42 U.S.C. § 1395w–131: Application to Medicare…

§1395w–131 Application to Medicare Advantage Program and Related Managed Care Programs

Title 42 › CHAPTER 7 — SOCIAL SECURITY › SUBCHAPTER XVIII — HEALTH INSURANCE FOR AGED AND DISABLED › Part D — Voluntary Prescription Drug Benefit Program › subpart 3 — application to medicare advantage program and treatment of employer-sponsored programs and other prescription drug plans › § 1395w–131

Last updated Sep 22, 2026|Official source

Summary

Starting January 1, 2006, Medicare Advantage (MA) organizations must make sure that any MA plan they offer in a given area either includes required prescription drug coverage or that the organization offers another plan in the same area that does. MA organizations may not offer prescription drug benefits (beyond original Medicare Parts A and B) through MSA plans. Other MA plans can only offer drug coverage if that coverage meets the rules for qualified prescription drug coverage. "Required coverage" for an MA–PD plan means either basic prescription drug coverage or supplemental drug coverage that does not charge a monthly supplemental premium because a rebate is used to offset that premium. The rules also say that people are only treated as having been moved into an MA–PD plan by default if their prior plan already had some drug coverage. If someone stops an MA–PD plan in their first year, they may sign up for a standalone Part D plan when they return to original Medicare. If an organization stops offering MA plans that lack qualified drug coverage, affected enrollees are assumed to go back to original Medicare unless they actively pick an MA–PD plan; that move counts as an involuntary termination for certain purposes and must be explained in plan materials. Part D rules generally apply to MA–PD drug benefits, though the Secretary can waive duplicate or conflicting rules and may allow MA-owned pharmacies (not mail-order) to count as sufficient access if the network is adequate. Special exceptions apply to private fee-for-service plans that offer drug coverage: they are not required to provide negotiated pharmacy prices, may be exempt from some pharmacy access and disclosure rules if they cover drugs from all pharmacies without extra cost-sharing, are not required to have certain drug management or therapy programs, have reinsurance and other financial rules adjusted by the Secretary, and are exempt from some bidding and risk corridor rules. Organizations providing drugs under reasonable cost contracts or PACE programs may follow similar Part D rules if they choose to offer qualified drug coverage, but they cannot enroll people who are not already in that contract or program, and their bids are not counted in the national or benchmark bid calculations.

Title 42, §1395w–131

The Public Health and Welfare, Source: USLM XML via OLRC

(a)Special rules relating to offering of qualified prescription drug coverage

(1)In general

An MA organization on and after January 1, 2006—

(A)may not offer an MA plan described in section 1395w–21(a)(2)(A) of this title in an area unless either that plan (or another MA plan offered by the organization in that same service area) includes required prescription drug coverage (as defined in paragraph (2)); and

(B)may not offer prescription drug coverage (other than that required under parts A and B) to an enrollee—

(i)under an MSA plan; or

(ii)under another MA plan unless such drug coverage under such other plan provides qualified prescription drug coverage and unless the requirements of this section with respect to such coverage are met.

(2)Qualifying coverage

For purposes of paragraph (1)(A), the term “required coverage” means with respect to an MA–PD plan—

(A)basic prescription drug coverage; or

(B)qualified prescription drug coverage that provides supplemental prescription drug coverage, so long as there is no MA monthly supplemental beneficiary premium applied under the plan (due to the application of a credit against such premium of a rebate under section 1395w–24(b)(1)(C) of this title).

(b)Application of default enrollment rules

(1)Seamless continuation

In applying section 1395w–21(c)(3)(A)(ii) of this title, an individual who is enrolled in a health benefits plan shall not be considered to have been deemed to make an election into an MA–PD plan unless such health benefits plan provides any prescription drug coverage.

(2)MA continuation

In applying section 1395w–21(c)(3)(B) of this title, an individual who is enrolled in an MA plan shall not be considered to have been deemed to make an election into an MA–PD plan unless—

(A)for purposes of the election as of January 1, 2006, the MA plan provided as of December 31, 2005, any prescription drug coverage; or

(B)for periods after January 1, 2006, such MA plan is an MA–PD plan.

(3)Discontinuance of MA–PD election during first year of eligibility

In applying the second sentence of section 1395w–21(e)(4) of this title in the case of an individual who is electing to discontinue enrollment in an MA–PD plan, the individual shall be permitted to enroll in a prescription drug plan under part D at the time of the election of coverage under the original medicare fee-for-service program.

(4)Rules regarding enrollees in MA plans not providing qualified prescription drug coverage

In the case of an individual who is enrolled in an MA plan (other than an MSA plan) that does not provide qualified prescription drug coverage, if the organization offering such coverage discontinues the offering with respect to the individual of all MA plans that do not provide such coverage—

(i)the individual is deemed to have elected the original medicare fee-for-service program option, unless the individual affirmatively elects to enroll in an MA–PD plan; and

(ii)in the case of such a deemed election, the disenrollment shall be treated as an involuntary termination of the MA plan described in subparagraph (B)(ii) of section 1395ss(s)(3) of this title for purposes of applying such section.

The information disclosed under section 1395w–22(c)(1) of this title for individuals who are enrolled in such an MA plan shall include information regarding such rules.

(c)Application of part D rules for prescription drug coverage

With respect to the offering of qualified prescription drug coverage by an MA organization under this part on and after January 1, 2006—

(1)In general

Except as otherwise provided, the provisions of this part shall apply under part C with respect to prescription drug coverage provided under MA–PD plans in lieu of the other provisions of part C that would apply to such coverage under such plans.

