription drug coverage as provided in
applicable employer/union-only group waiver guidance and/or in this addendum. Failure to
reference a regulatory requirement in this addendum does not affect the applicability of such
requirements to the Sponsor and CMS.
	 
	B.	 	In the event of a conflict between the employer/union-only group waiver guidance issued prior
to the execution of the contract and this addendum, the provisions of this addendum shall
control. In the event of any conflict between the employer/union-only group waiver guidance
issued after the execution of the contract and this addendum, the provisions of the
employer/union-only group guidance shall control.
	 
	C.	 	In the event of any conflict between the provisions of this addendum and any other provision
of the contract, the terms of this addendum shall control.

Article II

Sponsor Reimbursement to Pharmacies

	A.	 	Effective January 1, 2010, Sponsor will issue, mail, or otherwise transmit payment with
respect to all clean claims submitted by pharmacies (other than pharmacies that dispense drugs
by mail order only or are located in, or contract with, a long-term care facility) within 14
days of receipt of an electronically submitted claim or within 30 days of receipt of a claim
submitted otherwise.
	 
	B.	 	Effective January 1, 2010, Sponsor must ensure that a pharmacy located in, or having a
contract with, a long-term care facility will have not less than 30 days (but not more than 90
days) to submit claims to the Sponsor for reimbursement.
	 
	C.	 	Effective January 1, 2009, if Sponsor uses a standard for reimbursement of pharmacies based
on the cost of a drug will update such standard not less frequently than once every 7 days,
beginning with an initial update on January 1 of each year, to accurately reflect the market
price of acquiring the drug.

Article III

Record Retention and Reporting Requirements

 

 

The section entitled “RECORD MAINTENANCE AND ACCESS” is amended to include the following provision:
“Sponsor agrees to maintain records and provide access in accordance with 42 CFR §§ 423.505 (b)(10)
and 423.505(i)(2)(ii).”

Article IV

CMS Notice of Sponsor Contract Non-Renewal

Paragraph 1 of the section entitled “QUALIFICATION TO RENEW ADDENDUM” is revised to read as
follows:

“1. In accordance with 42 CFR §423.507, the Sponsor will be determined qualified to renew this
addendum annually only if—

	 	(a)	 	The Sponsor has not provided CMS with a notice of intention not to
renew in accordance with Article VII of this addendum, and
	 
	 	(b)	 	CMS has not provided the Sponsor with a notice of intention not to
renew.”

Article IV

Addendum Term

This addendum is effective from the date of CMS’ authorized representative’s signature and shall
remain in effect for as long as the Sponsor remains a Part D sponsor under contract with CMS.

Article VI

Modification or Termination of Addendum by Mutual Consent

This addendum may be modified or terminated at any time by written mutual consent in
accordance with 42 CFR 423.508.

Article XII

Severability

Severability of the addendum shall be in accordance with 42 CFR §423.504(e).

Article XIII

Miscellaneous

	A.	 	Terms not otherwise defined in this addendum shall have the meaning given such terms at 42
CFR Part 423 or, as applicable, 42 CFR Part 422 or Part 417.

 

 

	B.	 	The Sponsor agrees that it has not altered in any way the terms of the addendum presented for
signature by CMS. Sponsor agrees that any alterations to the original text the Sponsor may make
to this addendum shall not be binding on the parties.

In witness whereof, the parties hereby execute this contract modification

FOR THE SPONSOR

	 	 	 	 	 	 	 
	Heath Schiesser

	 	 
	 	President and CEO
	 	 
	Print Name

	 	 	 	Title	 	 
	 
	 	 	 	 	 	 
	/s/ Heath Schiesser

	 	 	 	9/5/08	 	 
	 
Signature

	 	 	 	Date	 	 
	 
	 	 	 	 	 	 
	WellCare of Texas, Inc.

	 	 	 	8735 Henderson Rd., Tampa, FL 33634	 	 
	Organization

	 	 	 	Address	 	 

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

	 	 	 	 	 
	/s/ Cynthia Tudor

	 	 
	 	9/18/08
	 
Cynthia
Tudor, PH.D.

	 	 	 	Date
	Director 

Medicare Drug Benefit Group and 

C&D Data Group 

Center for Drug and Health Plan Choice
	 	 	 	 

 

 

Medicare Advantage Attestation of Benefit Plan

WELLCARE OF TEXAS, INC.

H1264

Date: 08/29/2008

I attest that I have examined the Plan Benefit Packages (PBPs) identified below and that the
benefits Identified in the PBPs are those that the above-stated organization will make available to
eligible beneficiaries in the approved service area during program year 2009. I further attest that
we have reviewed the bid pricing tools (BPTs) with the certifying actuary and have determined them
to be consistent with the PBPs being attested to here.

I further attest that these benefits will be offered in accordance with all applicable Medicare
program authorizing statutes and regulations and program guidance that CMS has issued to date and
will issue during the remainder of 2008 and 2009, including but not limited to, the 2009 Call
Letter, the 2009 Solicitations for New Contract Applicants, the Medicare Prescription Drug Benefit
Manual, the Medicare Managed Care Manual, and the CMS memoranda issued through the Health Plan
Management System (HPMS).

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	CMS	 	 
	 	 	Segment	 	 	 	 	 	Plan	 	Transaction	 	 	 	Part D	 	Approval	 	Effective
	Plan ID	 	ID	 	Version	 	Plan Name	 	Type	 	Type	 	Premium	 	Premium	 	Date	 	Date
	004	 	0	 	8	 	WellCare Value
	 	HMOPOS	 	Renewal	 	0.00	 	0.00	 	08/29/2008	 	01/01/2009
	005	 	0	 	8	 	WellCare Value
	 	HMOPOS	 	Renewal	 	0.00	 	0.00	 	08/29/2008	 	01/01/2009
	006	 	0	 	8	 	WellCare Access
	 	HMO	 	Renewal	 	0.00	 	24.20	 	08/29/2008	 	01/01/2009
	007	 	0	 	8	 	WellCare Access
	 	HMO	 	Renewal	 	0.00	 	25.40	 	08/29/2008	 	01/01/2009
	008	 	0	 	8	 	WellCare Dividend
	 	HMOPOS	 	Renewal	 	0.00	 	0.00	 	08/29/2008	 	01/01/2009
	009	 	0	 	8	 	WellCare Select
	 	HMOPOS	 	Renewal	 	0.00	 	15.10	 	08/29/2008	 	01/01/2009
	010	 	0	 	8	 	WellCare Select
	 	HMOPOS	 	Renewal	 	0.00	 	18.60	 	08/29/2008	 	01/01/2009
	011	 	0	 	8	 	WellCare Select
	 	HMOPOS	 	Renewal	 	0.00	 	17.80	 	08/29/2008	 	01/01/2009
	013	 	0	 	8	 	WellCare Value
	 	HMOPOS	 	Renewal	 	0.00	 	0.00	 	08/29/2008	 	01/01/2009
	014	 	0	 	8	 	WellCare Dividend
	 	HMOPOS	 	Renewal	 	0.00	 	0.00	 	08/29/2008	 	01/01/2009
	016	 	0	 	9	 	WellCare
Reserve
	 	HMO	 	Renewal	 	0.00	 	25.30	 	08/29/2008	 	01/01/2009

