CMS Pub. 100-18, ch. 12, § 20.4

Waiver of Uniform Premium Requirement

The uniform premium requirement (see 42 CFR §423.286(a)) has been waived for entities

offering “800 series” plans under certain circumstances. Under this waiver of the uniform

premium requirement, entities offering “800 series” plans serving multiple regions or the

nation will be allowed to vary premium and cost sharing between defined market areas within

the same employer/union sponsored group plan. This waiver is contingent on the requirement

that the market areas (geographic areas) within the employer sponsored group plan with

premium variation are based on objective market information demonstrating verifiable

differences in drug costs between these market areas. The PDP sponsor must have

documentation validating the drug cost variation in these market areas comprising the plan.

PDP sponsors will be required to retain all of these documents and must provide access to this

documentation for inspection or audit by CMS (or its designee) in accordance with the

requirements of 42 CFR 423.504(d) and 423.505(d) and (e).

Premium Subsidization by Employer/Union Group Health Plan Sponsors

Under its waiver authority, CMS will allow the employer/union sponsoring the PDP flexibility

in determining how much of a plan enrollee’s Part D monthly beneficiary premium it will

subsidize, subject to the conditions set forth below.

First, an employer/union sponsor can subsidize different amounts for different classes of

enrollees in a plan provided such classes are reasonable and based on objective business

criteria, such as years of service, date of retirement, business location, job category, and

nature of compensation (e.g., salaried vs. hourly). Different classes cannot be based on

eligibility for the Part D Low-Income Subsidy. Second, the premium cannot vary for

individuals within a given class of enrollees. Third, with regard to the Part D premium, an

employer/union cannot charge an enrollee for prescription drug coverage provided under the

PDP more than the sum of his or her monthly beneficiary premium attributable to basic

prescription drug coverage and 100% of the monthly beneficiary premium attributable to his

or her non-Medicare Part D benefits (if any). The employer/union must pass through any

direct subsidy payments received from CMS to reduce the amount that the beneficiary pays

(or in those instances where the subscriber to or participant in the employer/union-only plan

pays premiums on behalf of a Medicare eligible spouse or dependent, the amount the

subscriber or participant pays).

As a condition of CMS providing these particular waivers, PDP sponsors that offer “800

series” PDPs to employers/unions will be required to obtain in writing from such

employers/unions their agreement that they will satisfy the requirements of this waiver with

respect to the premiums charged to their participants. Also, PDP sponsors will be required to

retain these agreements with employers/unions and provide access to these written agreements

to CMS (or its designees) in accordance with 42 CFR 423.504(d) and 423.505(d) and (e).

Charging Different Premiums to Different Employer/Union Group Health Plan Sponsors

In addition to the flexibilities outlined above for employers/unions to subsidize different

amounts of an enrollee’s premium contribution, “800 series” PDPs have the flexibility to

negotiate with and vary the premium charged to particular employer/union group health plan

sponsors. This includes the ability to “experience rate” “800 series” employer/union group

health plan sponsors in determining these premiums.