Medicare Part D is the Prescription Drug portion of Medicare. Part D plans are available from private insurance companies contracted with Medicare to provide and coordinate prescription benefits to beneficiaries. There are two ways for Medicare beneficiaries to get prescription drug coverage: through a stand-alone Medicare Part D plan if you have Original Medicare, or through a Medicare Advantage with Prescription Drug plan (MAPD). Because these plans are offered through Medicare-approved private insurance companies, the insurance company must make sure the people in their plan can get medically necessary drugs to treat their conditions. Each drug plan must provide at least 2 drugs per drug category, but the plans can choose which specific drugs they cover. Plans are required to cover almost all drugs in the protected categories: antipsychotics, antidepressants, anticonvulsants, immunosuppressants, cancer drugs, and HIV/AIDS drugs.
Medicare Part D plans cover Prescription Drugs in phases that help limit the cost to the insured.
[CLICK Here to see Medicare Part D Coverage and Phases]
Drug coverage costs are:
- Monthly premium
- Yearly deductible
- Copayments / Coinsurance
- Coverage gap (aka the Donut Hole)
- Catastrophic coverage
Cost Control
To control costs, drugs are assigned to Tiers. Tiers represent how much you pay out of pocket for the drugs listed in each tier. A typical Medicare Drug Plan may have the following tiers:
- Tier 1 – Preferred Generic drugs
- Tier 2 – Generic drugs
- Tier 3 – Preferred Brand drugs
- Tier 4 – Non-Preferred Brand drugs
- Tier 5 – Specialty drugs
This list of covered prescription drugs is called a formulary. The formulary lists all the drugs that the Medicare Part D plan or the MAPD plan cover. Drug plans may change the formulary throughout the plan year.
Insurance companies monitor utilization and manage costs through prior authorization, step therapy, and quantity limits.
Prior Authorization: Plans may require Prior Authorization before they will cover the cost of a certain drug. Your prescriber must show the plan that you meet the criteria to have that drug, even if the medication is for a medical condition other than the ones that the drug was approved (off-label use). When this occurs, plans will likely have alternative medications on their formulary for the medical conditions, for which the drug can be prescribed. If your prescriber believes that it is necessary for you to be on that drug, either you or your prescriber can contact the plan to request an exception. Your prescriber must give a statement supporting the request. If the request is approved, the plan will cover the drug, even if you didn’t get prior authorization for the drug.
Step Therapy: Step therapy is a cost containment measure and requires that you first try a drug from the same category but at a lower tier before you are approved to “step” to the more expensive drug. However, if your prescriber believes that because of your medical condition it is medically necessary for you to be on the expensive step therapy drug without trying the less expensive drug first, you or your prescriber can contact the plan to request an exception. Your prescriber can also request an exception if he or she believes you will have adverse health effects if you take the less expensive drug, or if your prescriber believes the less expensive drug would be less effective. Your prescriber must give a statement supporting the request. If the request is approved, the plan will cover the more expensive drug, even if you did not try the less expensive drug first.
Quantity Limits: Plans often limit the quantity of drugs they cover to ensure patient safety and control costs. If your prescriber believes that, because of your medical condition, the quantity limit is not medically appropriate, you or your prescriber can contact the plan to ask for an exception.
New Drug Plan: When changing to a new drug plan you are eligible for a one-time, 90-day supply of your current drug. This temporary supply allows time so that you and your physician have time to find another drug on the plan’s formulary that will work as well as the drug you are currently taking. If no alternate drug is identified, your prescriber can contact the plan to ask for an exception.