Page 1 of 2 — WELLCARE OF TEXAS, INC. — H1264 — 08/29/2008

 

 

	 	 	 	 	 
	/s/ Heath Schiesser

	 	9/5/08
	 	 
	 
CEO:

	 	Date:	 	 
	Heath Schiesser 

CEO/President 

8735 Henderson Road 

Tampa, FL 33634

813-290-6205
	 	 	 	 
	 
	 	 	 	 
	/s/ Thomas L. Tran

	 	9/5/08	 	 
	 
CEO:

	 	Date:	 	 
	Tom Tran 

CFO 

8735 Henderson Road 

Tampa, FL 33634

813-290-6200 1770)
	 	 	 	 

Page 2 of 2 — WELLCARE OF TEXAS, INC. — H1264 — 08/29/2008EX-10.2

Exhibit 10.2

ADDENDUM TO CONTRACTS WITH MEDICARE PART D SPONSORS

PURSUANT TO SECTIONS 1860D-1 THROUGH 1860D-42 OF THE SOCIAL

SECURITY ACT FOR THE OPERATION OF A VOLUNTARY MEDICARE

PRESCRIPTION DRUG PLAN

The Centers for Medicare and Medicaid Services (hereinafter referred to as “CMS”) and
___________________________, an organization operating a Voluntary Medicare Prescription Drug Plan (hereinafter referred
to as “the Sponsor”) agree, pursuant to 42 C.F.R. § 423.508(a) to amend the contract (                      ) governing the Sponsor’s Part D operations described in Section 1860D-1 through
1860D-42(with the exception of 1860D-22(a) and 1860D-31) of the Social Security Act (hereinafter
referred to as “the Act”) to include the provisions stated below.

This addendum is made pursuant to Subpart L of 42 CFR Part 417, Subpart K of 42 CFR Part 422, and
Subpart K of 42 CFR Part 423.

NOTE: For the purposes of this addendum, “the Sponsor” includes the following: standalone
prescription drug plan (PDP) sponsors, Medicare managed care organizations offering Part D benefits
(MA-PD), and employer group/union-only organizations. For a PDP sponsor, this document amends its
contract with CMS. For MA-PD organizations and employer group/union-only benefit sponsors, this
document amends the Part D addendum to their Medicare managed care contracts with CMS.

 

 

Article I

Medicare Voluntary Prescription Drug Benefit

	A.	 	This addendum is in no way intended to supersede or modify 42 CFR, Parts 417,422 or 423,
except as to any requirements set forth in 42 CFR Part 423 that are specifically waived or
modified for Sponsors offering a prescription drug benefit exclusively to Part D eligible
individuals enrolled in employment-based retiree prescription drug coverage as provided in
applicable employer/union-only group waiver guidance and/or in this addendum. Failure to
reference a regulatory requirement in this addendum does not affect the applicability of such
requirements to the Sponsor and CMS.
	 
	B.	 	In the event of a conflict between the employer/union-only group waiver guidance issued prior
to the execution of the contract and this addendum, the provisions of this addendum shall
control. In-the event of any conflict between the employer/union-only group waiver guidance
issued after the execution of the contract and this addendum, the provisions of the
employer/union-only group guidance shall control.
	 
	C.	 	In the event of any conflict between the provisions of this addendum and any other provision
of the contract, the terms of this addendum shall control.

Article II

Sponsor Reimbursement to Pharmacies

	A.	 	Effective January 1, 2010, Sponsor will issue, mail, or otherwise transmit payment with
respect to all clean claims submitted by pharmacies (other than pharmacies that dispense drugs
by mail order only or are located in, or contract with, a long-term care facility) within 14
days of receipt of an electronically submitted claim or within 30 days of receipt of a
claim submitted otherwise.
	 
	B.	 	Effective January 1, 2010, Sponsor must ensure that a pharmacy located in, or having a
contract with, a long-term care facility will have not less than 30 days (but not more than 90
days) to submit claims to the Sponsor for reimbursement.
	 
	C.	 	Effective January 1, 2009, if Sponsor uses a standard for reimbursement of pharmacies based
on the cost of a drug will update such standard not less frequently than once every 7 days,
beginning with an initial update on January 1 of each year, to accurately reflect the market
price of acquiring the drug.

Article III

Record Retention and Reporting Requirements

 

 

The section entitled “RECORD MAINTENANCE AND ACCESS” is amended to include the following provision:
“Sponsor agrees to maintain records and provide access in accordance with 42 CFR §§ 423.505 (b)(10)
and 423.505(i)(2)(ii).”

Article IV

CMS Notice of Sponsor Contract Non-Renewal

Paragraph 1 of the section entitled “QUALIFICATION TO RENEW ADDENDUM” is revised to read as
follows:

“1. In accordance with 42 CFR §423.507, the Sponsor will be determined qualified to renew this
addendum annually only if—

	 	(a)	 	The Sponsor has not provided CMS with a notice of intention not to
renew in accordance with Article VII of this addendum, and
	 
	 	(b)	 	CMS has not provided the Sponsor with a notice of intention not to
renew.”

Article IV

Addendum Term

This addendum is effective from the date of CMS’ authorized representative’s signature and shall
remain in effect for as long as the Sponsor remains a Part D sponsor under contract with CMS.

Article VI

Modification or Termination of Addendum by Mutual Consent

This addendum may be modified or terminated at any time by written mutual consent in
accordance with 42 CFR 423.508.

Article XII

Severability

Severability of the addendum shall be in accordance with 42 CFR §423.504(e).

Article XIII

Miscellaneous

	A.	 	Terms not otherwise defined in this addendum shall have the meaning given such terms at 42
CFR Part 423 or, as applicable, 42 CFR Part 422 or Part 417.

 

 

	B.	 	The Sponsor agrees that it has not altered in any way the terms of the addendum presented
for signature by CMS. Sponsor agrees that any alterations to the original text the Sponsor may
make to this addendum shall not be binding on the parties.

