C.F.R. » Title 42 » CHAPTER IV—CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES › SUBCHAPTER B—MEDICARE PROGRAM › PART 423—VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT › Subpart G—Payments to Part D Plan Sponsors For Qualified Prescription Drug Coverage

42 C.F.R. § 423.315

General payment provisions

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(a) Source of payments. CMS payments under this section are made from the Medicare Prescription Drug Account.

(b) Monthly payments. CMS provides a direct subsidy in the form of advance monthly payments equal to the Part D plan's standardized bid, risk adjusted for health status as provided in § 423.329(b), minus the monthly beneficiary premium as determined in § 423.286.

(c) Reinsurance subsidies. CMS provides reinsurance subsidy payments described in § 423.329(c) on a monthly basis during a year based on either estimated or incurred allowable reinsurance costs as provided under § 423.329(c)(2)(i), and final reconciliation to actual allowable reinsurance costs as provided in § 423.343(c).

(d) Low-income subsidies. CMS makes payments for premium and cost sharing subsidies, including additional coverage above the initial coverage limit, on behalf of certain subsidy-eligible individuals as provided in §§ 423.780 and 423.782. CMS provides low-income cost-sharing subsidy payments described in § 423.782 through interim payments of amounts as provided under § 423.329(d)(2)(i) and reconciliation to actual allowable reinsurance costs as provided in § 423.343(d).

(e) Risk-sharing arrangements. CMS may issue lump-sum payments or adjust monthly payments in the following payment year based on the relationship of the Part D plan's adjusted allowable risk corridor costs to predetermined risk corridor thresholds in the coverage year as provided in § 423.336.

(f) Retroactive adjustments and reconciliations. CMS reconciles payment year disbursements with updated enrollment and health status data, actual low-income cost-sharing costs and actual allowable reinsurance costs as provided in § 423.343.

(g) Special rules for private fee-for-service plans—(1) Application of reinsurance. For private fee-for-service plans (as defined by § 422.4(a)(3) of this chapter) offering qualified prescription drug coverage, CMS determines the amount of reinsurance payments as provided under § 423.329(c)(3).

(2) Exemption from risk corridor provisions. The provisions of § 423.336 regarding risk sharing do not apply.

(h) Selected drug subsidy. CMS provides selected drug subsidy payments described in § 423.329(e) on a monthly basis during a year based on either estimated or incurred allowable reinsurance costs as provided under § 423.329(e)(2)(i), and final reconciliation to actual allowable reinsurance costs as provided in § 423.343(e).

[70 FR 4525, Jan. 28, 2005, as amended at 91 FR 17589, Apr. 6, 2026]
Notes of Decisions
Cited in 3 cases (2 in the last 5 years), 2013–2023 · leading case: United States ex rel. Schutte v. Supervalu Inc., 598 U.S. 739 (2023).
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United States ex rel. Schutte v. Supervalu Inc., 598 U.S. 739 (2023). “§ 1395w–115; 42 CFR §§ 423.315 , 423.329. Those plan sponsors, in turn, enter contracts with pharma- Cite as: 598 U.”
United States ex rel. Schutte v. Supervalu Inc., 598 U.S. 739 (2023). “§1395w–115; 42 CFR §§423.315 , 423.329. Those plan sponsors, in turn, enter contracts with pharma- cies (sometimes through middlemen called pharmacy bene- fit managers).”
Fox Ins. Co. v. Centers for Medicare & Medic, 715 F.3d 1211 (9th Cir. 2013). · cites it 2× “42 C.F.R. §§ 423.315 ; 423.329. The payments are calculated on the basis of an estimate by CMS of the prospective monthly costs of the plan sponsor, after the plan sponsor submits a bid.”
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