Coordination of Benefits between Part D Plans and Other Prescription Coverage Providers (CMS-10171)

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CMS Manual System
Pub. 100-18 Medicare Prescription Drug
Benefit Manual
Transmittal

Department of Health &
Human Services (DHHS)
Centers for Medicare &
Medicaid Services (CMS)
Date:

SUBJECT: Release of Chapter 14 - Coordination of Benefits
I. SUMMARY OF CHANGES: The initial publication of Chapter 14 of the Medicare
Prescription Drug Benefit Manual includes information on Coordination of Benefits.
NEW/REVISED MATERIAL - EFFECTIVE DATE*:
IMPLEMENTATION DATE:
Disclaimer for manual changes only: The revision date and transmittal number apply
to the red italicized material only. Any other material was previously published and
remains unchanged. However, if this revision contains a table of contents, you will
receive the new/revised information only, and not the entire table of contents.
II. CHANGES IN MANUAL INSTRUCTIONS: (N/A if manual not updated.)
(R = REVISED, N = NEW, D = DELETED)
R/N/D
N

CHAPTER/SECTION/SUBSECTION/TITLE
14/Entire Chapter

III. FUNDING: No additional funding will be provided by CMS; contractor
activities are to be carried out within their operating budgets.
IV. ATTACHMENTS:
Business Requirements
X Manual Instruction
Confidential Requirements
One-Time Notification
Recurring Update Notification
*Unless otherwise specified, the effective date is the date of service.

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Medicare Prescription Drug Benefit
Manual
Chapter 14 — Coordination of Benefits
Table of Contents
(Rev.)
10 – Introduction
20 – Overview
30 – CMS Requirements
30.1 – Enrollment File Sharing
30.2 – Validation of Information About Other Payers
30.3 – Establishing the Order of Payment for Part D Coordination of Benefits
(COB)
30.4 – Contracting with a TrOOP Facilitation Contractor
30.4.1 –TrOOP Facilitation Process
30.4.2 –Enhancements to E1 Transactions
30.4.3 –Real-time versus Batch Processing
30.4.4 –Enhancements to N1 Transactions
30.4.5 –TrOOP Accounting
30.5 –Assessment of COB User Fees
40 – Beneficiary Requirements
40.1 – Providing Information to Sponsors on Other Coverage
40.2 – Using On-line Processing
40.3 – Submitting Documentation for Off-line Processing on a Timely Basis
50 – Part D Sponsor Requirements
50.1 – Providing 4Rx Data on Primary Coverage
50.2 – Surveying Beneficiaries Regarding Other Prescription Drug Coverage and
Transmitting Such Information to CMS
50.3 – Connecting to Systems Supporting COB
50.4 – Processing Claims and Tracking TrOOP
50.4.1 –Receiving an N1, Without Supplemental Payer on File
50.4.2 – Beneficiary Cash Purchases
50.5 – Standardized Claims Messaging

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50.5.1 – Primary Payer Use of Optional Fields to Support COB
50.6 – Accepting Payment of Premiums From Other Payers
50.7 – Coordinating Payment of a Lump Sum for Supplemental Coverage
50.7.1 – The Risk-Based Combined Uniform Benefit/Lump Sum
Contribution Approach
50.7.2 – The Non-Risk-Based Lump Sum Payment with Claims
Reconciliation Approach
50.8 – Claims Reconciliation Reports
50.9 – Transferring TrOOP Balance When a Beneficiary Changes Part D
Sponsors
50.9.1 – Manual TrOOP Balance Transfer Process
50.9.2 – Automated TrOOP Balance Transfer Process
50.10 – Special Transition Period for Retroactive Enrollment Situations
50.11 – Sharing Formulary Information with Other Payers
50.12 – Sharing Claims Data
50.13 – Applying Medicare Secondary Payer (MSP) Requirements
50.13.1 – Workers’ Compensation
50.13.2 – Flexible Savings Accounts (FSAs), Health Savings Accounts
(HSAs), Archer Medicare Savings Accounts (MSAs), and Health
Reimbursement Accounts (HRAs)
50.14 – Executing Business Associate Agreement with TrOOP Contractor
50.15 – Payment Reconciliation
50.15.1 – Plan-to-Plan Reconciliation during Transition Periods
50.15.2 – Other CMS-Defined Reconciliation Processes
50.15.3 – Retrospective Resolution Directly with Other Payers
50.15.4 –Re-adjudication versus Pharmacy Reprocessing
50.15.5 – Claims Filing Timeframes
60 – Coordination of Benefit Activities of Non-Part D Payers
60.1 – Reporting the Existence of Prescription Drug Coverage Provided to
Enrollees
60.2 – Obtaining and Reporting Rx Identifiers
60.3 – Supplying Claims Information When a Supplemental Payment Is Made
60.4 – Coordinating with Part D Sponsors for Payment of Premiums
60.5 – Following MSP Laws and Order of Payment Standards
60.5.1 –Internal Revenue Service (IRS)/Social Security Administration
(SSA)/CMS Data Match
60.5.2 –FSAs, HSAs, MSAs, and HRAs
Appendix A - TrOOP Facilitation Process

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Appendix B - COB-related Web Sites
Appendix C - COB Survey
Appendix D - Part D Sponsor Implementation Guide Automated TrOOP Balance
Transfer
Appendix E - Issues for Other Entities Providing Prescription Drug Coverage
Appendix F - Part D Requirements Waived for PACE Organizations

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10 – Introduction
(Rev.)
This chapter provides guidance to Part D sponsors regarding our requirements and
procedures for coordination of benefits (COB) with other providers of prescription drug
coverage. The chapter is divided into five main areas:
•

Section 20 – Overview

•

Section 30 – CMS Requirements

•

Section 40 – Beneficiary Requirements

•

Section 50 – Part D Sponsor Requirements

•

Section 60 – Coordination of Benefit Activities of Non-Part D Payers

20 – Overview
(Rev.)
Part D sponsors are required to coordinate with State Pharmaceutical Assistance
Programs (SPAPs) and other providers of prescription drug coverage with respect to the
payment of premiums and coverage, as well as coverage supplementing the benefits
available under Part D. * The Medicare Modernization Act (MMA) specified that these
coordination requirements must relate to the following elements: (1) enrollment file
sharing; (2) claims processing and payment; (3) claims reconciliation reports; (4)
application of the protection against high out-of-pocket expenditures by tracking true outof-pocket (TrOOP) expenditures; and (5) other processes that CMS determines.
When a Medicare Part D enrollee has other prescription drug coverage, COB allows the
plans that provide coverage for this same beneficiary to determine each of their payment
responsibilities. This process is necessary in order to avoid duplication of payment and
to prevent Medicare from paying primary when it is the secondary payer. While this is
the principal purpose of COB within the contexts of Medicare Parts A and B, COB also
serves an additional function within the Part D context: it provides the mechanism for
support of the tracking and calculating of beneficiaries’ “true out-of-pocket” (TrOOP)
expenditures, or “incurred costs” as defined in the MMA and CMS’ implementing
*

Under 42 CFR 423.458(d), Part D requirements may be waived for Programs of All-Inclusive Care for the
Elderly (PACE) organizations if the requirements are determined to be duplicative of, or in conflict with,
provisions that would otherwise be applicable to these organizations. Appendix F provides additional guidance
on the applicability of the COB requirements to PACE organizations.

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regulations. Costs for covered Part D drugs are treated as “incurred” only if they were
paid by the individual (or by another person, such as a family member, on behalf of the
individual), paid by CMS on behalf of a low-income subsidy-eligible individual, or paid
under a qualified SPAP as defined in our regulations. Costs do not count as “incurred”
when: 1) no benefits are provided because of the application of either a formulary or the
Medicare Secondary Payer (MSP) laws, or 2) when costs are reimbursed through
insurance or otherwise, a group health plan, or similar third party arrangement.
Therefore, only certain costs not paid for by the Part D sponsor count toward TrOOP. In
2008, under the defined standard Part D benefit, catastrophic coverage is triggered only
after $4,050 of TrOOP expenditures; in 2009, this amount increases to $4,350.
The MMA provided CMS with authority to impose user fees to defray the costs of Part D
COB activities, as well as to retain a portion of those user fees to offset costs associated
with the TrOOP facilitation process. The MMA prohibits CMS from levying user fees on
SPAPs, however. In CMS’ regulations, CMS clarifies that only Part D sponsors – not
SPAPs or other payers – will be assessed user fees beginning in 2006. However, CMS
also notes that, while Part D sponsors may charge user fees to other payers for COB
activities, these user fees must be reasonable and related to the Part D sponsors’ actual
costs of COB with these entities. In addition, any user fees Part D sponsors charge other
entities must specifically exclude those activities which are covered by the user fees CMS
is collecting for COB. Thus, for example, Part D sponsors may not charge user fees for
activities such as the costs of the claims transaction by supplemental payers (since Part D
user fees funded by CMS are used in part for that purpose), but sponsors may charge for
activities such as the exchange of claims data.
Although this chapter provides guidance primarily for Part D sponsors, the various
processes associated with COB involve interaction between multiple parties. For that
reason, CMS provides detailed guidance regarding the COB requirements applicable to
the various parties including beneficiaries, Part D sponsors, and other payers.
In Appendix A of this guidance, CMS provides an illustration of how the TrOOP
facilitation process works. Appendix B contains a list of Web sites relevant to COB and
referenced in this chapter. In Appendix C, CMS offers a sample format for the
beneficiary COB survey, and in Appendix D includes the automated TrOOP balance
transfer guidance issued March 18, 2008. Appendix E provides detail on specific issues
that may relate to (or be of particular interest to) other payers and entities with which Part
D sponsors, per the requirements of 42 CFR 423.464(f), are required to coordinate,
including SPAPs, Medicaid, VA, TRICARE, Indian Health Service and tribal health
coverage, safety-net providers, patient assistance programs (PAPs), personal health
savings vehicles, AIDS drug assistance programs (ADAPs), PACE plans, and Medicare
Part B. Further guidance on systems requirements and technical details involved in the

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COB process has been issued in other communications and is included here by reference.
In Appendix F, CMS addresses the applicability of COB to PACE requirements.

30 – CMS Requirements
(Rev.)
CMS leveraged its existing Medicare COB processes to facilitate COB under Part D. In
addition, through the use of a TrOOP facilitation process that uses an existing industry
claims transactions set (described in further detail in section 30.4 of this chapter), CMS
supports the tracking and calculation of enrollees’ TrOOP balances by Part D sponsors.

30.1 – Enrollment File Sharing
(Rev.)
Prior to the enactment of the mandatory insurer reporting provision of the Medicare,
Medicaid, and SCHIP Extension Act of 2007 (Section 111 of P.L. 110-173), except for
employers/union plans that are required by MSP-related law to report enrollment
information on certain active employees, there was no requirement for other payers of
health benefits to report their enrollment to CMS or the plans. The COB enrollment file
sharing programs provides inherent incentives for other payers to coordinate drug
benefits. Many other payers voluntarily provide information regarding prescription drug
coverage they offer that is either primary or supplemental to Part D.
Beginning in 2009, the new mandatory insurer reporting of MSP group health coverage
will become operationally effective. The provisions will be implemented January 1, 2009
for information about group health plan arrangements, and July 1, 2009, for information
about liability insurance, no-fault insurance, and workers' compensation. Although these
requirements are not specific to Part D, CMS will encourage insurers providing
prescription drug coverage to include this information in their mandatory reporting.
Currently, CMS coordinates benefits with other payers with respect to Part A and B
coverage to reduce mistaken payments and administrative expenses that would otherwise
be incurred by the Medicare program. The CMS COB contractor collects information on
beneficiaries’ other coverage primarily through the use of data sharing agreements. The
Voluntary Data Sharing Agreements (VDSAs) and Coordination of Benefits Agreements
(COBAs) that already existed were modified to include Part D information. CMS also
created new types of agreements, such as those with SPAPs, specifically for the exchange
of Part D information.
After the data sharing agreement is executed, the other payer sends the COB contractor a
file of it enrollees. For Part D purposes, the COB contractor: 1) compares the list of the
other payer’s enrollees to the current population of Medicare Part D enrollees; 2) captures

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and maintains the resulting matches and any information updates; and 3) transmits the
matches/updates to the CMS Medicare Beneficiary Database (MBD). CMS sends this
information as often as daily to the TrOOP facilitator and the sponsor. The data consist
of a detail record for each enrollee whose other payer information is reported in the
attachments to the detail record. Attachments to the detail record may include up to 20
primary records containing information on other payers that are primary to Part D, and up
to 20 supplemental records containing information on payers that pay after Part D. The
data elements that are included, if applicable, in the detail, primary and supplemental
records are reflected in tables below.
Table 30.1-1 COB File—Data Elements in Detail Record
Record Type
HICN/RRB Number
SSN
Date of Birth
Gender Code
Contract Number
Plan Benefit Package
Action Type
Table 30.1-2 COB File—Data Elements in Primary Record
Insurer's Address-1
Record Type
Insurer's Address-2
HICN/RRB Number
Insurer's City
SSN
Insurer's State
Date of Birth
Insurer's ZIP Code
Gender Code
Insurer TIN
RxID Number
Individual Policy Number
RxGroup Number
Group Policy Number
RxBIN Number
Effective Date
RxPCN Number
Termination Date
Rx Plan Toll Free Number
Relationship Code
Sequence Number
Payor ID
COB Source Code
Person Code
MSP Reason (Entitlement Reason
Payer Order
from COB)
Policy Holder's First Name
Coverage Code
Policy Holder's Last Name
Insurer's Name
Policy Holder's SSN

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Employee Information Code
Employer's Name
Employer's Address 1
Employer's Address 2
Employer's City
Employer's State
Employer's ZIP Code
Filler
Employer TIN
Filler
Claim Diagnosis Code 1
Claim Diagnosis Code 2
Claim Diagnosis Code 3
Claim Diagnosis Code 4
Claim Diagnosis Code 5
Attorney's Name
Attorney's Address 1
Attorney's Address 2
Attorney's City
Attorney's State
Attorney's ZIP
Lead Contractor
Class Action Type
Administrator Name
Administrator Address 1
Administrator Address 2
Administrator City
Administrator State
Administrator ZIP
WCSA Amount
WCSA Indicator

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Table 30.1-3 COB File—Data Elements in Supplemental Record
Record Type
HICN/RRB Number
SSN
Date of Birth
Gender Code
RxID Number
RxGroup Number
RxBIN Number
RxPCN Number
Rx Plan Toll Free Number
Sequence Number
COB Source Code
Supplemental Type Code
Coverage Code
Insurer's Name
Insurer's Address-1
Insurer's Address-2
Insurer's City
Insurer's State
Insurer's ZIP Code
Individual Policy Number
Group Policy Number
Effective Date
Termination Date
Relationship Code
Payor ID
Person Code
Payer Order

Further information about the format and business rules of the COB file to sponsors is
contained in Section 10 of the Plan Communications User’s Guide (PCUG); the guide is
available on the CMS Web site. For further information about current Medicare COB
processes, see the Medicare Part D COB Web site. (See Appendix B for the specific Web
addresses for these sites.)
The COB Contractor will send as much information as is available. In some cases, CMS
through the COB contractor may determine there is other prescription drug coverage, but
may be unable to identify the Rx identifiers. In such cases, CMS will supply the
information so that the sponsors are at least aware of the other coverage.

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30.2 – Validation of Information About Other Payers
(Rev.)
When a Part D sponsor or a beneficiary provides information to the COB contractor
about other coverage, the COB contractor validates the completeness of this information,
then applies and maintains it in MBD. MBD transmits this information to both the
TrOOP facilitator and Part D sponsors from the Medicare Advantage-Prescription Drug
(MARx) system via the COB file.
The COB contractor’s role in Part D COB is to assist sponsors in identifying other
coverage and in determining whether other payments count toward the beneficiary’s
TrOOP by specifying the supplemental payer type.
The table below crosswalks the TrOOP eligibility of payments by other payers with the
MSP reason codes and insurance or coverage type codes on the COB file.
Table 30.2-1-Other Payer Codes and TrOOP Eligibility
Other Payer

MSP Reason Code

Employer Group
Health Plan

A (Working Aged)
B (ESRD)
G (Disabled)
D (Auto insurance;
no fault)
E (Workers’
Compensation (WC))
L (Liability)
H (Black Lung (BL))

Non-Employer
Group Health
Plan

Secondary
Insurance

Federal
Government
Programs

Insurance or
Coverage Type
Code

L (Supplemental
insurance)
M (Medigap)
O (Other)
T (Federal
Employees
Health Benefit
Program
[FEHBP],
Veterans

Relationship
of Coverage
to Medicare

TrOOP
Eligibility

Primary

N

Primary

N

Secondary

N

Secondary

N

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Other Payer

Qualified State
Pharmaceutical
Assistance
Program (SPAP)3
Non-qualified
SPAP
Medicaid
Manufacturer
Patient
Assistance
Program (PAP)1
AIDS Drug
Assistance
Programs
(ADAPs)
Charities
Health
Reimbursement
Accounts
(HRAS)4
1

MSP Reason Code

Administration
(VA) coverage1,
Indian Health
Service
(IHS)/Tribal
coverage2)
2 (TRICARE)
Insurance or
Coverage Type
Code

Relationship
of Coverage
to Medicare

TrOOP
Eligibility

Q

Secondary

Y

N

Secondary

N

1
P

Secondary
Secondary

N
N

S

Secondary

N

R
Z

Secondary
Secondary

Y
N

Coverage is separate and distinct from Part D; see Appendix E for further discussion.
Tribes using Tribal-only money qualify as TrOOP-eligible, but manual processing will
be necessary to handle these cases.
3
State-only funded SPAPs
4
For non-working, aged beneficiaries, payments are secondary to Medicare and nonTrOOP-eligible
2

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30.3 – Establishing the Order of Payment for Part D Coordination of
Benefits (COB)
(Rev.)
In order to provide a consistent set of rules for the order of payment on Part D claims and
establish a basis for the accurate calculation of the TrOOP balance, CMS establishes that
Part D sponsors and all secondary payers on Part D claims should adhere to the following
order of payment standards. All payers are legally required to adhere to MSP laws and
any other federal and state laws establishing payers of last resort (e.g., TRICARE). In all
other situations, the Rules for Coordination of Benefits adopted in the most current
National Association of Insurance Commissioners Coordination of Benefits Model
Regulation should be followed.
The COB contractor includes payment order indicators on other payer records it sends to
MBD. Sponsors use this data element to sort COB records for display in reply
transactions to the pharmacy. The COB contractor calculates payer order based on MSP
rules, relationship to policyholder, and type of supplemental insurance. Rules for using
the payment order indicator are contained in the PCUG.

30.4 – Contracting with a TrOOP Facilitation Contractor
(Rev.)
All Part D sponsors must correctly calculate the TrOOP amount in order to properly
adjudicate beneficiary claims, as well as to communicate this information to plan
enrollees. This process is logistically complex because there may be multiple payers (for
example, SPAPs or employer or union plans). True COB, in which the order of payment
among multiple payers with responsibility for paying prescription drug claims on behalf
of an individual is established and programmed into the systems of the secondary payers,
did not generally take place in pharmacy benefit management prior to Part D
implementation. In lieu of Part D sponsors separately setting up procedures to coordinate
benefits with every other payer with responsibility for drug coverage for one of their Part
D enrollees, CMS published a request for comment on the feasibility of an online realtime process. In response to this CMS request, representatives from pharmacies,
pharmacy benefit managers (PBM) companies and pharmacy data processing and
standard-setting organizations provided extensive input and comments to design an
automated solution for COB and the facilitation of the TrOOP accounting process. The
industry, working in collaboration with the National Council of Prescription Drug
Programs (NCPDP), developed a TrOOP facilitation process that allows the majority of
pharmacy claims processing to take place “real time” at the pharmacy at point of sale
(POS). To this end, supplemental payers are required to utilize the Health Insurance

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Portability and Accountability Act (HIPAA) coordination of benefits transaction
standard, which requires the use of the NCPDP Telecommunication Standard
Implementation Guide to communicate secondary payer transactions back to the primary
Part D sponsor for purposes of tracking TrOOP in real time. Version C.1 of the NCPDP
Implementation Guide first detailed the processing requirements involved in the TrOOP
facilitation process.
In 2005, CMS awarded a contract to NDC Health (currently RelayHealth) to act as the
TrOOP facilitation contractor (also referred to as the TrOOP facilitator) for Part D claims
processing. The TrOOP facilitation contractor, in conjunction with CMS, is responsible
for establishing procedures for facilitating eligibility queries (E1 transactions) at POS,
identifying costs that are being reimbursed by other payers, and for alerting Part D
sponsors about such transactions.

30.4.1 –TrOOP Facilitation Process
(Rev.)
With the implementation of Medicare Part D, new electronic transaction capabilities
became available to pharmacies. These offer pharmacies the ability to submit eligibility
inquiries without the need to fill a prescription and to bill payers supplemental to
Medicare.
A pharmacy uses the eligibility inquiry process, known as an E1 transaction, to submit
real-time transactions to the TrOOP Facilitator. Eligibility transactions are used to
determine a Medicare beneficiary’s Part D coverage information. Pharmacies use this
service when the beneficiary does not have their Medicare Part D Plan Card information
to retrieve information needed to bill a claim to a patient’s insurance plan, or to determine
billing order if the beneficiary has multiple insurance coverage.
Part D sponsors, supplemental payers, switches (claims routers), and the TrOOP
Facilitator must interact to accurately track a patient’s true out of pocket expenses.
Claims to supplemental payers, known as B transactions, are submitted by the pharmacy
to their switch. The switch will forward to the TrOOP facilitator the B transactions that
are not rejected by the supplemental payer and that contain an RxBIN/Processor Control
Number (PCN) combination for a plan that covers Medicare Part D beneficiaries. This
RxBIN/PCN combination is the flag that switches use to route the data to the facilitator.
The TrOOP facilitator uses the B transaction to trigger the creation of a reporting
transaction (N) and delivers the N transaction to the Part D sponsor in real-time. All
supplemental billing claims must be processed through a switch so that the switch can

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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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deliver the transactions to the TrOOP facilitator to enable accurate TrOOP reporting at
the Part D sponsor.

