Medicare Part D: Things People With Cancer May Want to Know

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Formularies and drug coverage

A formulary is a list of the drugs covered by the prescription drug plan or other insurance plan that offers drug coverage benefits.

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 US Food and Drug Administration (FDA) as safe and effective. Plans have a lot of freedom when deciding which drugs they will cover. Most plans 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, 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’ll probably have higher co-pays, especially for the drugs that cost a lot.

Medicare drug plans are required to cover almost all cancer drugs, but it’s very important to make sure your drugs are on your 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 are 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 exact name, 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 specific information on Part D plan formularies by:

  • Contacting the plan for its current formulary, or visiting the plan’s website
  • Visiting www.medicare.gov/find-a-plan online
  • 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). It’s also available in Spanish.
  • Calling your State Health Insurance Assistance Program. Getting contact information for each state is covered in the section called “Where can I get more help?
  • Checking for local events that offer help enrolling. Contact your local Office on Aging. For the telephone number, visit www.eldercare.gov. Or, 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 find out which tier your drugs are on (explained in “What is a formulary tier?”). This is different with each prescription drug plan.

Table 1: Sample formulary

 

    Tier

    Other limits

    Alkylating Agents

    CEENU

    2

 

    Leukeran

    2

 

    Cyclophosphamide

    1

    Prior authorization*

    Matulane

    3

    Prior authorization

    Antimetabolites

   

    Hydroxyurea

    1

 

    Megestrol acetate

    1

    Prior authorization

    Methotrexate

    1

 

    Purinethol

    1

 

    Thioquanine

    1

 

    Immune Modulators and Vaccines

    ACEL-IMUNE vial

    2

 

    ACTHIB/DTP vaccine vial

    2

 

    Aldara

    3

    Prior authorization

    Arava

    3

    Prior authorization

    Attenuvax vaccine w/diluent

    2

 

    Avonex

    4

    Prior authorization

    Azathioprine

    1

 

    Betaseron 0.3 mg vial

    4

    Prior authorization

    BIAVAX II vaccine w/diluent

    2

 

    Cellcept

    2

    Prior authorization

    Cholera vaccine vial

    2

 

    Tier 1 is a generic drug; tier 2 is a preferred brand drug; tier 3 is a non-preferred brand; and tier 4 is a specialty drug.

    Source: Adapted from a Part D Plan Formulary

    * Prior authorization means that your doctor must explain that the drug is medically necessary.

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, and some have specialty tiers. In most cases, plans define the tiers like this:

  • Tier 1 – Generic drugs. Tier 1 drugs usually cost the least.
  • Tier 2 – Preferred, brand name drugs. These are brand name drugs which cost 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” doctors on a managed care plan’s roster. Tier 3 drugs cost 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.

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 is an example of the range of plan tier co-pays and co-insurances for 4 different prescription drug plans in one area of the country.

In this 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’s 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 Part D plan formularies’ tiered cost-sharing requirements in different plans

    Prescription

    Drug Plan

    Tier 1

    (generic)

    Tier 2

    (preferred brand)

    Tier 3

    (non-preferred brand

    Tier 4

    (specialty)

    Plan A

    $5

    $28

    $55

    25%

    Plan B

    $2

    $20

    $40

    N/A

    Plan C

    $10

    $25

    50%

    25%

    Plan D

    $4

    $17

    75%

    25%

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

An example using Plan A in the above formulary in 2014

Let’s say you need a cancer drug that is on tier 4 of your plan formulary, which means you pay 25% of the cost. The drug costs $1000 a month. This means it will cost you $250 per month after you have paid the plan’s deductible, and until you and the plan have paid a total cost of $2,850. Reaching this limit puts you in the coverage gap (donut hole), which in this case will be about 3 months into the year if this is your only drug.

While in the coverage gap you will have to pay 47.5% of the cost ($475). So, it will cost you $475 a month until your out-of-pocket costs reach $4,550 or your total drug costs hit $6,687.50, at which point you reach the catastrophic benefit level. The total cost will reach $6687.50 nearly 7 months into the year.

