Document:

EX-10.1

Contract with Approved Entity Pursuant to section 1860D-31 of the Social Security Act for the

Operation of a Medicare-Approved Prescription Drug Discount Card

Between

Centers for Medicare & Medicaid Services (hereinafter referred to as “CMS”)

And

WellCare of Louisiana, Inc.

(hereinafter referred to as the “Card Sponsor”)

CMS and the Card Sponsor, an entity that has been determined eligible to operate a
Medicare-approved prescription drug discount card by the Administrator of CMS under 42 CFR
§403.806, agree to the following for the purposes of section 1860D-31 of the Social Security Act
(hereinafter referred to as “the Act.”)

Article I

Term of Contract

The term of this contract shall be from the date of the Card Sponsor’s authorized representative’s
signature through December 31, 2005, with the Card Sponsor required to continue to make available
to beneficiaries still enrolled on December 31, 2005 drug discounts and any remaining transitional
assistance until the earlier of each enrollee’s effective date of enrollment in a Part D drug plan
or the last day of the initial open enrollment period for Part D. The Card Sponsor shall not
accept new enrollments after December 31, 2005. There shall be no renewal of this contract under
section 1860D-31 of the Act.

Article II

Medicare-Approved Prescription Drug Discount Card

	 	A.	 	The Card Sponsor agrees to operate a Medicare-Approved Drug Discount Card(s) (hereinafter
referred to as a “drug card”), as described in its application for Medicare approval and in
compliance with the provisions of this contract, which incorporates in its entirety the
December 16, 2003 Solicitation for Applications (for non-Medicare Managed Care Contractors)
(as amended by the final version of the Solicitation released by CMS on January 15, 2004)
[Attachment A or the “solicitation’] (hereinafter collectively referred to as “the contract”).
The Card Sponsor also agrees to operate in accordance with the regulations at 42 CFR §§
403.800 through 403.822, and section 1860D-31 of the Social Security Act, and the
solicitation, as well as other applicable Federal statutes, regulations, and policies. This
contract is deemed to incorporate any changes that are required by statute to be implemented
during the term of this contract and any regulations or policies implementing or interpreting
such statutory provisions.

	 	B.	 	CMS agrees to perform its obligations to the Card Sponsor, including those obligations
relating to transitional assistance made available to drug card enrollees, throughout the term
of this contract, consistent with the regulations at 42 CFR §§ 403.800 through 403.822,
section 1860D-31 of the Social Security Act, and the solicitation, as well as other applicable
Federal statutes, regulations, and policies.

Article III

Functions to be Performed by the Card Sponsor

A. DRUG CARD OFFERING

	 	1.	 	Card Sponsor agrees to comply with the prescription drug discount, rebate, and
formulary requirements of 42 CFR §403.806(d) and the qualifications stated in Section 3.2
of the solicitation.

	 	2.	 	Card Sponsor agrees to report to CMS changes in its drug card offering (including
changes in negotiated prices) in accordance with the schedule and format requirements
posted by CMS on its web site.

B. SERVICE AREA AND PHARMACY ACCESS

	 	1.	 	The Card Sponsor agrees to comply with the service area and pharmacy access
requirements of 42 CFR §403.806(f) and Sections 3.3.1 and 3.3.2 of the solicitation for the
service identified for each drug card(s) described in the Card Sponsor’s application(s) for
Medicare approval.

C. ELIGIBILITY AND ENROLLMENT

	 	1.	 	The Card Sponsor agrees to enroll in its drug card(s) all Medicare beneficiaries
residing within their drug card(s) service area(s) who apply for enrollment in the Card
Sponsor’s drug card(s) and meet the drug card eligibility requirements of 42 CFR
§403.810(a) and the qualifications stated in Section 3.5.1 of the solicitation.

	 	2.	 	The Card Sponsor agrees to administer the transitional assistance program for all card
enrollees who apply for transitional assistance and meet the eligibility requirements
stated in 42 CFR §403.810(b), (c) and (d) and the qualifications stated in Section 3.5.2 of
the solicitation.

	 	3.	 	The Card Sponsor agrees to enroll (including tasks related to transitional assistance
eligibility determinations) and disenroll Medicare beneficiaries from its drug card(s) in
accordance with 42 CFR §403.811 (a) and (b) and the qualifications stated in Sections 3.5.1
and 3.5.2 of the solicitation.

	 	4.	 	The Card Sponsor agrees to cooperate with CMS’s contracted independent review entity in
processing applying beneficiaries’ requests for eligibility reconsideration in accordance
with 42 CFR §403.810(g) and the qualifications stated in Sections 3.5.2 and 3.5.3 of the
solicitation.

	 	5.	 	If the Card Sponsor elects to charge an annual enrollment fee, the Card Sponsor agrees
to comply with 42 CFR §403.811(c) and the qualifications stated in Section 3.5.1 of the
solicitation.

D. CARD SPONSOR PAYMENT AND TRACKING OF TRANSITIONAL ASSISTANCE

The Card Sponsor agrees to administer the payment of transitional assistance to eligible
beneficiaries consistent with 42 CFR §403.808 and 42 CFR §403.806(e) and Sections 3.5.4 and
3.5.5 of the solicitation.

E. CMS REIMBURSEMENT OF CARD SPONSORS FOR TRANSITIONAL ASSISTANCE

The Card Sponsor agrees to comply with the qualifications stated in Sections 3.5.4 and 3.5.5 of
the solicitation to receive reimbursement from CMS for transitional assistance used by enrollees
in the Card Sponsor’s drug card(s). CMS agrees to pay any enrollment fee for transitional
assistance enrollees to the Card Sponsor in accordance with 42 CFR § 403.808(c). The Card
Sponsor recognizes that transitional assistance and enrollment fees paid by CMS are paid with
Federal funds.

F. OTHER DRUG-RELATED ITEMS AND SERVICES INSIDE THE SCOPE OF THE APPROVAL

Consistent with 42 CFR § 403.806(h) and Section 3.4 of the solicitation, the Card Sponsor agrees
that it may provide under the approval, at its discretion, non-required additional services
related to a covered drug card drug (e.g., durable medical equipment related to a covered drug)
or discounts on over-the-counter drugs for no extra charge to enrollees. These services would
be in addition to the basic program requirements, such as 1) offering negotiated prices on
covered discount card drugs, 2) ensuring convenient pharmacy access, 3) reducing the likelihood
of medical errors and adverse drug interactions, 4) providing customer service and information
and outreach materials, 5) providing a grievance mechanism, and 6) administering transitional
assistance. The Card Sponsor agrees that its drug card enrollees shall not be charged an
additional fee for either required services or additional services provided under the approval.

G. INFORMATION AND OUTREACH ACTIVITIES

	 	1.	 	The Card Sponsor agrees to develop information and outreach materials and conduct
information and outreach activities in a manner consistent with the requirements of 42 CFR
§403.806(g)(1) through (5) and the qualifications stated in Section 3.5.9 of the
solicitation, as well as the Information and Outreach Guidelines posted on the CMS web
site.

	 	2.	 	The Card Sponsor agrees to comply with the marketing limitations stated in 42 CFR §
403.813(a).

H. CUSTOMER SERVICE

The Card Sponsor agrees to operate a call center to serve its drug card enrollees, potential
applicants, and pharmacists that meets at least qualifications stated in 42 CFR §403.806(g)(6)
and Section 3.5.6 of the solicitation.

I. REDUCTION OF MEDICAL ERRORS

Consistent with 42 CFR § 403.806(g)(7) and Section 3.5.7 of the solicitation, the Card Sponsor
agrees to operate a system, supported by scientific and clinical literature, to reduce the
likelihood of medication errors and adverse drug interactions and to improve medication use.

J. GRIEVANCES/CUSTOMER COMPLAINTS

The Card Sponsor agrees to establish and maintain a grievance process to track and address in a
timely manner enrollees’ complaints about any aspect of the Card Sponsor’s operations consistent
with the provisions of 42 CFR §403.806(j) and the qualifications stated in Section 3.5.8 of the
solicitation.

K. TIMEFRAMES

The Card Sponsor agrees that it may not begin any information and outreach or enrollment
activities related to its drug card(s) until:

1. CMS approves of the Card Sponsor’s information and outreach materials;

	 	2.	 	the Card Sponsor provides to CMS executed contracts with its subcontractors, if any,
and copies of all versions of its pharmacy network contracts;

	 	3.	 	the Card Sponsor has executed contracts with its network pharmacies satisfactory to
CMS;

	 	4.	 	the Card Sponsor has operationalized its call center in accordance with Article III. H;
and

	 	5.	 	the Card Sponsor establishes and maintains CMS approval of a system for conducting
electronic transactions with CMS.

Article IV

Reporting and Record Retention

A. CARD SPONSOR REPORTING

The Card Sponsor agrees to report to CMS data, in accordance with Section 3.6 of and Attachment
6 to the solicitation, consistent with the provisions of 42 CFR §403.806(i)(1), (2), (3), and
(4). In addition, the Card Sponsor agrees to submit to CMS at the request of CMS a description
of the services provided under the Card Sponsor’s drug card(s) in accordance with 42 CFR
§403.806(i)(5).

B. RECORD RETENTION

The Card Sponsor agrees to retain records that it creates, collects, or maintains as part of its
operations of a drug card(s) for at least six years following the termination of this contract
in accordance with 42 CFR §403.813(b). For the period during which the Card Sponsor retains
these records, the Card Sponsor shall continue to apply security and privacy protections as
required under 42 CFR §403.812(b) and 42 CFR §403.812(c)(1). At the end of this period, the
Card Sponsor will certify to CMS in writing that such records have been destroyed or, if it is
infeasible to destroy such records, protections are extended to such information to the extent
required by law.

Article V

HIPAA Transactions/Privacy/Security

	 	A.	 	The Card Sponsor agrees that it will comply with 42 CFR §403.812 and the qualifications of
Sections 3.5.10 and 3.5.11 of the solicitation.

	 	B.	 	The Card Sponsor agrees to comply with the Privacy Rule as it applies to business associates
of CMS for the purposes of operating the transitional assistance portion of its drug card(s)
as follows:

1. Obligations and Activities of the Card Sponsor

	 	a.	 	The Card Sponsor agrees to not use or disclose protected health information
other than as permitted or required by this contract or as required by law.

	 	b.	 	The Card Sponsor agrees to use appropriate safeguards to prevent use or
disclosure of the protected health information other than as provided for by this
contract.

	 	c.	 	The Card Sponsor agrees to mitigate, to the extent practicable, any harmful
effect that is known to the Card Sponsor of a use or disclosure of protected health
information by the Card Sponsor in violation of the requirements of this contract.

	 	d.	 	The Card Sponsor agrees to report to CMS any use or disclosure of the protected
health information not provided for by this contract of which it becomes aware.

	 	e.	 	The Card Sponsor agrees to ensure that any agent, including a subcontractor, to
whom it provides protected health information received from, or created or received by
the Card Sponsor on behalf of CMS agrees to the same restrictions and conditions that
apply through this contract to the Card Sponsor with respect to such information.

	 	f.	 	The Card Sponsor agrees to provide access, at the request of CMS to protected
health information in a designated record set, to CMS or, as directed by CMS, to an
individual in order to meet the requirements under 45 CFR § 164.524.

	 	g.	 	The Card Sponsor agrees to make any amendment(s) to protected health
information in a designated record set that CMS directs or agrees to pursuant to 45 CFR
§ 164.526 at the request of CMS or an individual.

	 	h.	 	The Card Sponsor agrees to make internal practices, books, and records,
including policies and procedures and protected health information, relating to the use
and disclosure of protected health information received from, or created or received by
the Card Sponsor on behalf of CMS available to CMS for purposes of determining CMS’
compliance with the Privacy Rule.

	 	i.	 	The Card Sponsor agrees to document such disclosures of protected health
information and information related to such disclosures as would be required for CMS to
respond to a request by an individual for an accounting of disclosures of protected
health information in accordance with 45 CFR § 164.528.

	 	j.	 	The Card Sponsor agrees to provide to CMS or an individual information
collected in accordance with Article V.B.1.i of this contract to permit CMS to respond
to a request by an individual for an accounting of disclosures of protected health
information in accordance with 45 CFR § 164.528.

2. Permitted Uses and Disclosures by the Card Sponsor –

	 	a.	 	Except as otherwise limited in this contract, the Card Sponsor may use or
disclose protected health information on behalf of, or to provide services to, CMS for
purpose of administering the transitional assistance program, if such use or disclosure
of protected health information would not violate the Privacy Rule if done by CMS or
the minimum necessary policies and procedures of CMS.

	 	b.	 	Except as otherwise limited in this contract, the Card Sponsor may use
protected health information for the proper management and administration of the Card
Sponsor or to carry out the legal responsibilities of the Card Sponsor.

	 	c.	 	Except as otherwise limited in this amendment, the Card Sponsor may disclose
protected health information for the proper management and administration of the Card
Sponsor, provided that disclosures are required by law, or the Card Sponsor obtains
reasonable assurances from the person to whom the information is disclosed that it will
remain confidential and used or further disclosed only as required by law or for the
purpose for which it was disclosed to the person, and the person notifies the Card
Sponsor of any instances of which it is aware that in which the confidentiality of the
information has been breached.

	 	d.	 	The Card Sponsor may use protected health information to report violations of
law to appropriate Federal and State authorities, consistent with 45 CFR §
164.502(j)(1).

	 	3.	 	Provisions for CMS to Inform the Card Sponsor of Privacy Practices and
Restrictions –

	 	 	 	a            CMS shall notify the Card Sponsor of any limitation(s) in its notice of privacy
practices of CMS in accordance with 45 CFR § 164.520, to the extent that such
limitation may affect the Card Sponsor’s use or disclosure of protected health
information.

	 	b.	 	CMS shall notify the Card Sponsor of any changes in, or revocation of,
permission by the individual to use or disclose protected health information, to the
extent that such changes may affect the Card Sponsor’s use or disclosure of protected
health information.

	 	c.	 	CMS shall notify the Card Sponsor of any restriction to the use or disclosure
of protected health information that CMS has agreed to in accordance with 45 CFR §
164.522, to the extent that such restriction may affect the Card Sponsor’s use or
disclosure of protected health information.

	 	4.	 	Permissible Requests by CMS —  CMS shall not request that the Card Sponsor use
or disclose Protected Health Information in any manner that would not be permissible under
the Privacy Rule if done by CMS. This provision shall not apply to the specific Card
Sponsor uses and disclosures of protected health information as described in Article V.B.2.

5. Effect of Termination

	 	a.	 	Except as provided in paragraph (b) of this section, upon expiration of the
record retention period described in Article IV.B., the Card Sponsor shall return or
destroy all protected health information received from CMS, or created or received by
the Card Sponsor on behalf of CMS. This provision shall apply to protected health
information that is in the possession of subcontractors or agents of the Card Sponsor.
The Card Sponsor shall retain no copies of the protected health information.

	 	b.	 	In the event that the Card Sponsor determines that returning or destroying the
protected health information is infeasible, the Card Sponsor shall provide to CMS
notification of the conditions that make return or destruction infeasible. Upon CMS
agreement that return or destruction of protected health information is infeasible, the
Card Sponsor shall extend the protections of this contract to such protected health
information and limit further uses and disclosures of such protected health information
to those purposes that make the return or destruction infeasible, for so long as the
Card Sponsor maintains such protected health information.

	 	C.	 	The Card Sponsor agrees that it will ensure that all its agents and subcontractors comply
with all of the requirements of 42 CFR §403.812 when performing functions on the Card
Sponsor’s behalf related to the operation of the Card Sponsor’s drug card(s).

Article VI

Business Integrity and Financial Stability

The Card Sponsor agrees to maintain a satisfactory record of financial stability and business
integrity during the term of this contract in accordance with 42 CFR §403.806(b)(2), and to
require the same of any subcontractor on whom the Card Sponsor relied during the application
process to satisfy the 3 years experience requirement in 42 CFR §403.806(a)(2) and the covered
lives requirement in 42 CFR §403.806(a)(3) or to develop the pharmacy network; negotiate with
manufacturers of pharmacies for rebates, discounts, or other price concessions; handle
eligibility for or enrollment in the Card Sponsor’s drug card(s) and/or transitional assistance;
and administering transitional assistance.

Article VII

Compliance With Other Laws and Regulations

In accordance with 42 CFR §403.806(c), the Card Sponsor agrees to comply with all applicable
Federal and State laws, including the Federal anti-kickback statute (section 1128B(b) of the
Act) and the False Claims Act (31 U.S.C. §§3729-3733)

Article VIII

Operation of a Drug Card That Includes Long Term Care Facilities

In the event that the Card Sponsor has applied for, and CMS has granted, special approval for
the operation of a drug card(s) that includes pharmacies serving long term care facilities, in
addition to the requirements stated elsewhere in this contract, the Card Sponsor agrees to
comply with the requirements of 42 CFR §403.816(b) and (c) and the qualifications stated in
Section 4.1 of the solicitation.

Article IX

Operation of a Drug Card That Includes I/T/U Pharmacies

In the event that the Card Sponsor has applied for, and CMS has granted, special approval for
the operation of a drug card(s) that includes Indian Health Service, Indian Tribe and Tribal
Organization, and Urban Indian Organization (I/T/U) pharmacies, in addition to the requirements
stated elsewhere in this contract, the Card Sponsor agrees to comply with the requirements of 42
CFR §403.816(d) and (e) and the qualifications stated in Section 4.2 of the solicitation.