30.4.2 –Enhancements to E1 Transactions
(Rev.)
Prior to the implementation of Part D in 2006, additional functionality for eligibility
inquiries was made available through an enhanced E1 transaction. This enhanced E1
capability enables pharmacies to separately request verification of a beneficiary’s
Medicare Part A/B eligibility— an essential step in the POS facilitated enrollment
process (described in section 50.15 of this chapter).
As of December 1, 2006, further enhancements to the E1 inquiry added data elements to
the E1 response. Expanding the E1 response to include, for example, the Part D
sponsor’s contract number, benefit ID, benefit effective date and benefit termination date,
better informs pharmacies of beneficiaries’ enrollment in Part D. For more information
about the E1 transactions, see the RelayHealth Web site. See Appendix B for the specific
Web address.

30.4.3 –Real-time Versus Batch Processing
(Rev.)
For instances in which Part D plan enrollees’ secondary coverage is identified in advance
by CMS systems (as described in section 30.1 of this chapter), multiple-payer claims are
automatically adjudicated at the POS. The TrOOP facilitation contractor captures
secondary payer claims transactions based on unique routing information collected
previously at enrollment or through the COB contractor’s system. The TrOOP
facilitation contractor also has a batch process available for claims that it receives in a
manner other than real time (for example, claims from programs such as the Indian
Health Service (IHS) or those presented by the beneficiary to a secondary payer in hard
copy). Other payers can then send their paid claims data directly to the TrOOP
facilitation contractor in batch form. Once the contractor receives the batched paid
claims data, it will follow the same online process, creating an NCPDP N1 transaction
and sending it to the beneficiary’s Part D sponsor for accurate TrOOP recalculation.

30.4.4 –Enhancements to N1 Transactions
(Rev.)

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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
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CMS, through the TrOOP facilitation contractor, continues to seek to enhance Nx
transactions. One such enhancement would involve the creation by the TrOOP facilitator
of a unique Transaction Reference ID for each N1 transaction created and the inclusion
of this ID in subsequent N transactions routed to the Part D sponsor. In handling
adjustments and reversals, the TrOOP facilitator would use certain designated fields to
match the B transactions to prior N1 transactions. When a B2 transaction is received
without a Cardholder ID, the facilitator would use the fields to match the B2 transaction
to the prior N1 transaction in order to retrieve the Cardholder ID for inclusion in the N2
transaction to the Part D sponsor. If an adjustment/reversal matches a prior B1
transaction on all the designated fields, the facilitator would include the Transaction
Reference ID from the N1 transaction for the matched claim on the N2 and N3
transactions routed to the Part D sponsor. So, when the facilitator sends an N2, N3
and/or a final N1 transaction to a Part D sponsor, the transaction reference number
would be consistent among all transactions for the same prescription/service claim. CMS
and the TrOOP facilitation contractor will provide guidance on this enhancement as soon
as it is available.

30.4.5 –TrOOP Accounting
(Rev.)
Part D sponsors should note information about a payer’s TrOOP eligibility status based
on the information in the COB file in order to determine whether or not a payment should
count toward TrOOP. CMS recognizes that pharmacies play an integral role in claims
processing and TrOOP accounting, and CMS has engaged pharmacists in extensive
outreach efforts so that they fully understand how they can interact with these systems.
For more detail about the TrOOP facilitation process, see Appendix A.

30.5 –Assessment of COB User Fees
(Rev.)
The MMA provided CMS with the authority to impose user fees to facilitate the transfer
of information necessary for benefit coordination. In conjunction with this authority,
CMS is using the fees for activities such as, covering the cost of N1 transactions, funding
the COB Contractor, and supporting CMS systems upgrades for transferring COB data to
sponsors.
Sufficient time has elapsed since the implementation of Medicare Part D for CMS to
refine its budgetary needs related to the information transfer necessary for COB in Part
D. Over these past months, CMS has made a number of systems improvements, such as

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displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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enhancing the eligibility query (E1) response, and has increased systems security for the
COB-associated data exchanges.
Further systems upgrades are planned or are under discussion for next year. In addition
to automating the transfer of TrOOP balances between sponsors when beneficiaries
transfer between plans during the coverage year, CMS is exploring an expanded role for
the TrOOP facilitator to further support Part D sponsor activities related to COB.
Examples of these enhancements include:
•

Replaying N transactions when a claim initially rejects;

•

Development and production of reports to Part D sponsors on N1s; and

•

Analysis and creation of a test environment to improve the E1 match rate.

As a result, the user fee increased for 2007 to $1.36 per enrollee and continued at that
rate for 2008. It is collected at the rate of $0.15 per enrollee per month from January
through August, and $0.16 per enrollee for the month of September. Upon review of the
anticipated costs of COB activities in 2009, the COB user fee will increase to $2.52 per
enrollee for contract year 2009. The 2009 user fee will be collected at a monthly rate of
$0.28 for the first 9 months of the coverage year (for an annual rate of $0.21 per enrollee
per month.)

40 – Beneficiary Requirements
(Rev.)

40.1 – Providing Information to Sponsors on Other Coverage
(Rev.)
Beneficiaries must supply Part D sponsors with information about other prescription drug
coverage the beneficiaries have. As provided in the MMA, beneficiaries are legally
obligated to report this information, and any material misrepresentation of such
information by a beneficiary may constitute grounds for termination of coverage from
Part D. CMS guidance on material misrepresentation regarding third party
reimbursement and disenrollments for this reason is provided in section 40.2.5 of the
Prescription Drug Plan (PDP) Eligibility, Enrollment and Disenrollment Guidance
available on the CMS Web site. See Appendix B for the specific Web address. Part D
sponsors must regularly survey their enrollees regarding any other coverage they may
have (as described in section 50.2 of this chapter) and report that information to the COB
Contractor for validation.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

40.2 – Using On-line Processing
(Rev.)
CMS expects beneficiaries to take advantage of automated real-time prescription drug
claim processing whenever it is available so that the supplemental payer information can
be utilized to coordinate benefits seamlessly at the point of sale. Paper claim (receipt)
submission should be limited to those situations (such as out-of-network pharmacies) in
which on-line claims processing is not available at the pharmacy in order to promote
accurate TrOOP accounting, and to minimize both administrative costs to the Part D
sponsors and the Medicare program as well as opportunities for fraudulent duplicative
claim reimbursements.

40.3 – Submitting Documentation for Off-line Processing on a Timely
Basis
(Rev.)
Beneficiaries are responsible for submitting documentation for purchases that are made
off-line (i.e., when on-line claims processing is not available at the pharmacy). These
would include out-of-network claims, claims resulting from the use of drug discount
cards other than that of the beneficiary’s Part D sponsor, as well as other occasions on
which the beneficiary had to pay and submit a paper claim to the plan. It is the
beneficiary’s responsibility to submit documentation to the Part D sponsor so that
beneficiary TrOOP balance and other accumulators can be updated timely.

50 – Part D Sponsor Requirements
(Rev.)

50.1 – Providing 4Rx Data on Primary Coverage
(Rev.)
Effective August 2007, all plan-submitted enrollment transactions to the MARx
system must include 4Rx data. The 4 Rx data, including the RxBIN, Processor
Control Number (PCN), Group ID (RxGRP) and Cardholder ID (RxID), are
identifying data required for claims routing. If CMS accepts the enrollment
transaction, the enrollment information with the 4Rx data are sent by the MBD to
the TrOOP facilitation contractor to support eligibility (E1) transactions from
pharmacies, which are needed anytime a beneficiary presents for the first time at a

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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pharmacy and does not have a plan-issued card for drug benefits. For CMSgenerated enrollment transactions, including auto-enrollments, facilitated
enrollments, plan rollovers, reassignments, and user interface transactions, Part
D sponsors are required to submit the 4Rx data via a 72 transaction to CMS
within 72 hours following the date of the Transaction Reply Report (TRR)
reporting the enrollment to the sponsor.
Two important benefits accrue as a result of this change in the enrollment
process. CMS and the TrOOP facilitation contractor have a set of 4Rx data for all
enrollees whose transactions have been processed successfully in CMS systems.
In addition, most of the time lag between CMS accepting an enrollment and the
TrOOP facilitation contractor having 4Rx data has been eliminated.

50.2 – Surveying Beneficiaries Regarding Other Prescription Drug
Coverage and Transmitting Such Information to CMS
(Rev.)
As provided in the MMA, beneficiaries are legally obligated to report information about
other prescription drug coverage or reimbursement for prescription drug costs that the
beneficiaries have or expect to receive; any material misrepresentation of such
information by a beneficiary may constitute grounds for termination of coverage from a
Part D plan. Part D sponsors must, therefore, regularly survey their enrollees regarding
any other prescription drug coverage they may have and report that information –
including, if known, any Rx data (RxBIN, PCN, RxGRP, and RxID) – to the COB
contractor so that it can be validated, captured, and maintained in MBD for COB
purposes. Anytime a Part D sponsor receives information concerning a change, this
information should be sent electronically to the COB contractor within 30 days of receipt.
Sponsors shall not transmit information about other coverage that the COB contractor has
already applied to MBD and that the sponsor has already received in the COB file, but
rather only change transactions.
Except as noted, this survey should be performed within 30 days of the date the sponsor
processes a beneficiary’s enrollment and annually thereafter. Beneficiaries who may be
exempted from the survey at the time of plan enrollment include auto-enrolled
beneficiaries, those who are deemed to have elected an MA-PD, and those individuals
who are passively enrolled in a MA-PD Special Needs Plan. Sponsors, however, must
survey these individuals, along with all other plan enrollees, as part of their annual survey
process. In addition to the exempted beneficiaries, if an enrollee indicates on his or her
enrollment form that there is no other prescription drug coverage, no sponsor follow-up is
required until the annual survey is performed. However, if the enrollee indicates on the

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displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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enrollment form that he or she in fact has other prescription drug coverage or does not
provide any response to those questions, the sponsor must perform the 30-day survey.
The survey should collect from the enrollee the same information on other payers that
Part D sponsors must submit electronically to the COB contractor. Sponsors have the
flexibility to design their survey process according to their own needs. CMS has
developed an electronic survey form (see Appendix C) that sponsors are free to use or
adapt for this purpose. Note that use of this form is optional and sponsors are not
required to submit their surveys for marketing material review. Sponsors may conduct
their survey by telephone, mail, email if available, or in-person. The survey should not
require that the beneficiary provide his or her SSN; instead, sponsors should use other
identifiers, such as the Member ID. Also, in addition to providing a self-addressed return
envelope for mail surveys, sponsors should include on the survey form itself the mailing
address to be used for completed surveys in case the envelope is lost or damaged.
Further, if an MA-PD sponsor wishes to do so, this survey may be combined with the
working aged survey for Medicare Advantage (MA) plans, now known as the MSP
Survey. If the sponsor elects this approach, the timing of the combined survey must be
such that the sponsor meets the timing requirement of the MSP Survey to permit
appropriate payment adjustments to be made based on the MSP information provided by
the beneficiaries.
A non-response to the survey regarding other prescription drug coverage cannot be
interpreted as a negative answer, since effective coordination of benefits with other
prescription drug coverage requires that sponsors be aware of any other prescription drug
coverage a beneficiary may have. Therefore, sponsors are required to follow up with
enrollees who fail to respond. Follow-up with non-responding enrollees may be
conducted by telephone, mail, email if available, or in person. After unsuccessful
attempts to gain a response using one mode, sponsors may find a change to another mode
is more productive. Also, if the beneficiary has had drug claims, sponsors may contact
the pharmacy to determine if COB information was captured while the beneficiary was in
the pharmacy. Sponsors are expected to make a minimum of three attempts to follow up
with non-responding enrollees. At least one of the follow-up efforts must involve the use
of a different method of contact. For example, if the initial survey was mailed, at least
one of the follow-up attempts must be other than a mailed survey; i.e., must be conducted
by telephone, email if available, or in-person.
Part D sponsors also are responsible for sending electronic updates about their enrollees’
other sources of prescription drug coverage to the COB contractor. Since supplemental
payer information is essential for coordination of benefits, sponsors should submit this
information to the COB contractor at least monthly.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

50.3 – Connecting to Systems Supporting COB
(Rev.)
Data from CMS to sponsors
The COB contractor performs a daily update of information on other coverage to MBD.
Sponsors must establish connectivity with CMS systems, which, among other things,
allows Part D sponsors to have direct access to other payer status information as often as
their business requirements indicate. Every Federal business day, the COB contractor
pushes out updated information to MBD and then CMS sends the COB file to the Part D
sponsors. For more information on receiving COB files, see the Plan Communications
User’s Guide (PCUG) available on the CMS Web site. (Refer to Appendix B for the Web
address.) It is incumbent upon Part D sponsors to note any changes to other payer status
included in CMS systems and to send that information to the COB contractor.
Data from sponsors to the COB system
There is an electronic interface between Part D sponsors and the COB contractor known
as the Electronic Correspondence Referral System (ECRS). ECRS allows Part D
sponsors to submit post-enrollment transactions that change or add to currently known
COB information. Part D sponsors may send ECRS transactions in any of three possible
ways: 1) by using Network Data Mover (NDM) (a secure file transfer process) to
connect to the ECRS Online Application; 2) by using NDM to send an ECRS flat file; or
3) by using a current SFTP connection to send an ECRS flat file. Part D sponsors are
updated on the status of these transactions as they move through the COB systems and
informed on the determination made by the COB contractor on the transactions via a
COB data report/file. Further information on ECRS is contained in the ECRS User
Guide available on the CMS Web site; see Appendix B for the specific Web address.
The data provided by the COB contractor on supplemental payers and order of payment
is generally the best available information for Part D sponsors and pharmacies to act
upon. However, it is important to note that Part D sponsors must coordinate benefits
with all other payers providing coverage for covered Part D drugs, even if the COB
contractor is unaware of some payers who have submitted batched claims after the pointof-sale transaction at a network pharmacy. Although the COB contractor may be
unaware of them, these other payers may submit claims directly to the Part D sponsor or
through the TrOOP facilitation contractor, thereby enabling benefit coordination by the
Part D sponsor. Once a sponsor becomes aware of these other payers, sponsors must
submit this information via ECRS to the COB contractor.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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Sponsors should utilize the electronic interface established with CMS (via the MARx
system) to handle plan enrollments, to transmit certain other payer data elements upon
enrollment, and to receive daily transmissions of validated COB information. As new
information about other prescription drug coverage is discovered, sponsors should use
ECRS to send the information to CMS. Sponsors should not use the enrollment update
transaction to communicate this subsequent information.
Beyond the electronic data transfers requirements described above, Part D sponsors must
establish procedures for at least weekly file processing. Sponsors are required to not only
receive information, but also apply it to their systems.

50.4 – Processing Claims and Tracking TrOOP
(Rev.)
Part D sponsors must correctly calculate the TrOOP amount in order to properly
adjudicate beneficiary claims, as well as to communicate this information to plan
enrollees. In order to calculate TrOOP, Part D sponsors will have to determine if other
entities have made payments on covered drugs, and whether such payments fall under the
legal definition of incurred costs (as described in 42 CFR §423.100). CMS assists in this
process by providing a TrOOP facilitation contractor (described in section 30.4 of this
chapter) that requires that supplemental payers utilize the HIPAA coordination of
benefits transaction standard, which requires the use of the NCPDP Standard
Implementation Guide to communicate other payer transactions back to the primary Part
D sponsor for purposes of tracking TrOOP in real time. Part D sponsors are required to
process claims and track TrOOP in real time including providing known supplemental
payer information to the pharmacy and by accepting and processing N transactions. CMS
expects Part D sponsors to establish policies and procedures appropriately restricting the
use of paper claims to those situations in which on-line claims processing is not available
to the beneficiary at the point of sale in order to promote accurate TrOOP accounting, as
well as to minimize administrative costs to the Part D sponsors and the Medicare program
and opportunities for fraudulent duplicative claim reimbursements.
When secondary payer information is not captured upfront in CMS systems, however,
Part D sponsors are required to retroactively adjust claims and TrOOP balances. CMS
also establishes an order of payment (see section 30.3) to the validated payer-identifying
data that is transmitted to both the TrOOP facilitator and the Part D sponsors from MARx
via the COB file. This order of payment assists sponsors in processing claims when there
are multiple other payers on a beneficiary’s record. This is important, particularly for
payers – such as SPAPs – considered payers of last resort. Because Part D sponsors are
ultimately responsible for accurately tracking TrOOP, they are required to retroactively
adjust claims and TrOOP balances when errors are made in terms of order of payment.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Regardless of whether a retroactive change to TrOOP is the result of a sponsor's receipt
of retroactive secondary payer information or an error in payer order, the sponsor has
two choices. The sponsor may adjust each claim that was affected by the retroactive
change or may process the adjustment as they administer the benefit, provided that:
•

TrOOP accumulators are updated immediately;

•

Monies owed beneficiaries are refunded promptly;

•

Claims are restacked and adjustments are processed at least quarterly; and

•

An exceptions process exists for more frequent processing to meet beneficiary
needs, such as at disenrollment during the coverage year.

The methodologies for handling retroactive changes in TrOOP are described in Section 9
of the Prescription Drug Event (PDE) guidance available on the CMS Web site. See
Appendix B for the specific Web address. For further detail on reconciling payments, see
section 50.15 of this chapter.
Part D sponsors must make timely retroactive adjustments of claims and TrOOP
balances. CMS reserves the right to establish required timeframes for these adjustments
based on acquired experience.
While this document is not meant to capture the TrOOP facilitation process in exhaustive
detail, other sources are available in:
•

Appendix A of this chapter which contains more information, in flow chart
format, about what the TrOOP facilitation process entails.

•

The TrOOP facilitation contractor Web site; see Appendix B for the specific Web
address.

•

The NCPDP Implementation Guide which is the official vehicle for establishing
electronic processing rules.

•

The Prescription Drug Event (PDE) Data Guidance on the CMS Web site which
explains TrOOP and PDE data reporting; see Appendix B for the Web address.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

•

Chapter 5 of this manual which will address benefits, beneficiary protections
and benefit design and will contain information on incurred costs counting
toward TrOOP.

50.4.1 –Receiving an N1, Without Supplemental Payer on File
(Rev.)
Part D sponsors should accept N1 transactions even in those instances where they have
no supplemental payer information on file to identify the payer. CMS encourages
sponsors to then follow up by contacting the beneficiary (which may be accomplished in
conjunction with the annual COB survey of plan enrollees if that survey will be
conducted within the next 2 months) to identify the supplemental payer. Once the
sponsor receives this information, it should be transmitted to the COB contractor for
verification of the secondary coverage.
Note that in the event that a Part D sponsor is a secondary payer in accordance with the
application of Medicare Secondary Payer (MSP) rules, the Part D sponsor is required to
process claims in real time to support the TrOOP facilitation process.
Explanations of benefits (EOBs) provide enrollees with their year-to-date TrOOP
balances and gross covered drug costs and information on the enrollees’ position in the
Part D benefit. To ensure enrollees are appropriately informed, CMS requires that
sponsors develop EOBs that provide information in a form understandable to all
enrollees. EOB formats are included in the Medicare marketing guidelines available on
the Web site; see Appendix B for the specific Web address.

50.4.2 – Beneficiary Cash Purchases
(Rev.)
Although CMS expects it to happen rarely, an individual may be able to obtain a lower
price at a network pharmacy than that which his or her plan charges (the plan’s
negotiated price) in any applicable coverage gap or deductible. This may be possible if
the pharmacy is offering a “special” price or other discount for all customers, or if the
beneficiary is using a discount card, and the beneficiary is in any applicable coverage gap
or deductible phase of his or her Part D benefit and is able to receive a better cash price
for a covered Part D drug at a network pharmacy than the sponsor offers via its
negotiated price. In this situation, he or she may purchase that covered Part D drug
without using his or her Part D benefit or a supplemental card. The enrollee’s purchase
price for the discounted drug will count toward total drug spend under his or her Part D
benefit and TrOOP balance provided the Part D sponsor becomes aware of it.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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The enrollee must take responsibility for submitting the appropriate documentation to his
or her plan in order to have the amount count toward his or her total drug spend and
TrOOP balances. 1 Sponsors must accommodate the receipt of such information directly
from enrollees and adjust total drug spend and TrOOP balances accordingly consistent
with their established processes and clear instructions for these enrollee paper claim
submissions.
Note that this lower cash purchase policy does not apply in any phase of an enrollee’s
Part D benefit in which he or she is liable for any less than 100 percent cost-sharing. In
other words, it does not apply outside of any applicable coverage gap or deductible phase
of his or her benefit. CMS has limited the policy’s applicability in order to ensure that
enrollees: (1) do not unwittingly forego sponsor-funded coverage, which in most cases
will be the lowest price available given the price concessions built into the plan’s
negotiated prices; (2) have the benefit of plan drug utilization review and other safety
edits that can only be provided if the plan adjudicates the claim; and (3) proceed through
the benefit as quickly as possible in order to reach catastrophic coverage. It is unlikely
that the use of discount cards or other special discounts will be a significant source of
savings for most enrollees. It is possible, however, depending on the cost of the drug that
if an enrollee fails to submit even one claim for a purchase made under the circumstances
explained above, the enrollee will ultimately spend more than he or she would have under
his or her plan’s negotiated prices.
CMS also notes that organizations or entities offering discount card or other discounted
price arrangements must comply with all relevant fraud and abuse laws, including, when
applicable, the Federal anti-kickback statute and the civil monetary penalty law
prohibiting inducements to beneficiaries. The HHS Office of the Inspector General
(OIG) enforces Federal fraud and abuse statutes, and all questions regarding the
compliance of specific arrangements with these statutes should be referred to the OIG.
1

Note that in cases where a pharmacy offers a lower price to its customers throughout a benefit year, this would
not constitute a "lower cash price" situation that is the subject of this guidance. For example, Wal-Mart and
other retailers recently introduced programs offering a reduced price for certain generics to its customers. The
low Wal-Mart price on these specific generic drugs is considered Wal-Mart’s “usual and customary” price, and is
not considered a one-time "lower cash" price. Part D sponsors consider this lower amount to be “usual and
customary” and will reimburse Wal-Mart on the basis of this price. To illustrate, suppose a Plan's usual
negotiated price for a specific drug is $10 with a beneficiary copay of 25% for a generic drug. Suppose WalMart offers the same generic drug throughout the benefit for $4. The Plan considers the $4 to take the place of
the $10 negotiated price. The $4 is not considered a lower cash price, because it is not a one-time special price.
The Plan will adjudicate Wal-Mart’s claim for $4 and the beneficiary will pay only a $1 copay, rather than a
$2.50 copay. This means that both the Plan and the beneficiary are benefiting from the Wal-Mart “usual and
customary” price, and the discounted Wal-Mart price of the drug is actually offered within the Plan’s Part D
benefit design. Therefore, the beneficiary can access this discount at any point in the benefit year, the claim will
be adjudicated through the Plan's systems, and the beneficiary will not need to send documentation to the plan to
have the lower cash price count toward TrOOP.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

This section reflects CMS’ current beneficiary cash purchase policy. However, if
significant issues arise, CMS will revisit the policy.

