Medicare Transitional Drug Assistance Program for States

To provide Federal funding for transitional assistance to certain low-income Medicare beneficiaries, for the purchase of prescription drugs as referenced in Section 1860D-31(b)(2) of the Act.

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

In fiscal year 2004 credits are to be made available to each transitional-assistance eligible Medicare beneficiary electing to participate in the program.

Uses and Use Restrictions

Credits will be administered through private discount card sponsors in accordance with the requirements of 42 CFR 403.806, 403.808, and 403.816 for the transitional assistance benefit.

Eligibility Requirements

Applicant Eligibility

A non-governmental, single legal entity doing business in the United States; having three years of private sector experience in the United States in pharmacy benefit management; and at the time of application for Medicare endorsement, it or a subcontractor, operates a pharmacy benefit program, a prescription drug discount card program, a low-income drug assistance program, or a similar program that serves at least one million covered lives and meets the requirements in 42 CFR 403.804 and 42 CFR 403.806.

Beneficiary Eligibility

Individuals who are Medicare beneficiaries, and whose income is not more than 135 percent of the poverty line. To qualify, beneficiaries must not receive outpatient drug coverage from other sources, including Medicaid, TRICARE, group health insurance or Federal Employee Health Benefit Plans (FEHBP), except if the drug coverage is through a Part C Medicare+Choice plan or a Medigap plan. Individuals must have been enrolled in the program by December 31, 2005.



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 drug discount card sponsor, to administer transitional assistance funds. Beneficiaries complete an enrollment form, which includes eligibility information, and submit it to an approved sponsor. The sponsor forwards the enrollment and eligibility information to CMS, which verifies eligibility for the card and for transitional assistance.

Award Procedures

Transitional assistance funds are drawn down by sponsors through the CMS payments management system on behalf of their transitional assistance enrollees, as the $600 credit is used by beneficiaries to pay for covered discount card drugs.


No further funds are available after the date on which the beneficiary enrolls in the new Medicare Part D drug benefit (first available on January 1, 2006), and in any case not beyond May 15, 2006 (for the beneficiary who does not enroll in Part D by the end of its initial enrollment period).


Authorized under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-73, Section 1860D-31 of the Social Security Act (the Act).

Range of Approval/Disapproval Time

19 months.


Sponsors whose applications to become an approved discount card sponsor are rejected have the right to a reconsideration process. Beneficiaries who are found by CMS to be ineligible for transitional assistance have the option of filing for reconsideration in accordance with 42 CFR 403.810(g).



Assistance Considerations

Formula and Matching Requirements

This program has no matching requirements.

Length and Time Phasing of Assistance

Project Period: May 3, 2004 through May 15, 2006.

Post Assistance Requirements


Periodic reports are due to CMS is accordance with the timeframes established by CMS.


Payment transactions may be audited by the Secretary or his agent.


Financial records, supporting documents, statistical records, and all other records pertinent to the project shall be retained for at least three years or until resolution of any audit questions.

Financial Information

Account Identification



(Benefit Outlays)FY 07 $9,815,000; FY 08 est $0; FY 09 est $0. (Last program benefit adjustments were made in FY 07; program is shut down; no further benefits).

Range and Average of Financial Assistance

Up to $600 in 2004 and 2005 per transitional-assistance eligible Medicare beneficiary electing to participate in the program.

Regulations, Guidelines, and Literature

Regulations governing this program were authorized under Section 1860D-31 of the Social Security Act, as enacted under Public Law 108-73, and were published on December 15, 2003.

Information Contacts

Regional or Local Office


Headquarters Office

Program Contact: Cynthia Moreno, Center for Beneficiary Choices, Health Plan Benefits Group, 7500 Security Boulevard, Baltimore, MD 21244; Telephone: (410) 786-1164.

Criteria for Selecting Proposals


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Edited by: Michael Saunders

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