Article X

Operation of Drug Card That Serves Medicare Beneficiaries Residing in the United States Territories

In the event that the Card Sponsor has applied for, and CMS has granted, special approval for
the operation of a drug card(s) that includes in its service area all of the territories of the
United States, in addition to the requirements stated elsewhere in this contract, the Card
Sponsor agrees to comply with the requirements of 42 CFR §403.817 and the qualifications stated
in Section 4.3 of the solicitation.

Article XI

Modification, Termination, Penalties, and Sanctions

A. MODIFICATION OR TERMINATION BY MUTUAL CONSENT

	 	1.	 	This contract may be modified or terminated at any time by mutual consent of the
parties.

	 	2.	 	If this contract is terminated by mutual consent, the Card Sponsor shall provide notice
to its drug card enrollees, by mail, at least 60 days prior to the termination effective
date. Such notice shall include a written description (provided by CMS) of alternative
approved card sponsors that serve the drug card enrollee’s address.

	 	3.	 	If this contract is modified by mutual consent, the Card Sponsor shall provide notice
to its drug card enrollees of any changes CMS determines are appropriate for notification
within timeframes specified by CMS.

	 	4.	 	CMS may unilaterally modify this contract to incorporate changes in a Card Sponsor’s
functions and responsibilities only as necessary to comply with a change to the Act or to
the regulations. Unless provided by statute or otherwise impracticable, CMS will provide
the Card Sponsor written notice of the modification, to the extent practicable, prior to
the date the modification is to be implemented.

B. TERMINATION BY CMS

	 	1.	 	To the extent permitted under 42 CFR §403.820(c), CMS may terminate this contract at
any time with notice for failure on the part of the Card Sponsor to comply with this
contract and the requirements of the Medicare-Approved Prescription Drug Discount Card
Program. CMS may terminate this contract if the Card Sponsor fails to maintain a
satisfactory record of business integrity (as required by 42 CFR §403.806(b)(2) and Section
3.1.4 of the solicitation) as evidenced by the following events, without limitation:

	 	a.	 	a criminal conviction or a civil judgment for conduct involving
fraudulent activities is entered by a court against the Card Sponsor after
execution of this contract; or

	 	b.	 	a sanction (including, but not limited to debarment, suspension, or
exclusion) is imposed against the Card Sponsor under any Federal program.

	 	2.	 	CMS may terminate this contract if the Card Sponsor, by June 8, 2004, fails to initiate
enrollment activities or is unable to fully operate its program in compliance with all
applicable rules and regulations.

	 	3.	 	Except as otherwise provided in paragraph 6, CMS agrees to provide the Card Sponsor
written notice of termination 30 days prior to the CMS-determined effective date of the
termination at which time the Card Sponsor must do the following:

	 	a.	 	Provide its drug card enrollees notice of the termination within 10
days of receiving notice from CMS. Such notice must be approved by CMS prior to
its being sent to enrollees;

	 	b.	 	Continue to provide services to its drug card enrollees for 90 days
after the drug card enrollees were sent the notice of termination from the Card
Sponsor, in which case CMS shall continue to reimburse the Card Sponsor for
transitional assistance the Card Sponsor made available to enrollees during that
period; and

	 	c.	 	Suspend all information and outreach and enrollment activities once
enrollees have received the notice of termination.

	 	4.	 	CMS agrees that, before terminating this contract, it shall provide the Card Sponsor
with reasonable opportunity to develop and receive CMS approval of a corrective action plan
to correct the deficiencies that are the basis of the proposed termination. This provision
shall not apply if the contract is terminated because a criminal conviction or civil
judgment for conduct involving fraudulent activities has been entered by a court against
the Card Sponsor or because a sanction, (including, but not limited to debarment,
suspension, or exclusion) under any Federal program involving the provision of health care
has been imposed against the Card Sponsor.

	 	5.	 	The Card Sponsor may appeal CMS’ decision to terminate this contract using the process
described in 42 CFR §403.820(f).

	 	6.	 	CMS may immediately terminate this contract upon written notice in the event of the
Card Sponsor’s nonprocurement debarment or suspension from any Federal program in
accordance with 45 CFR part 76.

C. TERMINATION BY CARD SPONSOR

	 	1.	 	The Card Sponsor may terminate this contract if CMS fails substantially to carry out
the terms of this contract.

	 	2.	 	In the event of such a termination, the Card Sponsor agrees that it shall provide
notice:

	 	a.	 	To CMS at least 90 days prior to the intended date of termination.
Such notice shall include the specific reasons why the Card Sponsor is requesting a
contract termination; and

	 	b.	 	To its drug card enrollees, by mail, at least 60 days prior to the
termination effective date. Such notice must be approved by CMS prior to
distribution and include a written description of alternative approved card
programs that serve the enrollee’s address. If CMS has not responded to the Card
Sponsor’s request for approval of notice within 15 days of submission, such notice
shall be deemed approved by CMS.

	 	3.	 	CMS shall determine the effective date of a Card Sponsor-initiated termination. Such
date shall be at least 90 days after the date CMS receives the Card Sponsor’s notice of
intent to terminate.

D. PENALTIES AND SANCTIONS

Consistent with 42 CFR §403.820(a) and (b), the Card Sponsor may be subject to penalties and
sanctions.

Article XII

Miscellaneous

	 	A.	 	DEFINITIONS: Terms not otherwise defined in this contract shall have the meaning given such
terms at 42 CFR §403.802.

	 	B.	 	SUBCONTRACTORS: The Card Sponsor shall ensure that any subcontractor or agent performing
functions on the Card Sponsor’s behalf related to operation of the Card Sponsor’s drug card(s)
agree to the same restrictions and conditions that apply through this contract to the Card
Sponsor.

	 	C.	 	AUTHORIZED REPRESENTATIVES: The Card Sponsor agrees to treat an individual’s authorized
representative as the individual as required by 42 CFR §403.806(l).

	 	D.	 	NOTICE: The Card Sponsor shall provide prompt written notice to CMS in the event of the
following:

	 	1.	 	The Card Sponsor terminates its contract with a subcontractor, as “subcontractor” is
described in Article VI. The Card Sponsor shall provide CMS with a copy of any contract
entered into with a new subcontractor.

	 	2.	 	Any material change in a Card Sponsor’s qualifications or representations, as stated in
the solicitation, or compliance with the requirements of this contract, or circumstances
that may result in breach of this contract, including a change in the Card Sponsor’s
pharmacy network which causes the Card Sponsor to no longer meet the pharmacy access
requirements of 42 CFR §403.806(f); or change in the Card Sponsor’s (or the subcontractors
identified in Article VI) financial rating, an increase in its liabilities such that they
exceed its assets, or a change in its cash flow or costs such that the Card Sponsor has
insufficient cash flow to meet its obligations as they become due so that the Card Sponsor
no longer meets the financial stability and business integrity requirements under Article
VI.

3. The Card Sponsor discontinues any product or service inside the scope of its approval;

4. The Card Sponsor wishes to offer a new product or service under its approval;

	 	5.	 	The Card Sponsor knows or has reason to believe it is under investigation by any
financial institution, government agency, or private organization on matters relating to
health care and prescription drug services and/or allegations of fraud, misconduct, or
malfeasance; and

	 	6.	 	The Card Sponsor is criminally convicted or has a civil judgment entered against it for
fraudulent activities or is sanctioned under any Federal program involving the provision of
health care.

E. CONNECTIVITY SERVICES:

	 	1.	 	The Card Sponsor agrees to use only CMS-approved telecommunication services provided by
CMS for the operation of the Card Sponsor’s drug card(s).

	 	2.	 	The Card Sponsor agrees the communication services, including circuits, equipment, and
software, provided by CMS are to be used in support of it drug card(s) or other
Medicare-related activities exclusively.

	 	3.	 	The Card Sponsor agrees not to reconfigure the telecommunication circuits, equipment,
or software provided by CMS in any manner for purposes other than support for its drug
card(s).

	 	4.	 	If the Card Sponsor or CMS chooses to terminate this contract, all communication
services provided by CMS for drug card purposes shall be terminated and all equipment and
software must be returned to CMS within 90 days of the effective date of termination. In
witness whereof, the parties hereby execute this contract.

FOR THE CARD SPONSOR

	 	 	 
	_Todd S. Farha     

	 	President & Chief Executive Officer
	 

	 	 
	Printed Name

	 	Title
	 
	 	 
	/s/ Todd S. Farha      

	 	     04/14/05     
	 

	 	 
	Signature

	 	Date
	 
	 	 
	WellCare of Louisiana, Inc.     

	 	8735 Henderson Road, Ren 2, Tampa, FL 33634
	 

	 	 
	Organization

	 	Address

FOR THE CENTERS FOR MEDICARE & MEDICAID SERVICES

	 	 	 
	/s/ Cynthia Moreno     

	 	5/5/05     
	 

	 	 
	Cynthia Moreno

	 	Date

Acting Director

Medicare Plan Accountability Group

Center for Beneficiary Choices

1

ATTACHMENT A

Medicare-Approved Prescription Drug Discount Card and Transitional Assistance Program

Solicitation for Applications for Medicare Managed Care Organizations

December 16, 2003

Table of Contents

1.0 INTRODUCTION

1.1  Background

	 	1.2	 	Special Qualifications for Card Programs Operated by or Contracting with
Medicare managed care organizations

	 	 	 
	1.3	 	Objectives
	1.4

1.5

1.6

	 	Program Overview

1.4.1 Summary of Card Program Responsibilities

1.4.2Summary of CMS Responsibilities

Period of Approval Agreement

Eligible Applicants

	 	 	 	 	 
	2.0 APPLICANT INSTRUCTIONS
	 	 
	 
	 	 	 	 
	
 
	 	2.1

2.2

2.3

2.4

2.5

2.6
	 	Application, Intent to Respond, and Application Inquiries

Approach to Application, Qualifications, and Evaluation

Application Format

Important Dates

Withdrawal of an Application

Amendments to an Application
	 
	 	 	 	 
	2.7	 	Protection of Commercial Information

	 
	 	 	 	 
	
 
	 	2.8

2.9

2.10
	 	Certification Instructions

Pre-Application Conference

Requests for Waived of Modified Qualifications

3.0 SUMMARY OF QUALIFICATIONS

	 	 	 	 	 
	3.1	 	Card Sponsor Organization, Structure, and Experience
	
 
	 	3.1.1

3.1.2
	 	Type of Applicant

Years of Experience

3.2 Formulary and Discounts to Beneficiaries

	 	 	 	 	 
	
 
	 	3.2.1

3.2.2
	 	Formulary

Pricing/Rebates and Discounts
	 
	 	 	 	 
	3.3	 	Service Area and Access to Pharmacies

	 
	 	 	 	 
	
 
	 	3.3.1

3.3.2
	 	Service Area

Retail Pharmacy Network

	 	3.4	 	Other Drug-Related Items and Services Under the Approval and Items and Services
Outside the Scope of the Approval

	 	 	 	 	 
	3.5	 	Card Program Administration and Customer Service
	
 
	 	3.5.1

3.5.2

3.5.3
	 	Beneficiary Eligibility/Enrollment/Enrollment Fee

Transitional Assistance Eligibility Determination

Reconsideration of Eligibility Determination

3.5.4 CMS Reimbursement of Transitional Assistance

3.5.5 Card Sponsor Payment and Tracking of Transitional Assistance

	 	 	 
	
 
	 	3.5.6 Call Center

3.5.7Reduction of Medication Errors

3.5.8Grievance/Customer Complaints

3.5.9Information and Outreach

3.5.10Privacy/HIPAA Transactions

3.5.11Security

3.6Card Sponsor Reporting to CMS
	
 
	 	 
	
 
	 	3.7Record Retention

3.8 Requests for Waiver or Modification of Requirements
	 
	 	 
	4.0

	 	CERTIFICATION

ATTACHMENTS

1.0 INTRODUCTION

The Centers for Medicare and Medicaid Services is seeking applications from Medicare managed
care organizations offering an exclusive card program (as described in the Medicare Prescription
Drug Discount Card and Transitional Assistance Program Interim Final Rule [Federal Register,
December 15, 2003]) who are interested in entering into a Medicare approval contract. Medicare
managed care organizations eligible to offer an exclusive card program are Part C organizations
offering a plan described at section 1851(a)(2)(A) of the Social Security Act and reasonable cost
reimbursement plans under Section 1876(h) of the Act. Applications are to be submitted according
to a process described under “Applicant Instructions” in Section 2.0.

1.1 Background

Statutory Authority

The Medicare Prescription Drug Discount Card and Transitional Assistance Program (hereafter
referred to as the “Medicare Drug Discount Card Program”) was established by section 101 subpart 4
of Pub.L. 108-173, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and
is codified in section 1860D-31 of the Social Security Act (the Act).

September 2002 Program Superceded

As stated in the interim final rule for this program, the final rule published September 4, 2002
(67 FR 56618) and the solicitation published in conjunction with that final rule have already been
withdrawn. This solicitation is in no way connected to the September 4, 2002 final rule.

	 	1.2	 	Special Qualifications for Card Programs Operated by or Contracting with Medicare Managed
Care Organizations

Overview

Entities already under contract with CMS to operate a Part C coordinated care plan described at
section 1851(a)(2)(A) of the Act or a reasonable cost reimbursement plan under section 1876(h) of
the Act (known as “Medicare managed care plans,” with the entities offering such plans known as
“Medicare managed care organizations”) may seek to operate as an approved discount card exclusively
for members of one or more their Medicare managed care plans (known as “exclusive card programs,”
with the organizations offering these exclusive card programs known as “exclusive card sponsors.”).
Medicare managed care organizations already have an established relationship with CMS and an
existing set of Medicare beneficiaries enrolled in their Medicare managed care plans. In addition,
their Medicare managed care plans may include an outpatient drug benefit offering with pharmacy
networks. Therefore, it is appropriate that we alter for exclusive card sponsors certain discount
drug card sponsor qualifications to ensure that members of Medicare managed care plans offered by
organizations sponsoring exclusive card programs can benefit from integration of the benefits
offered under the exclusive card program and their Medicare managed care plan. In addition,
altering card sponsor requirements that are duplicative of or conflict with requirements under the
Medicare managed care program will promote greater efficiency under both programs. Medicare
managed care organizations seeking an approval of a drug card whose enrollment is limited to
members of one or more of its Medicare managed care plans are required to complete this abbreviated
application for approval rather than the standard Medicare Discount Card Application used by all
other entities seeking an approval. Medicare managed card organizations seeking an approval for a
drug card program whose enrollment will not be limited to members of one or more of its managed
care plans should respond to the Solicitation for Application for Non-Medicare Managed Care
Organizations.

Congress has waived or modified standard drug program requirements in several areas for exclusive
card sponsors. In addition, CMS has waived or modified additional standard drug program
requirements for exclusive card sponsors under its authority under Section 1860D-31(h)(9)(B)(iii)
of the Act, which authorizes waiver or modification of approved sponsor requirements if those
requirements are duplicative of or conflict with requirements applicable to Medicare managed care
organizations under Part C or Section 1876 of the Medicare statute, or if waiver of the
requirements would improve coordination of the benefits under the Medicare Prescription Drug
Discount Card Program and Medicare managed care plans. Specifically, the following requirements
are waived or modified for exclusive card sponsors: (1) the requirements in 42 CFR 403.806(f)(1)
and (2) that approved sponsors offer their approved card programs to all discount card eligible
individuals residing in their service area and that their service area encompass all portions of a
State; (2) the pharmacy access standard under Section 1860D-31(e)(1)(B) of the Act; (3) the
covered lives requirement in 42 CFR 403.806(a)(3); and (4) the requirement in 42 CFR 403.808(d)(1)
that transitional assistance be applied only toward costs incurred for covered discount card drugs
obtained through the Medicare drug discount card program.

As discussed in further detail, we will consider waiving or modifying the following requirements
upon request:

	 	•	 	Formulary – If the exclusive card sponsor uses a formulary to administer any outpatient
drug benefit or discount card program offered to members of its Medicare managed care plans
that offer the exclusive card program and such formulary that differs from the formulary
requirements under 42 CFR 403.806(d)

	 	•	 	Obtaining manufacturer rebates – If the exclusive card sponsor offers a drug benefit to
members of its Medicare managed care plans that offer an exclusive card program and such
drug benefit does not currently obtain manufacturer rebates on prescription drugs as
required in 42 CFR 403.806(d)

	 	•	 	Reporting – If the exclusive card sponsor must report any information that is
duplicative of the reporting requirements under Part C or Section 1876(h) of the Act or
unnecessary in light of waiving for the exclusive card sponsor other card sponsor
requirements as required in 42 CFR 403.806(i).

	 	•	 	Reporting on formulary drug pricing data as required in 42 CFR 806(i).

	 	•	 	Applicant experience – 3 years of private sector experience in the United States in
pharmacy benefit management as required in 42 CFR 806(a)(2).