50.5 – Standardized Claims Messaging
(Rev.)
CMS requires the rapid adoption and use of new standardized messaging procedures
approved by NCPDP in order for Part D sponsors to more effectively communicate with
pharmacies and coordinate with other payers in real time. The adoption of new
messaging will address issues that have arisen at point of sale needing clarification of
certain claims adjudication responses that are specific to Part D, such as claims rejections
for drugs excluded from Part D coverage and for drugs that are covered under Medicare
Part B for the particular beneficiary. Further, by sending this additional information to
the pharmacy, payers can expedite resolution of questions concerning how to fill the
prescription and minimize staff time in answering phone calls and prior authorization
processes.
Therefore, Part D sponsors must promptly implement appropriate systems changes to
achieve the goals of any additional new messaging approved by the industry through
NCPDP to address clarifying information needed to adjudicate a Part D claim and
appropriately coordinate benefits in real time. While CMS strongly encourages sponsor
adoption and use of the standardized approach in the NCPDP guidance as issued in the
5.1 Editorial Document, until such time as alternative transactional coding is
implemented in a new version of the HIPAA standard, sponsors may adopt alternative
approaches that achieve the goals intended in the messaging guidance.
In order to promote the use of best practices and assist beneficiaries, pharmacies and
payers, CMS requires Part D sponsors implement an appropriate strategy that achieves
the goal of the industry consensus on messaging as expeditiously as practicable after a
consensus has been reached and documented by NCPDP.

50.5.1 – Primary Payer Use of Optional Fields to Support COB
(Rev.)
While CMS recognizes the version C.1 (and any future version) of the NCPDP
Implementation Guide as the official vehicle for establishing the special electronic
processing rules to be used in coordinating benefits and generating the N1 transaction,
version C.1 does not require that primary payers provide certain optional fields. The
optional fields are “Amount Applied to Periodic Deductible” [517-FH] and “Amount of

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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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Copay” [518-FI] in the response pricing segment of the NCPDP telecommunication
standard. However, CMS encourages payers to use these fields to assist secondary
payers in administering their benefit whenever possible. When these fields are provided
by the primary payer, they can be passed from the pharmacy to the secondary payer.

50.6 – Accepting Payment of Premiums From Other Payers
(Rev.)
As provided by the MMA, supplemental payers may wish to pay premiums on behalf of
Part D enrollees instead of (or in addition to) providing wrap-around coverage. Part D
sponsors are required to facilitate the billing and collection of such premiums. While
Part D sponsors must accept premium payments by supplemental payers on behalf of
their Part D enrollees, the details of such arrangements are strictly between Part D
sponsors and such payers. Part D sponsors should ensure that in accordance with the
uniform premium requirement the total premium payment for a beneficiary does not vary
among plan enrollees, except in the case of employer group plans for which this
requirement has been waived in part.
A beneficiary must not be disenrolled from a Part D sponsor if it has been notified that
the premiums are being paid by a SPAP or other payer and the sponsor has not yet
coordinated receipt of the premium payments with the SPAP or other payer. In these
cases, Part D sponsors are required to work directly with the SPAPs or the other payers to
systematically coordinate and accept premium payments in accordance with the Federal
regulations at 42 CFR 423.464(a)(1). That is, sponsors must bill the SPAP or other
payers directly for the beneficiary’s premium and not bill the beneficiary. Until the
sponsor can bill the SPAP or other payers directly, sponsors will not be in compliance
with the coordination of benefit requirements. Sponsors must not take any action,
including sending disenrollment notices directly to the beneficiary, to disenroll the
beneficiary for failure to pay premiums when the sponsor has failed to coordinate the
collection of premiums from other payers.
Sponsors currently receive data from CMS in the COB file indicating which beneficiaries
are covered under SPAPs. The Supplemental Type Code data field of the COB file (see
the PCUG, Appendix E.6.4) indicates the type of supplemental coverage a beneficiary
may have. An indicator of 'Q' identifies when a beneficiary has qualified SPAP coverage.
(Refer to Appendix B for the PCUG Web site.) Sponsors could use this data to withhold
systematic release of disenrollment notices to these beneficiaries when an SPAP is paying
on behalf of the beneficiary.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

In addition to accepting payment of premiums from other payers, Part D sponsors may
wish to consider providing advance notice to such payers when an enrollee is at risk of
losing coverage due to failure to pay their portion of a premium.

50.7 – Coordinating Payment of a Lump Sum for Supplemental
Coverage
(Rev.)
The MMA specifies that CMS’ COB requirements must include a method for the
application by a Part D sponsor of specified funding amounts (a lump sum per capita
method) from an SPAP for supplemental prescription drug benefits. Given that all COB
requirements established with respect to SPAPs must also be applied to other entities
providing prescription drug coverage, CMS requirements regarding the payment of a
lump sum for supplemental coverage (of cost sharing) are also applicable to other payers
mentioned in this chapter. Consequently, Part D sponsors are required to coordinate the
receipt and management of lump sum arrangements with other payers. It is important to
note, however, that the cost sharing funded by lump sum amounts will generally only
apply toward TrOOP if made by a qualified SPAP or a charity for Part D benefits, and if
made for expenditures on covered Part D drugs before a beneficiary reaches the annual
out-of-pocket limit.
SPAPs (and other payers) may choose to provide their wrap-around benefits to Part D
beneficiaries using four basic approaches:
1. Pay premiums for basic and/or supplemental benefits offered by Part D sponsors.
2. Wrap-around benefits at the point-of-sale: Pharmacy files a secondary claim to
the SPAP (or its processor) for payment.
3. Contract with Part D sponsors on a risk or non-risk-based lump sum per capita
method, i.e., solicit lump sum per capita bids from Part D sponsors in exchange
for the provision of wrap-around benefits.
4. Provide some combination of these approaches.
CMS is establishing standards for option 3 in order to provide clear guidance on the
approaches that will be deemed to be non-discriminatory among Part D sponsors in
accordance with §1860D-23(b)(2) of the Social Security Act. These include a risk-based
and a non-risk-based approach.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

50.7.1 – The Risk-Based Combined Uniform Benefit/Lump Sum
Contribution Approach
(Rev.)
CMS believes this market-based approach is equitable to both the SPAP and the Part D
sponsor, since it establishes a benchmark payment amount derived from the submission
of competitive Part D sponsor quotes and balances the interests of both parties. This
approach does not involve CMS in the bidding process. The following steps outline the
approach SPAPs may adopt when paying lump sum per capita payments to Part D
sponsors for wrap-around benefits in order to be deemed non-discriminatory with respect
to providing such benefits without regard to the Part D sponsor in which the SPAP
beneficiary enrolls. Note that this approach does not address or substitute for nondiscriminatory standards with respect to education and enrollment of beneficiaries by any
SPAP, or co-branding with Part D sponsors.
1. States that wish to adopt a lump sum per capita approach would define a uniform
“benefit package” that would be available to eligible beneficiaries who enroll in Part
D basic (not enhanced alternative) prescription drug coverage plans. (These wraparound benefit packages would be subsidized by the State and would reduce costsharing from that included in the basic benefit to a uniform cost-sharing level. No
changes would be made in plan formularies, plan pharmacy networks, or other
coverage rules.) The State would be free to include risk-sharing arrangements in their
defined benefit solicitation as long as identical arrangements were included in every
plan contract, and as long as such arrangements would be fully reconciled prior to
CMS allowable cost reconciliations with Part D sponsors.
2. All Part D sponsors in the region would be invited by the State to submit a quote
(note – the quote is for the increment above basic benefits) for providing the uniform
wrap-around benefit for a full-risk, lump sum per capita amount. States must use
normal channels for publishing procurement notices to publicize these requests for
proposals.
3. Part D sponsors that did not want to participate in this market would not be required
to submit quotes, and States would not be obligated to provide wrap-around benefits
to any beneficiaries choosing to enroll in such plans, or to promote such plans. (This
does not preclude a State from providing wrap-around coverage on behalf of SPAP
beneficiaries choosing to enroll in such plans, if it so chooses. In fact, if the SPAP
also elects to pay the premium for all basic benefits, this approach does not permit the
SPAP to exclude payment of premium for any Part D sponsors that do not participate
in the lump sum approach.) CMS recognizes that there will be some Part D sponsors
that will not be interested in the individual market (and will, in fact, not be available

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

to individuals) and will not want to be required to submit their quotes to the SPAPs.
Likewise, some Part D sponsors may not want to assume the additional
(unsubsidized) risk of the lump sum per capita approach, and would not be required
to enter into the bidding process.
4. Based upon the per capita quotes submitted by the sponsors, each State would
determine what it would pay using one of the two following approaches. CMS
believes that both approaches encourage sponsor participation in the lump sum
approach while balancing the interests of both parties.
A. States pay the actual quote proposed by each Part D sponsor. Under this
approach, all Part D sponsors that wanted to participate in the lump sum per
capita approach would submit their quotes. States would pay amounts based upon
each Part D sponsor’s quote, and the sponsors would accept full risk for the
supplemental costs of the SPAP beneficiaries as specified in the defined benefit.
This approach is equitable for the SPAP since it provides the option to choose this
approach over the 75th percentile approach if the results of paying each sponsor’s
quote would result in lower costs to the State. It is equitable to Part D sponsors
because SPAPs would be required to accept all quotes and no willing sponsor
may be excluded. CMS plays no role in this process other than standard setting,
and the terms of the bidding and contracting process are defined in the State’s
request for proposal (RFP) and contract. OR
B. States pay each Part D sponsor an amount equal to the 75th percentile quote.
This approach requires the State to pay a uniform amount to all sponsors based
upon the Part D sponsor quote amount submitted at the 75th percentile. Paying all
Part D sponsors the same amount is necessary under this approach in order to
provide protection against excessively low bids, given the competitive downward
pressure on bids and the lack of risk sharing. It also gives the State the
opportunity to cap its payments. Those sponsors with quotes above the 75th
percentile would need to collect the difference between the sponsor bid and the
State’s uniform contribution amount from the beneficiary in the form of an
additional premium. This approach is equitable to both the SPAP and the Part D
sponsor since it establishes a payment amount derived from the submission of
competitive Part D sponsor quotes, protects Part D sponsors from excessively low
bids and States from excessively high ones, and excludes no willing sponsors.
Again, CMS plays no role in this process other than to set the non-discriminatory
rules and threshold, and the terms of the bidding and contracting process are
defined in the State’s RFP and contract.
CMS notes that any additional premium collected from the beneficiary
attributable to the difference between the sponsor quote and the State’s uniform

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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contribution amount would not be a Part D premium. Therefore, it would not be
consolidated with the Part D premium for purposes of withholding by SSA or
plan payment determination. Any such premium must be collected directly from
the beneficiary by the sponsor.
As part of the State’s RFP and contract, any Part D sponsor that submits a quote
would be required to accept the lump sum per capita payments made by the State
under its chosen approach. Part D sponsors with lump sum quotes at or below the
State’s uniform contribution limit would have to accept the uniform contribution
limit as payment in full for the provision of SPAP wrap-around benefits. (Note
that some sponsors may be paid more than their quotes under this approach.)
Under the 75th percentile option, Part D sponsors with quotes higher than the
uniform contribution limit would have to accept the uniform payment from the
State and charge the balance of the quote to the beneficiary in the form of an
additional premium. Part D sponsors with quotes higher than the uniform
contribution limit would not have the option to accept the uniform contribution
and waive the additional beneficiary premium.
A Part D sponsor with a quote above the uniform contribution limit would be
allowed to withdraw its quote if it did not wish to participate with an additional
enrollee premium. However, in turn, the SPAPs would not be obliged to promote
or provide wrap-around benefits to beneficiaries that join these withdrawing
sponsors. CMS notes that if the SPAP also elects to pay the premium for all basic
benefits, this approach does not permit the SPAP to exclude payment of premium
for any Part D sponsors that do not participate in the lump sum approach. To do
otherwise would be violating the non discrimination requirements that an SPAP
must provide assistance to individuals in ALL part D sponsors without regard to
the plan in which the individual is enrolled.
5. In return, the State would have to ensure that its beneficiaries received equal access
to enrollment in and comparable information on all the Part D sponsors participating
in the chosen approach, without any steering to individual plans. In addition, even if
a sponsor is not accepting lump sum payments, the State should still explain that
beneficiaries can still enroll in that sponsor, but they will get only basic coverage –
without the SPAP additional defined benefit – if they do so. If the State has also
elected to pay the premium for all Part D basic benefits, this approach does not permit
the SPAP to exclude payment of premium for any Part D sponsors that do not
participate in the lump sum approach.
Note that this guidance is not intended to address all requirements on SPAPs
with respect to non-discriminatory beneficiary education, enrollment and cobranding activities. Other guidance exists on CMS’ Web site; for example,

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displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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guidance on co-branding with SPAPs is included in the Medicare marketing
guidelines available on the CMS Web site; see Appendix B for the specific Web
address.
CMS recognizes that under option A there is a strong financial incentive for SPAPs to
steer to sponsors with the lowest quotes in violation of CMS guidance. Therefore,
CMS forewarns States that CMS will be evaluating enrollment patterns among Part D
sponsors. If CMS determines that the distribution of SPAP beneficiaries in
participating Part D sponsors differs substantively and without good cause from the
distribution of similar non-SPAP Medicare beneficiaries enrolled in those sponsors,
CMS may conclude that the State has steered their SPAP beneficiaries towards
particular sponsors. In this case, CMS may no longer count that State’s SPAP
payments towards the beneficiary’s TrOOP threshold.
6. States would be required to report the results of the bidding process to CMS for
oversight purposes.
7. Part D sponsors participating in the lump sum approach would be required to provide
clear and prominently displayed information, which may include co-branding on the
sponsor’s ID card, identifying the SPAP as a co-provider of benefits under the
combined approach. (This requirement is limited to coordination of benefits with
SPAPs, and need not be extended to other payers unless desired by the Part D
sponsor.)
8. Part D sponsors would be required to provide claims data on the State’s enrollees to
the SPAPs periodically in order for the State to understand the utilization underlying
its costs.
CMS believes that this approach allows for a simplified method for SPAPs to provide
supplemental (cost sharing) benefits to their beneficiaries, as well as the following
additional benefits:
•

Provides a seamless process from the point-of-view of beneficiaries and
pharmacies.

•

Does not require the pharmacist to route a secondary claim.

•

Eliminates the need for multiple wrap-around methods on the part of the State.

•

Relieves SPAPs of obligation to provide wrap-around benefits for sponsors that
do not accept the lump sum payment.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

•

Establishes a fair and equitable lump sum amount based on competitive market
forces.

•

Makes additional risk bearing optional for Part D sponsors.

•

Although not required for other payers, this approach could work just as well for
other payers, if desired.

50.7.2 – The Non-Risk-Based Lump Sum Payment with Claims
Reconciliation Approach
(Rev.)
States that wish to fully subsidize a fixed portion of beneficiary cost sharing through their
SPAPs may do so as long as an equal subsidy amount is offered to each beneficiary in
each Part D sponsor. (This uniform payment requirement would not preclude
reimbursement of subsidy amounts in the event a given beneficiary did not incur the
entire amount of cost sharing.) These subsidy amounts would need to be applicable to
any enrollee cost sharing and not be tied to any particular benefit design, such as the
deductible or coverage gap, so that they would be applicable to every Part D sponsor
basic benefit design. Part D sponsors would enter into arrangements to receive such
subsidies and to apply the subsidy amounts to first dollar coverage of cost sharing for
each applicable beneficiary. Part D sponsors would be required to provide claims data on
the State’s enrollees to the SPAPs in order for the State to understand the utilization
underlying its costs, and for reconciliation of paid to incurred amounts.
The regulation at 42 CFR 423.464(a) requires that Part D sponsors must coordinate with
SPAPs and other entities providing other prescription drug coverage. This includes if the
SPAP or other payer is adopting a lump sum per capita approach when supplementing
Part D benefits in accordance with section 42 CFR 423.464(a)(2). Therefore, CMS
requires all Part D sponsors to have the capacity to participate in non-risk based
arrangements, if offered by the State, SPAPs or other payers so that their beneficiaries
can receive coordinated, wrap-around coverage at the point-of-sale. If a sponsor is out of
compliance with this regulatory requirement, CMS will not disqualify a state program
from its qualified SPAP status. CMS will not view SPAPs as discriminating, in violation
of section 1860D-23(b)(2) of the Act, due to a Part D sponsor’s failure to adhere to this
COB requirement.

50.8 – Claims Reconciliation Reports
(Rev.)

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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Except for the non-risk-based lump sum with reconciliation approach described in section
50.7.2, above, CMS does not believe there is any need for claims reconciliation reports.
In general, States (and other payers) will either receive secondary claims through their
own processors, or they will coordinate using approaches that do not require claim
reconciliations.

50.9 – Transferring TrOOP Balance When a Beneficiary Changes Part
D Sponsors
(Rev.)
Part D rules require sponsors to track the beneficiary’s TrOOP and correctly apply these
costs to the TrOOP limit in order to provide the catastrophic level of coverage at the
appropriate time. The TrOOP threshold is calculated on an annual basis and must be
transferred between Part D sponsors if a beneficiary disenrolls and re-enrolls at any time
before the end of a coverage year. Sponsor collection, and transfer if appropriate, of the
TrOOP and gross covered drug spending balances are essential for sponsors to correctly
manage the Part D benefit.

50.9.1 – Manual TrOOP Balance Transfer Process
(Rev.)
In 2006, the TrOOP balance transfer or explanation of benefits (EOB) transfer process
was first implemented to facilitate the required coordination of benefits between
sponsors, and the plan-to-plan transfer of TrOOP and total drug spend balances for
beneficiaries affected by the Enrollment Reconciliation process. CMS continues to
require its use to transfer TrOOP-related data whenever beneficiaries transfer from one
sponsor to another during the coverage year. Once the automated process is implemented
in 2009, further routine need for the manual data transfer process will be eliminated.
Part D sponsors are requested as a first step to populate the “EOB Transfer Contact” field
in the Health Plan Management System (HPMS). To enter this information, sponsors
need to follow this navigation path: HPMS Homepage > Contract Management >
Contract Management > Select Contract Number > Contact Data > EOB Transfer
Contact. CMS maintains a periodically updated posting of these contacts that is available
on the CMS Medicare Prescription Drug Coverage Contracting Web page; see Appendix
B for the specific Web address.
When a sponsor receives a disenrollment transaction with a transaction reply code of
[014] or [015] indicating that a member has disenrolled, the disenrolling sponsor must
create a special transfer EOB. This EOB must be created regardless of whether or not the

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

disenrolled beneficiary had claims activity. The transfer EOB must contain information
concerning the beneficiary’s TrOOP balance and gross covered drug costs and must be
sent to the new sponsor of record. The Source File ID field on the TRR identifies the
contract number of the sponsor of record that will receive the EOB which can be used to
locate the contact information posted as described above. The transfer EOB must be sent
to the new sponsor of record within 7 days of the date of the disenrollment TRR.
Because these data are essential to the accurate positioning of the beneficiary in the
benefit by the new sponsor of record, should the TrOOP balance or gross covered drug
costs change after an EOB has been sent, the disenrolling sponsor must send both the
beneficiary and the new sponsor of record an updated EOB reflecting the new total
TrOOP and gross covered drug spend balances. Any updated transfer EOBs must be sent
to the new sponsor of record by the 15th of the month following the change.
If the total number of beneficiary records to be transmitted to any one sponsor of record
is less than 100, this information may be in the form of a paper copy EOB. Note that only
the two relevant fields need be filled in, and there is no need to send a complete EOB that
includes proprietary pricing detail. If 100 or more records must be transmitted to a new
sponsor of record, the disenrolling sponsor must create an Excel file in the format shown
below.
Transfer EOB Format
A
HICN

B
Transfer
Out Plan
Contract
Number

C
Effective
Date

D
TrOOP
Balance

E
Gross
Covered
Drug
Costs

F
Coverage
Year

The effective date to be reported in Column C is the date through which the Column D
and E balances were calculated or updated. This date is critical to ensure that the
subsequent sponsor of record recalculates their TrOOP accumulators for the beneficiary
using the most recent information from the prior plan.
For example, a disenrolling sponsor sends the initial transfer EOB on February 4, 2007
(i.e., within 7 days of the date of the disenrollment TRR as required). The data reported
in this EOB reflect balances calculated through February 1, 2007. The EOB would look
as follows:
A

B

C

D

E

F

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

HICN

xxx-xx-xxxxA

Transfer
Out Plan
Contract
Number
Sxxxx

Effective
Date

TrOOP
Balance

2/1/2007

$ 42.00

Gross
Covered
Drug
Costs
$ 280.00

Coverage
Year
2007

In March, the sponsor receives and adjudicates a paper claim from January 2007 and on
03/29/07 recalculates the beneficiary’s TrOOP balances. By April 15, the sponsor must
send an updated transfer EOB. In this example, the updated EOB will contain the
following:
A
HICN

xxx-xx-xxxxA

B
Transfer
Out Plan
Contract
Number
Sxxxx

C
Effective
Date

D
TrOOP
Balance

3/29/2007

$ 52.00

E
Gross
Covered
Drug
Costs
$ 350.00

F
Coverage
Year
2007

Regardless of the transmission method used, a cover sheet should accompany the EOB
transfer data and include a contact should the receiving sponsor have questions or
require follow-up. Paper copy EOBs may be faxed to the EOB Transfer Contact
specified in HPMS for the sponsor of record or shipped through a common carrier to the
contact either as paper copy EOBs or scanned copies on a CD-ROM. When creating
transfer EOBs for fax transmission, sponsors should use a font that is large enough for
the EOB data to be legible even after multiple faxes.
Excel files must be shipped on a CD-ROM through a common carrier or encrypted using
a Federal Information Processing Standards (FIPS) approved encryption method and
attached to a transmittal email. The password for the encrypted file must be sent in a
separate email. (FIPS compliant encryption modules are listed on the National Institute
of Standards and Technology Web site; see Appendix B for the specific Web address.)
In the process of EOB transfer, should a sponsor receive EOB information for a
beneficiary who is not in their plan, contact should be made with the EOB Transfer
Contact at the sponsor that sent the EOB information to resolve the problem. The
sponsor sending the EOB is responsible for promptly querying CMS systems or
contacting CMS to identify the sponsor of record and for reissuing the transfer EOB data.

