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“BenefitsLink continues to be the most valuable resource we have at the firm.”

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Guest Article

(From the February 21, 2005 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

CMS Issues Class Waivers for Employers' Medicare Part D Plans

On February 11, 2005, the Centers for Medicare and Medicaid Services (CMS) released its first employer waivers authorized under the Medicare Modernization Act. These six general waivers for employer or union-operated Medicare Part D prescription drug plans are class waivers available to any employer or union plans that otherwise meet the Part D rules. Plans are not required to file for the waiver or even inform CMS that the plan will be using the waiver. The waivers cover the following rules.

Part D Timeline for Retiree Group Plans-- The deadlines for Part D plan submissions begin with a notice of intent to apply, which has a February 18, 2005 deadline. For plan year 2006, CMS has extended deadlines for Part D or MA Plans operated by employers or unions. The retiree group plan dates are: (1) March 23, 2005 for the notice of intent to apply for status as a plan; (2) April 18, 2005 to submit PDP or MA-PD applications to CMS; and (3) December 6, 2005 to submit PDP or MA-PD formularies to CMS. Additional deadline changes for submitting employer-sponsored prescription drug coverage bids will be announced.
State Licensure and Solvency Requirements-- An employer or union applying to become a PDP or MA-PD solely to provide prescription drug coverage to its retirees will not have to meet state licensing requirements as a condition of being a Medicare prescription drug sponsor. These applicants will have to certify that they meet CMS's planned solvency standards and/or have other safeguards in place. (The waiver does not discuss the details of this certification. Presumably, these certification requirements will be released later in the year.)
Governmental Entity Requirements-- To the extent state and local government retirement plans offer prescription drug plans to their retirees, CMS will waive the bar on state and local governments operating as a PDP or MA-PD.
Enrollment Requirements-- While other PDPs or MA-PD plans must offer coverage to all Medicare eligible individuals in their service areas, employer or union-sponsored group plans approved as PDPs or MA-PD plans may restrict enrollment solely to their retirees.
Service Area Requirements-- Generally PDPs or MA-PD plans may offer coverage only to retirees in their coverage region. Employers/unions which directly contract with CMS to sponsor their own PDP or MA-PD plans may cover all of their retirees, regardless of where the retirees reside in the nation.
Minimum Enrollment Requirements-- CMS will waive the minimum enrollment requirement for employer/union-sponsored retiree group plans approved as PDPs or MAPD plans.

To view the waiver notice click here.

CMS's Shifting Views on Waivers

CMS's attitude about the scope of its waivers seems to be evolving over time. In the preamble to the proposed regulations, CMS maintained its waiver authority is extremely limited with respect to employers. Rather than listing the types of waivers it might grant, the preamble listed the types of employer waivers CMS would not consider. And in public meetings CMS spokespersons frequently emphasized its limited waiver authority. In spite of the final rule's waiver provisions that closely track the earlier proposal, more recently CMS has repeatedly stressed it would attempt to use the waiver authority broadly.

Nevertheless, this first round of waivers again emphasizes the waiver authority will be extended only after weighing policy goals including:

providing group plan sponsors with maximum flexibility and minimum administrative burden with regard to requirements that would hinder the design of, the offering of, or the enrollment in, Part D plans offered to their retirees so plan sponsors will keep offering - and retirees can retain - high quality retiree prescription drug coverage;
adhering to budgetary constraints; and
considering the appropriate protections that Medicare enrollees may expect when enrolling in a Part D plan.

CMS intends to release additional waiver guidance detailing other employer group waivers CMS will approve soon. These waivers are expected to include marketing materials requirements, drug formulary requirements, and pharmacy access requirements, among others. CMS will also consider additional waiver requests relating to specific requirements on a case-by-case basis.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Bart Massey 202.220.2104, Elizabeth Drigotas 202.879.4985, Diane McGowan 202.220.2077, Taina Edlund 202.879.4956, Martha Priddy Patterson 202.879.5634, Laura Edwards 202.879.4981, Tom Pevarnik 202.879.5314, Mike Haberman 202.879.4963, Tom Veal 312.946.2595, Stephen LaGarde 202.879.5608, Deborah Walker 202.879.4955, J.D. Lutz 202.879.5366

BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above.