Every Part D plan has a list of covered drugs called a formulary. Medicare provides insurance companies that sell Part D plans guidelines for the classes of drugs they have to cover but does not always specify the exact drugs that must be included on the formulary. Medicare excludes some drugs from their list of drugs that must be covered. However, Part D plans can include them by using an enhanced formulary, which is an expanded list of covered drugs. In addition to the drugs covered, the Part D formulary includes information on deductibles, copays, and coinsurance that are applied to each drug. There are other rules about how the drugs are provided and approved defined in the Part D formulary. The most important and common are step therapy, prior authorization, and quantity limits, which are described below:
Step Therapy – This process you to start with the most cost-effective drug and only move to other, more costly, or risky medications if the others do not work.
Prior Authorization – Prior authorization requires Part D members to have their physician get approval from the insurance company prior to a prescription being written for a patient. This process is in place to ensure the drug is medically necessary and appropriate for the situation it is being used in. This is generally applied to very expensive or risky medications. If you fail to get prior authorization for a drug that requires it, it could cost you more out-of-pocket in the form of copays or coinsurance, or may not be covered.
Quantity Limits – For both cost and patient safety, Part D insurers can set limits on the quantity or number of drugs provided to a patient. These limits are usually applied to drugs that require special handling like refrigeration or that are very expensive. These limits are also applied to drugs that are known to be addictive or habit-forming, like painkilling opioids.