Section 3.0 further discusses these waivers and modifications. If the Applicant wishes for CMS to
waive/modify any of these requirements, it should request the waiver or modification, and provide
an explanation in support of its request, in its application. Applicants may also request that CMS
waive or modify other requirements for approval. To do so, the Applicant must demonstrate that the
requirements at issue are duplicative of, or conflict with, requirements applicable to Medicare
managed care organizations, or that they interfere with the coordination of benefits offered under
their drug card with benefits provided under the Medicare managed care program. NOTE: Our
regulations provide that the provisions in 42 CFR 403.812 and 403.813 may not be waived.

In addition, given the unique characteristics of and requirements under the Medicare managed care
program, the approach we are taking in the standard Medicare Discount Card Application is not
always warranted for Medicare managed care organizations that wish to operate an exclusive card
program. In order to account for these differences, we have also modified some of the procedures
for demonstrating compliance with certain drug card sponsor requirements. For example, although
exclusive card sponsors must meet the business stability and financial integrity requirement in 42
CFR 403.806(b), we permit exclusive card sponsors to demonstrate their compliance with this
requirement through continued compliance with 42 CFR 422.400 (in the case of Part C organizations)
or 42 CFR 417.120 and 417.122 (in the case of Medicare cost plans). In addition, we modify the
procedural requirements concerning the call center and the grievance/customer complaints processes.

1.3 Objectives

The Drug Card Program is intended as a transitional program to provide immediate assistance with
prescription drug costs to Medicare beneficiaries during CY 2004 and CY 2005 and through a
transitional period in 2006 while preparations are made for the implementation of a full Medicare
drug benefit in 2006. Medicare generally does not cover the cost of outpatient drugs. The
Medicare Drug Discount Card Program is designed to provide Medicare beneficiaries – and
particularly those without drug coverage – access to discounts on outpatient prescription drugs
through enrollment in card programs offered by sponsors approved by Medicare. Certain enrollees
may also qualify, based on low income and lack of other drug coverage, for up to $600 of annual
transitional assistance that they may apply directly to the cost of their drugs obtained using
their discount drug cards.

The objectives of the Drug Card Program are to:

	 	•	 	Provide eligible Medicare beneficiaries access to discounts on their purchases of
prescription drugs.

	 	•	 	Provide eligible low-income beneficiaries an annual prescription drug cost assistance
(referred to as “transitional assistance”) of up to $600.

	 	•	 	Provide access to the discounts and subsidies through approved qualified private sector
prescription drug discount card programs based on structure and experience, customer
service, pharmacy network adequacy, ability to garner and pass through prescription drug
manufacturer rebates, discounts, or other price concessions and available pharmacy
discounts.

	 	•	 	Promote beneficiary awareness of the Medicare Drug Discount Card Program through CMS’s
approval and ongoing beneficiary educational activities as well as card sponsors’ use of
the Medicare name. The increased visibility of the approved drug discount cards will lead
to greater enrollment by beneficiaries. This, combined with the exclusive enrollment
feature of the program, will provide card sponsors the necessary leverage to negotiate
competitive discounts and drug manufacturer rebates, discounts, and other price concessions
which can be used to reduce prescription drug prices for enrolled beneficiaries.

1.4 Program Overview

1.4.1 Summary of Card Program Responsibilities

Key aspects of each Medicare managed care approved discount card shall include the ability to:

	 	•	 	Enroll all current or new members of Medicare managed care plans offering exclusive
card programs, but give members an opportunity to actively decline enrollment , if
desired.

	 	•	 	Process beneficiaries’ enrollment applications for the drug discount card and
transitional assistance, and administer the payment of such assistance.

	 	•	 	Administer transitional assistance funds, including ensuring that such funds are
applied only to covered discount card drugs and, at the option of the Medicare managed
care organization, to deductibles, coinsurance, and copays associated with covered
discount card drugs covered under any drug benefit a Medicare managed care plan may
provide; applying appropriate coinsurance levels; and making available an enrollee’s
transitional assistance balance at the point of sale.

	 	•	 	Offer a contracted pharmacy network, providing access similar to the access already
available under a Medicare managed care plan’s current retail pharmacy network.

	 	•	 	Charge an annual enrollment fee of no more than $30 per year in 2004 and 2005 per
discount card enrollee. CMS will pay the enrollment fee on behalf of enrollees with
transitional assistance.

	 	•	 	Provide customer service to beneficiaries, including enrollment assistance, toll-free
telephone customer service help, and education about the drug card services similar to the
customer service already provided under the Medicare managed care plan’s customer service.

	 	•	 	Provide access to prescription drug-related items and services offered by the program
for no additional fee, such as drug interaction monitoring and allergy alerts through
detection systems linking pharmacies in the entire network.

	 	•	 	Protect the privacy of beneficiaries and beneficiary-specific health information.

	 	•	 	Limit enrollment in its Medicare-approved discount card program to eligible members of
its Medicare managed care plan offering the program.

	 	•	 	Develop educational materials and conduct information and outreach activities
consistent with CMS standards for completeness, appropriateness, and understandability.

1.4.2 Summary of CMS Responsibilities

Approval Process

CMS has determined the qualifications entities must meet to receive Medicare approval for their
prescription drug discount cards. CMS will review the applications for approval submitted in
response to this solicitation. CMS will determine which entities qualify for approval and enter
into agreements with appropriate card sponsors.

Drug Card Program Oversight

CMS plans to develop a Medicare Drug Discount Card program monitoring system to ensure
compliance with program requirements. We plan to focus on several operational areas critical to
beneficiary satisfaction with their drug card and to protecting the financial integrity of the
transitional assistance portion of the program. Specifically, we plan to focus on enrollment and
disenrollment, information and outreach, access to pharmacies and discounts, customer service,
confidentiality of enrollee information, and proper payment of transitional assistance. (NOTE:
CMS will monitor approved drug card sponsors to ensure that they maintain the confidentiality of
enrollee information required for approval. In addition, approved drug card sponsors, as covered
entities under the Privacy Rule, are subject to investigation and penalties for findings of Privacy
Rule violations as determined by the Department of Health and Human Services Office for Civil
Rights and the Department of Justice.)

Our monitoring efforts will be based on an analysis of data we collect from drug card sponsors, CMS
contractors, external government entities and our own systems. Such data will include pricing
information, card sponsor grievance logs, marketing review information, customer service
performance data, and customer complaints. For a list of the card sponsor reporting requirements,
please see Section 3.6.

CMS will develop and operate a complaints tracking system to monitor and manage complaints brought
to our attention that are not satisfactorily resolved through card sponsors’ grievance process. We
plan to conduct mystery shopping and beneficiary satisfaction surveys. Finally, CMS plans to
engage a program safeguard contractor to conduct random audits of card sponsors’ transitional
assistance enrollment and payment records.

Any information gathered will be analyzed to detect possible trends that indicate less than
satisfactory performance, significant departures from the marketed card program offering, or fraud
or other violations of State and Federal laws.

CMS will make determinations about the need for corrective action, intermediate sanctions, civil
monetary penalties, or contract termination, consistent with the requirements of 42 C.F.R.
§403.820. The Office of the Inspector General also has the authority to levy civil monetary
penalties in certain situations, consistent with 42 CFR 403.820. Finally, we will also make all
necessary referrals to the Department of Health and Human Services Office of the Inspector General,
or to Federal and State authorities where violations of laws under the jurisdictions of these
agencies is in question.

Education and Outreach

CMS is committed to educating Medicare beneficiaries about the Drug Discount Card Program, at the
time the approvals are announced and as part of ongoing education efforts thereafter. CMS
anticipates that there will be national media attention when the Medicare-approved discount card
programs are announced in the Spring of 2004. We will make available general program information
and a subset of comparison information for each non-Medicare managed care drug card program 30 days
before the initial enrollment date. The general information will address the availability of the
Medicare drug discount card program and general program features (e.g., limitation of enrollment to
only one drug card at a time, initial enrollment date, the use of formularies containing the drugs
on which discounts are available). CMS will also disseminate information about the availability of
transitional assistance and the eligibility requirements for such assistance. We will disseminate
specific comparison information about non-Medicare managed care drug card programs to promote
informed consumer choice, including enrollment fee, customer service hours, contact information,
drug card web site, and special notices (e.g., if a sponsor has a special approval for
administering their program to American Indians/Alaska Natives, residents of long term care
facilities, and/or residents of the territories). We will provide only limited information about
Medicare managed care drug card programs – specifically, whether a Medicare managed care plan
offers a Medicare-approved discount card program – and refer beneficiaries to Medicare managed care
plans for further information about Medicare managed care drug card programs. This information
will be made available through the Medicare web site (www.medicare.gov) and
through the toll-free information line (1-800-MEDICARE).

CMS plans to educate beneficiary and consumer groups, health care providers, States, and other
interested groups about the Medicare drug discount card program. CMS may also engage in other
activities that publicize or otherwise educate beneficiaries about the program.

CMS will provide, through the Prescription Drug and Other Assistance Program section of
www.medicare.gov, a price comparison web site that will include negotiated prices
in actual dollars, which will include dispensing fee information, for the purpose of comparing
across non-Medicare managed care approved card programs. If, as permitted below, a Medicare
managed care contractor requests a waiver of reporting price formulary drug pricing data through a
price comparison web site and we grant such a request, price information will not be provided for
exclusive Medicare managed care approved card program(s).

Information and Outreach Guidelines and Review

CMS has developed a contractor to provide technical assistance in the development of the
information and outreach guidelines. The guidelines are posted on the CMS website as a separate
document from this solicitation. Included in the information and outreach guidelines are standards
for the use of a Medicare approval emblem. To use the emblem on their cards, card sponsors will
need to abide by these standards.

CMS is responsible for the review of information and outreach materials associated with this
program. In addition, CMS is responsible for ensuring coordination of this process with the
current Medicare managed care marketing review process.

Enrollment Processing/Transitional Assistance Eligibility

CMS has developed a system to review an individual’s eligibility for the Medicare drug discount
card program and the transitional assistance. For individuals applying for the drug card, we will
verify an individual’s eligibility by confirming the individual’s status as a Medicare beneficiary
and his or her status in regard to receiving outpatient prescription drug assistance through title
XIX or an 1115 waiver. We will assess the latter through files provided to us by the State
Medicaid programs for this purpose.

We will also review the declared income of individuals applying for transitional assistance to
ensure that it does not exceed 135% of the poverty line for their declared family size. This
system consists of income and retirement benefit information provided by the Internal Revenue
Service and the Social Security Administration, and possibly other data sources that we may choose
to include. With regard to income and other benefits, we will take into consideration Social
Security benefits, Railroad Retirement benefits, Veteran’s benefits, Supplemental Security Income
benefits and Adjusted Gross Income as defined by the IRS.

To review income, we will use data sources that identify, for most individuals, the types of income
we will count. An individual denied access to transitional assistance or the discount card may
request that we reconsider our decision and provide us with information or an explanation regarding
his or her prescription health insurance, income, family size, or Medicare status. We will
contract with an independent review entity to conduct the reconsideration process.

We have also developed a database to track enrollment decisions by each individual and to ensure
enrollment exclusivity. This system will track enrollments and disenrollments from card programs
and will block new enrollments during any given enrollment year unless the enrollment occurs during
the Annual Coordinated Election Period or a special election period is indicated. This system will
also track whether an individual is enrolled in a Medicare managed care plan offering an exclusive
card program.

Transitional Assistance Administration

CMS will maintain as part of its enrollment and eligibility system, a process for determining when
a beneficiary is effectively enrolled and eligible for transitional assistance, the prorated
assistance amount for the year (if applicable), and the monthly balance.

CMS will establish accounts for each card sponsor utilizing the Department of Health and Human
Services (DHHS) Payment Management System (PMS). CMS will transmit to the PMS a withdrawal limit
for each card sponsor based on projected enrollment initially and then adjusted periodically based
on the number of enrolled beneficiaries determined eligible for transitional assistance, as
provided by CMS’ Medicare Beneficiary Database (MBD) Drug Card enrollment system. Card sponsors
will receive reimbursement for transitional assistance funds and enrollment fees by submitting
daily electronic requests to the PMS. Those funds will be made available through the Federal
Reserve to card sponsors’ bank accounts.

1.5 Period of Approval Agreement

CMS plans to approve all exclusive card programs that meet the qualifications in Section 3.0, and
to permit successful applicants to market and label their programs as “Medicare-approved.”
Announcements of the Medicare-approved discount card programs will begin in Spring 2004. The
effective period for approval will be from May 3, 2004 through December 31, 2005, with card
sponsors required to continue to make available to beneficiaries still enrolled on December 31,
2005 drug discounts and any remaining transitional assistance until each enrollee’s effective date
of enrollment in a Part D drug plan or the last day of the open enrollment period for Part D. Card
sponsors will not be permitted to accept new enrollments after December 31, 2005. There will be no
renewal of the approval under section 1860D-31 of the Social Security Act after the initial period
of approval.

After the initial application period, we will continue to accept applications for the approved card
on a flow basis only when included as part of an application for a new Medicare managed care
contract. No new applications will be accepted during contract year 2005 as part of CMS’
preparation for the transition to Medicare Advantage.

1.6 Eligible Applicants

The Applicant must currently operate as a Medicare managed care organization under a contract with
CMS. CMS’s contract will be with only one non-governmental legal entity. The Medicare managed
care organization must act as the sponsor and our contract will be with the Medicare managed care
organization.

Although we will amend only one entity’s contract per approved discount card program, the Applicant
may meet the qualifications in Section 3.0 by using its own capabilities or by combining its
capabilities with other entities through contracts or other legal arrangement.

2.0 APPLICANT INSTRUCTIONS

2.1 Application, Intent to Respond, and Application Inquiries

The Medicare managed care organization seeking an agreement with CMS to offer a Medicare-approved
discount card program may submit an application for approval for one or more exclusive drug
discount cards into which members of one or more of its Medicare managed care plans may
exclusively enroll. For example, a Medicare managed care organizations could offer exclusive card
program A to members of its Medicare managed care plan A, exclusive card program B to members of
its Medicare managed care plan B, and non-exclusive card C to all eligible Medicare beneficiaries
except members of Medicare managed care plans offering exclusive drug discount cards (including
members of Medicare managed care plans A and B). Medicare managed care plans that wish to offer a
non-exclusive card program must submit a separate application using the General Solicitation.

We encourage applicants to submit only one application describing all the exclusive cards they may
offer under their Medicare managed care offerings. However, for their own administrative
convenience, Applicants may elect to submit a separate application for each drug discount card they
intend to offer.

To assist CMS in planning for the review of applications and to assure that potential applicants
are notified of any additional guidance posted on the web, and for future correspondence, potential
applicants should notify CMS of their intention to apply by January 7, 2004. Applicants should
send notice of their intent to apply (including the completed CMS Connectivity Request by mail,
electronic mail, or fax to:

Kim August

Centers for Medicare & Medicaid Services (CMS)

Center for Beneficiary Choices

7500 Security Boulevard, Mail Stop C4-23-07

Baltimore, Maryland 21244-1850

Fax: 410-786-8933

E-Mail: kaugust@cms.hhs.gov

Applicants seeking the approval of multiple drug discount cards should submit only one notice
of intent to apply. This intent to apply should indicate the applicant’s primary contact and
include the contact’s:

	 	•	 	Direct telephone number;

	 	•	 	Fax number;

	 	•	 	E-mail address; and

	 	•	 	Mailing address

Inquiries about the application, including questions for the pre-application conference and the
intent to respond should be in writing and sent to: DrugCard@cms.hhs.gov.

Please note that entities that submit notices of intent to apply are not obligated to submit an
application for approval to CMS. However, CMS will not consider an application for approval from
an entity that has not submitted a timely notice of intent to apply. CMS has adopted this policy
because only Applicants who submit a timely Connectivity Request (as part of the notice of intent)
can eventually demonstrate their ability to exchange data with CMS in time to begin enrollment
activities on May 3, 2004.

2.2 Approach to Application, Qualifications, and Evaluation

An applicant must submit sufficiently comprehensive information to support the application. Using
the prompts under the “Application Requirements” headings in Section 3.0, the applicant shall
provide a description of the proposed program, demonstrating how it meets the qualifications
described under the “Qualifications” headings in Section 3.0, and otherwise how the program will
work. Also, an individual with legal authority to bind the Applicant shall sign and submit the
certification found in Section 5.0.

CMS reserves the right to request clarifications or corrections to a submitted application.

Applicants are advised that the information in their applications will be referenced in their Part
C or cost plan contract addendum.

This solicitation does not commit CMS to pay any cost for the preparation and submission of an
application.

CMS reserves the right to amend or cancel this solicitation.

Applicant responses to the prompts in Section 3.0 of the application will provide the information
necessary for CMS to determine, on the basis of a pass/fail evaluation, whether the proposed
discount card program meets the qualifications outlined below. Only those discount card programs
that meet all stated qualifications described in Section 3.0 will be approved. In addition,
applicants must participate in telecommunications and systems testing processes as described on the
CMS web site. The testing processes include demonstrating the ability to accurately submit and
receive test files provided by CMS. An applicant will be required to successfully complete
end-to-end system testing with CMS for transferring data before they can initiate their program.
Although Medicare managed care organizations have existing connectivity to CMS, their ability to
communicate with the eligibility and enrollment system must be established for this program.

Incomplete applications will not be considered.

