Will my drugs be covered?

Medicare Part D prescription drug plans are required by law to cover a wide range of generic and brand-name drugs. In order for any drug to be covered by Medicare, it must be approved by the Food and Drug Administration (FDA) as safe and effective. Still, plans do have a lot of freedom when deciding which drugs they will cover. Most plans will have a formulary, which is a list of drugs covered by the plan. A small part of a plan formulary is shown in Table 1. As a general rule, most plans will cover most of the commonly prescribed drugs used by Medicare beneficiaries. Very few plans include all drugs approved by the FDA on their formulary. If they do cover all or almost all FDA-approved drugs, you will probably have higher co-pays, especially for the more expensive drugs.

Medicare drug plans are required to cover almost all cancer drugs, but it is very important to make sure your drugs are on the plan's formulary.

How can I find out if a plan covers my drugs?

There are many ways to find out if a plan covers your drugs, but since many plans will likely be available in your area, this will take some time. The first step is to make a list of all your prescription drugs. For each drug, you need to know the dose (such as 20 mg) and the number or quantity that your doctor usually prescribes (for instance, 2 per day or 60 per month). Then you need to check the information on the Part D plan options in your area.

You can get personalized information on the Part D plans and their formularies by:

• visiting www.medicare.gov on the Web and click on "Formulary Finder"

• calling 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. Have your Medicare card, a list of the drugs you use, and the name of the pharmacy you use ready when you call

• getting a free copy of the booklet Your Guide to Medicare Prescription Drug Coverage, (CMS Pub. No. 11109), on www.medicare.gov, or by calling 1-800-MEDICARE (1-800-633-4227)

• calling your State Health Insurance Assistance Program (there is a chart with contact information for each state toward the end of this document)

• checking for local events that offer help enrolling. Contact your local Office on Aging. For the telephone number, visit www.eldercare.gov on the Web. Or you can call the Eldercare Locator at 1-800-677-1116 to learn how to reach your state office.

Once you figure out which plans cover all or most of your drugs, you need to check to see which tier your drugs are on. This also may be different with each different prescription drug plan.

Table 1: Part D sample formulary

* Prior authorization is discussed below.

What is a formulary tier?

A formulary tier tells you how much, if any, you will have to pay for a drug. Plans differ in the number of tiers they use. Most plans use 3 tiers; some use 4. In general, plans define the tiers like this:

• Tier 1 – Generic drugs. Tier 1 drugs usually cost you the least.

• Tier 2 – Preferred brand name drugs. These are brand name drugs which cost you more than tier 1 drugs.

• Tier 3 – Non-preferred brand name drugs. These are also brand name drugs but are "non-preferred" in much the same way that a doctor might not be included in the list of "preferred" physicians on a managed care plan's roster. Tier 3 drugs will cost you more than tier 1 and tier 2 drugs.

• Tier 4 – Some plans use this tier for specialty drugs, while others have a separate "specialty" tier. The drugs in these tiers are often very high-cost, name-brand drugs. Many times chemo drugs that you take by mouth can be found in these tiers. Most plans that use these tiers require enrollees to pay 25% of the cost of the drug. Some plans may charge as much as 33% or more. Plans are only allowed to include Part D drugs on specialty tiers if they cost more than $600 per month (even after price reductions that the plan negotiates).

How do formulary tiers affect what you have to pay out-of-pocket?

Each formulary tier is linked to either a flat dollar co-pay or a co-insurance percentage. Table 2 shows you a range of plan tier co-pays and co-insurance for 4 prescription drug plans for one area of the country. For example, Plan A has 4 tiers. For a 30-day supply of a generic (tier 1) drug, the beneficiary pays $5. If the prescription is for a preferred brand (tier 2), the beneficiary pays $28. If it is a non-preferred drug (tier 3), the co-pay jumps to $55. For a tier 4 drug, the beneficiary generally pays 25% of the plan's cost for the drug.

Table 2: Example of a Part D plan formulary's tiered cost-sharing requirements

Without any prescription drug coverage, specialty drugs, including many cancer drugs, could cost thousands of dollars a month. These drugs are often not made in generic forms. Even with Medicare's prescription drug benefit, the out-of-pocket costs may be high because of the way drug plans have set up their formularies.

For example, you may find Gleevec^®, a drug used to treat leukemia, on tier 3 or 4 of many plan formularies. This means it may cost you more than $250 per month after you have paid the plan's deductible, and before you fall into the coverage gap (donut hole). If you do fall into this coverage gap, your out-of-pocket cost for Gleevec is likely to be more than $1,000 per month. Then, once the catastrophic benefit is triggered, your monthly out-of-pocket cost may still be more than $50 per month. This catastrophic coverage is reached when you get to the upper limit of the out-of-pocket expenses set by Medicare Part D. (See the section, "What is the coverage gap, and what do I have to pay?" for more information.)

Another possibility is that a name-brand cancer drug like Gleevec^® may be in the formulary's specialty tier. Only Part D drugs that cost more than $600 per month may be placed in the specialty tier. And many Medicare Part D plans require prior authorization for coverage of these drugs.

What if I need a drug that isn't on the formulary or is only covered at a higher cost?

