CMS Pub. 100-18, ch. 12, § 10.1

CMS has statutory authority to waive or modify requirements that hinder the design of, the

offering of, or the enrollment in, employer/union sponsored standalone prescription drug plans

(PDPs). This statutory authority, set forth in section 1860D-22(b) of the Social Security Act

(the “Act”), provides:

(b) Application of MA Waiver Authority. – The provisions of section 1857(i) shall apply

with respect to prescription drug plans in relation to employment-based retiree health

coverage in a manner similar to the manner in which they apply to an MA plan in relation

to employers, including authorizing the establishment of separate premium amounts for

enrollees in a prescription drug plan by reason of such coverage and limitations on

enrollment to part D eligible individuals enrolled in such coverage.1

Under this specific statutory authority, in order to facilitate the offering of PDPs to

employer/union group health plan sponsors, CMS may grant waivers and/or modifications to

PDP sponsors. When exercising its discretion to grant these waivers or modifications, each

waiver or modification will be conditioned upon the PDP sponsor meeting a set of defined

circumstances and complying with a set of conditions. PDP sponsors offering employer

group plans must comply with all Part D requirements unless those requirements have been

specifically waived or modified.

Waivers/modifications may be granted to PDP sponsors offering “individual” PDPs or PDP

sponsors offering customized employer group PDPs offered exclusively to employer/union

group health plan sponsors. Individual PDPs are open to both individual Medicare

beneficiaries and employer/union sponsored group health plans’ Part D eligible beneficiaries.

Customized employer group PDPs offered exclusively to employer/union group health plan

sponsors include: (1) plans offered by PDP sponsors to employers/unions (these plans are

hereinafter referred to as “800 series” plans because their plan benefit packages are

enumerated in the CMS Health Plan Management System (HPMS) with identifiers in the 800s

to distinguish them from individual plans offered by PDP sponsors); and (2) plans offered by

employers/unions that directly contract with CMS (hereinafter referred to as “Direct Contract”

plans). These “800 series” and Direct Contract PDPs are referred to collectively as

employer/union-only group waiver plans (“EGWPs”).

Note that CMS’ employer group waiver authority only applies to the Part D portion of the

coverage provided by Cost Plans, not Parts A and B. Thus, Cost Plans may only use the Part

1 Section 1857(i) of the Act, which applies to Medicare Advantage Organizations, provides as follows: To

facilitate the offering of [Medicare Advantage] plans under contracts between [Medicare Advantage]

organizations and employers, labor organizations, or the trustees of a fund established by one or more employers

or labor organizations (or combination thereof) to furnish benefits to the entity’s employees, former employees

(or combination thereof) or members or former members (or combination thereof) of the labor organizations, the

Secretary may waive or modify requirements that hinder the design of, the offering of, or the enrollment in such

[Medicare Advantage] plans.

D waiver authority to offer Part D EGWPs as an optional supplemental benefit. Therefore,

Cost Plans with supplemental Part D benefits will only qualify for the employer/union group

health plan waivers applicable to Part D. See Pub. 100-16, Medicare Managed Care Manual,

Chapter 17 (Cost Based Payment), Subchapter F (Benefits and Beneficiary Protections),

Section 60.