42 CFR 423.507 - Nonrenewal of contract.
(a) Nonrenewal by a Part D plan sponsor.
(1) Except for fallback entities, a Part D plan sponsor may elect not to renew its contract with CMS, effective at the end of the term of the contract for any reason provided it meets the timeframes for doing so set forth in paragraphs (a)(2) and (a)(3) of this section.
(2) If a Part D plan sponsor does not intend to renew its contract, it must notify -
(i) CMS in writing by the first Monday of June in the year in which the contract ends;
(ii) Each Medicare enrollee by mail at least 90 calendar days before the date on which the nonrenewal is effective. The sponsor must also provide information about alternative enrollment options by doing one or more of the following:
(A) Provide a CMS approved written description of alternative MA plan and PDP options available for obtaining qualified prescription drug coverage within the beneficiaries' region.
(B) Place outbound calls to all affected enrollees to ensure beneficiaries know who to contact to learn about their enrollment options.
(3) If a Part D plan sponsor does not renew a contract under this paragraph (a), CMS cannot enter into a contract with the organization for 2 years unless there are special circumstances that warrant special consideration, as determined by CMS.
(4) During the same 2-year period specified under paragraph (a)(3) of this section, CMS will not contract with an organization whose covered persons also served as covered persons for the non-renewing sponsor. A “covered person” as used in this paragraph means one of the following:
(i) All owners of nonrenewed or terminated organizations who are natural persons, other than shareholders who have an ownership interest of less than 5 percent.
(ii) An owner of a whole or part interest in a mortgage, deed of trust, note or other obligation secured (in whole or in part) by the organization, or by any of the property or assets thereof, which whole or part interest is equal to or exceeds 5 percent of the total property and assets of the organization.
(iii) A member of the board of directors or board of trustees of the entity, if the organization is organized as a corporation.
(5) If a Part D plan sponsor does not renew a contract under this paragraph (a), it must ensure the timely transfer of any data or files.
(b) CMS decision that a Part D plan sponsor is not qualified to renew.
(1) Except for fallback entities, CMS may determine that a Part D plan sponsor is not qualified to renew its contract for any of the following reasons:
(i) The reasons listed in § 423.509(a) that also permit CMS to terminate the contract.
(ii) The Part D plan sponsor has committed any of the acts in § 423.752 that support the imposition of intermediate sanctions or civil money penalties under § 423.750.
(iii) The contract must be nonrenewed as to an individual PDP if that plan does not have a sufficient number of enrollees to establish that it is a viable independent plan option.
(2) Notice of non-renewal. CMS provides notice of its decision not to authorize renewal of a contract as follows:
(i) To the Part D plan sponsor by August 1 of the contract year.
(ii) To each of the Part D plan sponsor's Medicare enrollees by mail at least 90 calendar days before the date on which the nonrenewal is effective, or at the conclusion of the appeals process if applicable.
(iii) The notice provisions in paragraph (b)(2)(ii) of this section also apply in cases where a non-renewal results because CMS and the Part D plan sponsor are unable to reach agreement on the bid under subpart F.
(3) Opportunity to develop and implement a corrective action plan.
(i) Before providing a notice of intent of nonrenewal of the contract, CMS will provide the Part D plan sponsor with notice specifying the Part D sponsor's deficiencies and reasonable opportunity of at least 30 calendar days to develop and implement a corrective action plan to correct the deficiencies.
(ii) The Part D plan sponsor is solely responsible for the identification, development, and implementation of its corrective action plan and for demonstrating to CMS that the underlying deficiencies have been corrected within the time period specified by CMS in the notice requesting corrective action.
(4) Notice of appeal rights. CMS gives the Part D plan sponsor written notice of its right to appeal the decision that the sponsor is not qualified renew its contract in accordance with § 423.642(b).