RDS Program Overview

User Roles:

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This section provides an overview of the RDS Program. Review this information if you are a Plan Sponsor that is considering applying for the program, or if you are new to your role in RDS.

Select a topic for more information on the RDS Program:

Program Background

The Retiree Drug Subsidy (RDS) Program was enacted in December 2003 to reimburse Plan Sponsors for a portion of their Qualifying Covered Retirees' costs for prescription drugs otherwise covered by Medicare Part D that are attributable to such drug costs between the applicable Cost Threshold and Cost Limit. For more information about the Cost Thresholds and Cost Limits, refer to Cost Threshold and Cost Limit by Plan Year. Such incurred costs (including dispensing fees) that the Plan Sponsor pays, and that the retiree pays, are eligible for subsidy. Rebates received are subtracted from the amount eligible for subsidy.

To qualify for the subsidy, a Plan Sponsor must show that its coverage is "actuarially equivalent" to, or at least as generous as, the defined standard Medicare Part D coverage.

The RDS statutory provisions are published at 42 U.S.C. 1395ยง-132 (Section 1860D-22 of the Social Security Act). The regulations are published at 42 C.F.R. Part 423, Subpart R.

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Benefits of the RDS Program

The RDS Program has flexible rules that permit Plan Sponsors to continue providing drug coverage to their Medicare-eligible retirees at a lower cost.

RDS Program benefits include:

  • Reimbursement for a portion of Plan Sponsors' eligible expenses for retiree prescription drug benefits
  • Program flexibility that supports the Plan Sponsor's current prescription drug plan structure
  • Extensive educational materials and support

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Requirements of the RDS Program

  • Actuaries act on behalf of Plan Sponsors and complete a two-part Actuarial Equivalence Test indicating that the Prescription Drug Plan offered by the Plan Sponsor is as generous as, or more generous than the defined standard coverage under the Medicare Part D Prescription Drug Benefit.
  • Retirees must not be currently enrolled in Medicare Part D.
  • Plan Sponsors must use the RDS Secure Website to participate in the RDS Program and submit a timely application prior to the expiration of the Application Deadline, which includes a list of retirees for whom the Plan Sponsor is seeking subsidy.

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Qualifications for the RDS Program

To participate in the RDS Program, an organization must:

  • Have a valid Employer Identification Number (EIN)
  • Fall under one of the following categories:
    • Commercial
    • Government
    • Nonprofit
    • Religious
    • Union
  • Demonstrate that the coverage is as generous as, or more generous than the defined standard coverage under the Medicare Part D Prescription Drug Benefit.

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How the Program Works: RDS Program Lifecycle

Participating in the RDS Program begins with creating a Plan Sponsor Account, and submitting a timely RDS application prior to the expiration of the Application Deadline. For more information about the Application Deadline, including what is required to be submitted by the Application Deadline, refer to Important Application Deadline Information.

Ongoing maintenance of an approved RDS application is recommended throughout the application plan year. These tasks include managing RDS Secure Website user roles, managing retiree information, completing Payment Setup, performing Cost Reporting, submitting interim payments if the Plan Sponsor has elected an Interim Payment Frequency, and completing Reconciliation.

Creating a Plan Sponsor Account

A Plan Sponsor starts in the RDS Program by designating an Account Manager who will create a new Plan Sponsor Account, register the organization, and assign other key players required to complete RDS tasks.

Creating an RDS Application

After creating a Plan Sponsor Account, the Account Manager or Authorized Representative must create an RDS application on the RDS Secure Website for each plan year for which the Plan Sponsor would like to request subsidy.

For more information about the Application Deadline, including what is required to be submitted by the Application Deadline, refer to Important Application Deadline Information.

Managing RDS Secure Website User Roles

Tasks are completed by the key players who act on the Plan Sponsor's behalf. RDS user roles are granted specific tasks and privileges in the RDS system. The RDS Secure Website user roles include: Authorized Representative, Account Manager, Actuary, and Designee.

RDS Secure Website users must maintain an active Login ID and Password at all times.

To enforce a separation of duties, a user may not report cost data and request payments on the same application.