 

 

In witness whereof, the parties hereby execute this contract modification

FOR THE SPONSOR

	 	 	 	 	 
	 
	 	 	 	 
	Heath Schiesser

	 	President and CEO	 	 
	 

Print Name

	 	 

Title
	 	 
	 
	 	 	 	 
	 

Signature

	 	 

Date
	 	 
	 
	 	 	 	 
	 
 

Organization

	 	8735 Henderson Rd., Tampa, FL 33634
 

Address
	 	 

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

	 	 	 	 	 
	 
	 	 	 	 
	 

Cynthia Tudor, PH.D.

Director

Medicare Drug Benefit Group and

C&D Data Group

Center for Drug and Health Plan Choice

	 	 

Date
	 	  

 

 

2009 EGWP (“800 SERIES”) MA-ONLY ADDENDUM

EMPLOYER/UNION-ONLY GROUP PART C ADDENDUM TO CONTRACT

WITH APPROVED ENTITY PURSUANT TO SECTIONS 1851 THROUGH 1859

OF THE SOCIAL SECURITY ACT FOR THE OPERATION OF A MEDICARE

ADVANTAGE PLAN

The Centers for Medicare & Medicaid Services (hereinafter referred to as “CMS”) and
____________________________________________,
a Medicare Advantage Organization (hereinafter referred to as the “MA Organization”) agree to amend
the contract _____________________ governing the MA Organization’s operation of a Medicare Advantage plan described in
section 1851(a)(2)(A) or section 1851(a)(2)(C) of the Social Security Act (hereinafter referred to
as “the Act”), including all attachments, addenda, and amendments thereto, to include the
provisions contained in this Addendum (collectively hereinafter referred to as the “contract”),
under which the MA Organization shall offer Employer/Union-Only Group MA-Only Plans (hereinafter
referred to as “employer/union-only group health plans”) in accordance with the waivers granted by
CMS under section 1857(i) of the Act. The terms of this Addendum shall only apply to MA-only health
plans offered by the MA Organization exclusively to eligible individuals enrolled in
employment-based health coverage under a contract between the MA Organization and the
employer/union sponsor of the employment-based health coverage.

This Addendum is made pursuant to Subpart K of 42 CFR Part 422.

Page 1 of 6

 

Article I

Employer/Union-Only Group Medicare Advantage Health Plan

	A.	 	MA Organization agrees to operate one or more employer/union-only group health plans in
accordance with the Medicare Advantage contract (as modified by this Addendum), which
incorporates in its entirety the 2009 Application Instructions For Medicare Advantage
Organizations To Offer New Employer/Union-Only Group Waiver Plans (EGWPs) and any
employer/union-only group waiver guidance, including, but not limited to those requirements
contained in Chapter 9 of the Medicare Managed Care Manual).
	 
	B.	 	This Addendum is deemed to incorporate any changes that are required by statute to be
implemented during the term of the contract, and any regulations and policies implementing or
interpreting such statutory provisions.
	 
	C.	 	In the event of any conflict between the employer/union-only group waiver guidance issued
prior to the execution of the contract and this Addendum, the provisions of this Addendum
shall control. In the event of any conflict between the employer/union- only group waiver
guidance issued after the execution of the contract and this Addendum, the provisions of the
employer/union-only group guidance shall control.
	 
	D.	 	This Addendum is in no way intended to supersede or modify 42 CFR Part 422 or sections 1851
through 1859 of the Act, except as specifically provided in applicable employer/union-only
group waiver guidance and/or in this Addendum. Failure to reference a statutory or regulatory
requirement in this Addendum does not affect the applicability of such requirement to the MA
Organization and CMS.
	 
	E.	 	The provisions of this Addendum apply to all employer/union-only group health plans offered
by MA Organization under this contract number. In the event of any conflict between the
provisions of this Addendum and any other provision of the contract, the terms of this
Addendum shall control.

Page 2 of 6

 

Article II

Functions to be Performed by the Medicare Advantage Organization

A. PROVISION OF BENEFITS

	 	1.	 	MA Organization agrees to provide enrollees in each of its employer/union-only group
health plans the basic benefits (hereinafter referred to as “basic benefits”) as required
under 42 CFR §422.101 and, to the extent applicable, supplemental benefits under 42 CFR
§422.102 and as established in the MA Organization’s final benefit and price bid proposal
as approved by CMS.
	 
	 	2.	 	The requirements in section 1852 of the Act and 42 CFR §422.100(c)(1) pertaining to
the offering of benefits covered under Medicare Part A and in section 1851 of the Act and
42 CFR §422.50(a)(l) pertaining to who may enroll in an MA plan are waived for
employer/union-only group health plan enrollees who are not entitled to Medicare Part A.
	 
	 	3.	 	For employer/union-only group health plans offering non-calendar year coverage, MA
Organization may determine basic and supplemental benefits (including deductibles,
out-of-pocket limits, etc.) on a non-calendar year basis subject to the following
requirements:
	 
	 	 	 	(a) Applications, bids, and other submissions to CMS must be submitted on a calendar year
basis; and
	 
	 	 	 	(b) CMS payments will be determined on a calendar year basis.
	 
	 	4.	 	For employer/union-only group MA-only plans that have a monthly beneficiary rebate
described in 42 CFR §422.266:
	 
	 	 	 	(a) MA Organization may vary the form of rebate for a particular plan benefit package so
that the total monthly rebate amount may be credited differently for each employer/union
group to whom MA Organization offers the plan benefit package, with the exception of a
rebate credited toward the reduction of the Part B premium as stated in II.A.4(b); and
	 
	 	 	 	(b) MA Organization must:

	 	 	 	(i) ensure Part B premium reductions are the same for all enrollees in a plan benefit
package;
	 
	 	 	 	(ii) ensure that the total monthly rebate amount per enrollee is uniform across all
employer/union groups within the plan benefit package;
	 
	 	 	 	(iii) ensure that all rebates are accounted for and used only for the purposes provided
in the Act; and

Page 3 of 6

 

	 	 	 	(iv) retain documentation that supports the use of all of the rebates on a detailed
basis for each employer/union group within the plan benefit package and must provide
access to this documentation in accordance with the requirements of 42 CFR §422.501.

B. ENROLLMENT REQUIREMENTS

	 	1.	 	MA Organization agrees to restrict enrollment in an employer/union-only group
health plan to those individuals eligible for the employer’s/union’s employment-based
group coverage.
	 
	 	2.	 	MA Organization will not be subject to the requirement to offer the
employer/union-only group health plan to all eligible beneficiaries residing in the plan’s
service area as set forth in 42 CFR §422.50.
	 
	 	3.	 	If an employer/union elects to enroll eligible individuals eligible for its
employer/union-only group health plan through a group enrollment process, MA Organization
will not be subject to the individual enrollment requirements set forth in 42 CFR §422.60.
MA Organization agrees that it will comply with all the requirements for group enrollment
contained in CMS guidance, including those requirements contained in Chapter 2 of the
Medicare Managed Care Manual.

