Regulation of Medicare Part D Plans

Regulation of Medicare Part D Plans Chapter 6: Medicare Part D Subsidies Paid for and Paid by Medicare Part D Bene ciaries by Kathryn A. Roe, Esq. Managing Member The Health Law Consultancy For Customer Assistance Call 1-800-328-4880 Mat #41837110

2015 Thomson Reuters This publication was created to provide you with accurate and authoritative information concerning the subject matter covered; however, this publication was not necessarily prepared by persons licensed to practice law in a particular jurisdiction. The publisher is not engaged in rendering legal or other professional advice and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional. For authorization to photocopy, please contact the Copyright Clearance Center at 222 Rosewood Drive, Danvers, MA 01923, USA (978) 750-8400; fax (978) 646-8600 or West s Copyright Services at 610 Opperman Drive, Eagan, MN 55123, fax (651) 687-7551. Please outline the speci c material involved, the number of copies you wish to distribute and the purpose or format of the use.

About the Author Kathryn A. Roe, Esq. * Kathryn A. Roe is the managing member of The Health Law Consultancy, a Chicago boutique health law rm she co-founded in 2009. Ms. Roe delivers legal counsel to health industry organizations, with particular focus on the regulation and operation of health insurance and government health programs. Ms. Roe s advice and insights draw on over 20 years experience serving health insurers, their trade associations and vendors that support them. She began her legal career in 1992 as a compliance attorney with a publicly-traded life and health insurance company. Entering private practice in 1996, Ms. Roe was involved with the introduction of Medicare+Choice and the launch of Medicare Advantage and Medicare Part D. Ms. Roe s health law excellence is recognized by Chambers USA: America s Leading Lawyers for Business and Best Lawyers in America. A member of the Illinois State Bar, Ms. Roe earned a Juris Doctor from Northwestern University School of Law and a Bachelor of Arts in Economics, summa cum laude, from the University of Notre Dame. * The author wishes to thank Jena M. Grady for her research assistance for this chapter. Ms. Grady, a graduate of the Loyola University Chicago School of Law Class of 2015, interned at The Health Law Consultancy during which she provided her research assistance. iii

Medicare Part D Subsidies Paid For and Paid by Medicare Part D Bene ciaries by Kathryn A. Roe, Esq., The Health Law Consultancy 6:1 Generally 6:2 Low-income subsidy 6:3 Eligibility generally 6:4 Eligibility for full subsidy 6:5 Eligibility for partial subsidy 6:6 Application for eligibility 6:7 Deemed eligibility 6:8 Premium subsidy for full and partial subsidy eligible individuals 6:9 Low-income cost-sharing subsidy 6:10 Full subsidy eligible individuals 6:11 Partial subsidy eligible individuals 6:12 Part D plan sponsor administration of the low-income subsidy 6:13 State Pharmaceutical Assistance Programs 6:14 State program quali cation 6:15 Role of State program versus Part D plan sponsor role 6:16 Options for providing nancial assistance 6:17 Coordination with Part D plans 6:18 Part D income-related monthly adjustment amount 6:19 Quali cation and determination 6:20 Administration 6:21 Collection 6:1 Generally To ensure access to Part D plans by low-income Medicare bene ciaries, Congress authorized the Centers for Medicare & Medicaid Services (CMS) to subsidize the out-of-pocket costs of 2015 Thomson Reuters 1

6:1 By Kathryn A. Roe, Esq. purchasing and maintaining a Part D plan for Part D eligible individuals meeting speci ed nancial criteria. 1 Those federal subsidies may not o set all out-of-pocket cost that Part D eligibles incur to purchase and maintain a Part D plan. Low-income Part D eligibles may turn to other third parties for premium and cost-sharing assistance. Among those third parties are State Pharmaceutical Assistance Programs (SPAPs). Congress speci cally preserved a role for SPAPs in assisting lowincome Part D eligibles. 2 Congress returned to the matter of premiums for Medicare Part D in the Patient Protection and A ordable Care Act (PPACA) in 2010. 3 This time Congress directed an increase in the Part D premium obligation of Part D eligibles whose annual income exceeds an established threshold. 4 That premium increase e ectively reduces the monthly per enrollee direct subsidy that CMS pays Part D plan sponsors for providing Part D coverage for those high income individuals. 6:2 Low-income subsidy The low-income subsidy (LIS) available to qualifying Part D eligibles is comprised of two components. One component is a low-income premium subsidy to assist Part D eligibles in paying the monthly premium due under the Part D plans in which they enroll. 1 The other is a low-income cost-sharing subsidy to assist Part D eligibles in paying deductible, coinsurance, or co-payment obligations under the Part D plans in which they enroll. 2 CMS pays the low-income premium and cost-sharing subsidies on behalf of Part D eligibles qualifying for LIS to the sponsors of the Part D plans that enroll them. 3 CMS makes payments for the low-income premium subsidy for qualifying Part D eligibles as an adjustment to the monthly per enrollee direct subsidy CMS pays 1 42 U.S.C.A. 1395w-114(c)(1). 2 Medicare Prescription Drug, Improvement, and Modernization Act (MMA), Pub. L. No. 108-173, Title I, 101(a)(2); 42 U.S.C.A. 1395w-133. 3 Pub. L. No. 111-148. 4 Patient Protection and A ordable Care Act, Pub. L. No. 111-148, 3308(b)(1)(C); 42 U.S.C.A. 1395w-113(a)(1)(F). 1 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 10. 2 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 10. 3 42 U.S.C.A. 1395w-114(c)(1); 42 C.F.R. 423.315(d). 2