2.3 Application Format

In preparing your application in response to the prompts in Section 3.0 of this solicitation,
please repeat each question as stated, followed by your response. Provide complete answers, and
detail the opportunities and value your discount card program offers to Medicare beneficiaries, in
a clear, concise manner. If you have additional information you would like to provide, please
include this information as an appendix to your application, and cross-reference its relation to
the information requested.

In preparing your signed certification, please print out the certification provided in Section 4.0
of this solicitation and submit an original document signed by an individual with the legal
authority to bind the Applicant.

To assure that each CMS review panelist receives the application in the manner intended by the
applicant (e.g., collated, tabulated, colorized), applicants should deliver one (1) original and
ten (10) copies of the written application with one (1) diskette or CD copy of the application in
Microsoft Office format to the following address by 5:00 P.M. EST, January 30, 2004:

Centers for Medicare & Medicaid Services (CMS)

Center for Beneficiary Choices

Attn: Kim August

7500 Security Boulevard

Mail Stop C4-23-07

Baltimore, Maryland 21244-1850

CMS will not review applications submitted after the 5:00 P.M. deadline on January 30, 2004.

All copies and the original application should be in 3-ring binders. Tab indexing should be used
to identify all major sections of the application. Page size should be 8 1/2 by 11 inches and the
pages should be numbered. Type size should not be less than 12 point with a space and a half
between lines.

2.4 Important Dates

Application Review Process

	 	 	 
	Date	 	Milestone
	December 16, 2003

	 	Posting of solicitation on CMS web site.

Public Use Files available upon request.
	
 
	 	 
	 
	 	 
	December 16, 2003

	 	Questions due to CMS for Pre-Application Conference.
	 

	 	 
	 
	 	 
	December 18-19, 2003

	 	Pre-Application Conference.
	 

	 	 
	 
	 	 
	January 7, 2004

	 	Notification of intent to apply.

Submit telecommunications connectivity request to

CMS.
	 

	 	 
	 
	 	 
	TBA

	 	Transaction test files made available by CMS.
	 

	 	 
	 
	 	 
	January 12, 2004

	 	Telecommunications testing begins.
	 

	 	 

Implementation Process

	 	 	 
	Anticipated Date	 	Milestone
	January 30, 2004

	 	Applications due.

Information and outreach materials due.
	 

	 	 
	 
	 	 
	Late January – mid

March 2004

	 	

Review of applications.
	 

	 	 
	 
	 	 
	End of March 2004

	 	Finalize and sign approval agreements.
	 

	 	 
	 
	 	 
	mid-March 2004

	 	CMS completes review of information and outreach

materials.
	 

	 	 
	 
	 	 
	Late March 2004

	 	Announce approvals.

Completed transaction system check-list due to CMS.

End-to-end testing begins.
	 

	 	 
	 
	 	 
	April 1, 2004

	 	Drug Card sponsors’ information and outreach may

begin. Only approved materials may be used.
	 

	 	 
	 
	 	 
	April 30, 2004

	 	CMS launches price comparison web site.
	 

	 	 
	 
	 	 
	May 3, 2004

	 	Card sponsors’ enrollment may begin.
	 

	 	 
	 
	 	 
	June 1, 2004

	 	Card sponsors begin offering discounts;

enrollments become effective; transitional

assistance becomes available.
	 

	 	 

NOTE: The earliest date card sponsors may begin enrolling beneficiaries in their drug cards
is May 3, 2004. All of the dates stated in this solicitation assume that card sponsors are
preparing to meet that milestone. However, Applicants should be aware that they will be
required to have submitted to CMS completed contracts with their subcontractors and have had
their information and outreach materials approved by CMS before they will be permitted to
begin enrollment activities. The date each card sponsor may begin enrollment activities
will be determined by the date by which each completes these two tasks.

2.5 Withdrawal of an Application

An applicant may withdraw an application at any time before an agreement becomes effective, by
submitting a written notification for its withdrawal to the CMS contact noted above.

2.6 Amendments to an Application

Applicants are encouraged to provide sufficient documentation of qualification for approval at
the time applications are due to CMS. However, CMS may award approvals on the basis of Applicants’
representations of arrangements (e.g. contracts with pharmaceutical manufacturers, network pharmacy
contracts). In those situations, approved sponsors will be required to submit all required
documentation to CMS before sponsors will be permitted to begin information and outreach and
enrollment activities under the discount card program.

2.7 Protection of Commercial Information

Only information within a submitted application (or attachments thereto) that constitutes a
trade secret, privileged or confidential information, (as such terms are interpreted under the
Freedom of Information Act and applicable case law), and is clearly labeled as such by the
Applicant, will be protected from release by CMS under 5 U.S.C. § 552(b)(4). Information not
labeled as trade secret, privileged, or confidential will not be withheld from release under 5
U.S.C. § 552(b)(4).

2.8 Certification Instructions

Pursuant to the Certification Statement in Section 4.0, changes to the information furnished
in this application must be reported to:

Centers for Medicare & Medicaid Services (CMS)

Center for Beneficiary Choices

Attention: Kim August

7500 Security Boulevard, Mail Stop C4-23-07

Baltimore, Maryland 21244-1850

2.9 Pre-application Conference

CMS will hold a pre-application conference on December 18-19, 2003 for all interested applicants.
Applicants must pre-register for both sessions on-line at www.cms.hhs.gov under
the drug card initiative) by 12 Noon on December 16, 2003. The purpose of this conference is to
give applicants the opportunity to ask questions about this solicitation. The conference will
include a break-out session for Medicare managed care organizations that wish to offer an exclusive
card program. The conference will also include a session for applicants’ information systems staff
during which CMS staff will make presentations on systems requirements related to the drug card
program. There will also be a session to address the special approval for applicants interested in
operating exclusive card programs, as well as discount card programs that serve I/T/U pharmacies,
LTC facilities, and the U.S. territories. Questions submitted through
DrugCard@cms.hhs.gov to CMS by 12 Noon on December 16, 2003 will have priority
for oral response by CMS during the conference. Questions submitted after this date and from the
floor will be addressed orally as time permits. CMS will post a summary of the questions and CMS
responses on the CMS Web site at www.cms.hhs.gov.

2.10 Requests for Waived or Modified Qualifications

As noted above in the Overview (Section 1.2.), CMS will consider requests for waivers of Drug Card
Program qualifications. The chart below indicates the qualifications we understand Medicare
managed care contractors may find to conflict with or be duplicative of the requirements applicable
to Medicare managed care organizations, or to interfere with the coordination of benefits offered
under a Medicare+Choice or Medicare cost plan. Applicants should review the chart, including CMS’
rationale for how there might be proper basis for granting applying Applicants a waiver from such
qualifications. If the Applicant believes the rationale for waiving a qualification applies to it,
the Applicant may request a waiver of the identified qualification by stating “yes” in the far
right column of the chart. For those qualifications for which the Applicant has requested a
waiver, the Applicant should respond to the Application Requirements stated in this solicitation.
For those qualifications for which the Applicant has not requested a waiver, the solicitation
directs the Applicant to respond to the corresponding Application Requirement of the Solicitation
for Applications for non-Medicare Managed Care Contractors (the General Solicitation) posted on the
CMS Web site.

POTENTIAL SUBJECTS OF APPLICANT WAIVER/MODIFICATION REQUESTS

	 	 	 	 	 
	Potential Waivers	 	Rationale	 	Applicant Requests
	 	 	 	 	Waiver/
	 	 	 	 	Modification: Yes
	 	 	 	 	/ No
	 	 	Coordination	 	 
	 	 	between Medicare	 	 
	 	 	managed care plans	 	 
	 	 	and the discount	 	 
	ITEM 1: Formulary: A

Medicare managed care

contactor may request

a waiver/modification

of the requirements

to offer one drug in

each pre-determined

category or to offer

at least one generic

drug in at least 55%

of those categories

if the contractor

wishes to use under

its approved discount

card an existing

formulary used under

its plan(s)’ drug

benefit or drug

discount program, and

such formulary does

not meet these

requirements. The

formulary under the

approved discount

card must be

equivalent to the

formulary under the

drug benefit or drug

discount program

(excepting any drugs

that do not meet the

“covered discount

card drug” definition

in statute).

	 	card. Medicare

managed care

contractors that

offer discount

cards and drug

benefits may

already have

formularies in

place. The

formulary used

under a

contractor’s

approved discount

cards should

coordinate with the

formulary used

under its existing

drug benefits or

drug discount

program to ensure

optimal benefits

coordination for

Medicare managed

care plan

enrollees.

* An Applicant may

not request waiver

of the formulary

requirements under

this rationale if

(1) the Applicant’s

formulary under its

drug benefit or

drug discount

program meets the

formulary

requirements set

forth in 42 CFR

403.806(d), or (2)

the Applicant does

not currently use a

formulary under any

drug benefit or

drug discount

program offering.
	 	

	
 
	 	 
	 	

	 
	 	 	 	 
	ITEM 2: Manufacturer

Rebates: A Medicare

managed care

contractor may

request

waiver/modification

of requirements

relating to obtaining

manufacturer rebates

on prescription

drugs.

	 	Coordination

between Medicare

managed care plans

and the discount

card. If an

Applicant currently

offers a drug

benefit under its

plan(s), it may

have existing

contractual

arrangements for

discounted drug

prices that do not

include

manufacturer

rebates. It would

be disruptive to

these arrangements

and would also

potentially harm

coordination and

continuity of care

were CMS to require

that these existing

contractual

arrangements be

renegotiated to

include

manufacturer

rebates.

An Applicant may

not request a

waiver of the

manufacturer rebate

requirement if the

Applicant, either

itself or through

its

subcontractor(s),

has negotiated

manufacturer

rebates.
	 	

	
 
	 	 
	 	

	 
	 	 	 	 
	ITEM 3: Reporting:

A Medicare managed

care contractors may

request waiver of

certain reporting

requirements when

such requirements are

duplicative of

existing reporting

obligations for

operating its

Medicare managed care

plan(s).

	 	Duplicative of

Medicare managed

care contractor

requirements.

Given the breadth

and depth of

reporting

requirements

currently required

of Medicare managed

care contractors by

CMS, the reporting

requirements under

the drug card

program may

represent a

substantial

duplication of the

Applicant’s

existing Medicare

managed care

reporting

obligations.
	 	

	 
	 	 	 	 
	ITEM 4: Price

Compare: A Medicare

managed care

contractor may

request waiver of the

requirement to report

pricing data on their

formulary drugs to

CMS for the purpose

of display on CMS’

price comparison web

site. However,

Medicare managed care

contractors will be

required to submit

such data, like all

other drug card

sponsors, for CMS’

use in monitoring

drug card program.

	 	Conflicts with

Medicare managed

care contractor

enrollment

policies.

Enrollment in

exclusive drug

cards offered by

Medicare managed

care contractors

will be limited to

enrollees of the

contractors’

Medicare managed

care plans. As a

result, enrollees

in these cards will

not have had the

opportunity to

select a drug card

based at least in

part on drug prices

offered under the

drug card.

Therefore posting

the drug prices of

Medicare managed

care plan exclusive

drug cards on the

price comparison

web site serves no

practical purpose

and conflicts with

the enrollment

limitations placed

on exclusive drug

card offered by

Medicare managed

care contractors,
	 	

	
 
	 	 
	 	

	 
	 	 	 	 
	ITEM 5: Years of

Experience: A

Medicare managed care

contractor may

request waiver of the

requirement to

demonstrate that

they, or an entity

with which they

contract, have a

minimum of three

years experience in

pharmacy benefit

management.

	 	Duplicative of

Medicare managed

care contractor

requirements. CMS

adopted this

qualification to

ensure that it

would only approve

card programs

operated by stable

business entities.

Medicare managed

care contractors

have established

contracts with CMS.

To obtain these

contracts, Medicare

managed care

organizations have

already had to

demonstrate

sufficient

capability to

operate

successfully a

managed care plan.

Moreover, Medicare

managed care

contractors must be

licensed by the

States in which

they operate,

providing further

evidence of their

stability.

Therefore, this

qualification may

be considered

duplicative of

Medicare managed

care program

requirements.
	 	

	 
	 	 	 	 
	ITEM 6:

	 	

	 	

	Eligibility/Enrollment

Systems: A Medicare

managed care

contractor may

request waiver of the

requirement to

demonstrate the

capability to

exchange

beneficiary/transition

al assistance

eligibility data with

CMS or describe their

procedures for

accepting and

processing

disenrollment

requests.

	 	

Duplicative of

Medicare managed

care contractor

requirements.

Medicare managed

care contractors

already exchange

eligibility data

with CMS and have

procedures for

disenrollment in

place; provision of

this information

would be

duplicative.
	 	

	 

	 	 
	 	

3.0 SUMMARY OF QUALIFICATIONS

3.1 Card Sponsor Organization, Structure, and Experience

3.1.1 Type of Applicant

Qualification:

	 	•	 	Applicant currently operates as a Medicare managed
care organization under a Part C or under a reasonable
cost reimbursement contract with CMS.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Identify the legal entity (same as Applicant) that
would enter into agreement with CMS for approval of
its prescription drug discount card program.

	 	•	 	Identify all entities with which the Applicant is
under contract or other legal arrangement to meet all
the card program qualifications. Identify the
responsibility of these entities in meeting the
qualifications.

3.1.2 Years of Experience

Qualifications

Request for Waiver: Applicants who requested a waiver of this qualification by completing the
chart in Section 2.10 need not complete this section. Applicants who did not request a waiver
should provide a response to the Application Requirements stated in Section 3.1.2 of the General
Solicitation.

3.2 Formulary and Discounts to Beneficiaries

3.2.1 Formulary

Request for Waiver: Applicants who requested a waiver of this qualification by completing the
chart in Section 2.10 must complete this section. Applicants who did not request a waiver should
provide a response to Section 3.2.1 of the General Solicitation.

Qualifications:

	 	•	 	Applicant currently offers its commercial health plan
and/or Medicare managed care plan members access to
negotiated prices on prescription drugs through a
formulary.

	 	•	 	Beginning June 1, 2004, Applicant provides its drug
card enrollees access to the formulary to which
commercial and/or Medicare managed care plan members
currently have access.

	 	•	 	The list of discounted drugs included in the
Applicant’s formulary must be offered through the
Applicant’s contracted retail pharmacy network.
Offering these drugs through mail order does not count
toward meeting this qualification.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Attest that you will provide negotiated prices on all
covered discount card drugs on your formulary.

	 	•	 	Indicate which, if any, of the attached list of drugs
commonly used by Medicare beneficiaries, according to
results from the 2000 Medicare Current Beneficiary
Survey (Attachment 1) your card will include.

	 	•	 	While Applicants are not required to offer discounts
on all drugs, please discuss how your program may
accommodate the needs of certain populations or
address certain issues including:

	 	•	 	Offering discounts on drugs needed by special populations, including those who
are HIV positive, those with mental illnesses, those who require the use of alkylating
agents to treat certain forms of cancer, and those who have received organ/tissue
transplants requiring immunosuppressives.

	 	•	 	Offering discounts on appropriate selections and dosage forms of drugs within
each class or subclass as needed (for example, long-acting versus short-acting).

	 	•	 	State how your program guarantees that Medicare beneficiaries will receive (at point of sale) the lower of the
discounted price available through the program or the usual and customary price.

	 	•	 	Explain how you will monitor and enforce your drug card’s negotiated price.

3.2.2 Pricing/Rebates, Discounts, and Other Price Concessions

Qualifications:

Request for Waiver: Applicants who requested a waiver of this qualification by responding “yes” to
Item 2 in the chart in Section 2.10 must complete this section. Applicants who did not request a
waiver should provide a response to the Application Requirements stated in Section 3.2.2 of the
General Solicitation.

	 	•	 	Applicant offers discount card enrollees access to
“negotiated prices” calculated by combining a
percentage of rebates, discounts, and other price
concessions obtained from sources including
manufacturers, wholesalers, and pharmacies, as well as
any dispensing fee.

	 	•	 	Applicant charges enrollees at the point of sale the
lower of the card program’s negotiated price or the
pharmacy’s usual and customary price (the price that a
pharmacy would charge a customer who does not have any
form of prescription drug coverage).

	 	•	 	Applicant certifies that a contract exists with each
network pharmacy ensuring that rebates, discounts, or
other price concessions are passed through to the
Medicare beneficiaries in the form of lower prices.

	 	•	 	Applicant requires network pharmacies to inform
enrollees at the time of purchase of any differential
between the negotiated price of the drug being
dispensed and the price of the lowest-priced generic
alternative available (not limited to those generics
on the discount card program’s formulary) that is
therapeutically equivalent and bioequivalent and
available at the pharmacy. For prescriptions provided
via mail order, this information must be provided at
the time of delivery of the drug.

	 	•	 	Prices may vary based on pharmacy contract and
enrollee characteristics, such as transitional
assistance eligibility.

	 	•	 	Applicant agrees that, for the duration of the drug
card program(except during the week of November 15,
2004), any increase in the negotiated price for a
covered drug will not exceed an amount proportionate
to the change in the drug’s average wholesale price
(AWP), and/or an amount proportionate to the material
change in the Applicant’s cost structure, including a
material change in any discounts, rebates, or other
price concessions it receives from a pharmaceutical
manufacturer or pharmacy.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Describe the rebates (other than manufacturer
rebates), discounts, and/or price concessions secured
by contract. Indicate the amount of rebates (other
than manufacturer rebates) and/or discounts to be
passed through to beneficiaries directly at the point
of sale. Your description must include the following
information:

	 	•	 	Estimate the aggregate level of rebates (other than manufacturer
rebates)/discounts/other price concessions to be secured and the estimated total share
that will be passed though to Medicare beneficiaries in the form of lower prices at the
point of sale.

	 	•	 	Describe how actual rebates (other than manufacturer rebates)/discounts/other
price concessions will be tracked to determine whether they reach the level of
anticipated share.

	 	•	 	Explain how the process of passing through rebates (other than manufacturer
rebates), discounts, and any other price concessions at the point of sale will work.

	 	•	 	Indicate that a contract exists with each network pharmacy that ensures that
rebates or discounts are passed through to the drug card program enrollees in the form
of lower prices.

	 	•	 	If negotiated prices will vary systematically by type of enrollee (e.g., low
income enrollees or those with a particular disease or condition), please provide each
of the above separately for each category of enrollee by which negotiated prices will
vary under the program.

	 	•	 	Indicate that for the duration of the drug card program (except during the week of November
15, 2004, any increase in the negotiated price for a covered drug will not exceed an amount
proportionate to the change in the drug’s average wholesale price (AWP), and/or an amount
proportionate to the material change in your organization’s cost structure, including a
material change in any discounts, rebates, or other price concessions it receives from a
pharmaceutical manufacturer or pharmacy.

3.3 Service Area and Access to Pharmacies

3.3.1 Service Area

Qualification:

	 	•	 	A Medicare managed care plan drug card’s
service area must be identical to the service
area under the affiliated Medicare managed care
plan.
	 
	 	 	 	Application Requirement:
—

	 	•	 	Describe the service areas (by State and
county) of the Medicare managed care plans (H
number and plan number(s)) for which you will
be offering your discount card program.
	 
	 	3.3.2	 	Pharmacy Network
—

Qualifications:

	 	•	 	If the Applicant currently offers a prescription drug benefit under its Medicare managed care plan, the
Applicant must provide access to negotiated prices through a pharmacy network that is at least equivalent to
the pharmacy network it currently uses to dispense prescription drugs to its Medicare managed care plan
members.

	 	•	 	If the Applicant does not currently offer a prescription drug benefit under its Medicare managed care plan,
the Applicant provides access to negotiated prices through a network of pharmacies that meets Medicare
managed care provider access requirements at 42 CFR 422.112 (in the case of Part C organizations) and
417.416(e) (in the case of Medicare cost plans).

	 	•	 	NOTE: Applicants may offer a mail order option in addition to their contracted pharmacy network. (Mail
order option only is precluded.) CMS expects drug cards offering mail order services to provide
beneficiaries with access to a licensed pharmacist to answer questions, should there be inquiries that
require clinical attention.
	 
	 	 	 	Application Requirements:
—

	 	•	 	If you currently offer a drug benefit as part of a Medicare managed care plan under which you are requesting
to offer a Medicare-approved discount card program, indicate your intention to ensure that the pharmacy
network available to discount card enrollees will be at least equivalent to your current pharmacy network
under the Medicare managed care plan drug benefit.

	 	•	 	If you do not currently offer a drug benefit as part of a Medicare managed care plan under which you are
requesting to offer a Medicare-approved discount card program, describe the pharmacy network that will be
available to discount card enrollees for the purchase of covered discount card drugs.

	 	•	 	Describe the nature of your network pharmacy contracts. Describe your organization’s policies and
procedures for ensuring that these contracts are in compliance with all Federal and State laws. Describe
specific contracting provisions that allow the drug card to meet the requirements under this program,
including:

	 	•	 	Making available the balance of transitional assistance at the point of sale;

	 	•	 	Providing negotiated prices;

	 	•	 	Providing the enrollee with the differential in price between the drug being
purchased and the lowest priced therapeutically equivalent and bioequivalent generic
drug available at the pharmacy; and

	 	 	 
	
 
	 	oApplying the correct coinsurance amount.

	 	•	 	If your discount card includes mail order:

	 	•	 	Provide the mail order pharmacy name, address, phone number, business hours,
and senior management point of contact.

	 	•	 	Provide a description of the service and its operations, including states in
which pharmacy is licensed, how beneficiary education on generic substitutions is
conducted, and the availability of a pharmacist to answer enrollee questions.

	 	•	 	Indicate how you will monitor/conduct audits of mail order pharmacy services.

	 	•	 	State when you expect your mail order service will be available to enrolled
beneficiaries.

	 	3.4	 	Other Drug-Related Items and Services Under the Approval and Items and Services Outside
the Scope of the Approval

Qualifications:

	 	•	 	Applicant may provide under the approval, at its
discretion, non-required additional services related to
a covered discount card drug or a discount on
over-the-counter drugs under the approval for no extra
charge to enrollees (e.g., durable medical equipment
related to a covered drug). These services would be in
addition to the basic program requirements.

	 	•	 	Applicant agrees to ensure that enrollees are not
charged an additional fee for either required services
or additional services provided under the approval.
	 
	 	 	 	Application Requirement:
—

	 	•	 	List and describe any items or services related to
covered discount card drugs beyond those required to
qualify for approval, that you will offer enrollees for
free. Also list and describe whether and how you will
offer discounts on non-prescription drugs. Indicate
that you (and any other entity involved in operating
your drug card) will not charge any membership fee
(other than the enrollment fee) for any services
offered by your approved card.

3.5 Card Program Administration and Customer Service

3.5.1 Beneficiary Eligibility/Enrollment/Enrollment Fee

NOTE: Applicants should refer to Attachment 2 for an illustration of the Drug Card Enrollment
Process

Qualifications:

	 	•	 	Applicant limits enrollment in its drug card to current or
new members of the Medicare managed care plans offering such
exclusive card program who do not receive drug coverage
through a Medicaid plan, including Medicaid demonstration
programs under 1115 waivers (including Pharmacy Plus
waivers).

	 	•	 	Applicant limits enrollment in its drug card to those
Medicare managed care plan members who reside within the
Applicant’s service area.

	 	•	 	Applicant charges each enrollee (or State) an annual
enrollment fee of no more than $30 for 2004 and 2005.
Applicant must charge a uniform enrollment fee within each
Medicare managed care plan that offers the discount card.
The enrollment fee may neither change nor be pro-rated
during the year. No enrollment fee may be charged in 2006.
Applicant may subsidize the enrollment fee (or offer the
drug card for no fee) for drug card eligible

Medicare managed care plan members and, if it chooses to do so, must include the drug card program
as an additional benefit under its Adjusted Community Rate (ACR) filing. Should the Applicant
charge a fee for its exclusive card program, the benefit would be considered an optional
supplemental benefit.

	 	•	 	Applicant accepts for enrollment all eligible Medicare
managed care plan members who apply.

	 	•	 	Applicant accepts payment of enrollment fees from States
that offer such payments on behalf of Medicare beneficiaries
who are not determined eligible for transitional assistance.

	 	•	 	Applicant accepts enrollments in the following manner:

	 	•	 	For individuals applying for the drug card and transitional assistance,
Applicant collects an enrollment form. This form may be made available on-line as
a printable or downloadable form, but it must be signed and dated and returned to
the Applicant via mail or facsimile

	 	•	 	For individuals applying only for the drug card, Applicant accepts an
enrollment form via mail or facsimile, but may, and is encouraged to, accept drug
discount card enrollment requests via telephone and Internet.

	 	•	 	Medicare managed care organizations may use abbreviated
enrollment forms where applicable, especially where the
Medicare managed care organization already has some of the
required information about the beneficiary. CMS will
provide model standard enrollment forms, as well as model
abbreviated enrollment forms. Applicant may use the model
forms or may design its own forms, provided that such forms
contain at least the same elements as the CMS standard forms
and are reviewed and approved by CMS prior to use (whether
from those eligible beneficiaries who are members of, or
enrolling for the first time in, the Medicare managed care
plan) Applicant may ask beneficiaries to respond to
questions beyond those stated in the CMS standard form.
However, the beneficiaries must be informed that responding
to those questions is optional and that their decision to
answer the optional questions will not affect their
qualification for enrollment in the drug card.

	 	•	 	Beneficiaries enrolled in a Medicare managed care plan in
which an approved drug discount card is offered by a
Medicare managed care organization that is also an exclusive
card sponsor may only enroll in the approved drug card
program offered by that Medicare managed care organization
for that Medicare managed care plan.

	 	•	 	A beneficiary is entitled to a Special Election Period when
he or she enrolls in or disenrolls from a Medicare managed
care plan, irrespective of whether the Medicare managed care
plan offers an approved drug card program only to its
Medicare managed care plan members.

	 	•	 	Applicants make enrollments in their drug card effective on
the first of the month following the Applicant’s receipt of
a complete enrollment form from a beneficiary who is
determined eligible. Applicant makes enrollments received
during the Annual Coordinated Election

Period (November 15, 2004 through December 31, 2004) effective the following January 1, 2005.
Group enrollment (described below) is effective on the first of the month the Applicant reports
as the first month of the program.

	 	•	 	Applicant may “group enroll” all eligible members of one or
more of its Medicare managed care plan(s) into the approved
drug card program offered to members of such plans without
collecting an enrollment form (or submissions through other
means) from these individuals. However, prior to group
enrollment, Applicant must disclose to its Medicare managed
care enrollees its intent to group enroll them and provide
them the opportunity to actively decline the enrollment.
Applicant should inform its managed care enrollees that if
they decline enrollment in the Applicant’s drug card
program, they will be ineligible to enroll in another drug
card program as long as they remain enrolled in the
Applicant’s managed care plan. Applicant must explain the
annual enrollment fee, if any, provide information on the
availability of transitional assistance with instructions on
how to apply for it, and make an enrollment form for
transitional assistance available to all members. Applicant
may not group enroll for transitional assistance; a signed
standard enrollment form is required for transitional
assistance enrollment.

	 	•	 	Applicant contacts beneficiaries by telephone when an
incomplete enrollment application is submitted. Applicant
returns unsigned transitional assistance enrollment forms to
applying beneficiary for signature.

	 	•	 	Applicant keeps enrolled in its discount card those
beneficiaries who do not enroll in a new Medicare managed
care plan during the Annual Coordinated Election Period and
automatically charges these beneficiaries any applicable
annual enrollment fee for the second year of drug card
enrollment.

	 	•	 	Applicants may require payment of the enrollment fee, if
any, at the time they receive the enrollment form (or
Internet or telephone request), except for transitional
assistance beneficiary applicants. Applicants may not
collect a fee from transitional assistance enrollees.

	 	•	 	Applicant returns promptly any enrollment fee collected by
an applying beneficiary later determined ineligible for
enrollment in the Applicant’s approved drug card (e.g.,
beneficiary receives drug coverage through a Medicaid plan).

	 	•	 	Applicant submits in batch enrollment/eligibility
transactions to CMS according to the instructions provided.
Enrollment/eligibility transactions for drug card only and
transitional assistance must be batched separately. CMS
will provide responses to each submitted transaction.

	 	•	 	Applicant sends enrollment materials – including materials
describing the drug card program and an identification card
(or, if Medicare managed care plan ID card provides access
to the

discounts, Applicant notifies enrollees that this is the case) – within 5 business days of group
enrollment or of receipt of reply from CMS for all accepted enrollment/eligibility transactions.
Applicant informs transitional assistance enrollees of the date the $600 becomes available for
use and ensures enrollees understand the rules for accessing such assistance.

	 	•	 	Applicant reviews each enrollment form (or information
received through other means) it receives for
completeness, including signature (where necessary),
and screens each form to ensure answers to standard,
required data elements meet the criteria for
enrollment in the program. Any enrollment form that
indicates, through the answers to standard elements
attested to (under penalty of perjury) by the
beneficiary, that the beneficiary is ineligible for
enrollment will be identified by the Applicant.
Written notice must be sent to the beneficiary within
five business days of the Applicant’s identification
of ineligibility due to data submitted on the form.
This notice must describe the reason for being
identified as ineligible and include instructions on
accessing the reconsideration process.

	 	•	 	Applicant notifies beneficiaries disenrolling from the
Medicare managed care plan that they will lose access
to the exclusive card program. Applicant also
notifies such disenrolling members that they are
eligible for a Special Election Period and the length
of such Period.

	 	•	 	Applicant may involuntarily disenroll from its drug
card program a beneficiary who does not pay any
required annual enrollment fee. Applicant must notify
enrollees within 20 calendar days of the date the
annual fee was due that delinquency will result in
termination from its drug card program. If the
enrollee fails to pay the delinquent amount within 10
days of this notice, the Applicant may disenroll the
enrollee from its discount card program by submitting
transaction to CMS and notifying the enrollee that
his/her membership in the discount card program has
ended. The effective date of disenrollment is the
last day of the month in which the fee was due.
Applicant must inform the enrollee that he or she
cannot enroll in any other approved drug card program
as long as he or she remains enrolled in the Medicare
managed care plan in question. Applicant must also
inform the enrollee that the next possible enrollment
date, if applicable, is the Annual Coordinated
Election Period that begins November 15, 2004 and
continues through December 31, 2004.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Indicate your intention to limit enrollment in your
drug card to current and enrolling members of one or
more of your Medicare managed care plans.

	 	•	 	Indicate your intention to enroll all current and
enrolling Medicare managed care plan members eligible
for this program.

	 	•	 	State the annual enrollment fees (if any) you intend
to charge your drug card enrollees. If different fees
are charged in each of your Medicare managed care
plans, identify the fees by Medicare managed care
plan.

	 	•	 	Indicate that you will promptly refund enrollment fees
paid by beneficiaries applying for enrollment in your
discount card who are determined ineligible for
enrollment in a drug card program and by beneficiaries
who are determined to be eligible for transitional
assistance after they have been enrolled in your
discount card.

	 	•	 	Indicate that you will not charge enrollment fees to
beneficiaries who remain enrolled in your drug card
during 2006.

	 	•	 	Indicate that your drug card can be ready to enroll
beneficiaries on May 3, 2004 and provide discounts and
access to transitional assistance by June 1, 2004.

	 	•	 	Indicate whether you intend to group enroll your
Medicare managed care members in your proposed
discount card program and, if so, describe your group
enrollment process.

	 	•	 	For situations other than group enrollments, describe
your process for enrolling Medicare managed care plan
members in your proposed discount card program,
including the means by which you intend to perform the
enrollment function (e.g., paper, fax, telephone,
Internet for non-transitional assistance Applicants;
paper and fax only for transitional assistance
Applicants), your processes for verifying program
eligibility with CMS, communicating eligibility
determinations back to the applying beneficiary within
five days of receipt of the application, and making
enrollments effective on the first of the month
following your receipt of a complete enrollment form
that is determined eligible.

	 	•	 	Indicate that you will collect the data elements
described in the CMS standard enrollment form posted
on the CMS web site. Also indicate that for questions
concerning issues beyond those addressed by the CMS
standard enrollment form you will inform beneficiaries
that responding to those questions is optional.
Finally, indicate that you will inform beneficiaries
that their decision to answer the optional questions
will not affect their qualification for enrollment in
the drug card.

	 	•	 	Describe your organization’s capability to communicate
mainframe to mainframe to exchange beneficiary
eligibility data with CMS. Describe your
organization’s ability to separate drug card and
transitional assistance transactions before submitting
batch transactions. Describe the processing
environment that will be used to manage required
transactions and data.

	 	•	 	Describe your procedures for accepting and processing
disenrollment requests from beneficiaries, including
communicating such request to CMS. This description
must include a discussion of your procedures for
handling beneficiary requests for a Special Election
Period and reporting of any remaining transitional
assistance.

	 	•	 	Describe your procedures for notifying beneficiaries
that they will lose access to the exclusive card
program when they disenroll from the Medicare managed
care plan.

	 	•	 	Describe your procedures for informing beneficiaries
of the Special Election Period when they disenroll
from the Medicare managed care plan.

	 	•	 	Describe your procedures for involuntarily
disenrolling beneficiaries who fail to pay their
annual enrollment fee.

3.5.2 Transitional Assistance Eligibility Determination

Qualifications:

	 	•	 	Applicant submits transactions to CMS for a transitional
assistance eligibility determination for each complete
enrollment form (that includes transitional assistance) it
receives. Beneficiaries already enrolled as drug card
members (without transitional assistance) may apply for
transitional assistance at a later date by completing the
transitional assistance enrollment form and submitting it to
their current drug card sponsor.

	 	•	 	To be eligible for Transitional Assistance, each beneficiary
must be eligible for the drug card, must reside in one of
the 50 States or the District of Columbia, and must not
have:

	 	•	 	An annual income more than 135% of the poverty line (adjusted for
applicant’s family size, i.e., individual or couple) (NOTE: Beneficiaries enrolled
in Medicaid as a Qualified Medicare Beneficiary (QMB), Specified Low-Income
Medicare Beneficiary (SLMB), or Qualified Individual (QI) are deemed to meet the
income requirements for transitional assistance.);

	 	•	 	Medicaid (including under an 1115 demonstration program) that includes
outpatient prescription drug assistance;

	 	•	 	Other health insurance coverage that includes prescription drugs (such
as an employer-sponsored or retiree group health plan or a privately paid for
individual health insurance policy). Note: If other coverage is through a Medicare
managed care plan or Medigap plan (even if an employer pays for the premium of the
Medicare managed care plan or Medigap plan), it does not apply;

	 	•	 	TRICARE; or

	 	•	 	Federal Employee Health Benefits Program (FEHBP) (whether for current
or retired employees).

