42 CFR § 423.294 - Failure to collect and incorrect collections of premiums and cost sharing.

---
identifier: "/us/cfr/t42/s423.294"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "42 CFR § 423.294 - Failure to collect and incorrect collections of premiums and cost sharing."
title_number: 42
title_name: "Public Health"
section_number: "423.294"
section_name: "Failure to collect and incorrect collections of premiums and cost sharing."
chapter_name: "CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES"
subchapter_number: "B"
subchapter_name: "MEDICARE PROGRAM"
part_number: "423"
part_name: "VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, and 1395hh."
regulatory_source: "70 FR 4525, Jan. 28, 2005, unless otherwise noted."
cfr_part: "423"
---


# 423.294 Failure to collect and incorrect collections of premiums and cost sharing.

(a) *Requirement to collect premiums and cost sharing.* A Part D sponsor violates the uniform benefit provisions at § 423.104(b) if it fails to collect or incorrectly collects applicable cost sharing, or fails to collect or incorrectly collects premiums as required by § 422.262(e) of this chapter—

(1) In accordance with the timing of premium payments;

(2) At the time a drug is dispensed; or

(3) By billing the enrollee or another appropriate party after the fact.

(b) Refunds of incorrect collections—(1) *Definitions.* As used in this section the following definitions are applicable:

*Amounts incorrectly collected.* (A) Means amounts that exceed the monthly Part D enrollee premium limits under § 423.286 or exceed permissible cost-sharing or copayment amounts as specified in § 423.104(d) through (f), whether paid by or on behalf of the enrollee;

(B) Includes amounts collected with respect to an enrollee who was believed to be entitled to Medicare benefits but was later found not to be entitled; and

(C) Excludes de minimis amounts, as calculated per PDE transaction or per monthly premium billing.

*De minimis amounts* means an amount per PDE transaction for claims adjustments and per month for premium adjustments that does not exceed the de minimis amount determined for purposes of § 423.34(c)(2).

*Other amounts due* means amounts due to affected enrollees or others on their behalf (other than de minimis amounts) for covered Part D drugs that were—

(A) Accessed at an out-of-network pharmacy in accordance with the requirements at § 423.124; or

(B) Initially denied but, upon appeal, found to be covered Part D drugs the enrollee was entitled to have provided by the Part D plan.

(2) *General rule.* A Part D sponsor must make a reasonable effort to identify all amounts incorrectly collected and to pay any other amounts due during the timeframe for coordination of benefits as established at § 423.466(b). A Part D sponsor must issue a refund for an identified enrollee overpayment within the timeframe specified at § 423.466(a).

(3) *Refund methods*—(i) *Lump-sum payment.* The Part D sponsor must use lump-sum payments for the following:

(A) Amounts incorrectly collected as cost-sharing.

(B) Other amounts due.

(C) All amounts due if the Part D plan is going out of business or terminating its Part D contract for a prescription drug plan(s).

(ii) *Premium adjustment, lump-sum payment, or both.* If the amounts incorrectly collected were in the form of premiums, or included premiums as well as other charges, the Part D sponsor may refund by adjustment of future premiums or by a combination of premium adjustment and lump-sum payments.

(iii) *Refund when enrollee has died or cannot be located.* If an enrollee has died or cannot be located after reasonable effort, the Part D sponsor must make the refund in accordance with State law.

(4) *Premium reduction and compliance.* (i) If the Part D sponsor does not issue the refund as required under this section within the timeframe specified at § 423.466(a), CMS reduces the premium the Part D sponsor is allowed to charge a Part D enrollee by the amounts incorrectly collected or otherwise due.

(ii) The Part D plan may receive compliance notices from CMS or, depending on the extent of the non-compliance, be the subject of an intermediate sanction (for example, suspension of marketing and enrollment activities) in accordance with subpart O of this part.

(c) *Collections of cost-sharing and premium amounts*—(1) *General rule.* A Part D sponsor must make a reasonable effort to attempt to collect cost sharing from a beneficiary or to bill cost sharing or premiums to another appropriate party for all amounts other than de minimis amounts.

(2) *Timeframe.* Recovery notices must be processed and issued in accordance with the timeframe specified at § 423.466(a). A Part D sponsor must make a reasonable effort to attempt to collect these amounts during the timeframe for coordination of benefits as established at § 423.466(b).

(3) *Retroactive collection of premiums.* Nothing in this section alters the requirements of § 423.293(a)(4) of this part with respect to retroactive collection of premiums.

[89 FR 30836, Apr. 23, 2024]