CMS Pub. 100-16, ch. 8, § 60.2

Effective CY 2006, there are three general Part C payment rules for bid-based payments for

aged and disabled enrollees of CCPs and PFFS plans, summarized in Figure 1. See §70.2

for ESRD Enrollee Payment Rules and §70.3 for payment rules for enrollees who have

elected hospice.

Under the bidding methodology, per capita payment rates are plan-specific, because they

are calculated as the standardized (“1.0”) plan bid multiplied by the plan’s county ISAR

factor. (See §60.3.1 on the ISAR factor.)

Figure 1. Part C Payments for CCPs and PFFS

Plans

Rule 1. Payment of bid for plans with bids below benchmark. CMS’s advance monthly

payment for an enrollee is:

• The standardized bid for the plan (referred to at 42 CFR 422.304 as the unadjusted

MA statutory non-drug monthly bid amount) adjusted by the county ISAR factor

for the enrollee’s county of residence, and adjusted by the enrollee’s risk score.

Figure 1 refers to this quantity as the plan-specific ISAR-adjusted county rate; plus

• The rebate amounts allocated to non-prescription drug benefits (reduction of A/B

cost sharing and reduction of premiums for additional non-drug benefits) and the

Part D supplemental benefit.

The amount by which the plan reduces enrollees’ Part B premium is a foregone revenue

that remains in the Treasury, allowing CMS and SSA to decrease the enrollee’s Part B

premium by this amount. The amount by which the plan reduces the basic Part D

premium is reflected in CMS’ Part D payment to the plan.

Rule 2. Payment of bid for plans with bids equal to the benchmark. CMS’s advance

monthly payment for an enrollee is the standardized bid, adjusted by the county ISAR

factor for the enrollee’s county of residence, and adjusted by the enrollee’s risk score.

Rule 3. Payment of benchmark for plans with bids above the benchmark. CMS’s

advance monthly payment for an enrollee is:

Plan-specific ISAR-adjusted county rate

Rule 1. Monthly Per Capita Part C Payment for CCPs and PFFS Plans with Bid >

Benchmark

X

Risk

Score for

Enrollee

+

Rebate amounts for non-prescription drug benefits

+ rebate amount for Part D

supplemental benefits

Rules 2 & 3: Monthly Per Capita Part C Payment for CCPs and PFFS Plans with Bid ≤

Benchmark:

x

Plan-specific ISAR-adjusted county rate

Risk Score

for

Enrollee

-

Standardized

Beneficiary

Premium

• The standardized bid for the plan adjusted by the county ISAR factor for the

enrollee’s county of residence, and adjusted by the enrollee’s risk score; minus

• The standardized beneficiary basic A/B premium, which is the difference between

the standardized A/B bid and the standardized A/B benchmark.

Note on terminology. For bid-equal-benchmark plans and bid-above-benchmark plans, the

statute describes the base payment as the standardized benchmark, described at 42 CFR

422.304 as the unadjusted MA statutory non-drug monthly benchmark amount.

Here, we apply bid-based logic to describe payment formulas for Rules 2 and 3 – where the

bid minus the basic beneficiary premium is the benchmark. For Rule 2 plans with bid-equal-benchmark, the beneficiary premium is zero. For Rule 3 plans, the bid-based logic is

that the plan receives its bid through two revenue streams: (1) CMS’ benchmark payment

and (2) the enrollee premium payment. See §60.4 on the government premium adjustment

for Rule 3 plans.

Payment calculation in CMS’ systems are determined separately for Part A and Part B.

Part-B only plans are paid the Part B portion of the payment.