50.9.2 – Automated TrOOP Balance Transfer Process
(Rev.)

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displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
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Effective January 1, 2009, use of the new NCPDP Financial Information Reporting (FIR)
standard will be required to transfer TrOOP balances and gross covered drug costs
whenever a beneficiary makes an enrollment change at the contract-level during the
coverage year. The transfer process will begin with TrOOP facilitator's identification of
a change in enrollment at the contract-level. Upon identification of the change, the
facilitator will generate a FIR transaction to each prior sponsor with which the
beneficiary was enrolled or which paid covered part D drug claims for the beneficiary
during the coverage year. Transactions will begin with a FIR Inquiry to the earliest
sponsor on record in the coverage year; that sponsor's Inquiry response will be returned
to the facilitator. Each sponsor will respond with their monthly gross covered drug costs
and TrOOP amounts. If there are multiple plans prior to the current plan of record, the
accumulator values from the response just received are placed in a FIR Exchange
transaction and forwarded to the next sponsor. The facilitator will receive that next
sponsor’s transaction response and will continue the process of receiving and forwarding
the prior accumulators until each subsequent sponsor in consecutive order has received
and responded to a FIR Exchange transaction. The final Exchange transaction response
will contain the year-to-date monthly TrOOP-related data for all plans prior to the
current plan of record; these accumulated monthly amounts will then be forwarded by
the facilitator via a FIR Update transaction to the current plan of record.
A copy of the automated TrOOP balance transfer implementation guidance issued by
CMS on March 18, 2008, is included in Appendix D. Detail on the FIR transaction
standard is provided in the NCPDP Financial Information Reporting Standard
Implementation Guide v1.0 is available to NCPDP members on their Web site; see
Appendix B for the specific Web address.

50.10 – Special Transition Period for Retroactive Enrollment Situations
(Rev.)
In 2007, CMS implemented a special transition period with important COB
implications that requires Part D sponsors provide limited reimbursement for
covered Part D drugs for a time immediately preceding the minimum 30- or 90day transition period. This requirement applies to those situations involving
claims incurred by, or on behalf of, a beneficiary who has subsequently been
retroactively enrolled in a Part D sponsor by CMS. These situations almost
exclusively involve beneficiaries who are full-benefit dual eligibles. The special
transition period will be available to all beneficiaries.
Although CMS is working with the States to identify as many individuals as
possible in advance of the date they will become dually eligible in order to

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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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minimize issues involving retroactivity, there will be some situations CMS will
not be able to identify in advance. Because eligibility for Medicaid may be
retroactive for up to 3 months prior to the month in which the Medicaid
application was filed and Medicaid applications frequently require significant
time for the State to process, periods of retroactivity will continue to be several
months in duration. CMS expects that this problem will usually be mitigated by
the fact that, as a Medicare beneficiary, the individual will have had an
opportunity to enroll in a Part D sponsor and apply for the low-income subsidy.
For those who do enroll in a Part D plan, and then are retroactively eligible for
Medicaid, the effective date of their Part D plan enrollment is the later of the first
of the month the beneficiary is dually eligible, or January 2006.
For 2006, with respect to claims incurred during a period covered under actual
Part D enrollment, Part D sponsors were responsible for paying or reimbursing
the costs of a beneficiary’s Part D covered drugs to the extent that the sponsor
would have paid as a primary payer. If the beneficiary’s existing drug regimen
required prior authorization or included non-formulary drugs and the retroactive
period preceded the sponsor’s transition period, this may have resulted in gaps in
coverage. Coverage gaps may also have resulted from out-of-network pharmacy
status or pricing in excess of the sponsor’s negotiated rates that have been paid by
the beneficiary or another payer on the beneficiary’s behalf.
Beginning in 2007, CMS requires sponsors to provide a special transition period
to accommodate claims incurred during a no greater than 7 month period of
retroactive eligibility. The special transition period will be available to all
beneficiaries. During this special transition period, normal transition rules will
apply, but sponsors will be responsible for the allowable charges paid by other
third party payers for all Part D drugs, including non-formulary drugs provided
outside the transition period and formulary drugs with prior authorization
requirements. The beneficiary, or CMS in the case of low-income subsidy
individuals, will be responsible for any out-of-network or pricing differentials.
Sponsors need to accommodate and facilitate requests for reimbursement of claims
incurred during these periods. CMS prefers that sponsors, to the extent they are able, do
this electronically rather than by processing paper claims. To ensure that beneficiaries
and other third party payers have opportunity to request reimbursement for claims
incurred during the retroactive period, sponsors must use the date of the Medicaid
notification to establish a new timely claims filing period. Likewise, best available
evidence (BAE) documenting a reduced cost-sharing level of a low income subsidy
eligible beneficiary may be used to establish a new timely claims filing period for the
recovery of excess cost-sharing amounts; however, State notification of Medicaid

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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eligibility with an earlier effective date would supersede the BAE and open an additional
timely claims filing period for claims incurred during the retroactive period.
For example, a sponsor receives BAE dated April 2, 2008, for a beneficiary who has been
enrolled in their plan since December 2007, the BAE documents SSI eligibility effective
January 1, 2008. The sponsor uses the BAE to reduce the beneficiary's cost-sharing
effective January 2008 and permits network pharmacies holding a receivable on behalf of
the beneficiary to recover the excess cost-sharing amounts for claims that normally
would be outside the sponsor's timely claims filing window. In May, the sponsor receives
a copy of a State notice dated May 26 reporting Medicaid eligibility effective June 2007
and a TRR on June 7, 2008, reporting a retroactive Part D effective date of June 2007.
The sponsor uses the May notification from the State to create a new timely filing window
for claims incurred during the period June- November 2007.
Further, in order to give effective meaning to our special transition guidance, a March
31st deadline cannot be used as a barrier to payer requests for reimbursement of claims
incurred during periods covered by the retroactive enrollment. Rather, Part D plan
sponsors must accommodate and facilitate requests for reimbursement of claims
associated with retroactive enrollment coverage.
Thus, for example, if a sponsor receives a TRR on April 5, 2008, with a new enrollee
effective January 2008, the retroactive period is January 1, 2008 to April 4, 2008. Since
the sponsor must provide a special transition period to accommodate claims incurred
during the no greater than 7 month period of retroactive eligibility, the sponsor is
responsible for all claims during the retroactive period.
Similarly, if a sponsor receives a TRR on April 5, 2008, with a new enrollment effective
June 2007 for a beneficiary who was not previously enrolled in a Part D plan, the
retroactive period is June 1, 2007 to April 4, 2008, and the special transition period
applies for September 5, 2007 through April 4, 2008. For the retroactive period prior to
September 5, 2007, the sponsor can apply their formulary and pay negotiated rates.
Further, if a sponsor has a member enrolled effective January 1, 2008, and receives a
TRR on April 5, 2008, reporting a retroactive effective date to November 1, 2007, the
retroactive enrollment period is November 1 through December 31, 2007, and the special
transition provision applies for the 2-month period.
It is important to note also that plans are liable for claims received after March 31st even
in those instances when retroactive enrollment is not an issue. While in these instances
contractual provisions regarding timely claims filing may limit claims from network
pharmacies, non-network pharmacies and beneficiaries must still have the opportunity to
submit claims for reimbursement.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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The table below describes several frequently occurring scenarios to further
clarify when timely claims filing limits may, or may not, be applied in situations
involving special transition periods for retroactive enrollments.
Special Transition Period for Retroactive Enrollment and Timely Claims Filing
Scenarios
Scenario

Required Action by the
Part D Plan Sponsor

A beneficiary first enrolled in Part D in
2007 is retroactively determined to be dual
eligible effective in 2006 and another
payer paid for covered drugs in the
retroactive period.

Sponsors must coordinate benefits with
other payers as required by the
regulations at 42 CFR 423.464(f) without
imposing time limits.

A beneficiary first enrolled in Part D in
2007 is retroactively determined to be dual
eligible effective in 2006 and a network
pharmacy is holding receivables for
claims in the retroactive period.

For claims incurred during the period of
retroactive enrollment in Part D, sponsors
must use the date of the Medicaid
eligibility notification to establish a new
timely claims filing period.

A beneficiary first enrolled in Part D in
2007 is retroactively determined to be dual
eligible effective in 2006 and a nonnetwork pharmacy (includes stateoperated, facility-based pharmacies) is
holding receivables for claims in the
retroactive period.

Sponsors must consider the non-network
pharmacy as an “other” payer and
coordinate benefits without imposing time
limits.

A beneficiary first enrolled in Part D in
2007 is retroactively determined to be dual
eligible effective in 2006 and receives
notice of Medicaid eligibility close to or
after March 31, 2007.

Sponsors must accept claims from the
beneficiary without imposing time limits.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

A beneficiary not previously enrolled in
Part D is retroactively (auto- or)
facilitated enrolled in 2007 with a
coverage effective date in 2006.

Sponsors must accommodate claims for
non-formulary Part D drugs during a nogreater-than-7 month period of retroactive
eligibility, and claims for formulary drugs
during the entire period of retroactive
coverage.

50.11 – Sharing Formulary Information with Other Payers
(Rev.)
Although Part D sponsors may share detailed information about their formularies (in
electronic format) with other payers upon request, there is no specific requirement that
they do so. CMS has made the Medicare Prescription Drug plan information available
for purchase in Public Use Files (PUFs). These files contain all of the plan and formulary
data for all of the plans with the exception of the pricing data which is considered
proprietary. This is the only data set that is publicly available. Further information is
available on the CMS Web site; see Appendix B for the specific Web address.
In addition, as required by 42 CFR 423.120(b)(5)(i), sponsors will be required to inform
other payers of formulary changes (whether formulary deletions or changes in the tiering
status of a drug) at least 60 days in advance of such a change. This may be accomplished
by means of posting this information on Part D sponsor Web sites.

50.12 – Sharing Claims Data
(Rev.)
CMS does not have the authority to require data exchanges between Part D sponsors and
the States except as required for COB purposes. While the MMA requires Part D
sponsors to allow SPAPs and other entities providing prescription drug coverage to
“coordinate” with them, this language does not support requiring coordination of
anything but payment. However, CMS strongly encourages Part D sponsors to
independently share historical and ongoing data on these shared enrollees with other
payers – particularly with States – provided such disclosure is consistent with the
requirements of the HIPAA Privacy Rule. CMS encourages Part D sponsors to discuss
reciprocal arrangements with State Medicaid Plans under which Part D sponsors would
provide Part D drug claims data in exchange for both historical prescription drug claims
data and ongoing medical claims (particularly diagnoses) on the dual eligible population
to assist with medication therapy management and other quality assurance programs.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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CMS also encourages sponsors to provide for this reciprocal data exchange without the
charging of user fees.
Part D sponsors and States may negotiate the details regarding the development of a
Standard File Format for Patient Drug History and Standard Data Sharing Agreement.
NCPDP, which is the national standards organization for pharmacy claims, has adopted
the “Post Adjudication Standard”. Section 10 of the “Post Adjudication Standard
Implementation Guide, Version 1.0” contains the “Post Adjudication Utilization Record”
which is the recommended standard record States and Medicare Part D sponsors could
use to exchange drug history information. In order to access the NCPDP documentation
and use the Post Adjudication Utilization Record, the States and/or their contractors must
be members of NCPDP.
If the States and Medicare Part D sponsors agree to exchange enrollees’ drug history
information, states and sponsors are new business associates. It is therefore necessary
that the exchange of data complies with the requirements of HIPAA. To accomplish this,
a Patient Drug History Data Sharing Agreement signed by the Medicare Part D sponsor
and the State must be in place prior to executing file transfers between these entities.
CMS believes States have the authority under 42 USC §1396a(a)(25) to request
information to coordinate benefits States may have paid under the State Medicaid
program. CMS will be issuing guidance to States regarding the implementation of these
statutory requirements. CMS encourages Part D sponsors to review 42 USC
§1396a(a)(25) as well as the related CMS guidance.

50.13 – Applying Medicare Secondary Payer (MSP) Requirements
(Rev.)
The MMA (§1860D-2(a)(4)) extended MSP laws applicable to MA organizations to Part
D sponsors. Accordingly, Part D sponsors will have the same responsibilities under MSP
laws as do MA plans, including collection of mistaken primary payment from insurers,
group health plans, employer sponsors, enrollees, and other entities; and the interaction of
MSP rules with State laws. Part D sponsors must properly apply MSP laws and
regulations to their payments (e.g., working aged, WC).
Part D sponsors are responsible for adjudicating enrollees’ claims in accordance with
the following MSP rules. Also, sponsors are responsible for identifying and recovering
any MSP-related mistaken payments and submitting associated adjustments to CMS.
According to law, Medicare is the secondary payer in the following situations:

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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1. Employer group health plans (EGHP) MSP
a. Working Aged GHP – The beneficiary is actively working and is covered
under the employer's GHP or the beneficiary's spouse is actively working and
the beneficiary is covered under the spouse's employer GHP (≥20 employees;
or another employer in GHP> 20 employees.) (42 U.S.C. §1395(y)(b)).
b. Disability with GHP – The beneficiary is actively working for a large
employer and is covered under the employer's GHP, or a beneficiary’s family
member is actively working for a large employer and the beneficiary is
covered under the family member’s employer GHP (LGHP, ≥100 employees).
c. End Stage Renal Disease (ESRD) GHP – GHP (any size) is primary for the
first 30 months when an individual also becomes eligible for Medicare Part A
due to ESRD status. After30 months of Part A eligibility, Medicare becomes
primary.
2. Non-GHP MSP
a. WC – Beneficiary covered under WC due to job-related illness or injury.
b. Black Lung (BL) – The beneficiary has black lung disease and is covered
under the Federal Black Lung Program.
c. No-Fault/Liability – The beneficiary is covered by no-fault or liability
insurance due to an accident.
However, Part D sponsors should not immediately pay only as secondary. The action
required of the Part D sponsor is dependent on the type of other primary payer as
follows:
1. For the types of Employer Group Health Plans (EGHP) listed above, the Part D
sponsor will always deny primary claims that fall within the EGHP’s applicable
coverage dates and default to MSP. The types as listed above include: working aged
GHP, disability GHP, and ESRD GHP for first 30 months of Medicare Part A eligibility.
2. For WC, BL, and No-Fault or Liability coverage, the sponsor will always make
conditional primary payment unless the sponsor is aware that the enrollee has
WC/BL/No-Fault/Liability coverage and has previously established that a certain drug is
being used exclusively to treat a related injury. For example, when a beneficiary refills a
prescription previously paid for by WC, the Part D sponsor may deny primary payment
and default to MSP.

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displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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In all other instances, the Part D sponsor is required to make conditional primary
payment then recover any mistaken payments where it should have only paid secondary
to WC/BL/No-Fault/Liability coverage. For example, if a sponsor does not know whether
a given drug for which it is billed is related to the covered injury, the sponsor must pay
for the drug (if it is a covered Part D drug) and later retrieve any amounts that the other
insurance was supposed to cover.
This section provides clarification regarding a limited number of MSP situations;
however, Part D sponsors are required to apply all MSP laws whether or not they are
specifically mentioned here.

50.13.1 – Workers’ Compensation
(Rev.)
Payment under Medicare may not be made for any item or service when payment has
been made, or can reasonably be expected to be made, for such item or service under a
WC law or plan of the United States or any state. CMS recognizes that diagnostic
information is not collected at the point of sale, however, CMS expects Part D sponsors
to make good faith efforts to identify claims associated with WC.
It is, therefore, imperative that Medicare’s interests be protected when parties enter into
WC settlements. One method of protecting Medicare’s interest in a WC situation is a
Workers’ Compensation Medicare Set-aside Arrangement (WCMSA), which allocates a
portion of the WC settlement for future medicals and future prescription drug expenses.
“Future medicals and future prescription drugs” are those services and items provided
after the final WC settlement. CMS urges Medicare beneficiaries (and individuals who
expect to become entitled to Medicare within 30 months of receiving a WC settlement)
who are parties to WC settlements, judgments or awards to submit settlement
documentation to CMS for review prior to settlement to ensure the terms protect
Medicare interests. CMS reviews WCMSA proposals for Medicare beneficiaries with
WC settlements greater than $25,000 and for individuals who are within 30 months of
Medicare entitlement and possess a WC settlement greater than $250,000. Based on this
review, CMS will either concur with the proposal or counter with a different amount.
Additional information with regard to CMS’ WCMSA policy and procedures is available
on the CMS Web site, refer to Appendix B for the specific Web address.
WCMSA funds are administered by the claimant or a professional administrator
employed by the workers’ compensation employer, carrier or the claimant. CMS keeps a
record of the WCMSA amount determined by CMS to be adequate to protect Medicare’s
interests with regard to the claimant’s future medical treatment and/or prescription drug

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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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expenses. The claimant/professional administrator is responsible for submitting an
annual attestation form or professional accounting to the Medicare contractor. This
document attests that the claimant has appropriately expended the WCMSA funds for that
year.
In order to assist the Part D sponsors in making proper payments with regard to
WCMSAs, CMS will provide the Part D sponsors with the WCMSA amount. The
WCMSA amount is the combined amount for future medical and future prescription drug
costs related to the WC injury. Exhaustion of the combined WCMSA amount includes
both services (i.e., future prescription drug treatment and future medicals). For example,
if the total WCMSA amount provided to the Part D sponsors is $10,000, this amount can
include $7,000 for future prescription drug treatment and $3,000 for future medical
expenses. However, it is important that the Part D sponsors understand that even though
the total WCMSA amount is $10,000, the final actual expenditures could be $6,000 for
future prescription drug treatment and $4,000 for the future medical expenses, which will
still appropriately exhaust the WCMSA.
When the funds in a WCMSA are exhausted, the Part D sponsors must notify CMS so
that the MSP occurrence may be terminated. This is currently accomplished by reporting
the exhaustion of the WCMSA to the COB contractor. Once the entire CMS-approved
WCMSA has been properly exhausted, the Medicare Part D plan sponsor will resume
responsibility for paying claims for covered Part D drugs as though there were no WC
settlement.

50.13.2 – Flexible Savings Accounts (FSAs), Health Savings Accounts
(HSAs), Archer Medicare Savings Accounts (MSAs), and Health
Reimbursement Accounts (HRAs)
(Rev.)
Part D sponsors should not require beneficiaries to use the funds in their FSAs, HSAs, or
MSAs before making payments when the group health plans attached to such accounts
are primary under the MSP laws. However, under the MSP group health plan laws (e.g.,
when a beneficiary with current employment status has an HRA through his employer),
sponsors should make secondary payments after HRA funds are used.
When a beneficiary is non-working, an HRA is secondary to Medicare, but drug costs
paid or reimbursed from the HRA are not TrOOP-eligible.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

50.14 – Executing Business Associate Agreement with TrOOP
Contractor
(Rev.)
Consistent with the HIPAA Privacy Rule (45 CFR Parts 160 and 164), the TrOOP
facilitation contractor will be a business associate of Part D sponsors for the purpose of
performing TrOOP and COB functions. Accordingly, each Part D sponsor will be
required to execute a business associate agreement with the TrOOP facilitation contractor
covering TrOOP and COB functions. Note, however, that PBM subcontractors to Part D
sponsors will not be required to enter into separate business associate contracts with the
TrOOP facilitation contractor, since data at the PBM will be protected through business
associate agreements between the Part D sponsor and the PBM. To facilitate the
execution of these agreements between the TrOOP facilitation contractor and the Part D
sponsors, a standard language business associate agreement has been developed by CMS
and sponsors are strongly encouraged to sign this agreement without modification.

50.15 – Payment Reconciliation
(Rev.)
Because of program start-up issues in 2006, lags in the information available to
pharmacies at the point-of-sale regarding which Part D sponsor to bill may have resulted
in the pharmacies’ having access to outdated or incomplete information. Because
pharmacies generally relied in good faith on this information, in some cases the wrong
payer paid for a prescription. Given the volume of drug claims that pharmacies would
need to re-adjudicate as a result of incorrect Part D enrollment information available at
the point-of-sale, re-adjudication would have imposed a significant administrative and
financial burden on pharmacies. Therefore, payer-to-payer reconciliation procedures
were developed to mitigate the administrative and financial burden involved with readjudication of claims.
Although this payer-to-payer process was designed initially to be a temporary measure
during Part D’s start-up phase, CMS requires that sponsors continue to use the payer-topayer process. In addition, unforeseeable future events may create further need for
processes to reconcile payments when a payer other than the correct Part D sponsor of
record pays as primary for a covered Part D drug for an enrolled beneficiary. These other
reconciliation processes may be developed by CMS to accomplish payment reconciliation
without involving pharmacy reversal and re-adjudication of claims or the public release
of a payer’s proprietary information, such as negotiated rates.

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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

50.15.1 – Plan-to-Plan Reconciliation During Transition Periods
(Rev.)
The opportunity for beneficiaries to change their Part D plan enrollment during the
coverage year creates situations in which, due to lags associated with the enrollment
process and information systems updates, the sponsor from which a beneficiary has
transferred makes payment for covered prescription drug costs incurred after the effective
date of the beneficiary's enrollment in the new sponsor of record. In 2006, CMS
developed a plan-to-plan (P2P) reconciliation process with sponsor participation. This
process, implemented in three phases, enabled CMS to process prescription drug event
(PDE) data in these P2P transition situations and allow for financial reconciliation
between the affected Part D sponsors. The process's design reflects the consensus of
sponsor participants to prevent disclosure of proprietary pricing information by masking
the NDC coding. Furthermore, to protect sponsors from exposure to costs outside the
initial formulary transition period, CMS established a 30-day P2P transition period. The
P2P transition period ends on the later of:
1. 30 days after the effective date of the new plan enrollment, or
2. 30 days after the date the new contract of record submits the enrollment to CMS.
To address the payment reconciliations that are needed to resolve these enrollment
transition issues, CMS requires the on-going use of the P2P reconciliation and
reimbursement process. Therefore, throughout each coverage year, Part D sponsors will
continue to receive monthly P2P reports showing the payables and receivables for which
financial settlement is required. PDE guidance describing the process is available on the
CMS Web site; see Appendix B for the specific Web address.