C. BENEFICIARY PROTECTIONS

	 	1.	 	Except as provided in II.C.2., CMS agrees that with respect to any
employer/union-only group health plans, MA Organization will not be subject to the prior
review and approval of marketing materials and election forms requirements set forth in 42
CFR §422.80. MA Organization will be subject to all other disclosure requirements
contained in 42 CFR §422.111 and in CMS guidance, including those requirements contained
in Chapter 9 of the Medicare Managed Care Manual.
	 
	 	2.	 	CMS agrees that the disclosure requirements set forth in 42 CFR §422.111 will not
apply with respect to any employer/union-only group health plan when the employer/union is
subject to alternative disclosure requirements (e.g., the Employee Retirement Income
Security Act of 1974 (“ERISA”)) and fully complies with such alternative requirements. MA
Organization agrees to comply with the requirements for this waiver contained in
employer/union-only group waiver guidance, including those requirements contained in
Chapter 9 of the Medicare Managed Care Manual.

D. SERVICE AREA

	 	1.	 	CMS agrees that Local employer/union-only group health plans that provide coverage to
individuals in any part of a State may offer coverage to individuals eligible for the
employer/union-only group throughout that State provided the MA

Page 4 of 6

 

	 	 	 	Organization has properly designated (in accordance with CMS operational requirements) its
employer/union-only group service areas in CMS’s Health Plan Management System (HPMS) as
including those areas outside of its individual service area(s) to allow for enrollment of
these beneficiaries in CMS enrollment systems.
	 
	 	2.	 	CMS agrees that those Local Coordinated Care Health Plans that provide coverage to
individuals in any part of a State can offer coverage to beneficiaries eligible for the
employer/union-only group plan that reside outside of the State provided:
	 
	 	 	 	(a) the MA Organization has properly designated (in accordance with CMS operational
requirements) its employer/union-only group service areas in CMS’s Health Plan Management
System (HPMS) as including those areas outside of its individual State service area(s) to
allow for enrollment of these beneficiaries in CMS enrollment systems; and
	 
	 	 	 	(b) the MA Organization, either itself or through partnerships (i.e., arrangements) with
other MA Organizations, is able to meet CMS provider network adequacy requirements and
provide consistent benefits to those beneficiaries.
	 
	 	3.	 	CMS agrees that non-network Private Fee-for-Service employer/union-only group health
plans may offer coverage beyond their designated individual service areas to all enrollees
of a particular employer/union-only group plan, regardless of where they reside in the
nation, provided the MA Organization has properly designated (in accordance with CMS
operational requirements) its employer/union-only group service area in CMS’ HPMS as
including areas outside of its individual plan service area(s) to allow for the enrollment
of these beneficiaries in CMS enrollment systems.

F. PAYMENT TO MA ORGANIZATION

	 	 	MA Organization acknowledges that the risk sharing, plan entry and retention bonus provisions
of section 1858 of the Act and 42 CFR §422.458 shall not apply to Regional employer/union-only
group health plans.

Page 5 of 6

 

In witness whereof, the parties hereby execute this Addendum.

FOR THE MA ORGANIZATION

	 	 	 	 	 
	 
	 	 	 	 
	Heath Schiesser
 

Print Name

	 	President and CEO
 

Title
	 	 
	 
	 	 	 	 
	 

Signature

	 	 

Date
	 	 
	 
	 	 	 	 
	  

Organization

	 	8735 Henderson Rd., Tampa, FL 33634
 

Address
	 	 

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

	 	 	 	 
	 
	 	 	 
	Teresa DeCaro, R.N., MS

Acting Director

Medicare Drug and Health Plan Contract
     Administration
Group

Center for Drug and Health Plan Choice

	 	Date	 

Page 6 of 6

 

2009 EGWP (“800 SERIES”) MA-PD ADDENDUM

EMPLOYER/UNION-ONLY GROUP ADDENDUM TO CONTRACT WITH

APPROVED ENTITY PURSUANT TO SECTIONS 1851 THROUGH 1859 AND

1860D-1 THROUGH 1860D-42 OF THE SOCIAL SECURITY ACT FOR THE

OPERATION OF A MEDICARE ADVANTAGE PRESCRIPTION DRUG PLAN

The Centers for Medicare & Medicaid Services hereinafter referred to as “CMS”) and
_________________________________, a Medicare Advantage Organization (hereinafter referred to as the “MA Organization”) agree
to amend the contract _________ (INSERT “H” OR “R “ NUMBER) governing the MA Organization’s operation of a
Medicare Advantage plan described in section 1851(a)(2)(A) or section 1851(a)(2)(C) of the Social
Security Act (hereinafter referred to as “the Act”), including all attachments, addenda, and
amendments thereto, to include the provisions contained in this Addendum (collectively hereinafter
referred to as the “contract”), under which the MA Organization shall offer Employer/Union-Only
Group MA-PD Plans (hereinafter referred to as “employer/union-only group MA-PDs”) in accordance
with the waivers granted by CMS under section 1857(i) of the Act. The terms of this Addendum shall
only apply to MA-PD plans offered by the MA Organization exclusively to eligible individuals
enrolled in employment-based health coverage under a contract between the MA Organization and the
employer/union sponsor of the employment-based health coverage.

This Addendum is made pursuant to Subparts K of 42 CFR Parts 422 and 423.

Page 1 of 14

 

ARTICLE I

EMPLOYER/UNION-ONLY GROUP MEDICARE ADVANTAGE

PRESCRIPTION DRUG PLANS

	A.	 	MA Organization agrees to operate one or more employer/union-only group MA-PDs
in accordance with the Medicare Advantage contract (as modified by this Addendum), which
incorporates in its entirety the 2009 Application Instructions For Medicare Advantage
Organizations To Offer New Employer/Union-Only Group Waiver Plans (EGWPs) and any
employer/union-only group waiver guidance, including, but not limited to those requirements
contained in Chapter 9 of the Medicare Managed Care Manual).
	 
	B.	 	This Addendum is deemed to incorporate any changes that are required by statute to be
implemented during the term of the contract, and any regulations and policies implementing or
interpreting such statutory provisions.
	 
	C.	 	In the event of any conflict between the employer/union-only group waiver guidance issued
prior to the execution of the contract and this Addendum, the provisions of this Addendum
shall control. In the event of any conflict between the employer/union-only group waiver
guidance issued after the execution of the contract and this Addendum, the provisions of the
employer/union-only group guidance shall control.
	 
	D.	 	This Addendum is in no way intended to supersede or modify 42 CFR Parts 422 and 423 or
sections 1851 through 1859 and 1860D-1 through D-42 of the Act, except as specifically
provided in applicable employer/union-only group waiver guidance and/or in this Addendum.
Failure to reference a statutory or regulatory requirement in this Addendum does not affect
the applicability of such requirement to the MA Organization and CMS.
	 
