Medicare_Prescription Drug Coverage

To provide prescription drugs to Medicare beneficiaries through their voluntary participation in prescription drug plans, with an additional subsidy provided to lower-income beneficiaries.

Agency - Department of Health and Human Services

The Department of Health and Human Services is the Federal government's principal agency for protecting the health of all Americans and providing essential human services, especially to those who are least able to help themselves.

Website Address

Program Accomplishments

As of January 30, 2007, approximately 39 million enrollees had comprehensive drug coverage.

Uses and Use Restrictions

Payments will be made to participating prescription drug plans.

Eligibility Requirements

Applicant Eligibility

A non-governmental entity organized and licensed under State law as a risk-bearing entity eligible to offer health insurance in each State in which it is to offer a plan, meeting the requirements in 42 CFR 423.504 and 42 CFR 423.505.

Beneficiary Eligibility

Individuals who are entitled to Medicare benefits under Part A or enrolled in Part B, who reside in the plan's service area, and who are not enrolled in a Medicare Advantage plan, other than a Medicare savings account plan or private fee-for-service plan that does not provide qualified prescription drug coverage.



Aplication and Award Process

Preapplication Coordination

This program is excluded from coverage under E.O.


Application Procedures

Potential sponsors apply to CMS to become an approved prescription drug plan. Generally, individuals enroll directly with the prescription drug program sponsor. The sponsor forwards the enrollment and eligibility information to CMS, which verifies eligibility for the drug benefit. Some individuals who are entitled to both Medicare and Medicaid have been enrolled automatically. Low income beneficiaries may complete a subsidy application at any Social Security office or through their State Medicaid office.

Award Procedures

Payment will be made by CMS to the prescription drug plan sponsors.


Beneficiaries must enroll according to the enrollment periods specified in 42 CFR 423.38. Plans must submit bids by the first Monday in June of the year proceeding the calendar year they wish to participate.


Authorized under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Public Law 108-173, as Section 1860D of the Social Security Act.

Range of Approval/Disapproval Time

Up to six months for plan sponsors.


Sponsors whose applications to become a prescription drug plan sponsor are rejected have the right to a reconsideration and appeal process. Beneficiaries have the right to a reconsideration and appeal process for adverse coverage determinations.


Contracts with sponsors may be renewed annually. Beneficiaries may enroll and disenroll from plans according to the timeframes established in 42 CFR 423.30-423.46.

Assistance Considerations

Formula and Matching Requirements


Length and Time Phasing of Assistance


Post Assistance Requirements


Plans must provide periodic reports to CMS, enrollees and the general public on cost; utilization; availability, accessibility and acceptability of services; fiscal soundness and other information required by CMS.

Plans must provide an annual report of business transactions and combined financial statements.

Also, reports as required under the Employee Retirement Income Security Act of 1974.


Periodic audits of plans by HHS, the Comptroller General or their designees. Periodic audits by CMS and the HHS Office of Inspector General (OIG) of plan cost reporting. Audit by CMS of financial records of at least one-third of participating plans every year.



Financial Information

Account Identification



(Benefit Outlays) FY 07 $49,103,284,000; FY 08 est $45,087,000,000; and FY 09 est $54,815,000,000.

Range and Average of Financial Assistance

Determined by plan offerings,number of enrollees and utilization.

Regulations, Guidelines, and Literature

Regulations governing this program were authorized under Section 1860D of the Social Security Act, as enacted under Public Law 108-173, and were published on January 21, 2005.

Information Contacts

Regional or Local Office


Headquarters Office

Program Contacts: Eligibility and enrollment: Lynn Orlosky, Centers for Medicare and Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. Telephone: (410) 786-9064. Benefits and beneficiary protections: Vanessa Duran, Centers for Medicare and Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. Telephone: (214) 767-6435. Plan bidding process: Mark Newsom, Centers for Medicare and Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. Telephone: (410) 786-3198.

Criteria for Selecting Proposals


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Edited by: Michael Saunders

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