50.15.2 – Other CMS-Defined Reconciliation Processes
(Rev.)
Unforeseeable events in the future may create the need for processes that would require
Part D sponsors to coordinate benefits on a timely basis with other third parties and use
CMS-developed reconciliation processes, when established, in situations in which a payer
other than the correct Part D sponsor of record pays for covered Part D drug costs as a
primary payer. For example, this was the case in 2006 with respect to the State-to-Plan
Reconciliation Project in which some States made drug payments for dual eligible
beneficiaries and low-income subsidy entitled beneficiaries enrolled in Part D and were
subsequently reimbursed by CMS through a special demonstration authority. Processes,
similar to the State -to-Plan Reconciliation process employed in 2006, may need to be

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developed by CMS in lieu of requesting pharmacy claims reversals and re-adjudications
or the public release of a payer’s proprietary information (such as negotiated prices).

50.15.3 – Retrospective Resolution Directly with Other Payers
(Rev.)
The plan-to-plan reconciliation process resolves those situations in which a Part D
sponsor other than the sponsor of record paid claims for a beneficiary during the initial
transition period. However, situations will continue to arise outside the plan-to-plan
process in which other payers that are not Part D sponsors either pay, but should not have
paid at all, or pay more than they should have because they paid out of the correct payer
order. In these situations, Part D sponsors are required to work with these providers of
other prescription drug coverage to resolve these payment issues. Other payers, as well
as beneficiaries, are entitled to seek compensation from the Part D sponsor once the Part
D enrollment is confirmed. The sponsor should have a process in place to handle the
payment resolution and this process should not be restricted by the implementation of
timely filing requirements.
Further, Part D sponsors must determine whether or not any amount paid by these other
payers was TrOOP-eligible and must adjust, as necessary, the affected beneficiaries’
TrOOP balances. For example, the IHS, Tribes and Urban pharmacies are non-TrOOP
eligible payers when Federal funds are utilized.
As noted in the discussion of IHS/Tribal health coverage in Appendix E, some Tribes
may use exclusively non-Federal funding to pay Part D coverage on behalf of American
Indian and Alaska Native (AI/AN) Medicare beneficiaries when receiving services
through I/T/Us and other Part D providers. To the extent that a Tribe uses only nonFederal funding for all its medical services, payments made on behalf of AI/AN
beneficiaries for Part D cost-sharing may count toward TrOOP (provided no other
sources of funding otherwise render it a government-funded health program). Therefore,
Part D sponsors must ensure that they have a process in place to distinguish among
Tribes whose Part D cost-sharing payments count toward TrOOP (those that are
exclusively non-Federally funded) versus those whose Part D cost-sharing payments do
not count toward TROOP (those that, for example, receive any Federal or other
government funding for medical services). Many Tribal payments may not be made on
an on-line real-time basis and it may be difficult for sponsors to recognize those that are
TrOOP-eligible. In light of the difficulty, sponsors when approached by beneficiaries, or
by Tribes on their behalf, must have a process to make retroactive adjustments of TrOOP
balances.

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50.15.4 –Re-adjudication Versus Pharmacy Reprocessing
(Rev.)
If the total payment to the pharmacy for a claim was correct, however the sponsor
subsequently determines that an adjustment is required that does not affect the total
payment, but does alter the sponsor-beneficiary liability split, the sponsor must readjudicate the claim within its own system without involving the pharmacy. This is most
likely to occur when the sponsor corrects low-income beneficiary cost-sharing subsidy
levels.
Part D sponsors are encouraged to avoid pharmacy reprocessing, but CMS recognizes
that reversals may be appropriate under certain circumstances. Sponsor requests for
pharmacy reprocessing should in general be limited to those situations where the total
payment to the pharmacy changes, for example, in situations involving a pricing error.
Sponsors are responsible for reimbursing or collecting amounts from beneficiaries that
result from the reprocessing of these claims and should not transfer this responsibility to
pharmacies.

50.15.5 – Claims Filing Timeframes
(Rev.)
A number of issues associated with Part D, such as multiple payers, payer order, and
retroactive eligibility, create challenges for coordinating benefits among Part D sponsors
and other providers of prescription drug coverage. When all payer information is
available at the point-of-sale, pharmacies typically serve as the intermediary facilitating
coordination between Part D sponsors and other payers. However, when the information
necessary to identify the correct primary payer for Part D drugs provided to Medicare
beneficiaries enrolled in Part D sponsors is lacking, pharmacies may, through no fault of
their own, bill the State and other payers instead of a beneficiary’s Part D sponsor.
CMS addressed a major portion of these situations occurring during the first quarter of
2006 through special one-time reconciliation processes. The balance of these situations,
as well as those occurring subsequently, may some times require resolution through
claims reversal and rebilling. In their role of facilitating coordination between Part D
sponsors and payers, some pharmacies are agreeing to reverse incorrect claims and bill
the proper Part D sponsor. CMS believes that in those circumstances in which the
pharmacy is not at fault it would inappropriate for Part D sponsors to impose the
conventional 30-90 day timely filing limits rather than a less restrictive timeframe, as this
industry standard generally applies only when the pharmacy is in a position to correctly
bill, but fails to do so. CMS also believes that this process is appropriate for use in the

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Point of Sale Facilitated Enrollment process when incorrect health insurance claim
numbers (HICNs) were used.
To ensure effective coordination between Part D sponsors, SPAPs and other entities
providing prescription drug coverage, CMS required Part D sponsors to implement a
180-day timely claims filing limit for claims incurred January 1 through June 30, 2006.
This afforded pharmacies when not at fault for the original billing error adequate
opportunity to reverse and rebill such claims. This claims filing window was necessary
to accommodate the identification and resolution of coordination of benefits issues
requiring claims reversal and rebilling to appropriate payers.
Beginning in 2007, in lieu of a requirement for a 180-day timeframe, CMS requires
sponsors to establish at least a 90-day claims filing timeframe and to make appropriate
allowances for COB claims on a case-by-case basis. Once the next HIPAA coordination
of benefits transaction standard for retail pharmacy drug claims is effective, Part D
sponsors could consider using certain delay reason codes in the external code list,
specifically those that specify the reason for the delay in claims submission, in field
number 357-NV to differentiate COB-related delays from other types of delays.

60 – Coordination of Benefit Activities of Non-Part D Payers
(Rev.)

60.1 – Reporting the Existence of Prescription Drug Coverage Provided
to Enrollees
(Rev.)
As discussed in section 30.1 of this chapter, CMS expects that other payers will provide
information regarding any other prescription drug coverage that their Medicare enrollees
may have. As noted in section 40.1, Medicare beneficiaries are required to disclose this
information to Part D sponsors; consequently, other payers responsible for payment or
reimbursement of Part D claim cost sharing should assist their enrollees in discharging
this obligation. There are certain legal requirements to inform CMS when another payer
provides coverage that is primary to Medicare under the MSP laws (e.g., employers sent
the Data Match questionnaire described later in this chapter, the 42 CFR 411.25 notice
requirement). For this required MSP reporting, affected entities should use the MSPspecific reporting methods CMS requires (e.g., Data Match forms) or provides (e.g,
VDSA in lieu of Data Match forms). However, for seamless benefit coordination and
accurate TrOOP accounting, CMS strongly encourages payers to report their coverage
information even when it is not legally required.

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required to complete this information collection is estimated to average one hour per response, including the time to review
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To do this, CMS makes available a direct and easy data exchange process through a
vendor, the COB contractor. A data exchange with CMS allows other payers:
1. To assist beneficiaries in fulfilling their statutory obligation to disclose third
party reimbursement for Part D drug costs.
2. To avoid the cost of paying as primary when the payment should be secondary to
Part D.
3. As a sponsor of record, to be notified if a paid claim is reversed or adjusted
outside an on-line adjudication process.
4. If TrOOP-eligible, to cease payments for beneficiaries receiving the full lowincome subsidy who reach the catastrophic phase of the benefit, since at that
point, Medicare fully subsidizes the beneficiary's incurred costs for covered Part
D drugs.
The data exchange agreements require payers to periodically submit an input file
containing certain enrollee populations. In return, the payer will receive a response file
from the COB contractor indicating which of its enrollees are Medicare Part D
beneficiaries. More information about the COB process offered by CMS is available on
the Medicare COB Web site. See Appendix B for the specific Web address.

60.2 – Obtaining and Reporting Rx Identifiers
(Rev.)
Payers supplemental to Medicare should obtain a unique RxBIN and/or PCN
combination that will identify their paid claim responses for TrOOP tracking purposes for
those situations in which Part D is the primary payer. CMS recommends that payers
obtain an RxBIN and/or PCN combination unique to each separate plan they offer in
order to distinguish among all of their plans. This allows each benefit plan to fulfill its
obligation as a supplemental payer if it is identified on the COB file as secondary
coverage.
In order for Rx identifier information to be available at point-of-sale through the TrOOP
facilitation contractor and Part D sponsors, payers must report these unique identifiers to
CMS through the COB reporting process described in section 30 of this chapter. Payers
primary to Medicare will continue to use their existing BIN and/or PCN.
NOTE: Not all other prescription drug coverage will have Rx identifiers. For instance,
incident-driven coverage, such as Worker’s Compensation, does not normally provide

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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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electronic, point-of-sale benefits and thus does not need such identifiers; also SPAPs that
only offer premium assistance will not have them.

60.3 – Supplying Claims Information When a Supplemental Payment Is
Made
(Rev.)
In order for the COB and TrOOP tracking processes to function as effectively as possible,
other payers should supply paid claims information to the Part D sponsor after making a
payment that is supplemental to a Medicare payment. This will happen automatically if
the other payer reports their coverage information to CMS in accordance with the
processes described in section 60.1 of this chapter with the appropriate Rx BIN and/or
PCN combination to enable the TrOOP facilitator to identify the supplemental payer’s
status.
However, if the other payer is aware that the TrOOP facilitation process was not used for
some reason, or if the other payer does not have electronic claims capability, the payer
may alternatively submit paper claims or make arrangements to submit information in
another format in order for the data to be available for TrOOP calculations by Part D
sponsors. Further information on the batched claims process is available on the TrOOP
facilitator’s Web site; see Appendix B for the facilitator's Web address.

60.4 – Coordinating with Part D Sponsors for Payment of Premiums
(Rev.)
If one of the “other payers” listed in 42 CFR 423.464 chooses to pay Part D premiums on
behalf of its members who are enrolled in Part D sponsors, that payer should coordinate
directly with the Part D sponsors in question. Part D sponsors are required to allow and
facilitate premium payment coordination with other payers. If the sponsor fails to
comply with this requirement, it cannot disenroll a beneficiary for failure to pay
premiums. Further discussion on coordination of premiums is contained in section 50.6
of this chapter.

60.5 – Following MSP Laws and Order of Payment Standards
(Rev.)
MSP laws apply to all payers, including those providing prescription drug coverage, and
all payers are legally required to make themselves aware of and follow such laws. This
chapter provides clarification regarding the limited number of MSP situations described

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below; however, payers are required to know and apply all MSP laws whether or not they
are mentioned in this chapter.

60.5.1 –Internal Revenue Service (IRS)/Social Security Administration
(SSA)/CMS Data Match
(Rev.)
IRS/SSA/CMS Data Match requirements pursuant to the Consolidated Omnibus Budget
Resolution Act of 1989 apply to prescription drug coverage. Employers required to
complete Data Match forms must include prescription drug information – including their
ordinary RxBINs, PCNs, RxGRPs, and RxIDs – on their Data Match forms. Data Match
requirements may be fulfilled by obtaining a VDSA, (see section 30.1 of this chapter for
a brief description), and providing coverage information through that process. Note that
for Data Match and other MSP purposes, payers primary to Medicare do not need to
report the unique RxBIN and PCN combination they acquired for TrOOP purposes
because MSP claims do not go through the TrOOP facilitation process. (However,
beneficiary cost sharing on Part D sponsor claim payments as a secondary payer will
count toward TrOOP.)

60.5.2 –FSAs, HSAs, MSAs, and HRAs
(Rev.)
Payers that are required to report group health plan coverage to CMS under the MSP laws
do not have to report the FSAs, HSAs, or MSAs that may be attached to such coverage.
However, HRAs are group health plans, and payers should report HRAs to CMS in the
same manner as group health plan information is reported. Note that all of these accounts
must be structured to comply with Federal laws, including laws that may restrict their use
by Medicare beneficiaries.

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this information collection is 0938-0978. The time required to complete this information collection is estimated to average one hour per response, including the time to review instructions, search
existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving
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A p p e n d ix A : T rO O P F a c ilita tio n P ro c e ss

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existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving
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TrOOP Facilitation
Part D Plan
TrOOP facilitator builds
and routes the “N”
transaction to the
appropriate Part D Plan

Claims
Router/Switch

Secondary Claims
Status: Paid or Reversed

TrOOP
Facilitator

NCPDP “N” Transaction

Part D
Membership
File

“N” transaction contains
the TrOOP costs for Part
D Plans. Also
accommodates
adjustments & reversals

File has Part D
enrollment and other
insurer information

Solid = Request transaction
Dashed = Response transaction

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for
this information collection is 0938-0978. The time required to complete this information collection is estimated to average one hour per response, including the time to review instructions, search
existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving
this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for
this information collection is 0938-0978. The time required to complete this information collection is estimated to average one hour per response, including the time to review instructions, search
existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving
this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Eligibility Transaction
Pharmacy

E1Request
E1Reply

Claims Network

E1Request
E1Reply

Eligibility
Verif ication
Serv ice

History

CMSEnrollment
FileImport

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this information collection is 0938-0978. The time required to complete this information collection is estimated to average one hour per response, including the time to review instructions, search
existing data resources, gather the data needed, and complete and review the information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for improving
this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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Appendix B – COB-related Web Sites
(Rev.)
CMS Medicare Prescription Drug Coverage Contracting
http://www.cms.hhs.gov/PrescriptionDrugCovContra/
CMS WCMSA Policy
http://www.cms.hhs.gov/WorkersCompAgencyServices
Dual Eligible PACE Plan Beneficiary Accumulated True Out-of-Pocket Cost Calculator
http://www.cms.hhs.gov/apps/troopcalculator/
ECRS User Guide
http://www.cms.hhs.gov/manuals/downloads/msp105c05_att1.pdf
Medicare COB
http://www.cms.hhs.gov/COBGeneralInformation/
Medicare Marketing Guidelines
http://www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/FinalMarketingGui
delines.pdf
National Council for Prescription Drug Programs
www.ncpdp.org
National Institute of Standards and Technology
http://csrc.nist.gov/groups/STM/cmvp/documents/140-1/1401vend.htm
OIG Guidance on Part D and PAP
http://www.oig.hhs.gov/fraud/docs/advisoryopinions/2006/AdvOpn06-03F.pdf
PAP Data Sharing Agreements
http://www.cms.hhs.gov/PrescriptionDrugCovGenIn/07_PAPData.asp#TopOfPage
PDE Guidance
http://www.cms.hhs.gov/DrugCoverageClaimsData/Downloads/PDEGuidance.pdf
PDP Eligibility, Enrollment and Disenrollment Guidance
http://www.cms.hhs.gov/MedicarePresDrugEligEnrol/Downloads/CurrentPDPEnrollme
ntGuidance.pdf
Plan Communications User’s Guide (PCUG)

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http://www.cms.hhs.gov/mmahelp/downloads/PCUG_Main_Guide_v3_Final_Combin
ed_121007.pdf.
Public Use Files (PUFs)
http://www.cms.hhs.gov/NonIdentifiableDataFiles/09_PrescriptionDrugPlanFormula
ryandPharmacyNetworkFiles.asp#TopOfPage
RelayHealth
http://medifacd.relayhealth.com/home/MediFacd_home.htm
TrOOP Facilitation Contractor
http://medifacd.relayhealth.com/home/MediFacd_home.htm

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Appendix C – COB Survey
(Rev.)

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MEDICARE QUESTIONNAIRE FOR BENEFICIARIES WITH PRESCRIPTION
DRUG COVERAGE
NAME

DATE OF BIRTH
MEMBER ID

SECTION A – INFORMATION ABOUT YOU
1) Are YOU currently employed?
YES
NO
go to SECTION B)
2) Do YOU have any group health plan coverage through your current employer?
YES
NO
(If NO, go to SECTION B)
3) How many employees, including yourself, work for your employer?
Don’t know
1-19
20-99
100 or more

(If NO,

Please provide information about the employer and the employer group health plan in the spaces
below:
EMPLOYER NAME
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

NAME OF GROUP HEALTH PLAN
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

GROUP IDENTIFICATION NUMBER
DATE INSURANCE COVERAGE BEGAN
POLICY NUMBER
▬
▬
M M
D D
Y Y Y Y
4) Does your employer group health plan cover prescription drugs?
YES
NO
go to SECTION B)

(If NO,

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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Please use your insurance card to provide the following information if available:
Rx GROUP
Rx PCN
MEMBER ID
BIN

Rx

SECTION B – INFORMATION ABOUT YOUR HUSBAND/WIFE/FAMILY MEMBER
1) Is your family member currently employed? YES
NO
N/A
(If NO, or N/A,
go to SECTION C)
Husband/Wife/Family Member’s Name

First
Last

2) Does your husband/wife/family member have group health insurance coverage through their
employer?
YES
NO
(If NO, STOP, go to SECTION C)
3) How many employees including your family member, work for the employer from whom they
have health insurance?
Don’t know
1-19
20-99
100 or more
(If less than 20,
STOP, go to Section C)
(TURN PAGE
OVER)

SECTION B – INFORMATION ABOUT YOUR HUSBAND/WIFE/FAMILY MEMBER,
CONTINUED
4) Does your husband/wife/family member’s employer group health plan cover prescription
drugs?
YES
NO
(If NO, go to SECTION C)
Please use your husband/wife/family member’s insurance card to provide the following
information if available:
Rx Group
Rx PCN
MEMBER ID
Rx BIN
Please provide information about the employer and the employer group health plan in the spaces
below:
EMPLOYER NAME
ADDRESS

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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

ADDRESS
CITY
ZIP CODE

STATE

NAME OF GROUP HEALTH PLAN
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

GROUP IDENTIFICATION NUMBER
DATE OF INSURANCE COVERAGE BEGAN
POLICY NUMBER
▬
▬
M M
D D
Y Y Y Y
SECTION C – INFORMATION ABOUT YOUR SUPPLEMENTAL COVERAGE
1) Do you have any supplemental prescription drug coverage under your policy or another family
member?
YES
NO
(If NO, go to SECTION D)
If YES, what is your relationship to the policy holder?
Self
Family Member
Both
2) What type of policy is your supplemental drug coverage?
TRICARE
MEDIGAP
State Pharmaceutical Assistance
Program (SPAP)
Other
Please print below the name, and address of the insurance company providing your prescription
drug coverage:
NAME
ADDRESS
ADDRESS
CITY
ZIP CODE

POLICY NUMBER
BEGAN

STATE

DATE COVERAGE
▬
M

Y Y Y Y
Please use your insurance card to provide the following information if available:

M

▬
D

D

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Rx Group

Rx PCN

MEMBER ID
Rx BIN

(CONTINUED ON NEXT PAGE)

SECTION D – MORE INFORMATION ABOUT YOU
1) Are YOU receiving Black Lung Benefits?
YES
NO
2) Are YOU receiving Worker’s Compensation benefits?
YES
NO
3) Are YOU receiving treatment for an injury or illness which another party could be held liable or
could be covered under no-fault or auto insurance?
YES
NO

If YOU answered YES to any questions in this section, go to SECTION E
If YOU answered NO to all of these questions, sign below and return this
form.
YOUR SIGNATURE
AREA CODE

PHONE NUMBER

▬

SECTION E – MORE INFORMATION ABOUT YOUR BENEFITS
1) If YOU are getting Black Lung (Coal Miner’s) Medical Benefits, print the date the benefits
began.
▬
▬
M M
D D
Y Y Y Y
2) If YOU are now receiving any medical services related to an illness or injury which occurred on
the job, for which YOU have or will file a Worker’s Compensation claim, print the date the illness
or injury began.
▬
▬
M M
D
D
Y Y Y Y
Please provide information about the employer, insurance carrier, and attorney in the spaces
below:
EMPLOYER NAME
ADDRESS

▬

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

ADDRESS
CITY
ZIP CODE

STATE

NAME OF INSURANCE CARRIER
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

POLICY OR CLAIM NUMBER
NAME OF ATTORNEY (If Applicable)
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

BRIEF DESCRIPTION OF ILLNESS OR INJURY

(TURN PAGE OVER)

SECTION E – MORE INFORMATION ABOUT YOUR BENEFITS, CONTINUED
3) If YOU are now getting any treatment for an illness or injury for which another party could be
held liable, please print the date of illness or injury:
M M
NAME OF INSURANCE CARRIER

D

D

Y

Y

Y

Y

ADDRESS
ADDRESS
CITY
ZIP CODE
POLICY OR CLAIM NUMBER

STATE

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

NAME OF ATTORNEY (If Applicable)
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

BRIEF DESCRIPTION OF ILLNESS OR INJURY

4) If YOU are now getting any treatment for an illness or injury which could be covered under nofault or automobile insurance, print the date of the illness or injury:
▬
M

M

▬
D

D

Y

Y

Y

Y

NAME OF INSURANCE CARRIER
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

POLICY OR CLAIM NUMBER
NAME OF ATTORNEY (If Applicable)
ADDRESS
ADDRESS
CITY
ZIP CODE

STATE

BRIEF DESCRIPTION OF ILLNESS OR INJURY

YOUR SIGNATURE
AREA CODE
▬
Return To:

Plan Name

PHONE NUMBER
▬

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Plan Address
City, State

Zip Code

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Appendix D
(Rev.)