	E.	 	The provisions of this Addendum apply to all employer/union-only group MA-PDs offered by MA
Organization under this contract number. In the event of any conflict between the provisions
of this Addendum and any other provision of the contract, the terms of this Addendum shall
control.

Page 2 of 14

 

ARTICLE
II

FUNCTIONS TO BE PERFORMED BY THE MEDICARE ADVANTAGE

ORGANIZATION

A. PROVISION OF MA BENEFITS

	 	1.	 	MA Organization agrees to provide enrollees in each of its employer/union-only group
MA-PDs the basic benefits (hereinafter referred to as “basic benefits”) as required under
42 CFR §422.101 and, to the extent applicable, supplemental benefits under 42 CFR §422.102
and as established in the MA Organization’s final benefit and price bid proposal as
approved by CMS.
	 
	 	2.	 	The requirements in section 1852 of the Act and 42 CFR §422.100(c)(1) pertaining to the
offering of benefits covered under Medicare Part A and in section 1851 of the Act and 42
CFR §422.50(a)(l) pertaining to who may enroll in an MA-PD are waived for
employer/union-only group MA-PD enrollees who are not entitled to Medicare Part A.
	 
	 	3.	 	For employer/union-only group MA-PDs offering non-calendar year coverage, MA
Organization may determine basic and supplemental benefits (including deductibles,
out-of-pocket limits, etc.) on a non-calendar year basis subject to the following
requirements:
	 
	 	 	 	(a) Applications, bids, and other submissions to CMS must be submitted on a calendar year
basis; and
	 
	 	 	 	(b) CMS payments will be determined on a calendar year basis.
	 
	 	4.	 	For employer/union-only group MA-PDs that have a monthly beneficiary rebate described in 42 CFR §422.266:
	 
	 	 	 	(a) MA Organization may vary the form of rebate for a particular plan benefit package so
that the total monthly rebate amount may be credited differently for each employer/union
group to whom MA Organization offers the plan benefit package, with the exception of a
rebate credited toward the reduction of the Part B premium as stated in II.A.4(b); and
	 
	 	 	 	(b) MA Organization must:

	 	 	 	(i) ensure Part B premium reductions are the same for all enrollees in a plan benefit
package;
	 
	 	 	 	(ii) ensure that the total monthly rebate amount per enrollee is uniform across all
employer/union groups within the plan benefit package;
	 
	 	 	 	(iii) ensure that all rebates are accounted for and used only for the purposes

Page 3 of 14

 

	 	 	 	provided in the Act; and
	 
	 	 	 	(iv) Retain documentation that supports the use of all of the rebates on a detailed
basis for each employer/union group within the plan benefit package and must provide
access to this documentation for inspection or audit by CMS (or its designee) in
accordance with the requirements of 42 CFR 422.503(d) and 422.504(d) and (e).

	 	5.	 	MA Organization agrees it shall obtain written agreements from each employer/union
that provide that the employer/union may determine how much of an enrollee’s Part C
monthly beneficiary premium it will subsidize, subject to the restrictions set forth in
II.A.5(a) through (c). MA Organization agrees to retain these written agreements with
employers/unions and must provide access to this documentation for inspection or audit by
CMS (or its designee) in accordance with the requirements of 42 CFR 422.503(d) and
422.504(d) and (e)
	 
	 	 	 	(a) The employer/union can subsidize different amounts for different classes of enrollees
in the employer group health plan provided such classes are reasonable and based on
objective business criteria, such as years of service, date of retirement, business
location, job category, and nature of compensation (e.g., salaried v. hourly).
	 
	 	 	 	(b) The employer/union cannot vary the premium subsidy for individuals within a given class
of enrollees.
	 
	 	 	 	(c) The employer/union cannot charge an enrollee for coverage provided under the employer
group health plan more than the sum of his or her monthly beneficiary premium attributable
to basic benefits provided under the plan as defined in 42 CFR §422.2 (i.e., all
Medicare-covered benefits, except hospice services) and 100% of the monthly beneficiary
premium attributable to his or her non-Medicare Part C benefits (if any). MA Organization
must pass through the monthly payments described under 42 CFR 422.304(a) received from CMS
to reduce the amount that the enrollee pays (or, in those instances where the subscriber to
or participant in the employer plan pays premiums on behalf of a Medicare eligible spouse
or dependent, the amount the subscriber or participant pays).

B. PROVISION OF PRESCRIPTION DRUG BENEFITS

	 	1.	 	(a) Except as provided in II.B.1 (b), MA Organization agrees to provide basic
prescription drug coverage, as defined under 42 CFR §423.100, under any
employer/union-only group MA-PD, in accordance with Subpart C of 42 CFR Part 423.
	 
	 	 	 	(b) CMS agrees that MA Organization will not be subject to the actuarial equivalence
requirement set forth in 42 CFR §423.104(e)(5) with respect to any

Page 4 of 14

 

	 	 	 	employer/union-only group MA-PD and may provide less than the defined standard coverage
between the deductible and initial coverage limit. MA Organization agrees that its basic
prescription drug coverage under any employer/union-only group MA-PD will satisfy all of
the other actuarial equivalence standards set forth in 42 CFR §423.104, including but not
limited to the requirement set forth in 42 CFR §423.104(e)(3) that the plan has a total or
gross value that is at least equal to the total or gross value of defined standard
coverage.
	 
	 	 	 	(c) CMS agrees that nothing in this Addendum prevents MA Organization from offering benefits
in addition to basic prescription drug coverage to employers/unions. Such additional
benefits offered pursuant to private agreements between MA Organization and employers/unions
will be considered non-Medicare Part D benefits (“non-Medicare Part D benefits”). MA
Organization agrees that such additional benefits may not reduce the value of basic
prescription drug coverage (e.g., additional benefits cannot impose a cap that would
preclude enrollees from realizing the full value of such basic prescription drug coverage).
	 
	 	 	 	(d) MA Organization agrees that enrollees of employer/union-only group MA-PDs shall not be
charged more than the sum of his or her monthly beneficiary premium attributable to basic
prescription drug coverage and 100% of the monthly beneficiary premium attributable to his
or her non-Medicare Part D benefits (if any). MA Organization must pass through the direct
subsidy payments received from CMS to reduce the amount that the beneficiary pays (or, in
those instances where the subscriber to or participant in the employer plan pays premiums on
behalf of an eligible spouse or dependent, the amount the subscriber or participant pays).
	 
	 	 	 	(e) MA Organization agrees that any additional non-Medicare Part D benefits offered to an
employer/union will always pay primary to the subsidies provided by CMS to low-income
individuals under Subpart P of 42 CFR Part 423 (the “Low-Income Subsidy”).
	 
