How Do Drug Formularies Work?

Medicare formularies are lists of prescription drugs covered by Medicare prescription drug plans (Part D). These formularies are created by insurance companies that offer Medicare drug plans and are approved by Medicare.

Here's how they work:

1. Drug Coverage: Each Medicare drug plan has its own formulary, which includes various prescription drugs that the plan covers. These drugs are typically categorized into tiers based on cost and coverage rules.
   

2. Tiered Structure: Formularies often have multiple tiers, with different cost-sharing amounts for drugs in each tier. Generic drugs are usually in lower tiers with lower copayments or coinsurance, while brand-name drugs may be in higher tiers with higher cost-sharing.
   

3. Coverage Rules: Formularies may include coverage rules such as prior authorization, quantity limits, and step therapy. Prior authorization requires approval from the plan before the drug is covered, while quantity limits restrict the amount of a drug that can be obtained at one time. Step therapy requires trying lower-cost drugs before more expensive ones are covered.
   

4. Formulary Changes: Medicare drug plans can change their formularies throughout the year, but they must notify members in advance of any changes that affect their coverage. If a drug is removed from the formulary or its coverage changes, members may need to switch to an alternative drug or request an exception.
   

5. Drug Exceptions: If a drug that a beneficiary needs is not on their plan's formulary or has coverage restrictions, they can request a formulary exception. This involves providing documentation from the prescribing physician to demonstrate the medical necessity of the drug.
   

Overall, understanding the formulary of a Medicare drug plan is essential for beneficiaries to ensure they have access to the prescription drugs they need at the lowest possible cost. It's advisable for individuals to review their plan's formulary annually during the Medicare Annual Enrollment Period to ensure it still meets their needs.