This data is collected on the transitional assistance enrollment form.

	 	•	 	Applicant reviews each enrollment form (or information
received through other means) for completeness, including
signature (where necessary), and screens each form to ensure
that answers to standard, required data elements meet the
criteria for enrollment in the program. Any enrollment form
that indicates, through the answers to standard elements
attested to by the beneficiary, that the beneficiary is
ineligible for enrollment will be identified by the
Applicant. Written notice must be sent to the beneficiary
within 5 business days of the Applicant’s identification of
ineligibility due to data submitted on the form. This notice
must describe the reason identified for ineligibility and
include instructions on accessing the reconsideration
process.

	 	•	 	For enrollments not screened-out as above, Applicant
transmits all required data obtained from information
supplied by beneficiaries on the standard transitional
assistance enrollment

form to CMS according to the systems described on the CMS web site. CMS informs card sponsors
whether the beneficiary is eligible for transitional assistance and if each beneficiary was
enrolled in the transitional assistance program. Transitional assistance amounts will be
prorated based on the date the beneficiary’s complete enrollment form is received by the
Applicant during the second year of the discount card program (2005).

	 	•	 	Beneficiaries determined eligible for transitional assistance are entitled to continue to receive such
assistance for the duration of the drug card program, regardless of any changes in beneficiaries’ status.
Applicant must send enrollment materials (including a member handbook and ID card) to each accepted
enrollee within 5 business days of receipt of CMS reply.

	 	•	 	For Medicare beneficiaries whom CMS determines to be ineligible for transitional assistance, Applicant
notifies the beneficiary of this determination and his/her right to, and the process for, a reconsideration
of the determination as well as the opportunity to select the discount card only (if eligible). This
notification must be in writing and sent within 5 business days of the Applicant’s receipt of the CMS
eligibility determination reply.

	 	•	 	Applicant does not enroll in their drug discount card beneficiaries applying for transitional assistance if
CMS determines that the beneficiaries are eligible for transitional assistance.

	 	•	 	Applicants determine the appropriate coinsurance levels for each transitional assistance enrollee based on
the income information he or she provides on the standard enrollment form. For beneficiaries whose income
is at or below 100% of the poverty line, the coinsurance level is 5% of the price of the covered drug. For
beneficiaries whose income is above 100% and at or below 135% of the poverty line, the coinsurance level is
10% of the price of the covered drug.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Describe your process for collecting and reviewing information from Medicare beneficiaries applying for
transitional assistance. Indicate that your organization will send a written notice (stating the basis for
ineligibility and the right to reconsideration) to ineligible beneficiaries within five business days of
your identification of ineligibility due to data submitted on the enrollment form.

	 	•	 	Describe how you will handle incomplete enrollment forms or submissions.

	 	•	 	Indicate that you will forward to CMS applications of those beneficiaries who indicate that their income is
not more than 135% of the poverty line (adjusted for applicant’s family size); they are enrolled in
Medicaid but not receiving prescription medicine assistance or are medically needy and not receiving
prescription medicine assistance; and they do not have group health insurance coverage or a private health
insurance policy including drug coverage, TRICARE enrollment, or enrollment in a Federal Employee Health
Benefits Program plan.

	 	•	 	Indicate that you will not enroll beneficiaries in your card program who are applying for transitional
assistance until CMS has determined that they are eligible for such assistance.

	 	•	 	Describe your process for sending and receiving transitional assistance eligibility determination
information to and from CMS.

	 	•	 	Describe your process for notifying beneficiaries that they are ineligible for transitional assistance.

	 	•	 	Describe your process for determining and applying the appropriate coinsurance level for each transitional
assistance-eligible enrollee.

3.5.3 Reconsideration of Eligibility Determination

Qualifications

	 	•	 	Beneficiaries determined not eligible for the drug card
and/or transitional assistance may request reconsideration
of eligibility determination.

	 	•	 	Applicant provides timely written notice (that is, notice
within 5 business days of the Applicant’s identification of
ineligibility due to data submitted on the form) to
beneficiaries who are determined to be ineligible for the
drug card and/or transitional assistance. The notice must
describe the reason identified for ineligibility and contain
information on the beneficiary’s right to a reconsideration
of the determination and instructions on accessing the
reconsideration process. Finally, the notice must inform
the beneficiary of his or her option of enrolling in the
approved program without access to transitional assistance.

	 	•	 	The reconsideration process will be conducted by an
independent entity through a contract administered by CMS
and will include a review of the beneficiary’s enrollment
form and any other documentation required to successfully
review each individual case.

	 	•	 	The Applicant must communicate with the reconsideration
contractor and respond in a timely manner to requests for
information, such as copies of enrollment forms.

	 	•	 	The eligibility decision from the reconsideration process is
final. If the denial is reversed, the enrollment will be
effective beginning with the 1st of the month following the
positive eligibility determination from reconsideration,
AND, if eligible for transitional assistance, the amount of
available transitional assistance dollars (in year 2005)
relates directly to the month in which the sponsor received
the original, complete enrollment form for transitional
assistance. The reconsideration contractor will notify the
beneficiary by written notice, and CMS by submitting a
transaction to enroll as appropriate.

	 	•	 	Applicant will be notified by CMS of individuals determined
eligible for the drug discount card and/or transitional
assistance.

	 	•	 	If the denial is upheld, the reconsideration contractor will
notify the beneficiary in writing of its decision.

Application Requirements

	 	•	 	Describe your procedures for notifying beneficiaries of a
determination that they are ineligible for transitional
assistance and/or the discount card program and advising
them of their reconsideration rights. Such notice must be
provided within 5 business days of your organization’s
receipt of the CMS eligibility determination reply.

	 	•	 	Describe your procedures for communicating with and
responding to the independent review entity (IRE) conducting
transitional assistance or discount card eligibility
reconsiderations.

3.5.4 CMS Reimbursement of Transitional Assistance

Qualifications:

	 	•	 	Applicant registers with the DHHS Payment Management System (PMS) via the web site
http://dpmlink.dpm.psc.gov.

	 	•	 	Applicant submits EIN information (Attachment 3) to CMS upon award of Medicare approval for its
drug discount card. CMS establishes an account and a withdrawal limit in PMS for Applicant.

	 	•	 	Applicants submit payment requests associated with their transitional assistance members as needed
through the PMS. Based on this information, the PMS will authorize the Federal Reserve to make the
appropriate deposit into Applicant’s bank account.

	 	•	 	Applicant reports to CMS’ enrollment and eligibility system each month the following
beneficiary-level subsidy expenditure data for their transitional assistance-eligible enrollees:

	 	•	 	Applicant’s enrollment and eligibility system identification number;

	 	•	 	Each transitional assistance enrollee’s HIC number, name, sex, date of birth;
and

	 	•	 	Amount spent from each transitional assistance enrollee’s subsidy for that
month. Such amount shall represent only claims which have been adjudicated for payment
and not claims that are pending or denied.

	 	•	 	Applicant provides a certified electronic file or hard copy report to CMS each month of the monthly transitional
assistance expenditures and monthly cash payments from the PMS. The Applicant’s Chief Financial Officer will provide
certification.

	 	•	 	Applicant files a Federal Cash Transaction Report (PSC-272) in which the Applicant’s Chief Financial Officer certifies
the Applicant’s transitional assistance expenditures with PMS quarterly
	 
	 	 	 	Application Requirements:

	 	•	 	Indicate that your organization will register with PMS.

	 	•	 	Describe how your organization will interact with the PMS daily to request payment for your enrollees’ transitional
assistance expenditures.

	 	•	 	Indicate your intention to submit to CMS’ enrollment and eligibility system monthly beneficiary-level transitional
assistance expenditures for your transitional assistance-eligible enrollees. Indicate that the data will include:

	 	•	 	Your organization’s identification number;

	 	•	 	Each transitional assistance enrollee’s HIC number, name, sex, date of birth; and

o Amount spent from each transitional assistance enrollee’s subsidy balance for that month.

	 	•	 	Indicate your intention to provide a certified electronic
file or hard copy report to CMS each month of the monthly
transitional assistance expenditures and monthly cash
payments from the PMS. The Applicant’s Chief Financial
officer will provide certification.

	 	•	 	Indicate your intention to file a quarterly Federal Cash
Transaction Report (PSC-272) with PMS, in which your
organization’s Chief Financial Officer certifies your
organization’s transitional assistance expenditures.

3.5.5 Card Sponsor Payment and Tracking of Transitional Assistance

Qualifications:

	 	•	 	Applicant establishes internal controls, accounting
procedures and a financial accounting system to manage and
report the transitional assistance funds.

	 	•	 	Applicant makes available to enrollees with transitional
assistance, for the purchase of covered discount card drugs
and, at the option of the Medicare managed care
organization, for the payment of deductibles, copayments,
and coinsurance for any covered discount card drug under any
drug benefit it may provide to beneficiaries as part of its
Medicare managed care plan, the amount of transitional
assistance indicated by CMS. In most cases, the amount is
expected to be $600 annually in 2004 and 2005, but in some
cases in CY 2005 an enrollee’s transitional amount may be
prorated, and will thus be less than $600 in a given
enrollment year. No additional transitional assistance will
be made available to eligible enrollees during 2006.
However, an enrollee may use any transitional assistance
balance remaining at the end of 2004 or 2005 to purchase
covered drugs during the following year (i.e., 2005 and
2006).

	 	•	 	Applicant ensures that transitional assistance funds are
applied only to covered discount card drugs and, at the
option of the Medicare managed care organization, costs
incurred by the transitional assistance enrollee for covered
discount card drugs obtained through any

Medicare managed care prescription drug benefit it provides; specifically, Applicant may allow
transitional assistance enrollees to utilize transitional assistance to assist in paying
copayments, coinsurance, or deductibles for covered discount card drugs under any Medicare
managed care drug benefit it provides. For covered discount card drugs obtained under the

exclusive card program, Applicant must apply such funds regardless of whether the particular
drug being purchased is offered for a negotiated price by the sponsor. If no negotiated price
is offered, the pharmacy’s usual and customary price shall prevail. The usual and customary
price is the price that the pharmacy would charge a customer who does not have any form of
prescription drug coverage. Transitional assistance funds may not be used to purchase over the
counter drugs or to purchase or pay the cost-sharing for any drugs excluded from the definition
of “covered discount card drug” as stated in 42 CFR § 403.802.

	 	•	 	Applicant does not require its transitional assistance
enrollees to use the transitional assistance to which they
are entitled prior to drawing down any drug benefit offered
to beneficiaries by their Medicare managed care plan.

	 	•	 	Applicant ensures that when transitional assistance funds
are used, enrollees receive the lower of the negotiated
price (if any) or the usual and customary price.

	 	•	 	Applicant makes available electronically or by telephone at
point-of-sale information concerning the amount of
transitional assistance used and available for each
transitional assistance enrollee.

	 	•	 	Applicant reimburses directly: 1) pharmacies for
transactions where the balance of transitional assistance
reported was in excess of the amount available, and 2)
enrollees who become transitional assistance eligible after
their initial enrollment for any enrollment fee they had
paid prior to the determination, and 3) States in instances
where they have paid enrollment fees on behalf of
beneficiaries determined eligible for transitional
assistance after their initial enrollment.

	 	•	 	Applicant operates both a real-time transitional assistance
claims adjudication system and, for those claims involving
coordination of benefits issues, an off-line claims
processing system.

	 	•	 	Applicant tracks transitional assistance spending for each
enrollee with such assistance, including roll-over amounts,
if any, from the previous calendar year(s).

	 	•	 	Applicant develops and implements procedures to protect
against the misuse of transitional assistance in the event
of the theft or loss of an enrollee’s identification card.

	 	•	 	Applicant adopts a system for determining final transitional
assistance balances to be reported to CMS at the time a card
enrollee disenrolls from Applicant’s drug card program. CMS
will not adjust the final balance at a later date to account
for outstanding claims at the

time the Applicant reported the final balance, nor will CMS provide additional reimbursement to
the Applicant to make up the difference. If the Applicant’s systems for determining a final
transitional assistance balance potentially creates a financial liability for enrollees,
Applicant informs enrollees of such circumstances and the special responsibilities enrollees may
have in such circumstances.

	 	•	 	Applicant continues to make remaining amounts of
transitional assistance funds (which have been rolled
over from previous years) available to eligible
enrollees during the transition period (starting
December 31, 2005 and ending when the beneficiary
enrollees in a Part D plan or when the Part D initial
enrollment period expires, whichever comes first).

	 	•	 	Applicant accepts payment of enrollment fee from CMS
for transitional assistance enrollees.

	 	•	 	Applicant applies coinsurance requirements, such that
when transitional assistance is used, enrollees with
incomes greater than 100 percent and not greater than
135 percent of the poverty line (or others on their
behalf) pay no more than 90 percent of the charge for
the drug from their transitional assistance, and
transitional assistance enrollees whose income is not
greater than 100% of the poverty line pay no more than
95% of the charge for the drug from their transitional
assistance.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Describe the systems you will develop and implement to
track and manage transitional assistance on behalf of
transitional assistance-eligible beneficiaries.
Discuss the information and claims adjudication
systems you will develop to manage this effort.
Specifically:

	 	•	 	Describe how your organization will operate a real-time transactional assistance
claims adjudication system. Discuss how this system will interact with network
pharmacies to ensure accurate application of transitional assistance to the cost of
covered drugs. Include in this discussion the accurate calculation of applicable
coinsurance amounts. Should you elect to permit transitional assistance enrollees to
apply transitional assistance toward such cost-sharing, also describe the accurate
application of transitional assistance to any copayments, coinsurance, or deductibles
for any covered discount card drug obtained under any Medicare managed care drug
benefit your organization provides.

	 	•	 	Describe how your staff will update and monitor this system to ensure accurate
tracking of the transitional assistance spending. The discussion of this system should
reflect your intention to allow enrollees to roll over any remaining balance at the end
of one calendar year to their account for the next calendar year. This includes making
the remaining 2005 transitional assistance balance available to enrollees during their
transition period in 2006 (that is, the period between January 1, 2006 and the
effective date of the beneficiary’s enrollment in a Part D prescription drug plan or
the last day of the period in which the beneficiary may enroll under Part D, whichever
occurs first).

	 	•	 	Describe the internal controls, procedures, and
financial system your organization will use to make
transitional assistance account balance information
available at the point of sale for all eligible
beneficiaries with transitional assistance. Indicate
whether the information will be available
electronically, by telephone, or both.

	 	•	 	Describe the systems/ procedures your organization
will adopt to ensure that accurate final transitional
assistance balances are reported to CMS at the time a
card enrollee disenrolls from your drug card program.
If such systems potentially create a financial
liability for enrollees, describe your procedures for
informing enrollees of such circumstances and the
special responsibilities enrollees may have in such
circumstances.

	 	•	 	Indicate that your organization will reimburse: 1)
pharmacies for transactions where the balance of
transitional assistance reported was in excess of the
amount available, and 2) enrollees who became
transitional assistance eligible after their initial
enrollment for any enrollment fee they had paid prior
to the determination, and 3) States in instances where
they have paid enrollment fees on behalf of
beneficiaries determined eligible for transitional
assistance after their initial enrollment.

	 	•	 	Indicate circumstances under which off-line claims
adjudication (e.g., transactions involving pharmacies
without real-time communication capabilities,
institutional pharmacies) will be necessary. Describe
your system for processing these claims, including the
requirements for pharmacies and/or enrollees to submit
claims and your timeframe for adjudicating the claim,
providing a response to the pharmacy and/or enrollee,
and making the appropriate adjustment to the
enrollee’s account balance.

	 	•	 	Attest that you will not require transitional
assistance members of your Medicare managed care
plan(s) to use the transitional assistance to which
they are entitled prior to drawing down any drug
benefit offered to Medicare managed care plan members.
	 
	 	3.5.6	 	Call Center
—
	 
	 	 	 	Qualification:

	 	•	 	Applicant maintains a toll-free customer service call
center that is open during usual business hours and
provides customer telephone service in compliance with
usual business practices.

	 	•	 	Applicant uses CMS’ FTS2001 telecommunications
contract for its toll-free numbers, services, and
circuits, allowing beneficiaries calling the
1-800-MEDICARE information line to be transferred
directly to the Applicant’s customer service
representatives.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Describe the hours of operation and business practices
of your toll-free customer service call center.
Please indicate if you will use the same call
center/call center staff currently employed by your
Medicare managed care program.

	 	•	 	Explain in detail how your customer service function
would respond to the following types of concerns that
a beneficiary may experience:

	 	•	 	Questions or requests from transitional assistance-eligible enrollees
concerning the current balance of their transitional assistance remaining.

	 	•	 	Questions concerning differences between the Medicare drug discount card
program, other (non-approved) discount card programs, and prescription drug insurance.

	 	•	 	Discount card inquiries, prior to enrollment.