	 	 	 	(f) If an MA Organization uses a standard for reimbursement of pharmacies based on the cost
of a drug, MA Organization will update such standard not less frequently than once every 7
days, beginning with an initial update on January 1 of each year, to accurately reflect the
market price of the drug.
	 
	 	 	 	(g) Effective January 1, 2010, MA Organization will issue, mail, or otherwise transmit
payment with respect to all claims submitted by pharmacies (other than pharmacies that
dispense drugs by mail order only, or are located in, or .contract with, a long-term care
facility) within 14 days of receipt of an electronically submitted claim or within 30 days
of receipt of a claim submitted otherwise.
	 
	 	 	 	(h) Effective January 1, 2010, MA Organization must ensure that a pharmacy

Page 5 of 14

 

	 	 	 	located in, or having a contract with, a long-term care facility will have not less
than 30 days (but not more than 90 days) to submit claims to MA Organization for
reimbursement.
	 
	 	 	 	(i) MA Organization agrees to maintain records and provide access in accordance with 42 CFR
§§423.504(d), 423.505(b)(10), (d), and (e), and 423.505(i)(2)(ii).
	 
	 	2.	 	MA Organization agrees enrollees of employer/union-only group MA-PDs will not be
permitted to make payment of premiums under 42 CFR §423.293 (a) through withholding from
the enrollee’s Social Security, Railroad Retirement Board, or Office of Personnel
Management benefit payment.
	 
	 	3.	 	MA Organization agrees it shall obtain written agreements from each employer/union
that provide that the employer/union may determine how much of an enrollee’s Part D
monthly beneficiary premium it will subsidize, subject to the restrictions set forth in
113.3(a) through (g). MA Organization agrees to retain these written agreements with
employers/unions, including any written agreements related to items (d) through (f), and
must provide access to this documentation for inspection or audit by CMS (or its designee)
in accordance with the requirements of 42 CFR 423.504(d) and 423.505(d) and (e)
	 
	 	 	 	(a) The employer/union can subsidize different amounts for different classes of enrollees in
the employer/union-only group MA-PD provided such classes are reasonable and based on
objective business criteria, such as years of service, date of retirement, business
location, job category, and nature of compensation (e.g., salaried v. hourly). Different
classes cannot be based on eligibility for the Low Income Subsidy.
	 
	 	 	 	(b) The employer/union cannot vary the premium subsidy for individuals within a given class
of enrollees.
	 
	 	 	 	(c) The employer/union cannot charge an enrollee for prescription drug coverage provided
under the plan more than the sum of his or her monthly beneficiary premium attributable to
basic prescription drug coverage and 100% of the monthly beneficiary premium attributable to
his or her non-Medicare Part D benefits (if any). The employer/union must pass through
direct subsidy payments received from CMS to reduce the amount that the beneficiary pays
(or, in those instances where the subscriber to or participant in the employer plan pays
premiums on behalf of an eligible spouse or dependent, the amount the subscriber or
participant pays).
	 
	 	 	 	(d) For all enrollees eligible for the Low Income Subsidy, the low income premium subsidy
amount will first be used to reduce any portion of the MA-PD monthly beneficiary premium
paid by the enrollee (or in those instances where the subscriber to or participant in the
employer plan pays premiums on behalf of a low-income eligible spouse or dependent, the
amount the subscriber or participant

Page 6 of 14

 

	 	 	 	pays), with any remaining portion of the premium subsidy amount then applied toward any
portion of the MA-PD monthly beneficiary premium (including any MA premium) paid by the
employer/union. However, if the sum of the enrollee’s MA-PD monthly premium (or the
subscriber’s/participant’s MA-PD monthly premium, if applicable) and the employer’s/union’s
MA-PD monthly premiums (i.e., total monthly premium) are less than the monthly low-income
premium subsidy amount, any portion of the low-income subsidy premium amount above the total
MA-PD monthly premium must be returned directly to CMS. Similarly, if there is no MA-PD
monthly premium charged the beneficiary (or subscriber/participant, if applicable) or
employer/union, the entire low-income premium subsidy amount must be returned directly to
CMS and cannot be retained by the MA Organization, the employer/union, or the beneficiary
(or the subscriber/participant, if applicable).
	 
	 	 	 	(e) If the Part D sponsor does not or cannot directly bill an employer group’s
beneficiaries, CMS will permit the Part D sponsor to directly refund the amount of the
low-income premium subsidy to the LIS beneficiary. This refund must meet the above
requirements concerning beneficiary premium contributions; specifically, that the amount of
the refund not exceed the amount of the monthly premium contribution by the enrollee and/or
the employer. In addition, the sponsor must refund these amounts to the beneficiary within a
reasonable time period. However, under no circumstances may this time period exceed forty
five (45) days from the date that the Part D sponsor receives the low-income premium subsidy
amount payment for that beneficiary from CMS.
	 
	 	 	 	(f) The MA Organization and the employer/union may agree that the employer/union will be
responsible for reducing up-front the MA-PD premium contribution required for enrollees
eligible for the Low Income Subsidy. In those instances where the employer/union is not able
to reduce up-front the MA-PD premiums paid by the enrollee (or, the subscriber/participant,
if applicable), the MA Organization and the employer/union may agree that the employer/union
shall directly refund to the enrollee (or subscriber/participant, if applicable) the amount
of the low-income premium subsidy up to the MA-PD monthly premium contribution previously
collected from the enrollee (or subscriber/participant, if applicable). The employer/union
is required to complete the refund on behalf of the MA Organization within forty-five (45)
days of the date the MA Organization receives from CMS the low-income premium subsidy amount
payment for the low-income subsidy eligible enrollee.
	 
	 	 	 	(g) If the low income premium subsidy amount for which an enrollee is eligible is less than
the portion of the Part D monthly beneficiary premium paid by the enrollee (or
subscriber/participant, if applicable), then the employer/union should communicate to the
enrollee (or subscriber/participant) the financial consequences of the low-income subsidy
eligible individual enrolling in the employer/union-only group MA-PD as compared to
enrolling in another Part D plan with a monthly beneficiary premium equal to or below the
low income premium subsidy amount.

Page 7 of 14

 

	 	4.	 	For non-calendar year employer/union-only group MA-PDs, MA Organization may
determine benefits (including deductibles, out-of-pocket limits, etc.) on a non-calendar
year basis subject to the following requirements:
	 
	 	 	 	(a) Applications, formularies, bids and other submissions to CMS must be submitted on
a calendar year basis;
	 
	 	 	 	(b) The prescription drug coverage under the employer/union-only group MA-PD must be at
least actuarially equivalent to defined standard coverage for the portion of its plan year
that falls in a given calendar year. An employer/union-only group MA-PD will meet this
standard if its prescription drug coverage is at least actuarially equivalent for the
calendar year in which the plan year starts and no design change is made for the remainder
of the plan year. In no event can MA Organization increase during the plan year the annual
out-of-pocket threshold;
	 
	 	 	 	(c) After an enrollee’s incurred costs exceed the annual out-of-pocket threshold, the
employer/union-only group MA-PD must provide coverage that is at least actuarially
equivalent to that provided under standard prescription drug coverage; eligibility for such
coverage can be determined on a plan year basis.