Once the catastrophic benefit is triggered, your monthly out-of-pocket cost may still be about $50 per month until the end of the year. (See “What is the coverage gap, and what do I pay?” in the section called “Medicare Part D prescription drug coverage” for details on how these costs are calculated.)

Another possibility is that a name-brand cancer drug 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. This means your doctor must explain why you need that particular drug before you can get it (see “Prior authorization” below).

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 a beneficiary may ask the plan to cover a drug that isn’t listed on the plan’s formulary. This process may also be used to ask the plan to reduce the cost to the patient for a formulary drug. In either case, 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.

Note: The exceptions process does NOT apply to drugs that are already on the formulary’s specialty tier.

If the exceptions request is to reduce the patient’s cost for the drug, the plan may agree to cover the Part D drug at a lower cost if the doctor can show that any of these 3 conditions are true:

  • The preferred drug for treatment of the same condition would not work as well as the non-preferred drug
  • The preferred drug would have a harmful effect on the patient
  • Both (the preferred drug wouldn’t work as well and it would harm the patient)

If the beneficiary asks the plan to cover a drug that’s not on the formulary at all, 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 exceptions you can request

You can ask for an exception to a drug plan’s coverage rules. There are many types of exceptions you can ask for, but there are also limits on what you can ask. For instance:

  • You can ask to have your drug covered even if it’s 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 the drug you need. For example, if the drug has a step therapy requirement (see the next section), you can ask to have this requirement removed.
  • You can ask for lower cost tier 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. If the plan agrees, this would lower the amount you must pay for your drug. Most plans don’t allow an enrollee to request that a drug in the specialty tier (usually the 4th tier) be covered at a lower-cost tier.

You may be at the pharmacy when you first find out that the drug your doctor prescribed isn’t on your plan’s formulary. Or you may find it’s on your plan’s formulary but at a high cost-sharing tier. If this happens, you should be able to get a Medicare-approved form from your plan. You will need to give this form 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 a decision within 72 hours of the exception 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 who 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.

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

Medicare drug plans use many tools to manage prescription drug costs. 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 to these requirements.

Prior authorization

Prior authorization means that before the plan will cover the drug, your doctor must contact your drug plan and let them know that the drug is medically necessary. Some drugs cost more than others, and often a cheaper drug might work just as well. Still other drugs may be safe, but work only for limited amounts of time. To be sure certain drugs are used correctly and only when really needed, Medicare drug plans may require a prior authorization.

These requirements may help to ensure that drugs are used properly and that they work as intended. But they require your doctor to take extra steps when prescribing the drug, and it may take longer for you to get the drug from your pharmacy. Because each insurance plan varies, doctors sometimes don’t know that a drug requires prior authorization. Like you, your doctor may only find out after you go to the pharmacy and then you or the pharmacist call the doctor back.

Note: Prior authorization is often needed for drugs used to treat cancer and control nausea.

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 research showing that more frequent use means the drug isn’t working as it should. Or it may be unsafe to take more than a certain number in a month.

Note: Medicare drug plans may limit quantities of some drugs used in cancer treatment.

Step therapy

Also referred to as a fail-first requirement, the step therapy restriction denies payment for a drug unless certain other drugs have been tried first.

For example, the plan may cover a drug like esomeprazole (Nexium®) for heartburn only if the patient did not respond well to cheaper drugs. So a patient might first be treated with generic omeprazole (Prilosec®). If this drug doesn’t work well, coverage for a more expensive prescription dose of generic lansoprazole (Prevacid®) might be approved. And only if those drugs have been tried and didn’t work would coverage be approved for a brand-name drug, like Nexium.

Note: 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 with a cheaper drug before the original drug will be covered by the Part D plan.


Last Medical Review: 01/22/2014
Last Revised: 01/23/2014