The following is the text from the email distributed by the RDS on May 19, 2008:

Attention: All RDS Secure Web Site Users

On May 16, 2008, the Centers for Medicare & Medicaid Services (CMS) published in the Federal Register proposed revisions to the existing Retiree Drug Subsidy (RDS) regulations. The proposed revisions would add definitions for the following terms:

• Actually paid

• Administrative costs

• Negotiated prices

The proposed revisions would also revise definitions that already appear in the regulations for the following terms:

• Allowable retiree costs

• Gross covered retiree plan-related prescription drug costs

CMS is proposing to add and revise these definitions to ensure continued consistency in policy between the RDS program and the Medicare Part D program. By applying these definitions, RDS Plan Sponsors would be required to report Part D costs that reflect the amount the Plan Sponsor’s contracted pharmacy benefit management company (PBM) or other intermediary contracting organization pays a pharmacy, as opposed to the amount   the Plan Sponsor pays the PBM. Presently, reported costs can be based on either approach.

By applying these definitions, CMS would be codifying existing policy requiring Plan Sponsors to report rebates and other price concessions retained by a PBM or other intermediary contracting organization, regardless of the terms of the contract between the RDS Plan Sponsor and the PBM or intermediary contracting organization. As stated in existing CMS guidance, this policy is already in effect for RDS plan years that start on or after July 1, 2006.  Go to: Important Reminder About CMS Guidance on Calculating and Reporting Rebates.

The proposed revisions are located on page 28556 of the May 16, 2008 Federal Register (73 FR 28556). Comments on the proposed regulations are being accepted if received by 5:00 PM on July 15, 2008. Instructions on how to submit comments are included in the proposed regulations. You can access the proposed regulations by clicking on RDS Proposed Regulations. 

If you have any questions about the RDS provisions of these regulations, please refer to the contact information listed in the regulations for the Subpart R provisions.

Sincerely,

CMS’ RDS Center