Medicare Part D Subsidies 6:3 Part D plan sponsors for providing Part D coverage. 4 CMS makes payments for the low-income cost-sharing subsidy on an interim prospective basis during the coverage year for qualifying Part D eligibles to Part D plan sponsors pursuant to a CMS-established methodology. 5 After the end of each coverage year, CMS reconciles the low-income premium and cost-sharing subsidy payments CMS made to a sponsor for the coverage year against the actual lowincome premium and cost-sharing subsidy costs incurred by the sponsor. 6 6:3 Low-income subsidy Eligibility generally Individuals are eligible for LIS if they: (a) reside in any State (including the District of Columbia), 1 (b) are a Part D eligible enrolled in a Part D plan (Part D enrollee), 2 and (c) meet applicable income and resources requirements tied to the income and resource provisions for the Supplemental Security Income (SSI) program of Title XVI of the Social Security Act. 3 LIS-eligible individuals are separated into full subsidy and partial subsidy categories based on the income and resources requirements they satisfy. The same standards for income and resources apply to the income and resources requirements for determining full or partial subsidy eligibility. Income generally means income for purposes of determining SSI eligibility. 4 It includes value received in cash 4 42 U.S.C.A. 1395w-114(c)(1)(B) and (C); 42 C.F.R. 423.329(a)(1) and (b). 5 42 U.S.C.A. 1395w-114(c)(1)(B), (C) and (2); 42 C.F.R. 423.315(d), 423.329(a)(3) and (d)(2)(i). 6 42 U.S.C.A. 1395w-114(c)(1)(B) and (2); 42 C.F.R. 423.315(f), 423. 329(d)(2)(ii), and 423.343(b) and (d)(2). 1 Part D eligibles residing in a U.S. Territory may not be eligible for LIS unless the U.S. Territory applies for and is approved by CMS to receive grant monies to fund the provision of covered Part D drugs to their low-income Part D eligible residents. 42 U.S.C.A. 1395w-114(a)(3)(F); 42 C.F.R. 423.907. 2 Part D eligibles must enroll in a Part D plan to receive the premium and cost-sharing subsidies for which they are eligible. Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 30. 3 42 U.S.C.A. 1395w-114(a)(3)(A); 42 C.F.R. 423.773(a). 4 42 U.S.C.A. 1395w-114(a)(3)(C)(i); 42 C.F.R. 423.772 ( income ); see 42 U.S.C.A. 1382a. 2015 Thomson Reuters 3

6:3 By Kathryn A. Roe, Esq. or in kind and used to meet needs for food and shelter, but income does not include in kind support and maintenance. 5 Resources generally include liquid assets convertible to cash within 20 days and not excluded for purposes of determining SSI eligibility. 6 Resources also include real estate other than a primary residence or property on which a primary residence is located. 7 Resources do not include the value of a life insurance policy. 8 In determining full or partial subsidy eligibility, both income and resources take into account the countable income and countable resources of a LIS-eligible individual and any married spouse who lives in the same household with the LIS-eligible individual. 9 6:4 Low-income subsidy Eligibility for full subsidy A LIS-eligible individual is eligible for a full subsidy if the individual applies to and is determined by the Social Security Administration (SSA) or a State Medicaid agency, or if the individual is deemed by CMS to satisfy the income and resources requirements for full subsidy eligibility. To be determined a full subsidy eligible individual by SSA or a State Medicaid agency, a LIS-eligible individual must have: E countable income below 135% of the Federal Poverty Level (FPL), applicable to the State and family size (Full Subsidy Income Limit); 1 and E countable resources below or equal to three times the maximum amount of resources permitted for SSI eligibility, 5 42 U.S.C.A. 1395w-114(a)(3)(C)(i); 42 C.F.R. 423.772 ( income ); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 20 ( income ). 6 42 U.S.C.A. 1395w-114(a)(3)(D) and (E)(i); 42 C.F.R. 423.772 ( resources ); see 70 Fed. Reg. 4194, 4373 to 4374 (Jan. 28, 2005) (explaining CMS's election to narrow the scope of permitted resources for determining LIS eligibility relative to the scope of permitted resources for determining SSI eligibility, which is the resource standard that Congress speci ed in the MMA). 7 42 U.S.C.A. 1395w-114(a)(3)(D) and (E)(i); 42 C.F.R. 423.772 ( resources ). 8 42 U.S.C.A. 1395w-114(a)(3)(G)); 42 C.F.R. 423.772 ( resources ). 9 42 C.F.R. 423.772 ( income, resources ). 1 42 U.S.C.A. 1395w-114(a)(1); 42 C.F.R. 423.773(b)(1). 4