Part D Sponsor Implementation Guidance—
Automated TrOOP Balance Transfer

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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Part D Plan Sponsor Guidance on the Financial Information Reporting
(FIR) Transactions for Transferring True Out-of-Pocket Balances
Table of Contents
Background on TrOOP Balance Transfers
Implementation Timing and Issues
Pre-Implementation Testing and Certification
Plan Enrollment Types
Procedures for TrOOP Balance Transfer using FIR Transactions
Role of the TrOOP Facilitator
Inclusion of non-plans of record
Evaluation of transaction responses
Part D Sponsors’ Requirements
Multiple enrollments within a contract
Multiple Enrollment Types
Receipt of Inquiry when a prior plan is known
Sponsor requested FIR transactions
Correction of unacceptable responses
FIR transaction rejects
Timing of the FIR Inquiry and Update Transactions
FIR Transaction Response Time
Exceptions from Automated Processing
Scenarios

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Background on TrOOP Balance Transfers
Part D rules require sponsors to track the beneficiary’s true out-of-pocket (TrOOP) costs
and gross covered drug spending and correctly apply these costs to the TrOOP and
benefit limits in order to correctly place the beneficiary in the benefit and provide the
catastrophic level of coverage at the appropriate time. The TrOOP threshold and gross
covered drug spending are calculated on an annual basis and must be transferred between
Part D plans if a beneficiary disenrolls and re-enrolls at any time before the end of the
coverage year.
The TrOOP-related data must also be transferred between Part D plans in those
circumstances in which a Part D plan other than the plan of record paid for covered Part
D drug costs as a primary payer and subsequently becomes aware; for example, through a
CMS enrollment reconciliation process, that the beneficiary is enrolled in another Part D
plan.
Currently, CMS requires the use of a manual process to transfer the TrOOP-related data
between plans; however, the National Council for Prescription Drug Programs (NCPDP)
has approved a Financial Information Reporting (FIR) transaction standard that will
support the automated plan-to-plan transfer of these data. The “TrOOP facilitation
process,” established by CMS to capture TrOOP-relevant data from Part D sponsors online and send these data to the appropriate Part D Plan for TrOOP calculation, will use
the FIR to electronically transfer the TrOOP-related data between plans.

Implementation Timing and Issues
Part D sponsors must be prepared to initiate systems testing in the new transactions by
September 1, 2008, complete systems certification by November 1, 2008, and be fully
prepared to respond to transactions for 2009 enrollees on January 1, 2009. Previously,
CMS had announced a July 1, 2008 implementation. However, this new implementation
timeline will obviate the need for a mid-year conversion from the current manual TrOOP
data transfer process to the automated FIR process and the development of associated
coding unique to the implementation year. With the January 1, 2009, implementation of
the new FIR transactions to electronically transfer TrOOP and gross covered drug costs,
further routine need for the manual data transfer process will be eliminated.

Pre-Implementation Testing and Certification
The TrOOP facilitator in collaboration with CMS, NCPDP and industry representatives
will be developing a set of testing scenarios and a FIR testing certification process.
Guidance describing this process will be released when available. Part D sponsors must
ensure that their pharmacy benefit managers (PBM) or other processors are certified by

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

November 1, 2008. Therefore, CMS needs Part D sponsors to require their
PBM/processor to cooperate fully with and respond timely to all contacts from the
TrOOP facilitator, to participate in the testing process and achieve certification.
CMS reminds sponsors that under the regulations at 42 CFR 423.464, Part D sponsors are
required to coordinate benefits with other Part D plans to transfer TrOOP and gross
covered drug costs when a beneficiary changes enrollment during the coverage year to
enable the new plan of record to properly position the beneficiary in the benefit.
According to this regulation, sponsors must also comply with CMS established processes
to ensure coordination between plans. If the procedures and timelines outlined in the FIR
testing and certification guidance are not adhered to by Part D sponsors and any
applicable plan contractors, CMS has the authority to consider the sponsor out of
compliance with the Part D requirements and to take appropriate action.
CMS believes the extended timeframe for implementation of the automated TrOOP
balance transfer process will allow adequate time for all sponsors to program and test.
However, if any sponsors are not prepared to respond to the FIR transactions at the time
of implementation, the other Part D sponsors will be required to operate dual systems for
TrOOP balance transfer data, responding to electronic transactions and transferring data
received manually from non-compliant sponsors to systems for electronic retrieval.

Plan Enrollment Types
For purposes of the automated TrOOP balance transfer process,
1. A “plan of record” - is a Part D sponsor with a valid, effective enrollment in the
CMS system for a Medicare beneficiary for whom the sponsor receives final
monthly payment. A sponsor may be the beneficiary’s initial plan of record for
the coverage year, a subsequent plan of record with a closed period of enrollment,
and/or the current plan of record.
2. A “non-plan of record” is a Part D sponsor that paid covered Part D drug claims
for a Medicare beneficiary for whom the sponsor did not have a valid and
effective enrollment in the CMS system and for whom the sponsor did not receive
final monthly payment. This may occur in situations in which the sponsor
submitted an enrollment transaction that was processed, but then audited off due
to CMS’ receipt of a subsequent valid enrollment transaction for the same
effective date, or if the sponsor’s enrollment transaction was not accepted by
CMS and, therefore, is not in the CMS system. There might be multiple nonplans of record for a beneficiary during a coverage year, even for the same month.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Procedures for TrOOP Balance Transfer Using FIR Transactions
Role of the TrOOP Facilitator
Using the information the CMS TrOOP faciliation contractor receives nightly from the
CMS Medicare Beneficiary Database (MBD), the facilitator will identify when a change
in enrollment at the contract-level has occurred and will generate a FIR transaction to
each prior sponsor with which the beneficiary was enrolled or which paid covered part D
drug claims for the beneficiary during the coverage year. Transactions will begin with a
FIR Inquiry to the earliest sponsor on record in the coverage year; that sponsor's Inquiry
response will be returned to the facilitator. Each sponsor will respond with their monthly
gross covered drug costs and TrOOP amounts. If there are multiple plans prior to the
current plan of record, the accumulator values from the response just received are placed
in a FIR Exchange transaction and forwarded to the next sponsor. The facilitator will
receive that next sponsor’s transaction response and will continue the process of
receiving and forwarding the prior accumulators until each subsequent sponsor in
consecutive order has received and responded to a FIR Exchange transaction. The final
Exchange transaction response will contain the year-to-date monthly TrOOP-related data
for all plans prior to the current plan of record; these accumulated monthly amounts will
then be forwarded by the facilitator via a FIR Update transaction to the current plan of
record. The FIR transaction process flows, involving a single prior plan and multiple
prior plans, are detailed in section 4 of the NCPDP Financial Information Reporting
Standard Implementation Guide v1.0.
Inclusion of non-plans of record
As noted previously, TrOOP-related data must also be transferred between Part D plans
when a Part D plan other than the plan of record (i.e., a non-plan of record) paid for
covered Part D drug costs as a primary payer and subsequently becomes aware that the
beneficiary is enrolled in another Part D plan. This may occur if this other plan’s
enrollment was processed and then audited off due to CMS’ receipt of a subsequent valid
enrollment transaction for the same effective date, or if the enrollment in this other plan
was not accepted by CMS and, therefore, is not in the CMS system. Most audited
enrollments will be identifiable by the facilitator, unless more than one record was
audited off on the same day; in this case, only the latest audited record will be reflected
on the TrOOP file.
In situations in which the facilitator is unable to identify the existence of a non-plan of
record, in order for the TrOOP data to be transferred, the non-plan of record sponsor must
contact the facilitator and request inclusion in the FIR reporting. To include these nonplan-of-record sponsors in the FIR process, the facilitator must create a “proxy”
enrollment record identifying the sponsor, rather than CMS, as the source of the

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

information, the contact person providing the information and the date of contact. The
facilitator will include the non-plan of record in the FIR transaction stream preceding the
actual plan of record for the month(s) the non-plan of record paid Part D claims.

Evaluation of transaction responses
CMS will work with the facilitator to define a set of business rules for evaluating the
acceptability of sponsor FIR responses; these will be limited to edits to verify that there
are no missing/invalid data elements in the response that are required by the facilitator to
generate the next FIR transaction in the stream. If any of these business rules are
violated, the facilitator will suspend the transaction flow and contact the sponsor to
correct their transaction response. After the sponsor has completed correction, the
facilitator will re-initiate the FIR transaction stream.
Part D Sponsors’ Requirements
Part D sponsors must track TrOOP-related data for their months of coverage for
beneficiaries who disenroll during the coverage year and report these data, even if the
accumulator values are zeros, to the facilitator in response to FIR transaction requests.
Sponsors must also receive FIR transactions reporting TrOOP-related data reported by
prior plan sponsors through the facilitator, update their systems to incorporate these data,
examine their claims history and any previously reported amounts from prior plan
sponsors to determine the impact of any changes in reported data on the beneficiary’s
position in the benefit and re-calculate, as necessary, any prior claims affected by
changes in the TrOOP accumulators.
A change at the contract level will trigger the FIR transaction process. If the beneficiary
changes plan benefit packages (PBPs) within a contract, the sponsor is responsible for
ensuring that the TrOOP balance and gross covered drug costs for all months of the first
PBP’s coverage are available to the subsequent PBP regardless of whether the PBPs
within the contract use the same or different processors.
Further, some sponsors use different contractors for eligibility/enrollment functions and
claims processing. It is the sponsor’s responsibility to ensure that the contractor
responsible for TrOOP balance transfer has all eligibility and enrollment information to
properly administer the TrOOP balance transfer process consistent with this guidance and
the NCPDP Financial Information Reporting Standard Implementation Guide. This
would include having information to identify the beneficiary (e.g., the CMS date of birth)
and his or her eligibility and enrollment periods consistent with CMS requirements.
Multiple enrollments within a contract

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

When a beneficiary has multiple enrollments within a contract prior to a contract-level
enrollment change, the determination of which FIR transaction(s) is (are) sent and what
data are reported back on the transactions is dependent upon whether the BIN/PCN for
the multiple enrollments within the contract are the same or different. If there is a single
BIN/PCN for the multiple enrollments, the facilitator will send a single transaction to the
processor and the processor will report all months of coverage for the multiple
enrollments. If there are different BIN/PCNs for the multiple enrollments within the
contract, the facilitator will send separate transactions to each different BIN/PCN
combination and each processor will report for their months of coverage for that specific
BIN/PCN only.
The following scenarios describe the FIR reporting requirements in situations in which a
beneficiary has multiple plan enrollments within a contract during the coverage year,
involving the same and different BIN/PCN combinations.
Scenario 1
Beneficiary Enrollment History
Months of Contract/PBP
Plan
Coverage
Number
Jan. – Mar. S0001-001
A

BIN/PCN
611220/
1234567890

Apr.- May

S0001-002

B

611220/
1234567890

Effective
June

S0002-001

C

121212/
23232323bb

FIR
Processor
Transaction Response
FIR Inquiry Reports Jan.
– May data

FIR Update

When the facilitator identifies the contract-level enrollment change to Plan C, a FIR
Inquiry transaction will be sent to the BIN/PCN for Contract S0001. Since the BIN/PCN
combination is the same for both contract S0001 PBPs, the processor will respond with
the January through May accumulators, reporting all months of enrollment in Plans A and
B. The monthly accumulators for January through May will be forwarded by the
facilitator to the Plan C sponsor in a FIR Update transaction.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Scenario 2
Beneficiary Enrollment History
Months of Contract/PBP
Plan
Coverage
Number
Jan. – Mar. S0001-001
A

BIN/PCN
611220/
1234567890

FIR
Processor
Transaction Response
FIR Inquiry Reports Jan.
– Mar. &
June – Aug.
data

Apr.- May

S0002-001

B

121212/
23232323bb

FIR
Exchange

June – Aug.

S0001-001

C

611220/
1234567890

FIR
Exchange

Effective
Sept.

S0003-001

D

999991/
1552bbbbbb

FIR Update

Reports
Apr. – May
data
Reports
Jan.- Mar
data & any
changes to
June - Aug.
data
resulting
from Apr.May data

When the facilitator identifies the contract-level enrollment change to Plan D, a FIR
Inquiry transaction will be sent to the BIN/PCN for Contract S0001. Since the BIN/PCN
is the same for both Plans A and C, the processor will respond with the January through
March and June through August accumulators, reporting all months of enrollment in
Plans A and C. The Plan B sponsor will then receive a FIR Exchange transaction and
must respond by adding the April through May accumulators. Next, although Plan C has
already reported the June through August accumulators, the processor will receive a FIR
Exchange transaction from the facilitator to provide Plan B data from April to May. Plan
C will then be required to make any necessary adjustments resulting from reprocessing
based on their receipt and review of the April through May data from Plan B. The
adjusted amounts may be reported in the current or next/later response to the facilitator.
The accumulators for all months January through August will be forwarded by the
facilitator to the Plan D sponsor in a FIR Update transaction.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Scenario 3
Beneficiary Enrollment History
Months of Contract/PBP
Plan
Coverage
Number
Jan. – Mar.
S0001-001
A

BIN/PCN
611220/
1234567890

FIR
Transaction
FIR Inquiry

Processor
Response
Reports Jan.
– Mar. data

Apr.- May

S0002-001

B

121212/
23232323bb

FIR
Exchange

Reports Apr.
– May data

June – Aug.

S0002-002

C

166666/
FIR
88Abbbbbbb Exchange

Reports June
– Aug. data

Effective
Sept.

S0003-001

D

999991/
1552bbbbbb

FIR Update

When the facilitator identifies the contract-level enrollment change to Plan D, a FIR
Inquiry transaction will be sent to the BIN/PCN for Contract S0001. The processor will
respond with the January through March accumulators. Although Plan B and C are
within the same contract, the PBPs have different BIN/PCNs. Therefore, the facilitator
will send a FIR Exchange transaction to the Plan B BIN/PCN and the processor will
respond by providing the April through May accumulators. A subsequent FIR Exchange
transaction will be sent to the Plan C BIN/PCN for that processor to report the data for
the months of Plan C enrollment; this is the June through August accumulator data. The
accumulators for all months January through August will be forwarded to the Plan D
sponsor in a FIR Update transaction.
While these scenarios do not depict every possible situation involving multiple plan
enrollments within a contract, they are illustrative of the application of the NCPDP FIR
transaction flow to these situations and the potential need for sponsors to respond to
sequential FIR transaction requests.
At any time a plan sponsor has paid Part D drug claims for a beneficiary who is later
determined to be enrolled in another plan and the sponsor has not received a FIR
transaction to report the beneficiary’s TrOOP-related data, the sponsor must contact the
TrOOP facilitator to initiate the FIR process and include the additional sponsor in the
transaction stream.
Multiple Enrollment Types

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Regardless of whether a sponsor is a plan of record or a non-plan of record, the sponsor
must receive FIR transactions with TrOOP-related data reported by prior plans (both
prior plans of record and non-plans of record), update their systems to incorporate these
data, examine their claims history and previously reported amounts from the prior plans
to determine the impact of these data on the beneficiary’s position in the benefit, and
recalculate, as necessary, any prior claims affected by the new TrOOP accumulator data.
The recalculation of prior claims by both non-plans of record and plans of record based
on the receipt of new TrOOP-related data reported to them is necessary to ensure that
beneficiary adjustments resulting from the recalcuation are appropriately handled by the
sponsor that adjudicated the affected claim(s).
In addition, for any month in which a plan other than the actual plan of record for the
month (whether a prior plan of record or non-plan of record) has paid claims, the other
plan will precede the actual plan of record for the month in the FIR transaction stream.
The other plan’s accumulator data also will precede the actual plan of record’s claims
data for that month.
The following scenario describes FIR reporting in situations involving multiple
enrollment types.
Beneficiary Enrollment History
Months of Contract/PBP Plan
Coverage
Number
Jan. – Feb., S0001-001
A
but paid
(plan of
claims for
record)
Mar.
Mar. - June S0002-001
B
(plan of
record)

BIN/PCN
611220/
1234567890

FIR
Processor
Transaction Response
FIR Inquiry Reports Jan. –
Mar. data

121212/
23232323bb

FIR
Exchange

FIR
Exchange

July – Aug.

S0003-001

C
(non-plan
of record)

999991/
1552bbbbbb

Effective
July

S0004-001

D
(plan of
record)

166666/
FIR Update
88Abbbbbbb

Reports
Mar.(including
Plan A data) –
June data
Reports July –
Aug. data

In August, the facilitator identifies a contract-level enrollment change involving the
auditing off of the Plan C enrollment and the new enrollment in Plan D effective July. A
FIR Inquiry will be sent to the BIN/PCN for Contract S0001. The processor will respond

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

with the accumulator data for their months of enrollment, January and February. In
addition, because the Plan A paid claims in early March prior to receiving the TRR from
CMS reporting the beneficiary’s change in enrollment, the processor will include their
accumulator data for March as well.
The facilitator will send a FIR Exchange transaction to the BIN/PNC for Contract S0002.
The processor will incorporate the Plan A data into their system, including applying the
March data from Plan A prior to the Plan B claims for March. After examining the
amounts previously reported and their own claims history and recalculating any prior
claims, as necessary, the sponsor will respond with their March through June
accumulators either as a response to that, or a future transaction, from the facilitator.
A subsequent FIR Exchange transaction will be sent to the BIN/PCN for the non-plan of
record Plan C. This sponsor will incorporate the Plan A and B data into their system.
After examining the amounts previously reported and their own claims history and
recalculating any prior claims, as necessary, the sponsor will respond with their July
through August accumulators either as a response to that, or a future transaction, from the
facilitator.
The monthly accumulators for January through August will be forwarded to the Plan D
sponsor in a FIR Update transaction. With the retroactive enrollment of the beneficiary
in Plan D back to July, the Plan D sponsor must apply the July and August accumulators
reported by Plan C to each of those months prior to any claims Plan D adjudicated in July
and August.
Receipt of Inquiry when a prior plan is known
If a plan receives an Inquiry transaction from the facilitator, but is aware there was a prior
plan, the plan should process the FIR Inquiry transaction. The identity of the prior
sponsor must be known and may be determined by the sponsor’s previous receipt of a
P2P Plan Payable Report (Report 43) from CMS requiring payment to another Part D
sponsor or the beneficiary’s presentation of a paper EOB from a prior Part D payer.
In the Inquiry response, the sponsor will report the financial accumulators for their
months of enrollment only and will retrospectively contact the facilitator to identify the
prior payer. The existence in the sponsor’s system of financial accumulators that were
not added as a result of a FIR transaction could be used in these instances to trigger an
alert that would identify the need for follow-up with the facilitator.
If the facilitator can verify that the identified other sponsor had a terminated or
cancelled/audited enrollment for the beneficiary, that sponsor will be added, as
appropriate, to the FIR transaction process flow. Absent confirmation of a prior
enrollment transaction on the TrOOP file, the facilitator will contact the other sponsor

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

and secure the information necessary to create a proxy enrollment record, add the sponsor
to the FIR process flow, and initiate a new round of transactions. Although this process
currently requires manual follow-up, CMS will work to develop an automated process to
handle these situations.
Sponsor requested FIR transactions
If a change in a beneficiary’s TrOOP-related data occurs outside the scheduled timing
cycle or is of such a magnitude that the sponsor believes it is important to transfer the
updated data without waiting for the next scheduled transaction, the sponsor should call
the TrOOP facilitator’s help desk call center and request that a FIR transaction be
initiated. CMS will monitor the frequency of these requests and arrange for a secure Web
site to receive the requests if the volume warrants.

Correction of unacceptable responses
When the facilitator suspends a FIR response transaction as unacceptable, for example, if
the accumulated TrOOP reported for a month is negative number, the sponsor must make
the necessary changes and, once made, the facilitator will re-initiate the transaction
stream. Each sponsor must identify in the Health Plan Management System (HPMS) a
TrOOP Balance Transfer (TBT) Contact at the entity responsible for responding to the
sponsor’s FIR transactions. The facilitator will contact this person to determine the
estimated timeframe for correction and resumption of the transaction flow.
In the interim, if the suspended transaction was part of the initial stream following a
contract-level change in enrollment, the facilitator will continue the transaction flow with
the next payer. This will permit the new plan of record to receive all other accumulators
to position the beneficiary in the benefit. If the suspended transaction was part of a
subsequent flow, so accumulator data was reported previously to the new plan of record,
the facilitator will not re-initiate the transaction flow until the problem is corrected and
the suspended transaction can be processed.
Sponsors should not routinely question balances reported on the FIR transactions,
including accumulated TrOOP reported in excess of the maximum. A sponsor may
initially report accumulated TrOOP amounts that exceed the maximum for the coverage
year, but must reduce reported TrOOP to the maximum in a subsequent transaction flow.
The resolution of an amount reported in excess of the TrOOP limit will require that the
sponsor examine claims-level data to determine which claims will require reprocessing.
FIR transaction rejects

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Part D sponsors may reject FIR transactions for missing or invalid data; e.g., a
missing/invalid BIN number. However, under current CMS rules, X2 (Accumulated
Gross Covered Drug Cost exceeds maximum) will not be used.
The FIR transaction standard requires a patient date of birth, if known, in the patient
segment. If the date of birth is reported, the date reported in this field must match the
CMS date of birth to avoid rejects for a missing/invalid date of birth.
Timing of the FIR Inquiry and Update Transactions
For enrollment changes with prospective enrollment dates, the Inquiry transaction will be
sent 2 days prior to the new enrollment effective date. For enrollment changes with
retroactive effective dates, the Inquiry transaction will be sent the day following the day
the enrollment change is made in MBD and passed to the TrOOP facilitator.
Subsequent Inquiry transactions will be sent weekly for a 4-week period, then monthly
for an additional 6 months or until March 31st of the following year, whichever is sooner.
This pattern of Inquiry transactions will be followed for each subsequent enrollment
change occurring during the coverage year. The series of transactions will always begin
with the beneficiary’s first plan for the coverage year; this plan may be the actual first
plan of record or another plan that paid claims believing the beneficiary was enrolled in
their plan.
FIR Transaction Response Time
The facilitator will time out transactions without a response in 15 seconds. If a
transaction is timed-out, the facilitator will retry the transaction every 15 minutes for 48
hours. If after the 48-hour period the plan never responds, the facilitator will report the
occurrence to CMS for compliance action for sponsor failure to implement the FIR
transaction process as required. The facilitator will also contact the sponsor’s TBT
Contact for an estimated timeframe for correction and, as indicated previously in the
discussion of the handling of unacceptable transaction responses, will continue the
transaction flow if it is the first one following an enrollment change or suspend the flow
pending correction if the transaction is part of a subsequent transaction stream.
Exceptions from Automated Processing
Part D sponsors should accept FIR data as reported unless a problem is identified.
Problems may be identified through conflicting information, such as paper EOBs
presented by, or on behalf of, the beneficiary, that suggests reported data are wrong.
Also, there will be rare situations in which a discrepancy exists between the CMS and
sponsor’s enrollment information for a beneficiary and the discrepancy affects the FIR-

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

reported data. These situations, or those in which the beneficiary complains that his/her
TrOOP accumulators are materially incorrect, must be removed from automated
processing. In these instances, the sponsor should contact the facilitator’s help desk call
center to request the facilitator suspend the FIR transactions until the discrepancy is
resolved or, if necessary, for the remainder of the coverage year. Once the error is
resolved, the facilitator will remove the suspension and re-initiate the FIR process. A
manual process will be developed for the facilitator and CMS to work with the sponsors
to resolve the discrepancy and to report any updates to the financial accumulators that
occur while the discrepancy is being resolved.

