In an effort to promote beneficiary enrollment into Medicare Part D (the new prescription drug benefit), CMS published final regulations on September 1, 2005, and revised the marketing rules for endorsed prescription drug discount card sponsors effective October 1, 2005. 70 Fed. Reg. 52,019 (modifying 42 C.F.R. §§ 403.802, 403.806, and 403.813). Established by section 101, subpart 4 of the MMA (adding new SSA section 1860D-31), the Medicare Prescription Drug Discount Card and Transitional Assistance Program (the Program) was implemented by CMS in a recordbreaking timeframe through an interim final rule released only seven days after the enactment of the MMA. Basically, this voluntary Program charged an annual fee of up to $30 to provide discounts on certain drugs to the enrollees until the implementation of Part D.

However, the interim final rule prohibited the Program sponsors and their affiliated organizations from using an enrollee's individually identifiable information to market to enrollees products and services that were outside the scope of the Program. Thus, only products and services that were directly related to the covered discount prescription or OTC drugs offered without an additional fee could be marketed to the enrollees pursuant to the requirements of HIPAA. As its policy rationale, CMS explained that this restriction would foster beneficiary access to the Program, limit the total fees charged to $30, and prevent confusion between the Program and Part D.

Fortunately, because of eight public comments timely received and subsequently analyzed by CMS, the revised requirements facilitate the intent of Congress as expressed in its MMA Conference Report to encourage outreach and education about Part D, ensure enrollment and participation in Part D, and reduce barriers to marketing Part D. Calling the consequences of the prior interim rule unintentional yet contradictory to the intent of Congress, CMS relaxed the marketing limitations to provide a seamless transition from the Program to Part D by utilizing the existing relationships between the Program sponsors and the enrolled beneficiaries.

Therefore, labeled as "a component of the Secretary's strategy," the revised rules now permit endorsed sponsors of Medicare discount drug cards and their affiliated organizations to market to their enrollees the Part D plans that they offer to Medicare beneficiaries in accordance with the requirements of HIPAA. CMS made this possible by redefining such Part D plans as products or services of the Program, available for marketing. However, these marketing and promotional materials and activities must comply with the conditions imposed on all such materials and activities of other Part D plans.

Furthermore, CMS defined the term "affiliated organization" in three different ways to prevent third parties from acquiring sponsors solely to access their enrollees pursuant to this rule and take advantage of this new marketing opportunity. Specifically, to be considered an "affiliated organization," the organization and the endorsed drug card sponsor must be under common control. Alternatively, the organization must be under the control of the sponsor or vice-versa. Or, the organization must possess an ownership or equity interest of at least 5 percent in the sponsor on both the date the sponsor markets the organization's Part D plan and the date the sponsor signed its endorsement contract with CMS.

Overall, despite this recent relaxation of the marketing rules, the effectiveness of such marketing of Part D plans remains to be seen, especially given that the Program itself was voluntary for Medicare beneficiaries.