Here are the drug payment stages for Medicare Prescription plans
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Drug Utilization Rules That Affect Your Part D Coverage

Medicare allows drug plan carriers to apply certain rules for safety reasons and also for cost containment. The most common utilization rules that you may run into are:


• Prior Authorization

Plans may require a “prior authorization” to make sure certain prescription drugs are used correctly and only when medically necessary. This means before your plan will cover a certain drug, you must show the plan you meet certain criteria for you to have that particular drug

• Quantity Limits

For safety and cost reasons, plans may limit the amount of prescription drugs they cover over a certain period of time. For example, most people prescribed heartburn medication take 1 tablet per day for 4 weeks. Therefore, a plan may cover only an initial 30-day supply of the heartburn medication. If your prescriber believes that, because of your medical condition, a quantity limit isn’t medically appropriate (for example, your doctor believes you need a higher dosage of 2 tablets per day), you or your prescriber can contact the plan to ask for an exception.
What if my plan won’t cover a prescription drug I need?
If you belong to a Medicare drug plan, you have the right to:
• Get a written explanation (called a “coverage determination”) from your Medicare drug plan if your plan won’t cover or pay for a certain prescription drug you need, or if you’re asked to pay a higher share of the cost.
• Ask your Medicare drug plan for an exception (which is a type of coverage determination). If you ask for an exception, your doctor or other prescriber must give your drug plan a supporting statement that explains the medical reason for the request (like why similar drugs covered by your plan won’t work or may be harmful to you). You can ask for an exception if:
– You or your prescriber believes you need a drug that isn’t on your drug plan’s formulary.
– You or your prescriber believes that a coverage rule (like step therapy)
should be waived.
– You believe you should get a non-preferred drug at a lower copayment
because you can’t take any of the alternative drugs on your drug plan’s list of preferred drugs.

You or your prescriber must ask your plan for a coverage determination. If your network pharmacy can’t fill a prescription as written, the pharmacist will give or show you a notice that explains how to contact your Medicare drug plan so you can make your request.
A standard request for a coverage determination (including an exception) should be made in writing (unless your plan accepts requests by phone). You or your prescriber can also call or write your plan for an expedited (fast) request.
If you disagree with your Medicare drug plan’s coverage determination or exception decision, you have the right to appeal the decision. Your plan’s written decision will explain how to file an appeal. You should read this decision carefully, and call your plan if you have questions.


• Step Therapy

Step therapy is a type of prior authorization. In most cases, you must first try a certain less-expensive drug on the plan’s formulary that’s been proven effective for most people with your condition before you can move up a “step” to a more expensive drug. For instance, some plans may require you first try a generic drug (if available), then a less expensive brand-name drug on their drug list before you can get a similar, more expensive, brand-name drug covered.
However, if your prescriber believes that because of your medical condition it’s medically necessary for you to be on a more 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’ll 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 didn’t try the less expensive drug first.

Example of step therapy
Step 1—Dr. Smith wants to prescribe an ACE inhibitor to treat Mr. Mason’s heart failure. There’s more than one type of ACE inhibitor. Some of the drugs Dr. Smith considers prescribing are brand-name drugs covered by Mr. Mason’s Medicare drug plan. The plan rules require Mr. Mason to use a generic drug first. For most people, the generic drug works as well as the brand-name drugs.

Step 2—If Mr. Mason takes the generic drug but has side effects or limited improvement, Dr. Smith can provide that information to the plan to request approval to cover a brand-name drug that Dr. Smith wants to prescribe. If approved, Mr. Mason’s Medicare drug plan will then cover the requested brand-name drug.

How Medicare Drug Plans Use Pharmacies, Formularies And Common Coverage Rules


For more information on Medicare appeal rights, visit You can also call: 1-800-MEDICARE (1-800-633-4227) TTY users can call 1-877-486-2048. Information supplied via Medicare Fact Sheet May 2017


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