Each Medicare drug plan must have its own exceptions process through which an enrollee may ask the plan to cover a drug that is not listed on the plan's formulary. Or the process may be used to ask that the plan to reduce the cost to the patient for a formulary drug. In a case like this, the beneficiary is asking the plan to make an exception to its formulary requirements. If the plan turns the Medicare beneficiary down, the beneficiary has the right to appeal that decision. The exceptions process does NOT apply to drugs that are on the formulary's specialty tier.

If the exceptions request involves a plan's tiered cost sharing, the Part D drug being prescribed may be covered by the plan if the doctor can show that the preferred drug for treatment of the same condition would not work as well as the non-preferred drug, or it would have a harmful effect on the patient, or both. If the beneficiary asks the plan to cover a drug that's not on the formulary, the beneficiary's doctor may be asked for more information. The doctor would need to show that none of the drugs on the plan's formulary would work as well as the non-formulary drug, or that the formulary drug would harm the patient, or both. If one of these conditions is met, the plan may cover the drug.

Examples of the exceptions process

You can ask for an exception to a drug plan's coverage rules. There are many types of exceptions that you can ask for:

• You can ask to have your drug covered even if it is not on the formulary. If an exception is allowed, you would get your drug at the tier 3 co-pay (if your plan uses tiered cost-sharing). But if the plan grants your request to cover a drug not on the formulary, you may not ask the plan to cover it as a tier 2 or tier 1 drug (see below).

• You can ask to have coverage restrictions or limits lifted from your drug. For example, if your drug has a Step Therapy requirement (see next section), you can ask this requirement to be removed, and try a different drug first.

• You can ask for a higher level of coverage for your drug. If your drug is usually considered a tier 3 drug, you can ask that the plan cover it as a tier 2 drug instead. This would lower the amount you must pay for your drug.

You may be at the pharmacy when you first find out that the drug your doctor prescribed is not on your plan's formulary, or is on your plan's formulary but at a high cost-sharing amount. If this happens, you should be able to get a Medicare-approved form from your plan that you can give to your doctor to ask for an exception from your plan. Sometimes the plan's network pharmacies can give you the form. Generally, the plan must make this decision within 72 hours of your request.

If the plan denies your request for an exception, you can appeal the plan's decision. The appeals system includes a review of your plan's decision by an outside reviewer that is not part of your plan. You or someone you choose (for example, your son or grand-daughter) can begin the appeals process, as can the doctor who prescribed the drug. Contact your plan to find out exactly how to file an appeal. You should know that most plans do not allow an enrollee to request that a drug in the specialty tier (usually the 4th tier) be covered at a lower-cost tier.

Are there other conditions or limits on my Medicare drug coverage?

Medicare drug plans use many tools to manage prescription drug costs. These tools are designed to encourage the best and most cost-effective use of prescriptions by the Medicare beneficiaries enrolled in their plans. From the Medicare beneficiary and his or her doctor's point of view, these tools may be seen as barriers that keep them from getting the drugs they need. But without these tools, the plans might have to charge much higher premiums.

As explained in greater detail below, the cost management tools used by Medicare drug plans may include:

• requirements for prior authorization
• limits on the quantity of drugs available in any given period (most often one month)
• step therapy requirements

Enrollees and their doctors generally have the right to ask a Medicare drug plan to make an exception from these requirements (see below).

Prior authorization

Some drugs are more expensive than others, and often a less expensive drug may work just as well. Still other drugs may be safe and effective only for limited amounts of time. To be sure certain drugs are used correctly and only when truly needed, Medicare drug plans may require a prior authorization. This means that before the plan will cover these prescriptions, your doctor must first contact your drug plan and show that the particular drug you need is medically necessary.

These requirements may help to ensure that drugs are used properly and that they are effective. But they require your doctor to take extra steps in prescribing the drug and it may take longer for you to get the drug from your pharmacy. Because each insurance plan varies, doctors sometimes do not know whether a drug requires prior authorization. Like you, your doctor may only find that out after you go the pharmacy and then you or your pharmacist call the doctor back. Prior authorization requirements for certain drugs used to treat cancer and control nausea are common.

Quantity limits

A drug plan may limit the number of pills or the number of days a prescription may cover. For example, a plan might limit a person to a certain number of migraine medicines per month. The limit may be based on clinical evidence which shows that more frequent use may not be safe or effective. You may also find Medicare drug plan quantity limits for some drugs used in cancer treatment.

Step therapy

Also referred to as a fail-first requirement, the step therapy drug plan will deny payment for a drug unless certain other drugs have been tried first. For example, the plan may cover a drug like Nexium^® for heartburn only if the patient did not respond well to less costly drugs. So a patient might first be treated with generic ranitidine (Zantac^®). If this drug doesn't work well, coverage for a more expensive prescription dose of generic omeprazole (Prilosec^®) might be approved. And only if those drugs have been tried and did not work would coverage be approved for a brand-name drug, like Nexium^®.

Step therapy requirements are unusual for drugs used to treat cancer.

How does this affect cancer drug coverage?

Medicare requires Part D drug plans to cover almost all anti-cancer drugs in use today. If you have been doing well on a covered anti-cancer drug before you enroll in a Part D plan, you probably will not need to get prior authorization for the drug. You also are not likely to be asked to try and fail on another less costly drug like it before the original drug will be covered by the Part D plan.

Last Medical Review: 10/23/2008
Last Revised: 02/12/2009