Medicare Part D Subsidies 6:5 as applicable to a single individual or married couple (Full Subsidy Resource Limit). 2 The income and resources thresholds for full subsidy eligibility are updated annually. 3 A LIS-eligible individual is deemed by CMS to satisfy the income and resources requirements for full subsidy eligibility, and thereby be a full subsidy eligible individual, if the individual is: E a dual eligible individual entitled to full Medicaid bene ts under a State's Medicaid plan as speci ed at 42 C.F.R. 423.772 (full bene t dual eligible); 4 or E a recipient of SSI bene ts; 5 or E a dual eligible individual entitled to less than full Medicaid bene ts under a State's Medicaid plan (partial bene t dual eligible) as either a Quali ed Medicare Bene ciary (QMB), Speci ed Low-Income Medicare Bene ciary (SLMB), or Qualifying Individual (QI). 6 The less than full Medicaid bene ts to which QMBs are entitled is payment of their Medicare Part A and Part B premiums and cost sharing; the less than full Medicaid bene ts to which SLMBs and QIs are entitled is payment of their Medicare Part B premiums. 7 6:5 Low-income subsidy Eligibility for partial subsidy A LIS-eligible individual is eligible for a partial subsidy if the individual applies to and is determined by SSA or a State Medicaid agency to satisfy the income and resources requirements for partial subsidy eligibility. 2 42 U.S.C.A. 1395w-114(a)(1) and (3)(D)(i); 42 C.F.R. 423.773(b)(2)(i). 3 For purposes of determining a LIS-eligible individual's income level for full subsidy eligibility, the U.S. Department of Health and Human Services (DHHS) updates FPL annually. 42 C.F.R. 423.772 ( Federal Poverty Line ); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.1. For purposes of determining a LISeligible individual's resource level for full subsidy eligibility, CMS updates the resources thresholds for each successive coverage year by applying the annual percentage increase in the Consumer Price Index (all items, U.S. city average) as of September of the current coverage year to the resources thresholds for the current coverage year, rounded to the nearest multiple of $10. 42 U.S.C.A. 1395w-114(a)(3)(D)(ii); 42 C.F.R. 423.773(b)(2)(ii). 4 42 U.S.C.A. 1395w-114(a)(3)(B)(v)(I); 42 C.F.R. 423.773(c)(i). 5 42 U.S.C.A. 1395w-114(a)(3)(B)(v)(I); 42 C.F.R. 423.773(c)(ii). 6 42 U.S.C.A. 1395w-114(a)(3)(B)(v)(II); 42 C.F.R. 423.773(c)(iii). 7 See 42 U.S.C.A. 1396a(a)(10)(E)(i), (iii), and (iv). 2015 Thomson Reuters 5

6:5 By Kathryn A. Roe, Esq. To be determined a partial subsidy eligible individual by SSA or a State Medicaid agency, a LIS-eligible individual must have: E countable income below 150% of the FPL, applicable to the State and family size (Partial Subsidy Income Limit); 1 and E countable resources below or equal to a statutorily prescribed dollar amount, as applicable to a single individual or married couple (Partial Subsidy Resource Limit). 2 Both the income and resources thresholds for partial subsidy eligibility are higher than the income and resources thresholds for full subsidy eligibility. The income and resources thresholds for partial subsidy eligibility are updated annually, just like the income and resources thresholds for full subsidy eligibility. 3 6:6 Low-income subsidy Application for eligibility An individual may apply to SSA or the State Medicaid agency where the individual resides for a determination of LIS eligibility for full or partial subsidy. 1 SSA and State Medicaid agencies are responsible for notifying CMS of the applicants for LIS eligibility that they determine to be LIS-eligible and of subsequent changes to and terminations of those LIS eligibility determinations. 2 SSA generally makes LIS eligibility determinations based upon information furnished by applicants in the SSA subsidy application and obtained via automated data matches with other federal agency records and pursuant to SSA regulations. 3 Those SSA regulations explain how SSA applies the SSI statutory provisions for income and resources that SSA administers for the SSI 1 42 U.S.C.A. 1395w-114(a)(2); 42 C.F.R. 423.773(d)(1). 2 42 U.S.C.A. 1395w-114(a)(3)(E)(i)(I); 42 C.F.R. 423.773(d)(2)(i). 3 For purposes of determining a LIS-eligible individual's income level for partial subsidy eligibility, DHHS updates FPL annually. 42 C.F.R. 423.772 ( Federal Poverty Line ); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.1. For purposes of determining a LIS-eligible individual's resource level for partial subsidy eligibility, CMS updates the resources thresholds for each successive coverage year by applying the annual percentage increase in the Consumer Price Index (all items, U.S. city average) as of September of the current coverage year to the resources thresholds for the current coverage year, rounded to the nearest multiple of $10. 42 U.S.C.A. 1395w-114(a)(3)(E)(i)(II); 42 C.F.R. 423.773(d)(2)(ii). 1 42 U.S.C.A. 1395w-114(a)(3)(B)(i); 42 C.F.R. 423.774(a). 2 42 C.F.R. 423.904(b); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1. 3 See 42 C.F.R. 423.774(a); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1. 6

Medicare Part D Subsidies 6:6 program to determine LIS eligibility, in accordance with the MMA and CMS's implementing regulations, and what process SSA follows for making LIS eligibility determinations. 4 A State Medicaid agency may o er applicants for LIS eligibility determinations the opportunity to complete the SSA subsidy application and obtain an SSA determination of LIS eligibility. 5 CMS strongly encourages applicant use of the SSA subsidy application. 6 If an applicant accepts and completes the SSA subsidy application, the State Medicaid agency must forward the completed application to SSA for processing and making of the LIS eligibility determination. 7 If the applicant declines and wants a State determination of LIS eligibility, the State Medicaid agency must have and use its own subsidy application and process for making a LIS eligibility determination in accordance with the MMA and CMS's implementing regulations. 8 A State Medicaid agency must screen each applicant contacting it about LIS eligibility for QMB, SLMB and QI eligibility under the State's Medicaid plan, without regard for whether the applicant seeks an SSA or State determination of LIS eligibility. 9 If the applicant is determined eligible for QMB, SLMB, or QI, the State Medicaid agency must o er the applicant enrollment in the 4 See 20 C.F.R. Part 418, Subpart D. 5 Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 10.3.3 (Feb. 2009), available at http://www.cms.gov/medi care/eligibility-and-enrollment/lowincsubmedicareprescov/downloads/stateli SGuidance021009.pdf. 6 Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 10.3.3 (Feb. 2009), available at http://www.cms.gov/medi care/eligibility-and-enrollment/lowincsubmedicareprescov/downloads/stateli SGuidance021009.pdf; 70 Fed. Reg. 4194, at 4381 ( We encourage States to consider using the SSA application form and process as their default process for processing low-income subsidy applications. ) 7 Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 10.3.2 (Feb. 2009), available at http://www.cms.gov/medi care/eligibility-and-enrollment/lowincsubmedicareprescov/downloads/stateli SGuidance021009.pdf; 70 Fed. Reg. 4194, at 4381. 8 42 C.F.R. 423.904(a) and (d); Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 10.3.3 (Feb. 2009), available at http://www.cms.gov/medicare/eligibility-and-enrollment/lowincsubmedicare PresCov/Downloads/StateLISGuidance021009.pdf; 70 Fed. Reg. 4194, at 4381. 9 42 C.F.R. 423.904(c)(1); Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 20.1 (Feb. 2009), available at http://www.cms.gov/medicare/eligibility-and-enrollment/lowincsubmedicarepr escov/downloads/statelisguidance021009.pdf. 2015 Thomson Reuters 7