Note: The RDS Secure Website allows an individual to act in only one role at a time.

Managing Retiree Information

It is necessary to manage retiree information during the entire lifecycle of an RDS application. Plan Sponsors specify the method used to submit retiree data, the source of the retiree data, and the methods that CMS' RDS Center should deliver the Retiree Response Files and Weekly Notification Files.

The Application Submission Process requires the Plan Sponsor to send a retiree file to CMS' RDS Center with demographic and benefit enrollment information about the beneficiaries for whom subsidy is requested. This file is called a Valid Initial Retiree List.

After an application is approved, the Plan Sponsor should continue to send retiree files to CMS' RDS Center throughout the Application Lifecycle to notify CMS' RDS Center of any additions, deletions, or changes in Qualifying Covered Retiree (QCR) information. CMS' RDS Center will respond to the Valid Initial Retiree List and subsequent retiree files with a Retiree Response File using the method specified.

In addition, Weekly Notification Files are sent as necessary to inform the Plan Sponsor of changes that may impact the approved subsidy for QCRs. CMS' RDS Center evaluates program eligibility and provides the Plan Sponsor with Subsidy Periods and benefits for each beneficiary.

The Plan Sponsor and its agents must continually process Retiree Response and Weekly Notification Files produced by CMS' RDS Center throughout the plan year to keep internal retiree records updated to report accurate cost data to CMS' RDS Center.

Managing Retiree Electronic Data Interchange (EDI) Methods and Sources

Retiree EDI Methods and Sources are selected by the Plan Sponsor to indicate the methods by which Electronic Data files are sent and received. The selections may be changed at any time throughout the plan year after the appropriate connection has been established and tested.

Four methods of submission are available for exchanging retiree information with CMS' RDS Center:

  • RDS Secure Website to RDS Center
  • Vendor Mainframe to RDS Center Mainframe
  • Coordination of Benefits (COB): Voluntary Data Sharing Agreement (VDSA) or Mandatory Insurer Reporting (MIR)
  • Plan Sponsor Mainframe to RDS Center Mainframe

RDS Secure Website to RDS Center

Plan Sponsors and Vendors can upload retiree data formatted in a Comma Separated Value (CSV) file to the RDS Secure Website to submit retiree data.

Vendor Mainframe or Plan Sponsor Mainframe to RDS Center Mainframe

Data exchanged using a Vendor Mainframe or a Plan Sponsor Mainframe connection requires setup and testing before a retiree file can be accepted by CMS' RDS Center. Each retiree file must be formatted with a Header Record, Detail Record, and Trailer Record. A retiree file can include data for multiple applications in the same transmission.

Coordination of Benefits (COB): Voluntary Data Sharing Agreement (VDSA) or Mandatory Insurer Reporting (MIR)

A Voluntary Data Sharing Agreement (VDSA) or Mandatory Insurer Reporting (MIR) facilitated by CMS' Coordination of Benefits (COB) Contractor requires setup and testing before a retiree file can be accepted by CMS' RDS Center.

A Coordination of Benefits (COB) Contractor authorizes the Centers for Medicare & Medicaid Services (CMS) and an employer, or agent on behalf of an employer, to electronically exchange health insurance benefit entitlement information.

Payment Setup

During Payment Setup, the Plan Sponsor needs to determine who will report cost data for each Benefit Option, how the information will be transmitted, and who will request interim payments if the Plan Sponsor has elected an Interim Payment Frequency.

The Plan Sponsor may submit data on its own behalf or elect a Vendor to complete this Cost Reporter task.

Payment information may be transmitted using the RDS Secure Website or Mainframe connection.

All Benefit Options must be assigned to a Cost Reporter to complete Payment Setup.

Payment Setup must be complete prior to Cost Reporting or submitting Payment Requests.

Cost Reporting

Cost Reporting is the process of reporting cost data for Qualifying Covered Retirees (QCRs) on an approved RDS application. Interim cost data may be reported throughout the plan year if the Plan Sponsor has elected an Interim Payment Frequency. Final cost data must be reported for an Annual Payment Frequency and final Reconciliation.

