Under the model, CMS will create a two-sided risk model to incentive PDPs and MA-PDs to lower their catastrophic phase federal reinsurance subsidy spending. After each plan year, CMS will retrospectively create a spending target for the federal reinsurance subsidy CMS projects would have been paid to a model participants if it was not participating in the model. Model participants will receive performance-based payments if they stay below their target, but must repay ten percent of the additional spending if they exceed their target. CMS has not specified how the performance-based payments will be calculated.

In addition, CMS will allow model participants to create Part D Rewards and Incentive programs to strengthen enrollees’ clinical relationship with their providers and chosen Part D plans. CMS indicated that additional programmatic flexibilities will be provided to model participants.

CMS will be releasing a Request for Applications for plan year 2020, and applications will be accepted until March 1, 2019.