6:6 By Kathryn A. Roe, Esq. applicable program. 10 An applicant's acceptance of enrollment will generally result in deemed LIS eligibility for the applicant, without need for further LIS eligibility determination. 11 An applicant's refusal of QMB, SLMB, or QI enrollment will necessitate a State Medicaid agency's continued processing of the application for a LIS eligibility determination if the applicant has sought a State determination. 12 The e ective date of an individual's initial LIS eligibility determination is generally the rst day of the month in which the individual applies for the LIS eligibility determination. 13 LIS eligibility, therefore, takes e ect retroactively for individuals who are eligible for Medicare at the time they apply for a LIS eligibility determination. 14 For individuals who are not yet eligible for Medicare at the time they apply for a LIS eligibility determination, LIS eligibility takes e ect as of the rst day of the month in which their Medicare eligibility begins. 15 In no case may an initial LIS eligibility determination for an individual take e ect before the individual's Medicare eligibility begins, and in no case may LIS be paid for a LIS-eligible individual before the individual's Part D plan enrollment begins. 16 Initial LIS eligibility determinations made by SSA and State 10 42 C.F.R. 423.904(c)(2); Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 20.1 and 20.1.2 (Feb. 2009), available at http://www.cms.gov/medicare/eligibility-and-enrollment/lowincsu bmedicareprescov/downloads/statelisguidance021009.pdf. 11 Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 20.1 (Feb. 2009), available at http://www.cms.gov/medic are/eligibility-and-enrollment/lowincsubmedicareprescov/downloads/stateli SGuidance021009.pdf. For applicants determined eligible for SLMB or QI, a State Medicaid agency may close their pending applications for LIS eligibility determinations. For applicants determined eligible for QMB, the State Medicaid agency may not close their pending applications for LIS eligibility determinations in order to enable LIS eligibility determinations for months prior to their QMB eligibility. 12 Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 20.1.2 (Feb. 2009), available at http://www.cms.gov/medi care/eligibility-and-enrollment/lowincsubmedicareprescov/downloads/stateli SGuidance021009.pdf. 13 42 U.S.C.A. 1395w-114(a)(3)(B)(ii); 45 C.F.R. 423.774(b); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.2. 14 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.2. 15 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.2. 16 See Centers for Medicare & Medicaid Services, Medicare Prescription 8

Medicare Part D Subsidies 6:6 Medicaid agencies remain in e ect no more than 12 months. 17 The agency that makes an applicant's initial LIS eligibility determination SSA or a State Medicaid agency is responsible for all subsequent activity related to the determination. 18 That subsequent activity includes redeterminations and appeals of LIS eligibility, LIS level (i.e., full or partial) and LIS termination, and notice delivery to LIS-eligible individuals. 19 SSA conducts redeterminations and appeals for which SSA is responsible in the manner and frequency prescribed by SSA regulations for LIS eligibility determinations. 20 Each State Medicaid agency conducts redeterminations and appeals for which the agency is responsible in the manner and frequency prescribed by the State's Medicaid plan for redeterminations and appeals of Medicaid eligibility. 21 An exception to the standard e ective period for a determination or redetermination of LIS eligibility applies for a LIS-eligible individual whose spouse dies during an e ective period. In that case, the surviving LIS-eligible individual's then-current e ective period is extended 12 months after the date on which the thencurrent e ective period would have otherwise ended. 22 This extension applies regardless whether SSA or a State Medicaid agency made the surviving LIS-eligible individual's determination or redetermination. 23 Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.2. 17 42 U.S.C.A. 1395w-114(a)(3)(B)(ii); 42 C.F.R. 423.774(b); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.2. 18 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1; 70 Fed. Reg. 4194, at 4381. 19 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1, 40.1.5, 40.1.6 and 40.1.7. 20 42 U.S.C.A. 1395w-114(a)(3)(B)(iv); 42 C.F.R. 423.774(c)(2); 70 Fed. Reg. 4194, at 4381; see 20 C.F.R. Part 418, Subpart D. 21 42 U.S.C.A. 1395w-114(a)(3)(B)(iii); 42 C.F.R. 423.774(c)(1) and 423. 904(a); 70 Fed. Reg. 4194, at 4381; see Centers for Medicare & Medicaid Services, Guidance to States on the Low-Income Subsidy, 70 and 100.3 (Feb. 2009), available at http://www.cms.gov/medicare/eligibility-and-enrollment/low IncSubMedicarePresCov/Downloads/StateLISGuidance021009.pdf. 22 42 U.S.C.A. 1395w-114(a)(3)(B)(vi); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1. 23 42 U.S.C.A. 1395w-114(a)(3)(B)(vi); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1. 2015 Thomson Reuters 9

