Medicare Prescription Drug Coverage

To provide prescription drugs to Medicare beneficiaries through their voluntary participation in prescription drug plans, with an additional subsidy provided to lower-income beneficiaries.

Agency - Department of Health and Human Services

The Department of Health and Human Services is the Federal government's principal agency for protecting the health of all Americans and providing essential human services, especially to those who are least able to help themselves.

Website Address

Program Accomplishments

Not Applicable.

Uses and Use Restrictions

Payments will be made to participating prescription drug plans.

Eligibility Requirements

Applicant Eligibility

An entity organized and licensed under State law as a risk-bearing entity eligible to offer health insurance in each State in which it is to offer a plan, meeting the requirements in 42 CFR 423.504 and 42 CFR 423.505.

The entity may offer prescription drug coverage in conjunction with a Medicare Advantage plan or as a separate standalone benefit.

Beneficiary Eligibility

Eligible beneficiaries include individuals who are entitled to Medicare benefits under Part A or enrolled in Part B and who reside in the plan's service area. Individuals in a Medicare Advantage Plan with Part D coverage may not be separately enrolled in a stand alone prescription drug plan.


No Credentials or documentation are required. This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.

Aplication and Award Process

Preapplication Coordination

Preapplication coordination is not applicable.

Environmental impact information is not required for this program.

This program is excluded from coverage under E.O.


Application Procedures

This program is excluded from coverage under 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Potential sponsors apply to CMS to become an approved prescription drug plan. Generally, individuals enroll directly with the prescription drug program sponsor. The sponsor forwards the enrollment and eligibility information to CMS, which verifies eligibility for the drug benefit. Some individuals who are entitled to both Medicare and Medicaid have been enrolled automatically. Low income beneficiaries may complete a subsidy application at any Social Security office or through their State Medicaid office.

Award Procedures

Payment will be made by CMS to the prescription drug plan sponsors.


Contact the headquarters or regional office, as appropriate, for application deadlines.


Authorized under Part D of Title XVIII of the Social Security Act.

Range of Approval/Disapproval Time

Up to six months for plan sponsors.


Sponsors whose applications to become a prescription drug plan sponsor are rejected have the right to a reconsideration and appeal process. Beneficiaries have the right to a reconsideration and appeal process for adverse coverage determinations.


Contracts with sponsors may be renewed annually. Beneficiaries may enroll and disenroll from plans according to the timeframes established in 42 CFR 423.30-423.46.

Assistance Considerations

Formula and Matching Requirements

Statutory formulas are not applicable to this program. Matching requirements are not applicable to this program. MOE requirements are not applicable to this program.

Length and Time Phasing of Assistance

Indefinite. See the following for information on how assistance is awarded/released: Monthly payments to Prescription Drug Plan sponsors combined with an annual reconciliation adjustment.

Post Assistance Requirements


Plans must provide periodic reports to CMS, enrollees and the general public on cost; utilization; availability, accessibility and acceptability of services; fiscal soundness and other information required by CMS.

Plans must provide an annual report of business transactions and combined financial statements.

Progress reports are not applicable.

Expenditure reports are not applicable.

Performance monitoring is not applicable.


This program is excluded from coverage under 2 CFR 200, Subpart F - Audit Requirements. Periodic audits of plans by HHS, the Comptroller General or their designees. Periodic audits by CMS and the HHS Office of Inspector General (OIG) of plan cost reporting. Audit by CMS of financial records of at least one-third of participating plans every year.



Financial Information

Account Identification



(Insurance) FY 16 $89,102,000,000; FY 17 est $95,108,000,000; and FY 18 est $85,996,000,000

Range and Average of Financial Assistance

Determined by plan offerings, number of enrollees, and utilization.

Regulations, Guidelines, and Literature

Regulations governing this program are authorized under Part D of Title XVIII of the Social Security Act and are available at 42 CFR 423.

Information Contacts

Regional or Local Office


Headquarters Office

Lori Levine 7500 Security Blvd, Baltimore, Maryland 21244 Email: Phone: 410-786-7625

Criteria for Selecting Proposals

Not Applicable.

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