C. ENROLLMENT REQUIREMENTS

	 	1.	 	MA Organization agrees to restrict enrollment in an employer/union-only group MA-PD
to those individuals eligible for the employer’s/union’s employment-based group coverage.
	 
	 	2.	 	MA Organization will not be subject to the requirement to offer the
employer/union-only group MA-PD to all Medicare eligible beneficiaries residing in its
service area as set forth in 42 CFR §422.50.
	 
	 	3.	 	If an employer/union elects to enroll eligible individuals eligible for its
employer/union-only group MA-PDs through a group enrollment process, MA Organization will
not be subject to the individual enrollment requirements set forth in 42 CFR §422.60. MA
Organization agrees that it will comply with all the requirements for group enrollment
contained in CMS guidance, including those requirements contained in Chapter 2 of the
Medicare Managed Care Manual.

D. BENEFICIARY PROTECTIONS

	 	1.	 	Except as provided in H.D.2., CMS agrees that, with respect to any
employer/union-only group MA-PDs, MA Organization will not be subject to the information
requirements set forth in 42 CFR §423.48 and the prior review and approval of marketing
materials and election forms requirements set forth in 42

Page 8 of 14

 

	 	 	 	CFR §422.80 and §423.50. MA Organization will be subject to all other disclosure and
dissemination requirements contained in 42 CFR §422.111, §423.128 and in CMS
guidance, including those requirements contained in Chapter 9 of the Medicare Managed
Care Manual.
	 
	 	2.	 	CMS agrees that the disclosure and dissemination requirements set forth in 42 CFR
§422.111 and §423.128 will not apply with respect to any employer/union-only group MA-PD
when the employer/union is subject to alternative disclosure requirements (e.g., the
Employee Retirement Income Security Act of 1974 (“ERISA”)) and fully complies with such
alternative requirements. MA Organization agrees to comply with the requirements for this
waiver contained in employer/union-only group waiver guidance, including those
requirements contained in Chapter 9 of the Medicare Managed Care Manual.
	 
	 	3.	 	CMS agrees that with respect to any employer/union-only group MA-PDs, MA Organization
will not be subject to the Part D beneficiary customer service call center hour and
performance requirements. MA Organization agrees to operate beneficiary customer service
call center hours for any employer/union-only group MA-PDs that ensure a sufficient
mechanism is available to respond to beneficiary inquiries and provide customer service
call center services to these members during normal business hours. However, MA
Organization agrees that CMS may review the adequacy of these call center hours and
potentially require expanded beneficiary customer service call center hours in the event
of beneficiary complaints or for other reasons in order to ensure that the customer
service call center hours are sufficient to meet the needs of its enrollee population.

E. SERVICE AREA, FORMULARIES AND PHARMACY ACCESS

	 	1.	 	CMS agrees that Local employer/union-only group MA-PDs that provide coverage to
individuals in any part of a State may offer coverage to retirees eligible for the
employer/union-only group MA-PD throughout that State provided the MA Organization has
properly designated (in accordance with CMS operational requirements) its
employer/union-only group service areas in CMS’s Health Plan Management System (HPMS) as
including those areas outside of its individual service area(s) to allow for enrollment of
these beneficiaries in CMS enrollment systems. CMS also agrees that employer/union-only
group Regional MA-PDs that provide coverage to individuals in any part of a Region can
offer coverage to retirees eligible for the employer/union-only group MA-PD throughout that
Region.
	 
	 	2.	 	CMS agrees that those Local Coordinated Care Health MA-PDs that provide coverage to
individuals in any part of a State can offer coverage to beneficiaries eligible for the
employer/union-only group plan that reside outside of the State provided:

Page 9 of 14

 

	 	 	 	(a) the MA Organization has properly designated (in accordance with CMS operational
requirements) its employer/union-only group service areas in CMS’s Health Plan Management
System (HPMS) as including those areas outside of its individual State service area(s) to
allow for enrollment of these beneficiaries in CMS enrollment systems; and
	 
	 	 	 	(b) the MA Organization, either itself or through partnerships (i.e., arrangements) with
other MA Organizations, is able to meet CMS provider network adequacy requirements and
provide consistent benefits to those beneficiaries.; or
	 
	 	 	 	(c) the MA Organization will be afforded a limited flexibility in a portion of an expanded
employer/union-only group service area outside a State where it is unable to secure
contracts with an adequate number of network providers to satisfy CMS’ MA coordinated care
network adequacy requirements that otherwise would apply. As a condition of receiving this
waiver, the MA Organization agrees to meet each of the following requirements:

	 	 	 	(1) The MA Organization must be able to meet CMS’ MA coordinated care network
adequacy requirements for at least the majority of a particular employer or union
group’s beneficiaries enrolled in the “800 series” coordinated care plan. In those
instances where the MA Organization cannot meet this requirement for a particular
employer or union group’s beneficiaries, CMS will require information, including MA
network adequacy information for the particular employer or union group, to be
submitted for review and approval by CMS;
	 
	 	 	 	(2) All of an employer or union group’s beneficiaries, including those beneficiaries
that do not have access to contracted MA network providers, must receive the same
covered benefits, at the preferred in-network cost sharing for all covered benefits
offered by the coordinated care plan;
	 
	 	 	 	(3) The MA Organization must provide payment to noncontract providers in accordance
with the requirements of 1852(a)(2)(A) of the Social Security Act (i.e., the MA
Organization must provide “payment in an amount so that — (i) the sum of such
payment amount and any cost sharing provided under the plan is equal to at
least (ii) the total dollar amount of payment for such items and services as
would otherwise be authorized under parts A and B (including any balance billing
under such parts [emphasis added])”). Note that, unlike private fee-for-service MA
plans, MA Organizations offering local coordinated care plans have the ability to
pay more than the required above-mentioned statutory amounts to any particular
noncontract provider (See also 42 CFR 422.214; and 42 CFR 489.53(a)(2) (hospitals
and other institutional providers with Original Medicare fee-for-service provider
agreements that place certain restrictions on treating any Medicare beneficiaries
may be subject to having those agreements terminated by CMS));

Page 10 of 14

 