6:7 By Kathryn A. Roe, Esq. 6:7 Low-income subsidy Deemed eligibility CMS deems individuals who are full bene t dual eligible, SSI recipients, QMBs, SLMBs, or QIs to be automatically LIS eligible; these individuals need not apply to SSA or their State Medicaid agency for a LIS eligibility determination. 1 CMS uses data it regularly receives from SSA reporting of SSI recipients and from State Medicaid agencies reporting of full bene t dual eligibles and partial bene t dual eligibles, including QMBs, SLMBs, and QIs, to award automatic LIS eligibility. 2 Should an individual be reported to CMS by SSA or a State Medicaid agency as a full bene t dual eligible, SSI recipient or partial bene t dual eligible after the individual has been determined LIS eligible by application, CMS will establish deemed LIS eligibility and the applicable agency will terminate determined LIS eligibility for the individual. 3 CMS is responsible for notifying full bene t dual eligibles, SSI recipients and partial bene t dual eligibles of their deemed LIS eligibility and resultant quali cation for a full subsidy. 4 The e ective date of an individual's deemed LIS eligibility is the rst day of the month that the individual attains the status of full bene t dual eligible, SSI recipient or partial bene t dual eligible. 5 Deemed LIS eligibility, therefore, takes e ect retroactively for individuals who are eligible for Medicare at the time they apply for full Medicaid bene ts, SSI bene ts, or partial Medicaid bene ts and are determined retroactively eligible for the Medicaid or SSI bene ts for which they applied 6 For individuals who are not yet eligible for Medicare at the time they apply for full Medicaid bene ts, SSI bene ts, or partial Medicaid bene ts, deemed LIS eligibility takes e ect as of the rst day of the month in which their Medicare eligibility begins, so long as 1 42 U.S.C.A. 1395w-114(a)(3)(B)(v); 42 C.F.R. 423.773(c)(1). 2 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.1. 3 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.1.4. 4 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.4. 5 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.1. 6 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.1. 10

Medicare Part D Subsidies 6:7 CMS has timely received report from SSA or the State Medicaid agency of their Medicaid or SSA bene ts eligibility. 7 Initial deemed LIS eligibility continues from the e ective date through the end of the then-current calendar year, unless the effective date of an individual's deemed LIS eligibility is the rst of any month from July through December of the then-current calendar year. 8 In that case, initial deemed LIS eligibility continues from the e ective date through the end of the following calendar year. 9 The e ective period of an individual's deemed LIS eligibility does not end prematurely if during the e ective period the individual is no longer reported to CMS by the applicable agency as a full bene t dual eligible, SSI recipient or partial bene t dual eligible. 10 The LIS level of a deemed LIS-eligible individual may be changed midyear by CMS following initial deeming but only to increase the cost-sharing subsidy if CMS receives information from SSA or a State Medicaid agency supporting such change. 11 CMS conducts a re-deeming process in July through December of each calendar year to redetermine whether individuals with deemed LIS eligibility for the then-current calendar year continue to qualify for deemed LIS eligibility for the following calendar year. 12 Those individuals with deemed LIS eligibility for the thencurrent calendar year who are reported to CMS by SSA or a State Medicaid agency to be a full bene t dual eligible, SSI recipient or a partial bene t dual eligible for any month of July through December of the then-current calendar year will continue to be deemed LIS eligible by CMS for the following calendar year. 13 CMS is responsible for notifying individuals who do not continue to qualify for deemed LIS eligibility status for the following 7 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.1. 8 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.1. 9 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.1. 10 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.1. 11 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.3. 12 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.5. 13 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.5. 2015 Thomson Reuters 11

6:7 By Kathryn A. Roe, Esq. calendar year or who continue to so qualify but at a di erent LIS level for cost sharing. 14 6:8 Low-income subsidy Premium subsidy for full and partial subsidy eligible individuals LIS-eligible individuals whether determined or deemed LIS eligible are entitled to a premium subsidy based on income (without regard to resources). That subsidy reduces the monthly premium charged for basic prescription drug coverage 1 by the sponsor of their Part D plan. 2 The value of the low-income premium subsidy varies depending upon the LIS level for which the LIS-eligible individual quali es. 3 CMS prescribes the premium subsidy amount used to calculate a LIS-eligible individual's premium subsidy. The premium subsidy amount takes into account the monthly premium for basic prescription drug coverage, not just for the individual's selected Part D plan, but for all Part D plans in the PDP region in which a LIS-eligible individual resides. The premium subsidy amount equals the monthly premium for basic prescription drug coverage for the Part D plan in which the LIS-eligible individual enrolls, unless the regional low-income premium subsidy amount for the PDP region in which the individual resides is less. 4 The premium subsidy amount is then the regional low-income premium subsidy amount for that PDP region. 5 14 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 40.2.6. 1 Basic prescription drug coverage means coverage meeting the requirements for either de ned standard, actuarially equivalent standard, or basic alternative prescription drug coverage under Medicare Part D. 42 C.F.R. 423.100 ( alternative prescription drug coverage, basic prescription drug coverage, standard prescription drug coverage ); see 42 C.F.R. 423.104(d) and (e) (specifying the respective requirements for standard prescription drug coverage and basic alternative prescription drug coverage). 2 42 U.S.C.A. 1395w-114(a)(1)(A) and (2)(A); 42 C.F.R. 423.286(e); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 50. 3 42 U.S.C.A. 1395w-114(a)(1)(A) and (2)(A); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 50. 4 See 42 U.S.C.A. 1395w-114(a)(1)(A); 42 C.F.R. 423.780(b)(1); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 50.2. 5 See 42 U.S.C.A. 1395w-114(a)(1)(A); 42 C.F.R. 423.780(b)(1); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, 12