Scenarios
Scenario One: The beneficiary was enrolled in Plan A in January 2008, in Plan B in
February, 2008 and in Plan C for the remainder of the year. Both Plan A and B had claim
activity as reflected below.
Month

January
February
March

Plan A
Accumulated
TrOOP
200.00

Accumulated
Gross Covered
Drug Cost
275.00

Plan B
Accumulated
TrOOP

50.00

Accumulated
Gross Covered
Drug Cost
200.00

New plan C
begins coverage

Plan C began adjudicating claims with the $475 drug spend and $250 TrOOP amounts
received from Plan B. In April, Plan A received a reversal on a $100 claim and in
response to the next FIR Inquiry reported the following updated information to Plan B.
Month

January

Plan A
Accumulated
TrOOP
150.00

Accumulated
Gross Covered
Drug Cost
175.00

Plan B compared the previous transaction from Plan A and determined that the drug
spend accumulator decreased by $100. Plan B administers the defined standard benefit.
The plan reviewed its claims history and determined that the $100 decrease moved Plan
B’s first $100 claim from the ICP back to the Deductible. Because Plan B needed to
recalculate this claim to change it from $75 plan pay, $25 patient pay to $100 patient pay,
the plan passed on the new Plan A accumulators and its existing February amounts to
Plan C. In order to “pay back the benefit” Plan B was responsible for recouping the $75

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

differential from the beneficiary. In response to the next FIR Exchange transaction
received, Plan B reported its updated amounts to Plan C as shown below.
Month

January
February
March

Plan A
Accumulated
TrOOP
150.00

Accumulated
Gross Covered
Drug Cost
175.00

Plan B
Accumulated
TrOOP

125.00

Accumulated
Gross Covered
Drug Cost
200.00

New plan C
begins coverage

Scenario Two: Same circumstances as described in Scenario One except Plan B
administers a Basic Alternative benefit with no deductible; for the first $2500 the plan
pays 75% and the beneficiary pays 25%. Plan B reviewed its claims history and
determined that the $100 decrease in Plan A gross covered drug cost had no claims
impact, because no claims were repositioned in different benefit phases. Plan B
forwarded to Plan C the updated Plan A amounts for January and the existing Plan B
accumulators for February.
Scenario Three: The beneficiary was enrolled in Plan A in January 2008, in Plan B in
February, 2008 and in Plan C for the remainder of the year. Both Plan A and B had claim
activity as reflected below.
Month

January
February
March

Plan A
Accumulated
TrOOP
175.00

Accumulated
Gross Covered
Drug Cost
175.00

Plan B
Accumulated
TrOOP

125.00

Accumulated
Gross Covered
Drug Cost
200.00

New plan C
begins coverage

Plan C began adjudicating claims with the $375 drug spend and $300 TrOOP amounts
received from Plan B. In April, Plan A received documentation from the beneficiary
showing a $100 out-of-network prescription drug purchase. Plan A adjudicated the paper
claim and in response to the next FIR Inquiry reported the following updated information
to Plan B.
Month

January

Plan A
Accumulated
TrOOP
275.00

Accumulated
Gross Covered
Drug Cost
275.00

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Plan B compared the previous transaction from Plan A and determined that the drug
spend accumulator increased by $100. The plan reviewed its claims history and
determined that the $100 increase moved Plan B’s first $100 claim from the Deductible
into the ICP. Because Plan B needed to recalculate this claim to change it from $100
patient pay to $75 plan pay, $25 patient pay, the plan responded to the next FIR
Exchange transaction by passing on to Plan C the updated Plan A amounts for January
and Plan B’s existing February amounts. Plan B was responsible for reimbursing $75 to
the beneficiary.
In response to the next FIR Exchange transaction received, Plan B forwarded its updated
TrOOP accumulator to Plan C.
Month

January
February
March

Plan A
Accumulated
TrOOP
275.00

Accumulated
Gross Covered
Drug Cost
275.00

Plan B
Accumulated
TrOOP

50.00

Accumulated
Gross Covered
Drug Cost
200.00

New plan C
begins coverage

Scenario Four: The beneficiary was enrolled in Plan A in January 2008, in Plan B in
February, 2008 and in Plan C for the remainder of the year. Both Plan A and B had claim
activity as reflected below.
Month

January
February
March

Plan A
Accumulated
TrOOP
275.00

Accumulated
Gross Covered
Drug Cost
275.00

Plan B
Accumulated
TrOOP

50.00

Accumulated
Gross Covered
Drug Cost
200.00

Plan C begins

Plan C began adjudicating claims with the $475 drug spend accumulator it received from
Plan B. In April, Plan A received documentation from the beneficiary showing a $100
out-of-network prescription drug purchase. Plan A adjudicated the paper claim and in
response to the next FIR Inquiry reported the following updated information to Plan B.
Month

January

Plan A
Accumulated
TrOOP
300.00

Accumulated
Gross Covered
Drug Cost
375.00

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Plan B compared the previously reported amounts from Plan A and determined that the
gross covered drug cost had increased. Plan B administers the defined standard benefit.
Based on a review of its claims history, Plan B determined that the $100 increase had no
claims impact, because no claims were repositioned in different benefit phases.
Therefore, Plan B responded to the FIR Exchange transaction by reporting the following
amounts to Plan C.
Month

January
February
March

Plan A
Accumulated
TrOOP
300.00

Accumulated
Gross Covered
Drug Cost
375.00

Plan B
Accumulated
TrOOP

50.00

Accumulated
Gross Covered
Drug Cost
200.00

New plan C
begins coverage

Scenario Five: The beneficiary was enrolled in Plan A in January and February, 2008
and in Plan B for March, 2008 and forward. Plan B administers the defined standard
benefit. Because Plan A had no claim activity, it reported zero accumulators to Plan B on
the initial Inquiry transaction and Plan B adjudicated a $100 claim in the Deductible on
March 1.
Later on March 1, Plan B received a FIR Update transaction reporting the following
amounts from Plan A.
Month

January
February

Plan A
Accumulated
TrOOP
200.00
100.00

Accumulated
Gross Covered
Drug Cost
225.00
250.00

Upon receipt of this transaction, Plan B reviewed its claims history and determined that
the $475 increase moved Plan B’s first $100 claim from the Deductible into the ICP. Plan
B recalculated this claim to change it from $100 patient pay to $75 plan pay, $25 patient
pay. Plan B was also responsible for reimbursing $75 to the beneficiary.
Scenario Six: The beneficiary initially enrolled in Plan A during the AEP in December
2007. On December 31, 2007, the beneficiary sends an application to Plan B for
enrollment effective January 2008. Both plans administer the defined standard benefit,

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

and both issue a member ID card to the beneficiary. In February, the beneficiary changed
enrollment to Plan C.
During the month of January, the beneficiary used the ID cards from both Plan A and B.
Prior to receiving the TRR reflecting the enrollment change, Plan A paid claims in
January totaling $100 all patient pay in the Deductible. Plan B then paid a $50 claim in
January, also all patient pay in the Deductible. Because the Plan A enrollment was
processed for January, the TrOOP facilitator was able to identify the change of
enrollment to Plan B and sent a FIR Inquiry to Plan A. Upon the subsequent enrollment
change to Plan C, the Plan A and B amounts are reported as follows:
Month

January

February

Plan A
Accumulated
TrOOP
100.00

Accumulated
Gross Covered
Drug Cost
100.00

Plan B
Accumulated
TrOOP

Accumulated Gross
Covered Drug Cost

50.00 Plan B

50.00 Plan B

100.00 (Plan A) +
50.00 (Plan B) =
150.00(to new plan)

100.00 (Plan A) +
50.00 (Plan B) =
150.00(to new plan)

New plan C
begins
coverage

In March, one of Plan A’s paid claims from January was reversed by the pharmacy
decreasing the beneficiary’s gross covered drug cost and TrOOP amounts to $50. Plan A
reported the new accumulators to Plan B on the next FIR Inquiry transaction and
submitted a deletion PDE for the reversed claim.
Plan B reviewed its claims history and determined that the $50 decrease had no claims
impact, because no claims were repositioned in different benefit phases. Plan B sent the
updated amounts to Plan C as follows:
Month

January

February

Plan A
Accumulated
TrOOP
50.00

Plan C begins

Accumulated
Gross Covered
Drug Cost
50.00

Plan B
Accumulated
TrOOP

Accumulated Gross
Covered Drug Cost

50.00 Plan B

50.00 Plan B

50.00 (Plan A) +
50.00 (Plan B) =
100.00(to new plan)

50.00 (Plan A) +
50.00 (Plan B) =
100.00(to new plan)

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Scenario Seven: The beneficiary was in Plan A January-March 2008, in Plan B in April
and May 2008, and in Plan C for the remainder of the year. Both Plan A and B had claim
activity as reflected below.
Month

January
February
March
April
May
June

Plan A
Accumulated
TrOOP
150.00
125.00
31.25

Accumulated
Gross Covered
Drug Cost
150.00
125.00
125.00

Plan B
Accumulated
TrOOP

187.50
62.50

Accumulated
Gross Covered
Drug Cost

750.00
250.00

New plan C
begins coverage

Plan C began adjudicating claims with the $1400 in gross covered drug cost it received
from Plan B.
Plan A responded to the next FIR Inquiry transaction by reporting its existing
accumulators of $400 in gross covered drug costs and $306.25 in TrOOP to Plan B, but
Plan B was unable to respond before the Exchange transaction was timed out. The
TrOOP facilitator retried Plan B as specified in their FIR protocol. Once Plan B
responded, a FIR Inquiry was again sent to Plan A, and on their Exchange transaction,
Plan B responded with their current balances. The TrOOP facilitator then sent a FIR
Update transaction to Plan C reporting Plan A and B balances.
Scenario Eight: The beneficiary was in Plan A January-March 2008. During these
months, Plan A had claims activity. On March 12, the beneficiary elected enrollment in
Plan B for April, but subsequently, on March 29, elected enrollment for April in Plan C.
Because the Plan B enrollment was processed prior to the April cut-off, Plan B received a
TRR reporting the enrollment and issued a member ID card to the beneficiary. During
April, the Plan C enrollment was processed and Plan B enrollment was audited. The
beneficiary remained in Plan C through May and enrolled in Plan D effective June 2008.
With the TrOOP facilitator’s identification of the Plan B enrollment, Plan A received a
FIR Inquiry transaction on March 31st and reported accumulators to Plan B.
Month

January
February
March

Plan A
Accumulated
TrOOP
100.00
175.00
31.25

Accumulated
Gross Covered
Drug Cost
100.00
175.00
125.00

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Plan B began adjudicating claims in April with the $400 drug spend accumulator. The
Plan C enrollment was processed in April with a retroactive enrollment date of April 1.
Both Plan B and Plan C received TRRs reporting the Plan C enrollment, however prior to
receipt of this TRR, Plan B paid $100 in claims.
With the TrOOP facilitator’s notification of the Plan C enrollment, Plan A again received
a FIR Inquiry transaction and reported their accumulators to Plan B. Plan B compared
this with the previous FIR transaction from Plan A, determined there had been no change,
and forwarded the following accumulators to Plan C.
Month

January
February
March
April

Plan A
Accumulated
TrOOP
100.00
175.00
31.25

Accumulated
Gross Covered
Drug Cost
100.00
175.00
125.00

Plan B
Accumulated
TrOOP

25.00

Accumulated
Gross Covered
Drug Cost

100.00

Plan C began adjudicating claims with the $500 drug spend accumulator it received from
Plan B, and had claims activity. With the TrOOP facilitator’s identification of the Plan D
enrollment, Plan A again received a FIR Inquiry transaction and reported their
accumulators to Plan B. Plan B again compared this with the previously reported
amounts from Plan A, determined there had been no change, and forwarded the balances
to Plan C. Plan C compared this with the previous FIR Exchange transaction from Plan
B, determined there had been no change, and forwarded the balances to Plan D.
Month

January
February
March
April

Plan A
Accumulated
TrOOP

100.00
175.00
31.25

Accumulated
Gross
Covered
Drug Cost
100.00
175.00
125.00

Plan B
Accumulated
TrOOP

25.00

Accumulated
Gross
Covered
Drug Cost

100.00

Plan C
Accumulated
TrOOP

Accumulated
Gross Covered
Drug Cost

37.50 Plan C

150.00 Plan C

25.00 (Plan
B) +
37.50 (Plan
C) =
62.50(to new
plan)

100.00 (Plan B)
+
150.00 (Plan C)
=
250.00(to new
plan)

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

May
June

125.00

500.00

New Plan D

Plan D began adjudicating claims with the $1150 drug spend accumulator it received
from Plan C.
Scenario Nine: The beneficiary was enrolled in Plan A effective January 1, 2008, and
the plan had claims activity. On January 30, the beneficiary elected enrollment in Plan B
effective February 1. Because the Plan B enrollment was processed after the February
cut-off, Plan A continued processing claims until mid-February when the Plan B
enrollment was processed and Plan A received a TRR reporting the audited enrollment.
On March 10, the beneficiary’s enrollment request for Plan C was processed with an
effective date of April 1.
In February, when the TrOOP facilitator identified the Plan B enrollment, Plan A
received a FIR Inquiry transaction and reported the beneficiary’s accumulators to Plan B.
Month

January
February

Plan A
Accumulated
TrOOP
175.00
112.50

Accumulated
Gross Covered
Drug Cost
175.00
150.00

Plan B began adjudicating claims with the $325 drug spend accumulator. In March, the
pharmacy reversed a $75 February claim to Plan A changing the plan’s accumulators for
February. When the Plan C enrollment was processed in March, the TrOOP facilitator
identified the enrollment change and sent a FIR Inquiry transaction to Plan A which
reported the following updated accumulators to Plan B.
Month

January
February

Plan A
Accumulated
TrOOP
175.00
75.00

Accumulated
Gross Covered
Drug Cost
175.00
75.00

Plan B reviewed its claims history and determined that the $75 decrease moved Plan B’s
first February claim from wholly in the ICP to straddling the Deductible and ICP.
Because Plan B needed to recalculate this claim, the plan reported to Plan C the updated
Plan A January accumulators, the combined Plan A and B February drug costs, and the
total of the updated Plan A February TrOOP amount with the previous Plan B February
TrOOP balance.

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required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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Month

January
February

Plan A
Accumulated
TrOOP
175.00
75.00

Accumulated
Gross Covered
Drug Cost
175.00
75.00

Plan B
Accumulated
TrOOP

Accumulated Gross
Covered Drug Cost

25.00 Plan B

100.00 Plan B

75.00 (Plan A) +
25.00 (Plan B) =
100.00(to new plan)

75.00 (Plan A) +
100.00 (Plan B) =
175.00(to new plan)

With the next FIR Inquiry transaction, Plan A reported unchanged accumulators for
January and February to Plan B. Plan B reported the accumulators as previously sent to
Plan C, except the plan was also able to send an updated TrOOP balance for February
reflecting the re-adjudication of the straddle claim.

Accumulated
TrOOP
January
February

175.00
75.00

Accumulated
Gross Covered
Drug Cost
175.00
75.00

Accumulated
TrOOP

Accumulated Gross
Covered Drug Cost

43.75 Plan B

100.00 Plan B

75.00 (Plan A) +
43.75 (Plan B) =
118.75`(to new
plan)

75.00 (Plan A) +
100.00 (Plan B) =
175.00(to new plan)

After re-adjudicating the first February claim that had previously been processed in the
ICP as $75 plan pay and $25 patient pay, Plan B was responsible for recovering the
additional amount owed by the beneficiary.
Scenario Ten: The beneficiary was in Plan A January-February 2008, then Plan B
during March through June. Both plans had claims activity during the months of the
beneficiary’s enrollment in their plan. Effective July, the beneficiary chooses to re-enroll
in Plan A.
With the TrOOP facilitator’s identification of the Plan B enrollment, Plan A received a
FIR Inquiry transaction and reported accumulators to Plan B as follows:
Month

Plan A
Accumulated

Accumulated

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TrOOP
January
February

75.00
75.00

Gross Covered
Drug Cost
75.00
75.00

Subsequent FIR Inquiry transactions were sent to Plan A according to the established
schedule and the accumulators reported to Plan B. Then, with the TrOOP facilitator’s
identification in late June of prospective Plan A re-enrollment effective July 1st, Plan A
received a FIR Inquiry transaction and reported the accumulators to Plan B. Plan B
received and responded to a FIR Exchange transaction with the combined accumulators.
The following data were sent to Plan A in a FIR Update transaction and Plan A began to
adjudicate claims in July using $450 in gross covered drug costs.
Month

January
February
March
April
May
June
July

Plan A
Accumulated TrOOP
75.00
75.00

Accumulated Gross
Covered Drug Cost
75.00
75.00

Plan B
Accumulated
TrOOP

Accumulated Gross
Covered Drug Cost

25.00
100.00
14.25
25.00

25.00
100.00
75.00
100.00

Re-enrollment Plan A

Subsequently in early July, Plan A and B received TRRs indicating that the Plan A reenrollment was audited due to the beneficiary’s election to remain enrolled in Plan B.
However, because the Plan A re-enrollment was processed, Plan A paid claims in July
prior to receipt of the TRR. With the TrOOP facilitator’s identification of the audited
Plan A re-enrollment and the continuation of Plan B enrollment, Plan A received a FIR
Inquiry transaction and reported their January, February and July accumulators to Plan B.
Month

January
February
March
April
May
June
July

Plan A
Accumulated TrOOP
75.00
75.00

23.75

Accumulated Gross
Covered Drug Cost
75.00
75.00

Plan B
Accumulated
TrOOP

Accumulated Gross
Covered Drug Cost

25.00
100.00
14.25
25.00

25.00
100.00
75.00
100.00

95.00

Plan B compared these data with the January and February accumulators previously
reported by Plan A to determine if there had been a change that would affect Plan B’s

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adjudication of the claims processed during the period March through June. Plan B then
began processing claims in July with $545 in gross covered drug costs.

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required to complete this information collection is estimated to average one hour per response, including the time to review
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comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
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Appendix E – Issues for Other Entities Providing Prescription
Drug Coverage
(Rev.)
As provided in 42 CFR 423.464(f), Part D plans must permit SPAPs and entities
providing other prescription drug coverage to coordinate benefits with them. Examples
of entities providing other prescription drug coverage include SPAPs, Medicaid
programs, group health plans, FEHBP plans, military coverage, IHS coverage, charities,
manufacturer PAPs, Federally qualified health centers (FQHCs), and rural health centers
(RHCs). In this appendix, CMS discusses COB issues applicable to some of these
entities.

State Pharmaceutical Assistance Programs
Qualified SPAPs are unique among other payers because any payments supplementing
the benefits available under Part D coverage before a beneficiary reaches the annual outof-pocket limit made on their enrollees’ behalf count toward TrOOP. CMS expects that
qualified SPAPs will share enrollment files with CMS through the data sharing
arrangements outlined in section 30.1. Although SPAP wrap-around coverage
automatically counts toward TrOOP – and some programs have questioned the need for
SPAPs to participate in CMS’ COB and TrOOP facilitation processes – there are benefits
to participation in the COB process as other payers. For example, as part of the
enrollment file sharing with SPAPs, CMS provides SPAPs with certain information fields
(for example, low-income subsidy status and details) that they will need to effectively
wrap-around Part D coverage on behalf of their Part D enrollees. In addition, as noted
above, by making their claim payments a matter of record with the Part D plans, SPAPs
provide the means for Part D sponsors to execute reimbursement of erroneous payments,
such as those that may occur in reimbursing cost sharing incurred by low-income subsidy
eligible enrollees between the date of their eligibility and the time the subsidy has been
programmed by the Part D sponsor. Most importantly, participation in the TrOOP
facilitation process allows the beneficiary’s multiple benefits to process seamlessly at the
point of sale, even if they do not present all of their ID cards.
Exchanging Historical and Ongoing Claims Data
As mentioned in section 50.12 of this chapter regarding the sharing of claims data, CMS
cannot require data exchanges between Part D sponsors and the States, except as required
for COB purposes. However, CMS strongly encourages sponsors to independently share
historical and ongoing data on these shared enrollees with SPAPs, provided such
disclosure is consistent with the requirements of the HIPAA Privacy Rule. Drug history
exchanges between States and sponsors are discussed further in the section 50.12.

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Coordinating Payment
As provided in these guidelines, SPAPs may choose to coordinate their benefits with Part
D sponsors using a variety of approaches. With the exception of the risk-based approach,
all Part D sponsors are required to coordinate with the SPAP. As indicated in the prior
section discussing the non-risk approach, CMS will take compliance action against all
sponsors that do not comply with the non-risk requirement. If a sponsor is out of
compliance with this requirement, CMS will not disqualify a state program from its
qualified SPAP status. SPAPs will not be viewed as discriminating based on Part D
sponsor’s non-compliance because CMS believes the sponsor, by failing to adhere to this
COB requirement, has effectuated the discrimination. CMS will require states to collect
an attestation from the sponsor that it does not want to participate in the non-risk
approach. States will submit this attestation to CMS so that CMS may work with the
sponsors to comply with this COB requirement. Sponsors will also be required to
provide information to its beneficiaries that it is not participating in the state’s program.
In addition to the lump sum scenarios mentioned in section 50.7 of this chapter, SPAPs
may provide their own wrap-around benefit at the point-of-sale, or solicit a sponsor or
processor who agrees to administer their wrap-around benefit for them. The sponsor or
processor (who may or may not be a Part D sponsor) will administer their SPAP wraparound benefit. This organization will agree to administer the SPAP benefit to all Part D
beneficiaries that qualify for the SPAP benefit regardless of what Part D sponsor in
which the beneficiary is enrolled. As the administrator of the benefit, SPAPs will most
likely require these organizations to:
•

Process secondary claims using the NCPDP V. 5.1 electronic claims format.

