Credibility adjustment
(a)A Part D sponsor may add the credibility adjustment…#
(a) A Part D sponsor may add the credibility adjustment specified under paragraph (e) of this section to a contract's MLR if the contract's experience is partially credible, as defined in paragraph (d)(1) of this section.
(b)A Part D sponsor may not add a credibility adjustment…#
(b) A Part D sponsor may not add a credibility adjustment to a contract's MLR if the contract's experience is fully credible, as defined in paragraph (d)(2) of this section.
(c)For those contract years for which a contract has…#
(c) For those contract years for which a contract has non-credible experience, as defined in paragraph (d)(3) of this section, sanctions under § 423.2410(b) through (d) will not apply.
(d)(1) A contract's experience is partially credible if it is based on the experience of at least 4,800 member months and fewer than or equal to 360,000 member months.
(2) A contract's experience is fully credible if it is based on the experience of more than 360,000 member months.
(3) A contract's experience is non-credible if it is based on the experience of fewer than 4,800 member months.