CMS Pub. 100-16, ch. mc86c17f, § 10.4

(Rev. 77, Issued: 10-28-05, Effective Date: 10-28-05)

(70 FR 4243, Jan 28, 2005) A Medicare cost plan offering a cost plan may, but is not

required to, offer prescription drug coverage. There are three methods of offering

prescription drug coverage in a cost plan:

1) No Offering of a Part D Plan

The Medicare cost plan may elect not to offer qualified Part D coverage. In such

a case the Medicare cost plan may offer non-qualified prescription drug coverage

as an optional supplemental benefit. This non-qualified prescription drug

coverage may be, but is not required to be, creditable, as defined in 42 CFR

423.56. Enrollees of a cost plan not offering qualified Part D coverage may elect

to concurrently enroll in a Prescription Drug Plan (PDP).

2) Offering of Basic, Part D Coverage

An organization may elect to offer a Medicare cost plan that provides basic part

D coverage. If the organization so elects, then this Part D coverage must be

offered as an optional supplemental benefit; that is, an enrollee has the option,

but not the obligation, to purchase Part D coverage under the plan. All enrollees

who purchase the Part D coverage offered by the Medicare cost plan must

receive coverage of Part A and Part B, [or Part B only (for beneficiaries who are

not entitled to Part A)] benefits under that cost plan. If the enrollee elects not to

elect the Part D coverage offered by the Medicare cost plan, then such an

enrollee may concurrently enroll in a Prescription Drug Plan (PDP). A

Medicare cost plan offering qualified Part D coverage, may not offer non-qualified prescription drug coverage. (See 42 CFR 423.104(f)(4).)

3) Offering of Both Basic and Enhanced Alternative Part D Coverage

The Medicare cost plan may elect to offer both basic and enhanced alternative

Part D coverage as optional supplemental benefits. An enrollee may then elect to

either: (a) Purchase the basic Part D coverage; (b) Purchase the enhanced

alternative Part D coverage; or (c) To purchase neither. If the enrollee elects not

to elect part D coverage through the cost plan, the enrollee retains his/her right

to concurrently enroll in another Prescription Drug Plan (PDP). A Medicare

cost plan offering qualified Part D coverage, may not offer non-qualified

prescription drug coverage. (See 42 CFR 423.104(f)(4).)

If a Medicare cost plan offers qualified Part D coverage then the funding for the

Part D coverage is separate from the CMS funding for Part A and/or B coverage

(42 CFR 417.534(c)). Consequently, a Medicare cost plan may not apply

reductions or non-collection of deductibles and coinsurance for Part A and/or B

services to subsidize Part D coverage.

See §60 of this chapter for information on benefits in a Medicare cost employer

group health plan.