42 CFR § 423.855 - Definitions.

---
identifier: "/us/cfr/t42/s423.855"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "42 CFR § 423.855 - Definitions."
title_number: 42
title_name: "Public Health"
section_number: "423.855"
section_name: "Definitions."
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"
---


# 423.855 Definitions.

As used in this subpart, unless specified otherwise-

*Actual costs* means the subset of prescription drug costs (not including administrative costs or return on investment, but including costs directly related to the dispensing of covered Part D drugs during the year) that are attributable to standard benefits only and that are incurred and actually paid by the sponsor or organization under the plan.

*Actually paid* has the same meaning described in § 423.308.

*Eligible fallback entity* or *fallback entity* means an entity that, for a particular contract period-

(1) Is a PDP sponsor that does not have to be a risk-bearing entity (or, if applying to become a fallback entity, an entity that meets all the requirements to become a Part D plan sponsor except that it does not have to be a risk-bearing entity); and

(2) Does not submit a risk bid under § 423.265 for offering a prescription drug plan for any PDP region for the first year of that contract period. An entity is treated as submitting a risk bid if the entity is acting as a subcontractor for an integral part of the drug benefit management activities of an entity that is or applies to become a non-fallback PDP sponsor. An entity is not treated as submitting a bid if it is a subcontractor of an MA organization, unless that organization is acting as or applies to become a non-fallback PDP sponsor for a prescription drug plan.

*Fallback prescription drug plan* means a prescription drug plan (PDP) offered by a fallback entity that—

(1) Offers only defined standard or actuarially equivalent standard prescription drug coverage as defined in § 423.100;

(2) Provides access to negotiated prices, including discounts from manufacturers; and

(3) Meets all other requirements established for prescription drug plans, except as otherwise specified by CMS in this subpart or in separate guidance.

*Qualifying plan* means a full-risk or limited-risk prescription drug plan, as defined in § 423.258, or an MA-PD plan described in section 1851(a)(2)(A)(i) of the Act, that provides required prescription drug coverage, as defined in § 423.100 An MA-PD plan must be open for enrollment and not operating under a capacity waiver to be counted as a qualifying plan. A PDP must not be operating under a restricted enrollment waiver, such as those that may be granted to special needs plans or employer group plans, in order to be counted as a qualifying plan in an area.