Medicare Part D Subsidies 6:8 The regional low-income premium subsidy amount for a PDP region equals the greater of: E the low-income benchmark premium amount for basic prescription drug coverage for all Part D plans available in the PDP region in which a LIS-eligible individual resides; 6 or E the lowest monthly premium for a PDP plan providing basic prescription drug coverage in the PDP region in which the individual resides. 7 CMS annually calculates and publishes the regional low-income premium subsidy amount for each PDP region following Part D plan sponsors' submission of their bids for the upcoming coverage year. 8 Full subsidy eligibility entitles a LIS-eligible individual to a premium subsidy equal to 100% of the premium subsidy amount for the PDP region in which the individual resides. 9 Partial subsidy eligibility entitles a LIS-eligible individual to a premium subsidy that ranges from a high of 100% to a low of 25% of the applicable premium subsidy amount, based on the following sliding income scale: 10 Countable Income 11 Up to 135% FPL for applicable calendar year, State and family size Above 135% up to 140% FPL for applicable calendar year, State and family size Above 140% up to 145% FPL for applicable calendar year, State and family size Above 145% but below 150% FPL for applicable calendar year, State and family size Premium Subsidy 100% of premium subsidy amount 75% of premium subsidy amount 50% of premium subsidy amount 25% of premium subsidy amount CMS Pub 100-18, Ch. 13, 50.2. 6 A PDP region's low-income benchmark premium amount equals the weighted average of the monthly premium amounts attributable to basic prescription drug coverage for the PDP plans o ering basic prescription drug coverage, the PDP plans o ering enhanced alternative prescription drug coverage and the MA-PD plans o ering prescription drug coverage in the PDP region, calculated in accordance with 42 C.F.R. 423.780(b)(2). 7 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 50.2.1; see 42 U.S.C.A. 1395w- 114(b)(1); 42 C.F.R. 423.780(b)(1)(ii). 8 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 50.2.1. 9 42 U.S.C.A. 1395w-114(a)(1)(A); 42 C.F.R. 423.780(a). 10 42 U.S.C.A. 1395w-114(a)(2)(A); 42 C.F.R. 423.780(d). 11 See current calendar year income limits for low-income premium subsidy eligibility. POMS HI 03001.020. 2015 Thomson Reuters 13

6:8 By Kathryn A. Roe, Esq. Countable Income 11 150% FPL or above for applicable calendar year, State and family size Premium Subsidy 0% of premium subsidy amount In no case may a LIS-eligible individual be subject to an increase in the individual's monthly premium for Part D coverage by a Part D plan's addition of a late enrollment penalty. 12 In that way, the LIS-eligible individual avoids application of the late enrollment penalty even when otherwise appropriate, and CMS avoids application of premium subsidy dollars to premium charges unrelated to providing Part D coverage. This waiver of the late enrollment penalty continues from the e ective date of an individual's LIS eligibility until the individual is no longer continuously enrolled in a Part D plan, even if the individual subsequently loses LIS eligibility. 13 6:9 Low-income cost-sharing subsidy LIS-eligible individuals whether determined or deemed LIS eligible are entitled to a cost-sharing subsidy that reduces the deductible, coinsurance or co-payment amounts charged at the point-of-sale for covered prescription drug purchases under their Part D plan. 1 As with the premium subsidy, the value of the lowincome cost-sharing subsidy varies depending upon the LIS level for which the LIS-eligible individual quali es. 2 Both the full and partial cost-sharing subsidies are re ected in terms of maximum allowable deductible, coinsurance and costsharing amounts to be paid by LIS-eligible individuals for their covered prescription drug purchases under basic prescription drug coverage. If a LIS-eligible individual has certain basic prescription drug coverage such as actuarially equivalent standard or basic alternative prescription drug coverage with any cost sharing lower than the corresponding cost-sharing maximum prescribed for the full or partial cost-sharing subsidy for which the individual quali es, the lower cost sharing under the individual's Part D plan will apply without further reduction. 3 If a LISeligible individual, instead, has enhanced alternative prescription drug coverage, which combines basic prescription drug 12 42 U.S.C.A. 1395w-113(b)(8); 42 C.F.R. 423.780(e). 13 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 50.4. 1 42 U.S.C.A. 1395w-114(a)(1)(B) to (E) and (2)(B) to (E). 2 42 U.S.C.A. 1395w-114(a)(1)(B) to (E) and (2)(B) to (E). 3 42 C.F.R. 423.782(c); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 60.3. 14

Medicare Part D Subsidies 6:10 coverage with supplemental prescription drug bene ts that reduce covered prescription drug cost sharing, 4 a full or partial cost-sharing subsidy for which the individual quali es can apply to further reduce the cost sharing. 5 In other words, the costsharing subsidy may further reduce a LIS-eligible individual's out-of-pocket liability for a covered prescription drug, but only after the supplemental prescription drug bene ts have been applied to reduce that liability. 6 The maximum co-payment amounts applicable for the full and partial cost-sharing subsidies vary across prescription drug categories recognized by Congress and CMS for the low-income costsharing subsidy. 7 Those prescription drug categories are generic drugs, 8 multiple source preferred drugs, 9 and all other prescription drugs, including brand drugs and drugs that are not preferred drugs. The maximum co-payment amounts applicable for the full and partial cost-sharing subsidies do not, however, vary across prescription lls based on number of days' supply. Rather, the maximum co-payment amounts apply per prescription lled without regard to the number of days' supply. 10 6:10 Low-income cost-sharing subsidy Full subsidy eligible individuals Full subsidy eligibility entitles a LIS-eligible individual to a cost-sharing subsidy with the following general features based on basic prescription drug coverage under a Part D plan: E no annual deductible, 1 E reduced cost sharing in the form of small or no co-payments 4 42 C.F.R. 423.104(f)(1). 5 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 60.4.3. 6 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 60.4.3. 7 See 42 U.S.C.A. 1395w-114(a)(1)(D) and (2)(D) to (E); 42 C.F.R. 423.782(a)(2) and (b)(3). 8 42 C.F.R. 423.4 ( generic drug ). 9 See 42 U.S.C.A. 1396r-8(k)(7)(A)(i) ( multiple source drug ); 42 C.F.R. 423.100 ( preferred drug ). 10 Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 60.4.2. 1 42 U.S.C.A. 1395w-114(a)(1)(B); 42 C.F.R. 423.782(a)(1). 2015 Thomson Reuters 15