	 	 	 	(4) The MA Organization must take whatever steps are necessary to ensure that
beneficiaries residing in areas where the MA Organization is unable to secure
contracts with an adequate number of a specific type of provider(s) to satisfy CMS’
MA network adequacy requirements will have access to providers, including providing
assistance to these beneficiaries in locating providers and/or utilizing its
ability, as outlined above, to pay noncontract providers more than the statutory
minimum required in section 1852(a)(2)(A) of the Social Security Act;
	 
	 	 	 	(5) In addition to assisting enrollees residing in non-network areas of the local
coordinated care plan in finding providers who will furnish services, the MA
Organization must also establish a program to specifically assist these enrollees
in the coordination of their health care service. Areas that should be addressed in
its coordination plan for its non-network enrollees are discussed in section 120.3
of Chapter 4 of the Medicare Managed Care Manual; and
	 
	 	 	 	(6) In order to minimize any adverse effects on beneficiaries residing in areas
where the MA Organization is unable to satisfy CMS’ MA network adequacy
requirements, the MA Organization also must have in place an effective communication
plan with employer groups prior to transitioning these employer group beneficiaries
to the local coordinated care plan. This must include the following key
communications: (a) ensure employer sponsors and their beneficiaries understand how
the plan will work for those enrollees residing in areas where MA network providers
are not available, including that noncontract providers are generally not required
to accept the plan and furnish services; (b) ensure the MA Organization has a
targeted communication strategy and provides information and assistance for
beneficiaries affected by lack of access to network providers (i.e., whom they
contact if they have difficulties locating a provider that will furnish services,
etc); (c) conduct targeted education and outreach to the current providers of
beneficiaries affected by lack of access to network providers prior to transitioning
the group to the local coordinated care plan, explaining how the local coordinated
care employer group product works, how claims are submitted, etc.; and (d) assure
all noncontract providers that they will receive prompt and accurate payment.

	 	3.	 	CMS agrees that non-network Private Fee-for-Service employer/union-only group MA-PDs
may offer coverage beyond their designated individual service areas to all enrollees of a
particular employer/union-only group plan, regardless of where they reside in the nation,
provided the MA Organization has properly designated (in accordance with CMS operational
requirements) its employer/union-only group service area in CMS’ HPMS as including areas
outside of its individual plan service area(s) to allow for the enrollment of these
beneficiaries in CMS enrollment systems.

Page 11 of 14

 

	 	4.	 	MA Organization agrees to utilize, as the formulary for any employer/union-only group
MA-PD, a base formulary that has received approval from CMS, in accordance with CMS
formulary guidance, for use in a non-group MA-PD offered by MA Organization. Except as set
forth in 42 CFR §423.120(b) and sub-regulatory guidance, MA Organization may not modify
the approved base formulary used for any employer/union-only group MA-PD by removing
drugs, adding additional utilization management restrictions, or increasing the
cost-sharing status of a drug from the base formulary. Enhancements that are permitted to
the base formulary include adding additional drugs, removing utilization management
restrictions, and improving the cost-sharing status of drugs.
	 
	 	5.	 	For any employer/union-only group MA-PD, MA Organization agrees to provide Part D
benefits in the plan’s service area utilizing a pharmacy network and formulary that meets
the requirements of 42 CFR §423.120, with the following exception: CMS agrees that the
retail pharmacy access requirements set forth in 42 CFR §423.120(a)(1) will not apply when
the employer/union-only group MA-PD ‘s pharmacy network is sufficient to meet the needs of
its enrollees throughout the employer/union-only group MA-PD’s service area, as determined
by CMS. CMS may periodically review the adequacy of the employer/union-only group MA-PD’s
pharmacy network and require the employer/union-only group MA-PD to expand access if CMS
determines that such expansion is necessary in order to ensure that the
employer/union-only group MA-PD’s network is sufficient to meet the needs of its
enrollees.

F. PAYMENT TO MA ORGANIZATION

Except as provided in II.F.l through 4, payment under this Addendum will be governed by the rules
of Subparts G and J of 42 CFR Part 423.

	 	1.	 	MA Organization acknowledges that the risk sharing, plan entry and retention
bonus provisions of section 1858 of the Act and 42 CFR §422.458 shall not apply
to any employer/union-only group Regional MA-PDs.
	 
	 	2.	 	MA Organization acknowledges that the risk-sharing payment adjustment
described in 42 CFR §423.336 is not applicable for any employer/union-only group
MA-PD enrollee.
	 
	 	3.	 	MA Organization is not required to submit a Part D bid and will receive a monthly
direct subsidy under 42 CFR Subpart G for each employer/union-only group MA-PD enrollee
equal to the amount of the national average monthly bid amount (not its approved
standardized bid), adjusted for health status (as determined under 42 CFR §423.329(b)(1))
and reduced by the base beneficiary premium for the employer/union-only group MA-PD, as
adjusted under 42 CFR §423.286(d)(3), if applicable. The further adjustments to the base
beneficiary premium contained in

Page 12 of 14

 

	 	 	 	42 CFR §423.286(d)(1) and (2) will not apply.
	 
	 	4.	 	MA Organization will not receive monthly reinsurance payment
or low-income cost-sharing subsidy amounts in the manner set forth in 42 CFR §423.329(c)(2)(i) and 42 CFR
§423.329(d)(2)(i) for any employer/union-only group MA-PD enrollee, but instead will
receive the full reinsurance and low-income cost-sharing subsidy payments following the end
of year reconciliation as described in 42 CFR §423.329(c)(2)(H) and 42 CFR
§423.329(d)(2)(ii) respectively.
	 
	 	5.	 	For non-calendar year plans:
	 
	 	 	 	(a) CMS payments will be determined on a calendar year basis;
	 
	 	 	 	(b) Low income subsidy payments and reconciliations will be determined based on the
calendar year for which the payments are made; and
	 
	 	 	 	(c) MA Organization acknowledges that it will not receive reinsurance payments under 42 CFR
§423.329(c).

Page 13 of 14

 

In witness whereof, the parties hereby execute this Addendum.

FOR THE MA ORGANIZATION

	 	 	 	 	 
	 
	 	 	 	 
	Heath Schiesser

	 	President and CEO	 	 
	 

Print Name

	 	 

Title
	 	 
	 
	 	 	 	 
	 

Signature

	 	 

Date
	 	 
	 
	 	 	 	 
	 

	 	8735 Henderson Rd., Tampa, FL 33634
	 	 
	 

Organization

	 	 

Address
	 	 

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

	 	 	 	 	 
	 
	 	 	 	 
	 

Cynthia Tudor, PH.D.

Director

Medicare Drug Benefit Group and

C&D Data Group

Center for Drug and Health Plan Choice

	 	 

Date
	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

Teresa DeCaro, R.N., MS

Acting Director

Medicare Drug and Health Plan Contract

Administration Group

	 	 

Date
	 	 

Page 14 of 14

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