Federal law requires that cost data is submitted only for the QCRs, corresponding Subsidy Periods, and the Benefit Options in which each QCR is enrolled.

Cost Reporting assignments must be completed in Payment Setup prior to submission of cost data.

Reconciliation

Reconciliation is the process by which a Plan Sponsor who has received any interim payments must submit to CMS, after the end of the plan year, the total gross covered retiree plan-related prescription drug cost and actual cost adjustments for the application. The sum of the interim payments is compared with the final subsidy payment determination for the application. If the sum of the interim payment requests is larger than the final calculated subsidy amount for the application, CMS will initiate immediate overpayment recovery action including offset against other applications with positive payment requests.

A Plan Sponsor that chose an Annual Payment Frequency, or otherwise did not receive any interim payments, and that wishes to receive a subsidy, must use the Reconciliation process to submit final cost reports and submit its one and only subsidy payment request.

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Resources and Communication for the RDS Program

The RDS Program is virtually paperless. All communication is through the RDS Program Website, RDS Secure Website, and email.

RDS Program Website

The RDS Program Website is a comprehensive resource center for the RDS Program. Educational tools and announcements are available, as well as specific instructions to complete processes in the RDS Program.

RDS Secure Website

The RDS Secure Website allows participants to register and complete the tasks required to participate in the RDS Program and request subsidy.

For security purposes, RDS Secure Website users are required to complete a registration process and maintain an active Login ID and Password.

RDS Secure Website users may only act in one user role in the RDS Secure Website, so an individual must be assigned the same user role for each Plan Sponsor they are associated with. CMS' RDS Center validates an individual's Date of Birth and Social Security Number to ensure that each individual has only one user account at a time.

Email

CMS' RDS Center sends emails to RDS Program participants regarding account and application activity, notifications, deadline reminders, and updated information for both the RDS Program Website and the RDS Secure Website. It is important to keep your personal information accurate and up to date in the RDS Secure Website so that you may receive this information.

For a list of email addresses from which RDS correspondence may be sent, refer to the Contact Us page.

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RDS Secure Website User Roles and Other Program Stakeholders

Introduction to RDS Secure Website User Roles

The RDS Secure Website user roles required to participate in the RDS Program are: Account Manager, Authorized Representative, and Actuary. In addition to these roles, the Plan Sponsor may choose to assign a Designee to complete certain tasks.

Note: The RDS Secure Website allows an individual to act in only one role at a time.

To enforce a separation of duties, a user may not report cost data and request payments on the same application.

Account Manager

Purpose of the Account Manager

The Account Manager initiates and manages the Plan Sponsor's applications throughout their lifecycle, by beginning the application and completing its tasks. The Account Manager manages the reporting of retiree data, cost data, payment requests, Reconciliation, and assigns, manages, and reassigns other users within the Plan Sponsor's account to complete those tasks.

Account Manager Role and Responsibilities

The Account Manager may be an employee of the Plan Sponsor organization for which they initiate an RDS Program Application. If not directly employed by the Plan Sponsor, the Account Manager may act as an agent on behalf of the Plan Sponsor.

Special Considerations for the Account Manager Role

  • The Account Manager role and Authorized Representative role cannot be fulfilled by the same person.
  • The role of Account Manager must always be active with a current valid user assigned.
  • The Account Manager may, at any time, reassign the role of the Account Manager or the Authorized Representative, remove the duties and privileges of a Designee, add or delete a Designee, and assign an Actuary.
  • An Account Manager typically registers when creating a new Plan Sponsor Account. However, a reassigned or invited Account Manager registers through an email from CMS' RDS Center.
  • An Account Manager is required to be a registered RDS Secure Website User and maintain an active Login ID and Password.
  • The RDS Secure Website allows an individual to act in only one role at a time.

Authorized Representative

Purpose of the Authorized Representative

The Authorized Representative is a user chosen by the Plan Sponsor that is deemed to have sufficient authority to be legally responsible for the terms of the Plan Sponsor Agreement and the Reconciliation Agreement. The Authorized Representative has been granted the legal authority to bind the Plan Sponsor to the terms of the Plan Sponsor Agreement. The Authorized Representative takes responsibility for these agreements by signing them electronically during the application and Reconciliation processes.