6:10 By Kathryn A. Roe, Esq. E for covered prescription drug purchases up to the annual out-of-pocket threshold, 2 and no cost sharing for covered prescription drug purchases above the annual out-of-pocket threshold. 3 Those features mean that full subsidy eligible individuals experience no coverage gap for covered prescription drug purchases above the initial coverage limit up to the annual out-of-pocket threshold. 4 For those covered prescription drug purchases subject to reduced cost sharing up to the annual out-of-pocket threshold, the maximum allowable co-payment amounts for covered prescription drugs vary across di erent categories of full subsidy eligible individuals. 5 CMS annually adjusts the maximum allowable co-payment amounts up to the annual out-of-pocket threshold by the annual percentage increase in the Consumer Price Index for those full subsidy eligible individuals who are noninstitutionalized full bene t dual eligibles with income up to 100% FPL. 6 For all other full subsidy eligible individual categories, CMS annually adjusts the maximum allowable co-payment amounts up to the annual out-of-pocket threshold by the annual percentage increase in average total expenditures for covered prescription drugs. 7 The table below sets forth the maximum allowable deductible, coinsurance and co-payment amounts speci c to each category of full subsidy eligible individual with respect to the low-income cost-sharing subsidy. The table re ects the maximum applicable co-payment amounts up to the annual out-of-pocket threshold for each of these categories for the 2015 coverage year. 8 2 42 U.S.C.A. 1395w-114(a)(1)(D); 42 C.F.R. 423.782(a)(2). 3 42 U.S.C.A. 1395w-114(a)(1)(E); 42 C.F.R. 423.782(a)(3). 4 42 U.S.C.A. 1395w-114(a)(1)(C); 42 C.F.R. 423.782(a)(2). 5 See 42 U.S.C.A. 1395w-114(a)(1)(D); 42 C.F.R. 423.782(a)(2). 6 42 C.F.R. 423.782(a)(2)(iii). 7 See 42 C.F.R. 423.782(a)(2)(i) (cross-referencing 42 C.F.R. 423.104(d)(5)(i)(A)(2)). 8 Centers for Medicare & Medicaid Services, Announcement of Calendar Year (CY) 2015 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, Attachment V (Apr. 7, 2014), available at http://www.cms.gov/medicare/health-plans/medicareadvtgs pecratestats/downloads/announcement2015.pdf; see past and current plan year maximum copayment amounts applicable up to the annual out-of-pocket threshold for each full subsidy eligible individual category recognized for purposes of LICS. POMS HI 03001.005. 16

Medicare Part D Subsidies 6:11 Full Subsidy Category for Cost Sharing Determined by application as having income less than the Full Subsidy Income Limit and resources less than or equal to the Full Subsidy Resource Limit Deemed SSI recipient or partial bene t dual eligible Deemed full bene t dual eligible with income above 100% FPL, applicable to State and family size, but not institutionalized individual 9 Deemed full bene t dual eligible with income up to 100% FPL, applicable to State and family size, but not institutionalized individual Deemed full bene t dual eligible who is institutionalized individual or individual receiving home and communitybased services 10 Maximum Annual Deductible Maximum Cost Sharingupto Annual Out-of- Pocket Threshold $0 $2.65/generic drug $2.65/preferred multiple source drug $6.60/drug other than generic or preferred multiple source drug $0 $2.55/generic drug $2.65/preferred multiple source drug $6.60/drug other than generic or preferred multiple source drug $0 $2.65/generic drug $2.65/preferred multiple source drug $6.60/drug other than generic or preferred multiple source drug $0 $1.20/generic drug $1.20/preferred multiple source drug $3.60/drug other than generic or preferred multiple source drug Maximum Cost Sharing above Annual Out-of-Pocket Threshold $0 $0 $0 $0 $0 $0 $0 6:11 Low-income cost-sharing subsidy Partial subsidy eligible individuals Partial subsidy eligibility entitles a LIS-eligible individual to a cost-sharing subsidy with the following features applicable to basic prescription drug coverage under a Part D plan: E reduced annual deductible for covered prescription drug purchases, 1 E reduced cost sharing in the form of lower coinsurance for 9 42 C.F.R. 423.772 ( institutionalized individual ). 10 42 C.F.R. 423.772 ( individual receiving home and community-based services ). 1 42 U.S.C.A. 1395w-114(a)(2)(B); 42 C.F.R. 423.782(b)(1). 2015 Thomson Reuters 17