•

Require COB segment on the secondary claim.

•

Provide coverage of drugs on the State’s formulary.

•

Provide coverage of drugs at SPAP network pharmacies.

•

Administer rebates applicable to the SPAP wrap benefit.

Enrollment
Certain SPAPs may have the authority to enroll their members directly into Part D
sponsors if using an enrollment methodology expressly approved by CMS, and have
expressed a desire to be allowed to use a standard electronic file format to complete the
enrollment process. While Part D sponsors will not be required to accept a standard

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electronic file directly from an SPAP, CMS encourages Part D sponsors to negotiate with
SPAPs on this point so as to facilitate a streamlined enrollment process.
Medicaid
Beginning January 1, 2006, Medicaid can no longer receive Federal Financial
Participation (FFP) for drugs covered under Part D that are provided to full benefit dual
eligibles. State Medicaid programs continue to have the option of providing Medicaid
coverage of drugs listed under section 1927(d)(2) of the Social Security Act, which the
MMA excludes from the definition of coverage under Part D drugs. To the extent that
Medicaid covers those excluded drugs, the state can receive FFP for that coverage.
However, coverage of non-Part D drugs by State Medicaid programs will not count
toward a beneficiary’s TrOOP balance.
Drug coverage— CMS understands that many Medicaid programs may wish to provide
coverage for non-Part D drugs to provide continuity of coverage to dual eligible Part D
enrollees. To that end, Part D sponsors may wish to develop a process whereby the
pharmacy is informed that Medicaid is a payer only if a claim is denied as a non-Part D
drug and there are no other secondary/tertiary payers that may pay the claim. As of
August 2006, Part D sponsors are required to implement reject messaging that will allow
pharmacies to identify claims for excluded Part D drugs that can be billed to the State.
Data exchange— As discussed previously in section 50.12 of this chapter, CMS does not
have the authority to require data exchanges between Part D sponsors and the States,
except as required for COB purposes. However, CMS strongly encourages Part D
sponsors to independently share historical and ongoing data on these shared enrollees
with State Medicaid agencies, provided such disclosure is consistent with the
requirements of the HIPAA Privacy Rule. CMS believes claims data exchanges will be
mutually beneficial to States and Part D sponsors as they structure their benefits.
Veterans Administration Coverage
VA benefits – including prescription drug coverage – are separate and distinct from
benefits provided under Part D. By law, VA cannot bill Medicare. In other words,
coordination of benefits between Part D and VA benefits is not possible. While a
beneficiary may be eligible to receive VA prescription drug benefits and enroll in a Part
D sponsor, he or she cannot use both benefits for a single prescription. VA prescriptions
generally must be written by a VA physician and can only be filled in a VA facility or
through VA’s Consolidated Mail Outpatient Pharmacy (CMOP) operations. VA does not
fill prescriptions for Part D sponsors. Since VA and Part D benefits are separate and
distinct, a veteran’s payment of a VA medication copayment does not count toward his or
her gross covered drug costs or TrOOP expenditures under his or her Part D benefit.

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Given the fact that VA prescription drug coverage is creditable coverage, beneficiaries
will not face a penalty if they delay enrollment in a Part D plan. However, some
beneficiaries who receive less than full VA prescription drug benefits may benefit from
enrollment in a Part D plan – particularly if they are eligible for the low-income subsidy.
TRICARE
TRICARE for Life pays secondary to Medicare to the extent that a benefit is payable by
both Medicare and TRICARE. TRICARE for Life’s pharmacy benefit wraps around
Medicare Part D and will pay any beneficiary cost-sharing remaining – up through the
cost-sharing that beneficiary would have had otherwise paid under TRICARE – but only
if a beneficiary is enrolled in a Part D plan, the drug is a covered Part D drug, the covered
Part D drug is also covered by TRICARE, and the drug is obtained at a pharmacy
participating in both the Part D plan’s and TRICARE’s network.
Given the fact that TRICARE for Life is creditable coverage, beneficiaries will not face a
penalty if they delay enrollment in a Part D plan. However, some beneficiaries who
receive TRICARE for Life benefits may benefit from enrollment in a Part D plan –
particularly if they are eligible for the low-income subsidy. To the extent that a
beneficiary is enrolled in both TRICARE for Life and a Part D plan, information about
that beneficiary’s TRICARE coverage should be captured and maintained by the COB
contractor, and available to Part D sponsors as part of the COB process, through the
MARx system. Any wrap-around payments made by TRICARE for covered Part D
drugs will count toward a Part D enrollee’s gross covered drug costs but not toward
TrOOP because TRICARE is a government-funded health program and, as such, a
TrOOP-excluded payer.
Indian Health Service (IHS)/Tribal Health Coverage
The Indian health care system, consisting of tribal, urban, and federally operated IHS
programs, delivers a spectrum of clinical and preventive health services to its
beneficiaries, via a network of hospitals, clinics, and other entities. Section 42 CFR
423.464(f) implementing the Part D COB requirements requires sponsors to coordinate
benefits with the IHS and providers of other prescription drug coverage. Tribal health
coverage is recognized by CMS as a provider of other prescription drug coverage.
In most cases, supplemental coverage by IHS, Indian tribes and organization, and urban
Indian organizations (collectively I/T/U) facilities will not be considered TrOOP eligible
because these entities will fall under CMS’ definition of “government-funded health
program,” in 42 CFR 423.100. However, sponsors should be aware that some tribes,
when providing other prescription drug coverage, may be independent entities that use
only non-government funding to pay secondary coverage for all medical services,

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including Part D drugs. This being the case, the secondary coverage may be TrOOPeligible.
Although assistance with Part D cost-sharing by I/T/U pharmacies may not count as
incurred costs toward meeting the out-of-pocket threshold at which catastrophic coverage
under the Part D benefit begins, neither the MMA nor its implementing regulations
prohibit I/T/U facilities from assisting with cost-sharing or subsidizing of premiums. In
fact, by custom and regulation, AI/AN beneficiaries cannot be charged any cost-sharing,
meaning that I/T/U facilities must waive any co-payments or deductibles that would have
been applied by a Part D sponsor. CMS regulations require all Part D sponsors to offer
network contracts to all I/T/U pharmacies operating in their service area and, in addition,
will have to demonstrate to CMS that they provide convenient access to I/T/U
pharmacies for AI/ANs. Thus, COB with the IHS and tribes is inextricably tied to
pharmacy network contracting with I/T/U pharmacies. I/T/U pharmacies may submit
claims to Part D sponsors electronically (or via paper claims, to the extent that some of
the more remote I/T/U sites lack electronic capability). There does not exist any
capability under the current NCPDP Telecommunication Standard Implementation Guide
for I/T/U pharmacies that are not TrOOP-eligible to indicate the subsidization by IHS or
tribes of any applicable beneficiary cost-sharing so that such subsidies are not applied to
the beneficiary’s TrOOP balance. CMS recommends that sponsors set up logic in their
systems so that all claims from network I/T/U pharmacies are flagged and any applicable
beneficiary cost-sharing is not added to the beneficiary’s TrOOP amount. For cases in
which tribal organizations using tribal-only money qualify as TrOOP-eligible payers, Part
D sponsors must set up manual processes to receive this information and to adjust TrOOP
calculations accordingly.
If a tribal member new to the Part D benefit is initially unable to receive Part D benefits
through his/her Part D plan, the tribe may have stepped in to pay for the AI/AN Medicare
eligible’s Part D prescription drugs, utilizing a non-government source of funds, in lieu of
a Part D plan’s primary coverage. In such cases, tribes are entitled to seek compensation
from the Part D plan once enrollment is confirmed. Consistent with CMS COB
requirements, plans will be required to reimburse tribes when the tribe has paid primary,
just like any other provider of prescription drug coverage.
Safety-Net Providers
A majority of Medicare beneficiaries served by safety-net provider organizations have
limited incomes. These safety-net provider typically include Federal, State, and locally
supported community health centers (CHCs) or clinics, many of which are deemed
FQHCs, public hospital systems, and local health departments. In some communities
they also include mission-driven teaching hospitals, community hospitals and ambulatory
care clinics (which are often located in central city areas or serve as the sole provider of
health care in the community). RHCs, small rural hospitals, critical access hospitals,

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clinics that receive Ryan White HIV/AIDS grant funding, and nurse managed clinics also
constitute key components of the safety net.
An estimated 12,000 safety-net providers participate in the Health Resources and
Services Administration’s (HRSA) 340B Drug Pricing Program, which allows them to
buy their prescription drugs at significantly discounted prices. Participation in the 340B
Program can enable pharmacies to provide prescriptions to their patients at lower-thanmarket price. Because many safety-net providers acquire their prescription drugs through
Federal purchasing programs such as the 340B Drug Pricing Program, access to
prescription drugs and pharmacy services may be limited to their own patients and not to
the public at large. Such “closed pharmacies” may therefore not be open to the general
public. For this reason, safety-net pharmacies are typically smaller and less visible to the
public than retail pharmacies.
Part D sponsors are not required to contract with safety-net providers. However, CMS
created an incentive for Part D sponsors to contract with certain safety-net providers –
FQHCs and RHCs – by allowing them to count these pharmacies toward their retail
pharmacy networks.
COB between Part D sponsors and safety-net providers is inextricably tied to pharmacy
network contracting with safety net pharmacies because the assistance with cost-sharing
provided by safety-net pharmacies consists of waived or reduced Part D cost-sharing
amounts for beneficiaries enrolled in plans with which the pharmacies contract. The
MMA added a new exception to the anti-kickback statute under which pharmacies are
permitted to waive or reduce Part D cost-sharing amounts under certain circumstances.
For more information about this exception to the anti-kickback statute and the potential
impact on TrOOP of Part D cost-sharing waived or reduced by safety-net pharmacies,
refer to Chapter 5, section 30.4.
Charities
Regardless of whether a charity is a bona fide charity – and unless the charity is a group
health plan, insurance or otherwise, or other third party payment arrangement – any
assistance with Part D cost-sharing a charity provides on behalf of a Part D enrollee will
count toward a beneficiary’s TrOOP balance. However, to the extent that a charity
provides assistance in the form of in-kind donations, CMS generally considers that entity
to be a manufacturer patient assistance program (PAP) operating outside Part D, and
the value of that assistance does not count toward a beneficiary’s TrOOP balance (refer
to the section below on manufacturer PAPs for more detail).
Manufacturer Patient Assistance Programs

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Pharmaceutical manufacturers sponsor a number of PAPs that provide free product
(through in kind product donations) to low income patients – particularly those with
incomes below 200 percent of the federal poverty level (FPL) – with no or insufficient
prescription drug coverage. Part D sponsors are required to coordinate with
manufacturer PAPs (hereinafter referred to simply as “PAPs”), as detailed below.
Although sponsors are required to coordinate with PAPs, because PAPs operate entirely
outside the Part D benefit (unlike charities offering cost-sharing assistance), this
coordination is different in nature than coordination of benefits with supplemental payers
operating within the benefit. This is because any assistance a PAP provides to a Part D
enrollee for drugs that would have been covered under his/her Part D plan cannot count
as an incurred cost that would be applied toward the enrollee’s TrOOP balance or total
drug spend. In other words, beginning when a beneficiary’s assistance under a PAP is
effective (and for as long as the beneficiary remains eligible for PAP assistance), a claim
for a drug for which a PAP has provided assistance will never be submitted to a
beneficiary’s Part D plan.
The most effective – and, ultimately, for the beneficiary, the safest – way for PAPs to
operate outside the Part D benefit involves front-end data exchanges with CMS through
the use of PAP data sharing agreements (DSAs). General information about eligibility
file exchange with supplemental payers and other entities is provided in section 30.1 of
this chapter. Specific information about PAP DSAs is available on the CMS Web site;
see Appendix B for the Web address.
To address safety concerns associated with prescription drugs provided outside the Part
D benefits, the front-end data exchange process will enable sponsors to follow-up with
PAPs to identify those Part D drugs an enrollee is receiving outside the Part D benefit.
This will facilitate sponsors' provision of required drug utilization review and, if
applicable, medication therapy management program activities. Alternatively, a PAP
that does not participate in CMS's DSA process may provide its enrollees with a notice
indicating that they are receiving one or more drug products from that PAP. Sponsors
should follow up with PAPs regardless of how they receive information about the
possibility of PAP-provided assistance for any of their enrollees.
When a PAP exchanges eligibility file with CMS, it is identified on the COB data file as
Coverage Type “P,” which is not TrOOP-eligible. When a sponsor receives a COB data
file for an individual indicating a Coverage Type of “P,” it must follow up with the PAP
to obtain the drug-specific information it needs in order to: (1) set its systems to
recognize that drug as part of a patient’s profile for purposes of drug utilization review;
and (2) set its systems edits to prevent any payment for that prescription. This will be a
manual follow-up process because the COB file does not provide sponsors with
information about the specific drugs being provided to enrollees by the PAP. Although
CMS provides PAP sponsors with a list of COB contacts for each sponsor on the CMS

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Web site to facilitate this communication, it remains a sponsor requirement to coordinate
the exchange of information with PAPs operating outside the Part D benefit.
Contact information for PAPs will be available in the COB data file, and sponsors should
use this number to initiate this manual follow-up and data exchange process. The PAP’s
phone number will appear in the PDP COB data file, Appendix E.6.4 Supplemental
Record: Subordinate to DTL (Unlimited Occurrences), which can be found in the
PCUG. The phone number will be located in the data field labeled “Rx Plan Toll Free
Number” when the “Supplemental Code Type” is “P=Patient Assistance Program.”
CMS has encouraged PAPs operating outside the Part D benefit to enter into DSAs with
CMS similar to those entered into by supplemental payers coordinating benefit
administration with Medicare. Manufacturers sponsoring PAPs continue to express
interest in entering into DSAs with CMS, and CMS expects that sponsors will see an
increase in “P” (PAP) coverage type indicators on their COB data files as more PAPs
enter into DSAs and enroll Part D enrollees.
Sponsors may provide information on or even facilitate enrollment in PAPs for
financially needy enrollees, particularly as they reach the coverage gap. To the extent
that they do so, however, they will need to account for the potential decrease in
utilization resulting from enrollees’ receipt of free assistance in their bids.
Operating outside the Part D benefit does not preclude a PAP from requiring its enrollees
– including those enrolled in a Part D plan – from paying a nominal copayment when
they fill a prescription for a covered Part D drug for which they provide assistance. CMS
believes that any copayments assessed by PAPs operating outside the Part D benefit
should be nominal, since only nominal beneficiary cost-sharing is consistent with the
concept of operating outside Part D. Moreover, given that copayments are typically
assessed for purposes of minimizing drug overutilization, the assessment of anything but
nominal cost-sharing by PAPs is seemingly inconsistent with the mission of a charitable
organization structured to provide assistance with prescription drug costs to low-income
patients.
Although PAP payments made for those covered Part D drugs outside the benefit may
never count toward enrollees’ TrOOP or total drug spend balances, CMS clarifies that
any nominal PAP copayment amounts paid by Part D enrollees will be aggregated to their
TrOOP and total drug spend balances, provided the enrollees take responsibility for
submitting the appropriate documentation to their plan. It will not be permissible,
however, for beneficiary payments structured as administrative fees or premiums to be
aggregated to Part D TrOOP and total drug spend balances, as these types of beneficiary
out-of-pocket expenditures do not meet the definition of “incurred costs” at 42 CFR
423.100 and in chapter 5, section 30.

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instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
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Enrollee submission of this documentation is necessary because a PAP operating outside
the Part D benefit should never submit a claim for assistance provided for a covered Part
D drug to a Part D enrollee’s Part D plan. Consistent with CMS guidance on claims
processing, plans should process these enrollee-submitted claims in the order in which
they are received, not based on date of service.
Organizations or entities offering PAPs must comply with all relevant fraud and abuse
laws, including, when applicable, the Federal anti-kickback statute and the civil monetary
penalty prohibiting inducements to beneficiaries. Liability under the anti-kickback
statute requires a case-by-case analysis of the particular facts and circumstances,
including the intent of the parties. The HHS Office of the Inspector General (OIG)
enforces Federal fraud and abuse statutes, and all questions regarding the compliance of
specific arrangements with these statutes should be referred to the OIG. General OIG
guidance regarding Part D and PAPs is available on the OIG Web site; see Appendix B
for the specific Web address.
Personal Health Savings Vehicles
In the final Part D regulations, CMS indicated that HSAs, FSAs, and MSAs are not group
health plans for TrOOP purposes, and that distributions from these personal health
savings vehicles will count as incurred costs for the purposes of TrOOP accounting.
Thus, information about these accounts need not be reported to CMS. However, if any of
these accounts is set up to pay benefits at the point-of-sale, and wishes to be included in
the automated payer data exchange provided by the TrOOP facilitation contractor, the
administrators of such accounts would need to exchange eligibility files with CMS and be
included in the COB files provided by CMS. Alternatively, account administrators may
require beneficiaries to submit paper claims after the POS transaction and can then
submit those claims to the TrOOP facilitation contractor in batch form. The TrOOP
facilitation contractor will create an NCPDP N1 transaction based on that batched claims
data and will send it back to the beneficiary’s Part D sponsor for accurate TrOOP
recalculation.
HRAs, however, generally are considered group health plans for purposes of Part D, and
distributions from these accounts will not count toward TrOOP. HRAs are therefore
group health plans subject to all the requirements that apply to other payers providing
prescription drug coverage. HRA administrators will have the option of entering into
data sharing agreements offered by CMS, or they can submit batched claims data to the
TrOOP facilitation contractor after the POS transaction. This will help supplement the
information about other payers that beneficiaries must relay to their Part D sponsors and
aid in the accurate calculation of TrOOP.
AIDS Drug Assistance Programs (ADAP)

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

AIDS Drug Assistance Programs (ADAPs), which are funded under the Ryan White
CARE Act, are an integral component of the safety-net for HIV/AIDS patients because
they fill coverage gaps in public and private insurance for critical HIV/AIDS drug
treatments. Although assistance with Part D cost-sharing by ADAPs may not count as
incurred costs toward meeting the out-of-pocket threshold at which catastrophic coverage
under the Part D benefit begins, neither the MMA nor its implementing regulations
prohibit ADAPs from assisting with cost-sharing or subsidizing of premiums.
To the extent that ADAPs want to be set up to pay benefits at the point-of-sale and wish
to be included in the automated payer data exchange provided by the COB contractor,
they will need to exchange eligibility files with CMS and be included in the COB files
provided by CMS. The advantage to this approach is that claims will be automatically
adjudicated at point-of-sale (POS). Alternatively, ADAPs may require beneficiaries to
submit paper claims after the POS transaction and can then submit those claims to the
TrOOP facilitation contractor in batch form. The TrOOP facilitation contractor will
create an NCPDP N1 transaction based on that batched claims data and will send it back
to the beneficiary’s Part D sponsor for accurate TrOOP recalculation.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Appendix F – Part D Requirements Waived for PACE
Organizations
(Rev.)
PACE is a comprehensive, coordinated model of care designed to meet the needs of frail
elders. There are several key differences between the way in which PACE organizations
(POs) provide the Part D benefit and how it is provided by other Part D sponsors.
Tracking of TrOOP
• Dual Eligible Beneficiaries:
CMS fully subsidizes dual eligible individuals’ Part D coverage in PACE
organizations. Therefore, consistent with PACE rules, there is no beneficiary outof-pocket expense, which eliminates the applicability of TrOOP for these
beneficiaries.
• Beneficiaries Eligible for Only Medicare:
PACE beneficiaries who are only Medicare eligible pay a supplemental premium
based on the anticipated cost-sharing covered by the PACE plan. As a result, for
these beneficiaries TrOOP does not apply.
Accessing Covered Part D Drugs
For the most part, POs fully coordinate their participants’ access to covered Part D drugs,
providing prescriptions directly to the participant. As a result, most POs are not set up
for real-time, on-line prescription drug claims processing and neither have nor report 4Rx
data to CMS.
Transferring Data When a Beneficiary Changes Sponsors
When a beneficiary disenrolls from a PO and re-enrolls in another Part D sponsor at any
time during the coverage year, the PO is required to transfer the TrOOP balance (if any)
and the gross covered drug costs to the new sponsor of record to permit the correct
placement of the beneficiary in the benefit.
Prior to the January 1, 2009, implementation of the automated TrOOP balance transfer
(TBT) process, POs must send the beneficiary’s year-to-date TrOOP and gross covered
drug costs, including amounts accumulated during the beneficiary’s period of enrollment
in the PO plus amounts previously reported to the PO by a prior plan sponsor for months
of enrollment during the same coverage year. For beneficiaries who are Medicare and

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it
displays a valid OMB control number. The valid OMB control number for this information collection is 0938-0978. The time
required to complete this information collection is estimated to average one hour per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the information collection. If you have
comments concerning the accuracy of the time estimate(s) or suggestions for improving this form, please write to: CMS, 7500
Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Medicaid dual eligibles, POs should use the Dual Eligible PACE Plan Beneficiary
Accumulated True Out-of-Pocket Cost Calculator to calculate the amount of TrOOP to
be reported to the new plan sponsor. The calculator is available on the CMS Web site;
see Appendix B for the specific Web address.
After the January 2009 implementation of the automated TBT process, POs will no
longer be required to forward amounts from any prior plans of enrollment. These
amounts will be reported to the new sponsor via the FIR transactions. POs will be
exempt from the automated TBT process; therefore, POs must continue to use the current
manual process to report TrOOP balances and gross covered drug costs for beneficiaries
transferring enrollment to the new plan sponsor as reflected on the TRR reporting the
disenrollment from the PO.
CMS will continue to develop guidance to further clarify the applicability of the COB
requirements to the POs.