The Authorized Representative may also begin an application, complete many steps of the application (except attest the application), and assign or manage RDS Secure Website user roles as necessary. The Authorized Representative typically delegates these duties to the Account Manager or Designee and is not actively involved in the RDS Program other than verifying the work of other users.

The Authorized Representative must submit the RDS application.

The Authorized Representative must submit the final Reconciliation payment request and may submit interim payment requests.

The Authorized Representative is a designated Payment Requester and may not report any costs.

Authorized Representative Role and Responsibilities

The Authorized Representative must be an employee of the Plan Sponsor. For multi-employer plans, the Authorized Representative does not have to be an employee of the Plan Sponsor, but may be a member of the jointly appointed board of trustees, which includes both labor and management trustees.

Common examples of positions within the Plan Sponsor organization that are held by the Authorized Representative are:

  • Chief Executive Officer (CEO)
  • Chief Financial Officer (CFO)
  • President
  • Human Resources Director
  • General Partner

Special Considerations for the Authorized Representative Role

  • The Account Manager role and Authorized Representative role cannot be fulfilled by the same person.
  • The role of Authorized Representative must always be active with a current valid user assigned to it.
  • An Authorized Representative is invited to register through an email from CMS' RDS Center.
  • An Authorized Representative is required to be a registered RDS Secure Website User and maintain an active Login ID and Password.
  • The RDS Secure Website allows an individual to act in only one role at a time.

Actuary

Purpose of the Actuary

The Actuary is a professional contracted by the Plan Sponsor applying to the RDS Program to attest to the Actuarial Equivalence of the Benefit Options specified in an RDS application. The Plan Sponsor must show that its coverage is as generous as, or more generous than, the defined standard coverage under the Medicare Part D Prescription Drug Benefit.

Actuary Role and Responsibilities

To qualify for CMS' RDS Program, the Actuary must have a current membership and be in good standing with the American Academy of Actuaries. Attesting to the Actuarial Equivalence of the Benefit Options specified in the RDS application is the only responsibility of the Actuary.

Special Considerations for the Actuary Role

  • An Actuary is invited to register through an email from CMS' RDS Center.
  • An Actuary is required to be a registered RDS Secure Website User.

Designee

Purpose of a Designee

A Designee is an optional user role. A Designee or multiple Designees are created by the Account Manager or Authorized Representative to assist with RDS Secure Website tasks.

A Designee is assigned privileges by the Account Manager or Authorized Representative. A Designee can complete many different tasks. The following table identifies the name of the Designee privilege and the description of the task.

Designee Privileges

Designee Privileges with Privilege and Description
Privilege Description
Assign Actuary Enter Actuary Information in Step 3: Assign Actuary in the Application Submission Process
Complete Electronic Funds Transfer (EFT) Information Enter Banking Information and Bank Contact information to set up Electronic Funds Transfer in Step 5: Electronic Funds Transfer (EFT) Information in the Application Submission Process
Retiree Electronic Data Interchange (EDI) Methods and Sources Choose method and source of submission in Step 7: Retiree Electronic Data Interchange (EDI) Methods and Sources in the Application Submission Process. Available methods are: RDS Secure Website to RDS Center, Vendor Mainframe to RDS Center Mainframe, Coordination of Benefits (COB): Voluntary Data Sharing Agreement (VDSA) or Mandatory Insurer Reporting (MIR), or Plan Sponsor Mainframe to RDS Center Mainframe. Choose to receive copies of Retiree Response Files on the RDS Secure Website and choose Weekly Notification Method.
Define Benefit Options Define Benefit Option Name, Unique Benefit Option Identifier, Benefit Option Type, and in Step 2: Benefit Option in the Application Submission Process
Define Payment Frequency Choose between Monthly, Quarterly, Interim Annual, or Annual Payment Frequencies in Step 6: Payment Frequency in the Application Submission Process
Delete Application Request to CMS' RDS Center to delete an application
Request Extension Submit a request to extend the Application Deadline
Report Costs Submit Interim Cost Report or Final Cost Report
Request Payment Request Interim Payment and/or assist in preparing the Final Reconciliation Request
Submit Appeal Request an appeal to have a Determination reconsidered
View requested appeals
View Attestation Summary After Actuarial Attestation, view the Attestation Status of the Benefit Options for an RDS Program application
View/Send/Receive Retiree Data Manage retiree information using the RDS Secure Website. If authorized to view Protected Health Information (PHI), privileges include:
  • Upload retiree files
  • View Retiree Response Files sent to the RDS Secure Website
  • View Weekly Notification Files sent to the RDS Secure Website
  • View current Covered Retiree Counts
  • Request a Covered Retiree List
  • Download a Covered Retiree List
  • View Medicare Part D Rejection Notifications
Withdraw Application Request to CMS' RDS Center to withdraw an application

Designee Roles and Responsibilities

A Designee may be, but is not required to be, an employee of the Plan Sponsor. A Designee may be an employee of a Vendor contracted by the Plan Sponsor to report retiree data or cost data.

Special Considerations for the Designee Role

  • A Designee can be assigned to one or more applications.
  • A Designee can be assigned to applications for multiple Plan Sponsors. The assigned Designee privileges are specific to the application.
  • Designee privileges may be specified for each application.
  • A Designee may be assigned multiple privileges on an application. Designee privileges may differ across applications.
  • To enforce a separation of duties, a user may not report cost data and request payments on the same application.
  • If a Designee is assigned to an application, the user may not be assigned any other user role in the RDS Secure Website.

User Role for Multiple Plan Sponsors

The RDS Secure Website allows an individual to act in only one role at a time. An Authorized Representative and an Account Manager may be assigned to multiple Plan Sponsors acting in the same user role. A Designee and an Actuary may be assigned to multiple applications acting in the same user role.

To reassign a user associated with multiple Plan Sponsors, contact CMS' RDS Center.

Considerations for Reassigning User Roles

  • The Account Manager and Authorized Representative roles must be filled at all times.
  • The Account Manager and Authorized Representative may reassign one another if necessary.
  • An Account Manager or Authorized Representative may delete a Designee from an application.
  • An Account Manager, Authorized Representative, or Designee with Assign Actuary privilege may un-assign or change an Actuary.

Other Stakeholders

Vendor

A Vendor is a Pharmacy Benefit Manager (PBM), Health Plan, or other third-party company that a Plan Sponsor may contract to report cost data or manage retirees for the Plan Sponsor's applications.

Vendors must call CMS' RDS Center to register and obtain a Vendor ID.

If a Vendor will submit cost reports or retiree files using the RDS Secure Website, the Plan Sponsor must create a Designee role for the Vendor to access the RDS Secure Website. If the Vendor is submitting cost files or retiree files by Mainframe, a Designee user role may still be necessary to allow the Vendor to manage retiree information and cost submissions using the RDS Secure Website.

Coordination of Benefits (COB) Contractor: Voluntary Data Sharing Agreement (VDSA) or Mandatory Insurer Reporting (MIR)

A COB contractor may be responsible for managing retirees for the Plan Sponsor's application through VDSA or MIR.

Bank Contact

The Bank Contact may be employed by the Plan Sponsor or employed by the Plan Sponsor's bank.

The Bank Contact's primary responsibility is to answer any questions asked by CMS' RDS Center regarding Electronic Funds Transfer of payments.

The Bank Contact is not granted an RDS Secure Website Login ID.

The Bank Contact is assigned during the RDS Program application process by the Account Manager, Authorized Representative, or Designee with Complete Electronic Funds Transfer (EFT) Information privileges.

The Bank Contact's information may be updated throughout the plan year. This information must be completed for each new application and plan year.

Coordination Of Benefits (COB) Contractor

A Coordination of Benefits (COB) Contractor may set up retiree file data transfer for a Plan Sponsor using Voluntary Data Sharing Agreement (VDSA) or Mandatory Insurer Reporting (MIR).

The COB Contractor is not granted an RDS Secure Website Login ID.

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