(2)Waiver

The Secretary shall waive the provisions referred to in paragraph (1) to the extent the Secretary determines that such provisions duplicate, or are in conflict with, provisions otherwise applicable to the organization or plan under part C or as may be necessary in order to improve coordination of this part with the benefits under this part.

(3)Treatment of MA owned and operated pharmacies

The Secretary may waive the requirement of section 1395w–104(b)(1)(C) of this title in the case of an MA–PD plan that provides access (other than mail order) to qualified prescription drug coverage through pharmacies owned and operated by the MA organization, if the Secretary determines that the organization’s pharmacy network is sufficient to provide comparable access for enrollees under the plan.

(d)Special rules for private fee-for-service plans that offer prescription drug coverage

With respect to an MA plan described in section 1395w–21(a)(2)(C) of this title that offers qualified prescription drug coverage, on and after January 1, 2006, the following rules apply:

(1)Requirements regarding negotiated prices

Subsections (a)(1) and (d)(1) of section 1395w–102 of this title and section 1395w–104(b)(2)(A) of this title shall not be construed to require the plan to provide negotiated prices (described in subsection (d)(1)(B) of such section), but shall apply to the extent the plan does so.

(2)Modification of pharmacy access standard and disclosure requirement

If the plan provides coverage for drugs purchased from all pharmacies, without charging additional cost-sharing, and without regard to whether they are participating pharmacies in a network or have entered into contracts or agreements with pharmacies to provide drugs to enrollees covered by the plan, subsections (b)(1)(C) and (k) of section 1395w–104 of this title shall not apply to the plan.

(3)Drug utilization management program and medication therapy management program not required

The requirements of subparagraphs (A) and (C) of section 1395w–104(c)(1) of this title shall not apply to the plan.

(4)Application of reinsurance

The Secretary shall determine the amount of reinsurance payments under section 1395w–115(b) of this title using a methodology that—

(A)bases such amount on the Secretary’s estimate of the amount of such payments that would be payable if the plan were an MA–PD plan described in section 1395w–21(a)(2)(A)(i) of this title and the previous provisions of this subsection did not apply; and

(B)takes into account the average reinsurance payments made under section 1395w–115(b) of this title for populations of similar risk under MA–PD plans described in such section.

(5)Exemption from risk corridor provisions

The provisions of section 1395w–115(e) of this title shall not apply.

(6)Exemption from negotiations

Subsections (d) and (e)(2)(C) of section 1395w–111 of this title shall not apply and the provisions of section 1395w–24(a)(5)(B) of this title prohibiting the review, approval, or disapproval of amounts described in such section shall apply to the proposed bid and terms and conditions described in section 1395w–111(d) of this title.

(7)Treatment of incurred costs without regard to formulary

The exclusion of costs incurred for covered part D drugs which are not included (or treated as being included) in a plan’s formulary under section 1395w–102(b)(4)(C)(i) of this title shall not apply insofar as the plan does not utilize a formulary.

(e)Application to reasonable cost reimbursement contractors

(1)In general

Subject to paragraphs (2) and (3) and rules established by the Secretary, in the case of an organization that is providing benefits under a reasonable cost reimbursement contract under section 1395mm(h) of this title and that elects to provide qualified prescription drug coverage to a part D eligible individual who is enrolled under such a contract, the provisions of this part (and related provisions of part C) shall apply to the provision of such coverage to such enrollee in the same manner as such provisions apply to the provision of such coverage under an MA–PD local plan described in section 1395–21(a)(2)(A)(i) of this title and coverage under such a contract that so provides qualified prescription drug coverage shall be deemed to be an MA–PD local plan.

(2)Limitation on enrollment

In applying paragraph (1), the organization may not enroll part D eligible individuals who are not enrolled under the reasonable cost reimbursement contract involved.

(3)Bids not included in determining national average monthly bid amount

The bid of an organization offering prescription drug coverage under this subsection shall not be taken into account in computing the national average monthly bid amount and low-income benchmark premium amount under this part.

(f)Application to PACE

(1)In general

Subject to paragraphs (2) and (3) and rules established by the Secretary, in the case of a PACE program under section 1395eee of this title that elects to provide qualified prescription drug coverage to a part D eligible individual who is enrolled under such program, the provisions of this part (and related provisions of part C) shall apply to the provision of such coverage to such enrollee in a manner that is similar to the manner in which such provisions apply to the provision of such coverage under an MA–PD local plan described in section 1395w–21(a)(2)(A)(ii) of this title and a PACE program that so provides such coverage may be deemed to be an MA–PD local plan.

(2)Limitation on enrollment

In applying paragraph (1), the organization may not enroll part D eligible individuals who are not enrolled under the PACE program involved.

(3)Bids not included in determining standardized bid amount

The bid of an organization offering prescription drug coverage under this subsection is not be taken into account in computing any average benchmark bid amount and low-income benchmark premium amount under this part.

Editorial Notes

Amendments

2022—Subsec. (d)(7). Pub. L. 117–169 substituted “section 1395w–102(b)(4)(C)(i)” for “section 1395w–102(b)(4)(B)(i)”.

§1395w–131 Application to Medicare Advantage Program and Related Managed Care Programs

Summary

Title 42, §1395w–131

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata