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into account variation in costs for basic prescription drug coverage among PDPs and MA-PD plans based on the differences in actuarial risk of different enrollees being served, the statute “direct[s] CMS to apply a singular methodology” to address differences in actuarial risk between PDPs and MA-PD plans. Finally, the commenter suggested that CMS’ proposal to establish separate normalization factors for PDPs and MA-PD plans reflected a reinterpretation of the statute as authorizing separate methodologies for PDPs and MA-PD plans and was an unjustified departure from CMS’ longstanding approach of applying a single normalization factor in Part D risk adjustment. Response: CMS respectfully disagrees with the commenter and believes that we do have authority to utilize separate Part D normalization factors for PDPs and MA-PD plans. Section 1860D-15(c)(1)(A) of the Act directs the Secretary to establish risk adjustors based on an appropriate methodology for adjusting the standardized bid amount to take into account variation in costs for basic prescription drug coverage among PDPs and MA-PD plans based on the differences in actuarial risk of different enrollees being served without changing the aggregate amounts payable. Section 1860D-15(c)(1)(B) of the Act states that the “Secretary may take into account the similar methodologies used under section 1853(a)(3) to adjust payments to MA organizations for benefits under the original Medicare fee-for-service program option” (emphasis added). CMS does not understand this to be a “specific direction” to take into account the methodologies used under section 1853(a)(3) of the Act; to the contrary, CMS understands the statute’s use of “may” to mean that the Secretary is permitted – but not required – to take into account the “similar methodologies” used to adjust MA payments under section 1853(a)(3) of the Act. Specifically, while CMS may consider the methodologies used to adjust MA payments under section 1853(a)(3) of the Act, those adjustments are not required and do not supersede the directive at section 1860D-15(c)(1)(A) of the Act to develop an appropriate methodology for adjusting the standardized bid amount to take into account variation in costs for basic prescription drug coverage among PDPs and MA-PD plans based on the differences in actuarial risk of different enrollees being served. The statute does not specify that, if CMS takes into account “the similar methodologies” used to adjust MA payments under section 1853(a)(3), the Secretary is required to apply those methodologies uniformly without regard to plan type. In developing the Part D risk adjustment methodology, CMS has relied in large part on our approach to risk adjustment in Part C. For example, the RxHCC model is developed using condition categories (RxHCCs) and segments based on age, disability, institutional residence, and participation in the low income subsidy program, similar to how the CMS-HCC model is developed using condition categories (HCCs) and segments based on age, disability, institutional residence, and dual eligibility for Medicare and Medicaid. However, Part D has unique features which require considerations that do not exist in Part C. The RxHCC risk adjustment model predicts Part D costs, and our development of the RxHCC model takes into account differences in the Part D benefit, and Part D costs, as well as the profiles of Part D costs of the populations