	 	•	 	Problems in the enrollment process.

	 	•	 	Questions concerning negotiated prices and formulary offerings.

	 	•	 	Questions concerning the negotiated price for a particular drug at a specific
pharmacy.

	 	•	 	Questions concerning pharmacy access and mail order, if applicable, including
changes in the pharmacy network.

	 	•	 	Questions with a clinical component, including requests for counseling on
relevant costs of equivalent medications or the availability of generic drugs.

	 	 	 
	
 
	 	oQuestions concerning lost or stolen identification cards.
	 
	 	 
	
 
	 	oQuestions concerning denial of use of the card by a network pharmacy.
	 
	 	 
	
 
	 	oMail order pharmacy questions, issues, and concerns (if applicable).
	 
	 	 
	
 
	 	oQuestions from pharmacists concerning the Applicant’s drug card program.

	 	•	 	Describe your card sponsor’s additional mechanisms (if any) for communicating with enrollees or
pharmacies (fax, e-mail).

	 	•	 	Indicate your intention to work directly with CMS and its telecommunications vendors to develop the
direct transfer capabilities between the 1-800-MEDICARE information line and your customer service
representatives.
	 
	 	3.5.7	 	Reduction of Medication Errors
	 
	 	 	 	Qualifications:
—

	 	•	 	Applicant operates a system to reduce the likelihood of medication errors and adverse drug
interactions and to improve medication use.

	 	•	 	Applicant’s system is supported by scientific and clinical literature.

Application Requirement:

	 	•	 	If your system is an existing program, describe your past achievement in reducing
medication errors and adverse drug interactions and in improving medication use.

3.5.8 Grievance/Customer Complaints

Qualifications: 

	 	•	 	Applicant expands its existing Medicare managed care
grievance process to include its drug card program in
order to track and address in a timely manner
enrollees’ complaints about any aspect of the card
sponsor’s operations.
	 
	 	 	 	

	 	•	 	A grievance is any enrollee’s complaint or dispute
expressing dissatisfaction with the manner in which he
or she has received services under a drug card. The
subjects of a grievance may include:

	 	•	 	The timeliness, appropriateness, access to, and/or setting of services
provided by the card sponsor;

	 	•	 	Concerns about waiting times, demeanor of pharmacy or customer service
staff; or

	 	•	 	A dispute concerning the card sponsor’s refusal to offer discounts on
particular prescription drugs, failure to accept transitional assistance as payment
for prescription drugs, or charging of higher coinsurance payments than permitted
under the Medicare drug discount card program.

Application Requirements:

	 	•	 	Indicate that your organization will expand its existing Medicare managed care grievance
process to include your drug card program.

3.5.9 Information and Outreach

Qualifications:

	 	•	 	Applicant provides information and conducts outreach to Medicare beneficiaries to include a
detailed description of the following:

	 	•	 	Applicant’s drug card that includes information on how to become
enrolled in a program, how to qualify for the transitional assistance, and how
transitional assistance works;

	 	•	 	Negotiated prices offered for covered discount card drugs.

	 	•	 	The permissible services Applicant provides for no additional fee, such
as drug interaction counseling or allergy alerts;

	 	•	 	The availability of a grievance process and how it works;

	 	•	 	Toll-free numbers available to Applicant’s drug card enrollees;

	 	•	 	A list of contracted pharmacies and prescription drugs offered for a
negotiated price, and a guarantee that contracted pharmacies will provide the lower
of the negotiated price or the “usual and customary” price.

	 	•	 	Enrollment fees (if any);

	 	•	 	A notice that drugs and prices may change or vary and a description of
how the enrollee can obtain information regarding those changes and variations;

	 	•	 	A clear description of the service area in which Applicant’s drug card
is available;

	 	•	 	Applicant’s procedures for managing transitional assistance against an
enrollee’s cap or transitional assistance balance transfer to a newly elected
approved program as well as any potential enrollee liabilities related to such
procedures; and

	 	 	 
	
 
	 	oA privacy notice for protected health information.

	 	•	 	Applicant provides beneficiaries with information and outreach materials that comply with CMS information
and outreach guidelines. Such guidelines will be posted on the CMS web site at www.cms.hhs.gov
as a separate document from this solicitation. Applicant provides the materials to beneficiaries in
customer-appropriate printed material prior to and after enrollment.

	 	•	 	Applicant provides all information and outreach materials to CMS for review prior to conducting outreach to
Medicare beneficiaries. When acting in the capacity of a Medicare managed care plan and co-mingling plan
materials with card sponsor information and outreach materials, Medicare managed care organizations are
required to obtain approval from CMS. These materials require approval from the appropriate CMS Regional
Office and the contractor that will review drug card program information and outreach materials.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Indicate your intention to follow the information and outreach guidelines, which will be provided by CMS on
its web site (www.cms.hhs.gov). Any information and outreach materials submitted for CMS review
and approval along with your application materials should be consistent with the guidelines from CMS.

	 	•	 	Describe your expected information and outreach effort, including communication materials that will be
developed and how they will be used to market the program. Provide a

description of other communication channels that will be used to educate and enroll Medicare
beneficiaries (e.g., the Internet).

	 	•	 	Describe your efforts to accommodate beneficiaries with
disabilities and non-English speaking beneficiaries.

	 	•	 	Discuss your communication plan concerning the availability
of pharmacy services or discounts on over-the-counter drugs,
if any, that will be offered for no additional fee.

	 	•	 	Describe how you will monitor and track written inquiries
for information and outreach materials. Include the average
response time to send out materials.

3.5.10 Privacy/HIPAA Transactions

Qualifications:

	 	•	 	Applicant is a covered entity and complies with the regulations issued pursuant to the Health Insurance
Portability and Accountability Act (HIPAA) at 45 CFR parts 160 and 164, subparts A and E [the Privacy Rule]
as it applies to health plans. (NOTE: In applying the definition of “marketing” under the Privacy Rule,
Applicant’s information and outreach efforts under the drug card program that are directly related to
covered drugs and non-prescription drugs for which the Applicant will offer a discount, including
information on drug interactions, are permitted uses of protected health information as health care
operations.)

	 	•	 	Applicant complies with the Privacy Rule as it applies to business associates of CMS for the purposes of
operating the transitional assistance portion of the drug card program.

	 	•	 	Applicant notifies each beneficiary, prior to enrollment or at the time of enrollment, of expected uses and
disclosures of the beneficiary’s protected health information, as well as the beneficiary’s rights and
Applicant’s duties with respect to such information. Such notice is provided in plain language containing
sufficient detail to advise the beneficiary of the uses and disclosures permitted or required under
applicable law.

	 	•	 	Applicant obtains written authorization for all uses and disclosures of protected health information not
otherwise permitted under the Privacy Rule. Beneficiaries may authorize disclosure of their protected
health information to a third party, such as their employer. Such authorization may NOT be requested for
marketing products or services outside the drug card program’s approval.

	 	•	 	Applicant ensures that its agents and subcontractors comply with all the requirements of 45 CFR Parts 162
and 164 when performing functions on the Applicant’s behalf.

	 	•	 	Applicant complies with the requirements applicable to covered entities to the provisions of 45 CFR Part
160 relating to use of national identifiers. Applicant complies with any applicable standards,
implementation specifications, and requirements in the Standards for Electronic Transactions under 45 CFR
Parts 160 and 162 subparts I et seq.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Indicate your understanding of and agreement to protect protected health information in accordance with the
privacy provisions, (stated in Section 3.5.10 of this document) of the drug card program.

	 	•	 	Pursuant to the privacy provisions under this initiative:

	 	•	 	Describe how your organization will routinely use beneficiary data.

	 	•	 	Describe how your organization will obtain beneficiary written authorization
for the uses and disclosures of beneficiary data, and to permit an enrollee to revoke
that authorization. NOTE: Such authorization may not be requested for marketing for
services considered outside the scope of approval (that is, (a) not directly related to
a covered discount card drug or (b) not involving discounts on non-prescription drugs).

3.5.11 Security

Qualification:

	 	•	 	Applicant has, as of the initial enrollment date,
appropriate administrative, technical, and physical
safeguards in place to protect the privacy of
protected health information in accordance with 45 CFR
§164.530(c), and meets the standards, requirements,
and implementation specifications as set forth in 45
CFR part 164, subpart C, the HIPAA Security Rule,
prior to beginning enrollment of beneficiaries. If
the Applicant will not fully meet this requirement,
the Applicant must describe the Applicant’s plan for
coming into compliance with the specifications as set
forth in the Security Rule. Applicants are encouraged
        , but not required, to use Information Security
Program references as provided by the National
Institute for Standards and Technology (NIST) in
describing their efforts to implement reasonable
security measures.
	 
	 	 	 	Application Requirements:
—

	 	•	 	Provide your attestation that, as of the initial
enrollment date, appropriate administrative,
technical, and physical safeguards will be in place to
protect the privacy of protected health information in
accordance with 45 CFR §164.530(c), and that you will
meet the standards, requirements, and implementation
specifications as set forth in 45 CFR part 164,
subpart C, the HIPAA Security Rule, prior to beginning
enrollment of beneficiaries. If you are unable to
provide this later attestation, provide your plan for
coming into compliance with the specifications as set
forth in the Security Rule as of the compliance date
of the Security Rule.

You are encouraged, but not required, to use the Information Security Program references as
provided by the National Institute of Standards and Technology (NIST) in describing your
efforts to implement reasonable security measures.

3.6 Card Sponsor Reporting to CMS

Qualification:

Request for Waiver: Applicants who did not request any waivers requested by responding “yes” to
any item on the chart in Section 2.10 must provide a response to Section 3.6 of the General
Solicitation. Applicants who did request a waiver must meet the meet the qualifications as
described below

Application Requirements:

	 	•	 	Describe how your organization will adhere to the reporting requirements and schedule
outlined in Attachment 4 with the following exceptions:

	 	•	 	If you requested a waiver of duplicative reporting requirements under Item 3 of
the waiver chart, you need not address Items 1,3, and 10 of Attachment 4.

	 	•	 	If you requested a waiver of Item 2 of the waiver chart, you need not address
the manufacturer price concessions in Item 4 of Attachment 4.

	 	•	 	Describe the procedures your organization has adopted
to ensure that you will keep CMS informed of any
material modifications to your program.
	 
	 	3.7	 	Record Retention
	 
	 	 	 	Qualifications:
—

	 	•	 	Applicant complies with the record retention standard
requiring that the approved sponsor retain records
that it creates, collects, or maintains as part of its
operations while participating in the program as part
of its operation of an approved program for at least 6
years following the termination of the program, or in
the event that the contract with CMS is terminated, at
least 6 years following such termination.

	 	•	 	Applicant must continue to apply the security and
privacy protections described in Sections 3.5.10 and
3.5.11 to the maintained records.

Application Requirements:

	 	•	 	Describe your record retention policies and practices, and indicate your intention to
retain records related to your operation of your approved

card program for 6 years following the termination of the program or your contract with CMS.

	 	•	 	Indicate your intention to apply the security and privacy protections required of card
sponsors to the records related to the operation of your drug card program you will
maintain.

3.8 Requests for Waiver or Modification of Requirements

Qualification:

	 	•	 	Applicant may request additional waivers from or
modifications of requirements applicable to other drug
card sponsors. Applicant must demonstrate that the
requirements at issue are duplicative of, or conflict
with, requirements applicable to Medicare managed care
organizations, or that they interfere with the
coordination of benefits offered under their drug card
with benefits provided under the Medicare managed care
program.
	 
	 	 	 	Application Requirement:
—

	 	•	 	Indicate whether your organization wishes to request
any additional waivers from or modifications of
requirements applicable to drug card sponsors under
this program. Demonstrate that the requirements at
issue are duplicative of or conflict with requirements
applicable to Medicare managed care organizations, or
that they interfere with the coordination of benefits
offered under their drug card with benefits provided
under the Medicare managed care program.

2

4.0 CERTIFICATION

I, the undersigned, certify to the following:

	 	1)	 	I have read the contents of the completed application and the information
contained herein is true, correct, and complete. If I become aware that any
information in this application is not true, correct, or complete, I agree to notify
the Centers for Medicare & Medicaid Services (CMS) immediately and in writing.

	 	2)	 	I authorize CMS to verify the information contained herein. I agree to notify
CMS in writing of any changes that may jeopardize my ability to meet the qualifications
stated in this application prior to such change or within 30 days of the effective date
of such change. I understand that such a change may result in termination of the
Medicare approval contract.

	 	3)	 	I agree that if my program meets the minimum qualifications and is
Medicare-approved, I will abide by the requirements contained in Section 3.0 of this
Application and provide the services outlined in my application.

	 	4)	 	Neither I, nor any owner, director, officer, or employee of the [Applicant] or
other organization on whose behalf I am signing this certification statement, or any
contractor retained by the company or any of the aforementioned persons, currently is
subject to sanction under the Medicare or Medicaid program, or debarred, suspended or
excluded under any other Federal agency or program, or otherwise prohibited from
providing services to CMS or other Federal Agency.

	 	5)	 	I understand that in accordance with 18 U.S.C. § 1001, any omission,
misrepresentation or falsification of any information contained in this application or
contained in any communication supplying information to CMS to complete or clarify this
application may be punishable by criminal, civil, or other administrative actions
including revocation of approval, fines, and/or imprisonment under Federal law.

	 	6)	 	I further certify that I am an authorized representative, officer, chief
executive officer, or general partner of the business organization that is applying for
the approval of the a prescription drug discount card program.

	 	 	 
	___Todd S. Farha_________President & Chief Executive Officer
	Authorized Representative	 	 
	Name (printed) Title	 	 
	/s/ Todd S. Farha     

	 	04/14/05     
	 

	 	 
	Authorized Representative Signature

	 	Date (MM/DD/YY)
	 
	 	 

3

ATTACHMENT 1 – DRUGS COMMONLY USED BY MEDICARE BENEFICIARIES

DRUGS COMMONLY USED BY MEDICARE BENEFICIARIES

Place a check mark next to the drugs listed below which will be included for a discount at your
pharmacy network under your proposed program. This list represents top drugs commonly used by
Medicare beneficiaries, according to results from the 2000 Medicare Current Beneficiary Survey.

NOTE: In some cases, both the brand name and its generic equivalent are listed separately.

	 
	 

	? ACCUPRIL

	 

	? ACTOS

	 

	? ADALAT

	 

	? ALBUTEROL

	 

	? ALLEGRA

	 

	? ALLOPURINOL

	 

	? ALPHAGAN

	 

	? AMARYL

	 

	? AMBIEN

	 

	? AMIODARONE HCL

	 

	? AMITRIPTYLINE HCL

	 

	? ARICEPT

	 

	? ATENOLOL

	 

	? ATROVENT

	 

	? AVANDIA

	 

	? AXID

	 

	? BETAPACE

	 

	? BUSPAR

	 

	? CAPTOPRIL

	 

	? CARBIDOPA/LEVO

	 

	? CARDIZEM

	 

	? CARDIZEM CD

	 

	? CARDURA

	 

	? CASODEX

	 

	? CELEBREX

	 

	? CELLCEPT

	 

	? CIMETIDINE

	 

	? CIPRO

	 

	? CLOZARIL

	 

	? COMBIVENT INHALER

	 

	? COMBIVIR

	 

	? COREG

	 

	? COUMADIN

	 

	? COZAAR

	 

	? DEPAKOTE

	 

	? DETROL

	 

	? DIFLUCAN

	 

	? DIGOXIN

	 

	? DILANTIN

	 

	? DILTIAZEM

	 

	? DIOVAN

	 

	? EFFEXOR

	 

	? EPIVIR

	 

	? EVISTA

	 

	? FLOMAX

	 

	? FLOVENT

	 

	? FOLICACID

	 

	? FOSAMAX

	 

	? FUROSEMIDE

	 

	? GEMFIBROZIL

	 

	? GLIPIZIDE

	 

	? GLUCOPHAGE

	 

	? GLUCOTROL

	 

	? GLYBURIDE

	 

	? HYDROCHLOROTHIAZIDE

	 

	? HYDROCODONE/APAP

	 

	? HYTRIN

	 

	? HYZAAR

	 

	? IBUPROFEN

	 

	? IMDUR

	 

	? IPRATROPIUMBROMIDE

	 

	? ISOSORBIDEDN

	 

	? ISOSORBIDEMN

	 

	? K-DUR

	 

	? KLOR-CON

	 

	? LANOXIN

	 

	? LASIX

	 

	? LESCOL

	 

	? LEVAQUIN

	 

	? LEVOTHROID

	 

	? LEVOTHYROXINE

	 

	? LIPITOR

	 

	? LOPRESSOR

	 

	? LOTENSIN

	 

	? LOTREL

	 

	? MECLIZINE

	 

	? METOPROLOL

	 

	? MEVACOR

	 

	? MIACALCIN

	 

	? MINITRAN

	 

	? MONOPRIL

	 

	? MSCONTIN

	 

	? NAPROXEN

	 

	? NEORAL

	 

	? NEURONTIN

	 

	? NITROGLYCERIN

	 

	? NORVASC

	 

	? OXYCONTIN

	 

	? PAXIL

	 

	? PEPCID

	 

	? PLAVIX

	 

	? PLENDIL

	 

	? POTASSIUM

	 

	? POTASSIUM CHLORIDE

	 

	? PRAVACHOL

	 

	? PREDNISONE

	 

	? PREMARIN

	 

	? PREMPRO

	 

	? PREVACID

	 

	? PRILOSEC

	 

	? PRINIVIL

	 

	? PROCARDIAXL

	 

	? PROGRAF

	 

	? PROPOXY-N/APAP

	 

	? PROPRANOLOL

	 

	? PROSCAR

	 

	? PROZAC

	 

	? RANITIDINE

	 

	? RELAFEN

	 

	? RIBAVIRIN

	 

	? RISPERDAL

	 

	? SEREVENT

	 

	? SINGULAIR

	 

	? SYNTHROID

	 

	? TAMOXIFEN

	 

	? TEGRETOL

	 

	? TERAZOSIN

	 

	? TIAZAC

	 

	? TOPAMAX

	 

	? TOPROL XL

	 

	? TRAZODONE

	 

	? TRENTAL

	 

	? TRIAMTERENE/HCTZ

	 

	? ULTRAM

	 

	? VASOTEC

	 

	? VERAPAMIL

	 

	? VIOXX

	 

	? VIRACEPT

	 

	? WARFARIN SODIUM

	 

	? WELLBUTRIN

	 

	? XALATAN

	 

	? ZANTAC

	 

	? ZERIT

	 

	? ZESTRIL

	 

	? ZIAC

	 

	? ZOCOR

	 

	? ZOLOFT

	 

	? ZYPREXA

	 

	? ZYRTEC

	 

4

ATTACHMENT 2

Drug Card Enrollment Process Flowchart

[CHART]

5

ATTACHMENT 3 – PAYMENT INFORMATION FORM

As Government vendors, organizations with Medicare contracts are paid by the Department of
Treasury through an Electronic Funds Transfer (EFT) program. Government vendor payments are
directly deposited into corporate accounts at financial institutions on the expected payment date.
Additionally, CMS must have the EIN/TIN and associated name as registered with the IRS.