6:11 By Kathryn A. Roe, Esq. E covered prescription drug purchases above the annual deductible up to the annual out-of-pocket threshold, 2 and reduced cost sharing in the form of small co-payments for covered prescription drug purchases above the annual outof-pocket threshold. 3 As with full subsidy eligibility, partial subsidy eligibility results in no gap in coverage for covered prescription drug purchases above the initial coverage limit up to the annual out-of-pocket threshold. 4 For those covered prescription drug purchases subject to the annual deductible or the reduced cost sharing above the annual out-of-pocket threshold, CMS annually adjusts the maximum allowable deductible and co-payment amounts. 5 CMS adjusts both based upon the annual percentage increase in average total expenditures for covered prescription drugs. 6 The table below sets forth the maximum allowable deductible, coinsurance and co-payment amounts speci c to each category of partial subsidy eligible individual with respect to the low-income cost-sharing subsidy. 7 The table re ects the maximum applicable allowable co-payment amounts above the annual out-of-pocket threshold for each of those categories for the 2015 coverage year. 8 2 42 U.S.C.A. 1395w-114(a)(2)(D); 42 C.F.R. 423.782(b)(2). 3 42 U.S.C.A. 1395w-114(a)(2)(E); 42 C.F.R. 423.782(b)(3). 4 42 U.S.C.A. 1395w-114(a)(2)(C); 42 C.F.R. 423.782(b)(2). 5 42 U.S.C.A. 1395w-114(a)(2)(E); 42 C.F.R. 423.782(b)(1), (3). 6 42 C.F.R. 423.782(b)(1) and (3). 7 Centers for Medicare & Medicaid Services, Announcement of Calendar Year (CY) 2015 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, Attachment V (Apr. 7, 2014) available at http://www.cms.gov/medicare/health-plans/medicareadvtgsp ecratestats/downloads/announcement2015.pdf; see past and current plan year deductible amounts applicable for each partial subsidy eligible individual category recognized for purposes of LICS. POMS HI 03001.005. 8 Centers for Medicare & Medicaid Services, Announcement of Calendar Year (CY) 2015 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, Attachment V (Apr. 7, 2014) available at http://www.cms.gov/medicare/health-plans/medicareadvtgsp ecratestats/downloads/announcement2015.pdf; see current plan year maximum copayment amounts applicable above the annual out-of-pocket threshold for each partial subsidy eligible individual category recognized for purposes of LICS. POMS HI 03001.005. 18

Medicare Part D Subsidies 6:12 Partial Subsidy Category for Cost Sharing Determined by application as having income greater than the Full Subsidy Income Limit but less than Partial Subsidy Income Limit, and resources less than or equal to the Partial Subsidy Resource Limit Determined by application as having income less than the Full Subsidy Income Limit, and resources greater than the Full Subsidy Resource Limit but less than or equal to the Full Subsidy Resource Limit Maximum Annual Deductible Maximum Cost Sharing Above Deductible up to Annual Out-of- Pocket Threshold Maximum Cost Sharing above Annual Out-of-Pocket Threshold $66 15% coinsurance $2.65/generic drug $2.65/preferred multiple source drug $6.60/drug other than generic or preferred multiple source drug $66 15% coinsurance $2.65/generic drug $2.65/preferred multiple source drug $6.60/drug other than generic or preferred multiple source drug 6:12 Part D plan sponsor administration of the lowincome subsidy Notifying Enrollees about LIS Eligibility. Part D plan sponsors are responsible for notifying qualifying enrollees of their initial LIS eligibility, including their LIS e ective dates and levels. Part D plan sponsors are also responsible for e ecting reductions in those enrollees' premiums and cost sharing when and how indicated by their LIS e ective dates and levels. 1 Part D plan sponsors are likewise responsible for notifying enrollees of subsequent changes to their LIS level or terminations of their LIS eligibility, and for implementing those changes and terminations in the determination of those enrollees' premium and cost-sharing obligations. 2 CMS enables Part D plan sponsors to carry out these obligations by regularly reporting on 1 42 U.S.C.A. 1395w-114(c)(1)(B); 42 C.F.R. 423.800(b); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.2. 2 42 U.S.C.A. 1395w-114(c)(1)(B); 42 C.F.R. 423.800(b); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.2. 2015 Thomson Reuters 19

6:12 By Kathryn A. Roe, Esq. LIS eligibility determinations, changes and terminations to Part D plan sponsors for their Part D enrollees. 3 Adhering to CMS's Best Available Evidence Policy for Cost- Sharing Subsidy. Part D plan sponsors must adhere to CMS's best available evidence (BAE) policy for establishing the correct LIS level for cost sharing at the point-of-sale for covered prescription drug purchases by LIS-eligible individuals. 4 The BAE policy requires Part D plan sponsors to: E accept from, or on behalf of, a LIS-eligible individual documentation or information speci ed by CMS, which evidences the individual's status as a noninstitutionalized, institutionalized, or home and community-based servicesreceiving full bene t dual eligible or a SSI recipient or partial bene t dual eligible, and the e ective date of that status, 5 E furnish access to covered prescription drugs at the point-ofsale at the cost sharing appropriate to the LIS-eligible individual's status established by the BAE documentation or information received, 6 E update Part D plan sponsor's systems to re ect the correct LIS level for cost sharing for the LIS-eligible individual based upon the BAE documentation or information received, 7 and E request an update of CMS's systems to the extent CMS's systems do not re ect the correct LIS level for cost sharing for the LIS-eligible individual based upon the BAE documentation or information received. 8 The BAE policy also requires Part D plan sponsors to respond 3 42 U.S.C.A. 1395w-114(c)(1)(A); 42 C.F.R. 423.800(a); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.1 and App. E. 4 42 C.F.R. 423.800(d); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.5. 5 42 C.F.R. 423.772 ( best available evidence ) and 423.800(d)(1); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.5.2. 6 42 C.F.R. 423.800(d)(2); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.5.2. 7 42 C.F.R. 423.800(d)(2); CMS, Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.5.2. 8 42 C.F.R. 423.800(d)(2); Centers for Medicare & Medicaid Services, Medicare Prescription Drug Bene t Manual, CMS Pub 100-18, Ch. 13, 70.5.2 and 70.5.4. 20