CMS Pub. 100-18, ch. 12, § 20.12.2

Benefits provided to EGWP enrollees cannot vary based on the Part D eligible’s LIS

eligibility. In addition, for an LIS Part D eligible enrollee in an EGWP, CMS will subsidize

only those cost-sharing obligations actually imposed on the Part D eligible under the plan,

which includes any supplemental prescription drug coverage offered by the employer/union

group health plan sponsor, with the supplemental coverage primary to the LIS program.

For example, an “800 series” PDP that provides benefits exclusively to employer X’s Part D

eligibles has a $100 deductible. For expenses incurred by a full subsidy eligible individual,

CMS’ payments to the plan will be determined based on that $100 deductible (minus any

minimal co-pays an individual is responsible for under 42 CFR 423.782(a)). CMS payments

will not be based on the plan having a $265 deductible (as reflected in Part D defined standard

prescription drug coverage).

As noted above, beginning with the 2008 contract year, PDP sponsors are no longer required

to submit Part D EGWP bids. As a result, beginning in 2008, CMS will not pay interim

prospective LIS cost sharing amounts to EGWPs because these amounts are directly derived

from Part D bids. Instead, as a condition of the waiver of the requirements to submit a Part D

bid, CMS will make LICS payments during the normal year-end reconciliation process.