ORGANIZATION INFORMATION

NAME OF ORGANIZATION:

DBA, if any:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ADDRESS:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CITY:	 	 	 	 	 	 	 	 	 	 	 	 	 	STATE:	 	ZIP CODE:
	CONTACT PERSON NAME:	 	 	 	 	 	 
	TELEPHONE NUMBER:	 	 	 	 	 	 
	CONTRACT NO’s.:	 	H	 	 	 	 	 	; H	 	; H	 	; H
	 	 	 	 	 	 	 	 	(If known)	 	 	 	 	 	 	 	 	 	 	 	 

 TIN/EIN NAME of business for tax purposes (as registered with the IRS: a W-9 may be
required)

EMPLOYER/TAX IDENTIFICATION NUMBER (EIN or TIN):

	 	 	 	 	 	 	 	 	 
	Mailing address for 1099 tax form:
	 	 	 	 
	STR1:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	STR2:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	CITY:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	STATE:
	 	ZIP:                         
	 	 	—	 
	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	FINANCIAL INSTITUTION	 	 	 	 	 	 	 	 
	NAME OF BANK:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ADDRESS:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	CITY: STATE:
	 	ZIPCODE:	 	 	—	 
	 
	 	 	 	 	 	 	 	 
	ACH/EFT COORDINATOR NAME:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	TELEPHONE NUMBER:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	NINE DIGIT ROUTING TRANSIT (ABA) NUMBER:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DEPOSITOR ACCOUNT TITLE:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DEPOSITOR ACCOUNT NUMBER:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

CIRCLE ACCOUNT TYPE: CHECKING            SAVINGS (Please attach a copy of a voided check)

SIGNATURE & TITLE OF ORGANIZATION’S AUTHORIZED REPRESENTATIVE:

 DATE:      

Signature Title

     Print Name Phone Number

ATTACHMENT 4 —  Reporting Requirements

Routine Reporting Requirements

All data in this section are due to CMS on the 10th business day of the month
following the reporting period and the data are to reflect the activity for that reporting
period only. For example, aggregated grievance data for the month of May 2004 are due to
CMS by 5:00 pm ET on June14, 2004 and should reflect the grievance activity for May 2004;
and, customer service data for the months of May, June, and July 2004 are due to CMS on
August 13, 2004 by 5:00 pm ET and should reflect the customer service activity for May –
July 2004. Exact due dates for all data will be posted on CMS’ website at
www.cms.hhs.gov.

All data submissions to CMS must include a certification by the Sponsor that based on best
knowledge, information, and belief, the reported information is accurate, complete,
truthful, and supportable.

Applicant must report aggregated grievance and prescription data on a monthly basis and
customer service information and information on price concessions and pass-through to
beneficiaries on a quarterly basis directly into CMS’ Health Plan Management System (HPMS).
Please refer to the instructions posted on CMS’ website at
www.cms.hhs.gov for information about accessing HPMS. Applicant must
report data on transitional assistance reimbursement on a monthly basis directly into the
Medicare Beneficiary Database (MBD).

	 	 	 
	Item 1 - Aggregated Grievance data, due monthly, include:

	 	•	 	Sponsor identification;

	 	•	 	Number of filed grievances, broken down by category of grievance (i.e., enrollment,
disenrollment, marketing, benefits/access, pricing/co-insurance, customer service,
confidentiality, pharmacies, other);

	 	•	 	Number of resolved grievances; and

	 	•	 	Number of resolved grievances that favor beneficiaries.
	 
	 	Item 2	 	- Prescription data, due monthly, include:

	 	•	 	Sponsor identification;

	 	•	 	Total number of prescriptions (aggregate and decile);

	 	•	 	Average number of prescriptions (aggregate and decile) per enrollee.
	 
	 	Item 3	 	- Customer service data, due quarterly, include:

	 	•	 	Sponsor identification;

	 	•	 	Percent customer service rep time manning phones and responding to enrollee
inquiries;

	 	•	 	Total number of calls;

	 	•	 	Number and percent of calls answered within 30 second;

• Number and percent of beneficiary calls that are abandoned from automated queue;

	 	•	 	Call center business hours;

	 	•	 	Percent of business hours when call center was not available;

	 	•	 	Average days to process new members;

	 	•	 	Average days to provide new or replacement discount cards;

	 	•	 	Average days to respond to written correspondence;

	 	•	 	Average days to fulfill mail order request — no intervention required; and

	 	•	 	Average days to fulfill mail order request — intervention required.

Item 4 — Reporting requirements for price concessions and pass-throughs to beneficiaries,
due quarterly, include:

	 	•	 	Sponsor identification.

	 	•	 	Percent of total amount of the price concessions negotiated in each manufacturer
contract for the drug card program that is passed through to beneficiaries.

	 	•	 	Average dollar amount of manufacturer price concessions per drug card script by
each manufacturer.

	 	•	 	Percent of total amount of the price concessions negotiated across all retail
pharmacy contracts, and by mail order, that is passed through to beneficiaries.

	 	•	 	Average negotiated price per script across all drugs produced by each manufacturer.

	 	•	 	Average dollar amount of pharmacy price concessions per drug card script by all
retail pharmacy, and by mail order.

	 	•	 	Average dollar amount of manufacturer price concessions per brand name drug
card script.

	 	•	 	Average dollar amount of manufacturer price concessions per generic drug
card script.

	 	•	 	Average dollar amount of pharmacy price concessions per brand name drug
card script.

	 	•	 	Average dollar amount of pharmacy price concessions per generic drug card
script.

	 	•	 	Range and average negotiated price by NDC code (including by manufacturer on
generics) at a given point in time.

	 	•	 	Average and range of dispensing fees.

Item 5 — Reporting requirements for transitional assistance reimbursement, due monthly,
include:

	 	•	 	Sponsor identification.

	 	•	 	Each transitional assistance enrollee’s:

	 	•	 	HIC Number

	 	•	 	Name

	 	•	 	Sex

	 	•	 	Date of Birth

	 	•	 	Amount spent from each transitional assistance enrollee’s subsidy balance for that
month.

Item 6 — Applicant must report to CMS immediately any aberrancies or high utilization and
spend patterns (identified by Zip Code) observed in claims data for particular
drugs/controlled substances. If no patterns are detected during a month, Applicant
certifies to CMS, by the 10th business day of the next month, that it checked
for such patterns.

Reporting/monitoring requirements for irregular utilization patterns for specific drugs,
due monthly, include:

	 	•	 	Sponsor identification.

	 	•	 	Check for aberrant or high outlier utilization patterns for drugs with abuse/misuse
potential and alert CMS as soon as irregular utilization patterns are uncovered.

	 	•	 	Drugs with significant abuse/misuse potential as denoted by
DEA Control Schedule II through Schedule V.

	 	•	 	If no unusual utilization patterns are uncovered for a month, certify to CMS that
such utilization patterns were not uncovered in the analysis.

Item 7 — Reporting requirements concerning any material modifications to the Card Sponsor’s
drug card program (e.g., changes to formulary, pharmacy network, customer service
practices), due as soon as they occur, include:

	 	•	 	Sponsor identification.

	 	•	 	A description of the change.

	 	•	 	How the change will impact the Sponsor’s drug card program.

Item 8 — Reporting requirements for any increase in prices in a calendar year that are due
to anything other than changes in average wholesale price (AWP), due with the submission of
the price comparison files, include:

	 	•	 	Sponsor identification.

	 	•	 	Rationale for negotiated price increase.

Note to above requirement: Sponsors do not have to report any increases in
negotiated prices that occur during the week of November 15, 2004.

Item 9 — Claims-Based Data Elements 

Our oversight strategy anticipates that we would audit the following claims-based data
elements in the event we conduct an audit. At that time we will specify the format in
which the data shall be provided.

	 	•	 	Sponsor ID;

	 	•	 	Beneficiary Name;

	 	•	 	Beneficiary HIC#;

	 	•	 	Eleven Digit National Drug Code (with Dosage Information);

	 	•	 	Sponsor’s Negotiated Price without the Dispensing Fee;

	 	•	 	Dispensing Fee;

	 	•	 	Beneficiary Co-Pay Amount;

	 	•	 	Sales Tax Amount;

	 	•	 	Generic Indicator;

	 	•	 	Usual & Customary Price without the Dispensing Fee;

	 	•	 	AWP;

	 	•	 	DEA Number of Prescribing Physician;

	 	•	 	Prescription Number;

	 	•	 	NABP Number of Pharmacy that Filled Prescription; and

	 	•	 	Date Prescription Filled.

Item 10 — Grievance-Based Data Elements

Our oversight strategy anticipates that we would audit grievance logs in the event we
conduct an audit. At that time we will specify the format in which the data shall be
provided.

	 	 	 	 	 	 	 
	Grievance logs must consist of the following data fields:

	 	•	 	Sponsor ID;

	 	•	 	Beneficiary Name;

	 	•	 	Beneficiary HIC#;

	 	•	 	Date Grievance Received;

	 	•	 	Date Grievance Decided;

	 	•	 	Disposition of Grievance; and

	 	•	 	Category of Grievance based on those below.
	 
	 	 	 	Grievance log categories are:

	 	•	 	Enrollment

	 	•	 	Enrollment materials (card) not distributed in a timely manner.

	 	•	 	Beneficiary charged too much for enrollment fees.

	 	•	 	Enrollment fees per sponsor are not the same for all
beneficiaries enrolled in each State and all beneficiaries are not allowed to
enroll in each State

	 	•	 	Disenrollment

	 	•	 	Sponsors inappropriately encourage beneficiaries to disenroll
or disenroll beneficiaries for an invalid reason.

	 	 	 
	
 
	 	oNot correctly processing requests for disenrollment timely

	 	•	 	Marketing

	 	•	 	Sponsors are falsely advertising product or services that aren’t
covered by the discount card.

	 	•	 	Sponsors are falsely advertising network.

	 	•	 	Sponsors are not advertising accurate drug prices.

	 	•	 	Sponsors are participating in illegal marketing practices such as
door-to-door marketing of the drug card, or offering illegal inducements to enroll
in the drug card.

	 	 	 
	
 
	 	oSponsors are using unapproved marketing materials.

	 	•	 	Benefits/Access

	 	•	 	Sponsors do not have a mechanism that informs the beneficiary
on amount of transitional assistance remains (electronically or by telephone)
at the point-of-sale of covered discount card drugs.

	 	•	 	Sponsor inaccurately tracks a beneficiary’s transitional
assistance spending.

	 	•	 	Sponsors do not provide that each pharmacy that dispenses a
covered discount card drug shall inform a TA individual enrolled under the

	 	•	 	program of the differential between the price of the drug and
the price of the lowest priced, therapeutically bioequivalent generic drug

covered by the discount card program at the time of purchase? (Note: long-term
care and Indian health services may not be required to provide this service.)

	 	•	 	Sponsors and/or providers are discouraging use of the card
for all or certain drugs covered by the card.

	 	•	 	The service area represented in the solicitation is not
available to beneficiaries.

	 	•	 	The sponsor does not provide an adequate grievance process.

	 	•	 	Pricing/Co-Pays

	 	•	 	Enrollees do not have access to negotiated prices.

	 	•	 	Pharmacies (sponsors) are charging more than the lower of the
price based on negotiated prices or the U&C price.

	 	•	 	TA beneficiaries are not being charged the proper
co-insurance based on beneficiary status (e.g., 100% of FPL or 135% of FPL).

	 	•	 	Customer Service

	 	•	 	Sponsors do not have an accessible toll-free number for
providing, upon request, specific information such as negotiated prices and
amount of transitional assistance remaining available through the program.

	 	•	 	Sponsors are not meeting their self-reported timeframes for
customer service.

	 	•	 	Sponsors do not provide the required level of service to
non-English speakers and the hearing impaired.

	 	•	 	Sponsors are not providing accurate and/or timely information
about the card.

	 	•	 	Confidentiality

	 	•	 	Sponsors are not meeting HIPAA requirements (after HIPAA
provisions are implemented).

	 	•	 	Sponsors are using enrollee information to market products
outside of the drug card provisions (e.g., are sponsors selling member
mailing lists).

	 	•	 	Pharmacies
oPharmacies cannot access sponsor information in a timely manner.
oPharmacies are not getting paid by the sponsor in a timely manner.

	 	•	 	Other (if grievance does not fit into one of the above categories)

6EX-10.2

APPENDIX X

	 	 	 	 	 
	Agency Code: 12000 (Health)	 	Contract Number: C-014386
	Period: October 1, 1997 through June 30, 2005	 	Funding Amount for Period: No change

This is an AGREEMENT between THE STATE OF NEW YORK, acting by and through the Department of
Health, having it’s principal office at Corning Tower, Empire State Plaza, Albany, NY,
(hereinafter referred to as the STATE), and Wellcare of New York, Inc.(hereinafter
referred to as the CONTRACTOR), for modification of Contract Number C-014386 as amended as
follows:

Appendix ., Section II, entitled “Obligation and Activities of the Business Associate” paragraphs
(b) and (d) are hereby amended to comply with new federal Health Insurance Portability and
Accountability (“HIPAA”) regulations governing security of electronic information by addition of
new provisions, appearing here in italics.

(b) The Business Associate agrees to use the appropriate safeguards to prevent use of disclosure
of the Protected Health Information other than as provided for by this Agreement and to implement
administrative, physical and technical safeguards that reasonably and appropriately protect the
confidentiality, integrity and availability of any electronic Protected Health Information that it
creates, receives, maintains or transmits on behalf of the Covered Entity pursuant to this
Agreement.

(d) The Business Associate agrees to report to the Covered Program, any use or disclosure of the
Protected Health Information not provided for by this Agreement, as soon as reasonably practicable
of which it becomes aware. The Business Associate also agrees to report to the Covered Entity any
security incident of which it becomes aware.

All other provisions of said AGREEMENT shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as of the dates appearing under
their signatures.

	 	 	 	 	 
	     

	 	     
	 	

	 
	 	 	 	 
	CONTRACTOR SIGNATURE

	 	STATE AGENCY SIGNATURE
	 	

	 
	 	 	 	 
	By: /S/ Todd S. Farha

	 	By: /S/ Judith Arnold
	 	

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	Todd S. Farha

	 	Judith Arnold
	 	

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	Title: President & Chief Executive Officer

	 	Title: Deputy Commissioner
	 	

	 
	 	 	 	 
	 	 	Division of Planning, Policy, and Resource Development

	 
	 	 	 	 
	Date: 03/29/05

	 	Date: 04/01/05
	 	

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	
 
	 	State Agency Certification

•
	 	

“In addition to the acceptance of the contract.

	 	•	 	I also certify that original copies of this

	 	•	 	signature page will be attached to all other

	 	•	 	exact copies of this contract.”

     

	 	 	 	 	 
	STATE OF FLORIDA
	 	 	)	 
	 
	 	)  SS.:

COUNTY OF HILLSBOROUGH

On the 29th day of March 2005, before me personally appeared Todd S. Farha, to me
known, who being by me duly sworn, did depose and say that he resides at Tampa, Florida, that he is
the President & Chief Executive Officer of the WellCare of New York, Inc., the corporation
described herein which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of said corporation.

 /S/ Kathleen R. Casey  

(Notary) Kathleen R. Casey

STATE COMPTROLLER’S SIGNATURE

Title:     

Date:     04/18/05

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]