Most people understand that prescription drugs are covered by Medicare Part D and many Medicare Advantage Plans. What’s not quite as clear is the Drug Tier System and how it works. I’m often asked, “How does my insurance plan come up with what I have to pay for my prescriptions, and is there a way to cut my costs?”
Let’s first take a look at prescription drug plans. All prescription drug plans (PDPs) have a list of drugs that are covered by their plan. This list is called the ‘formulary.’ By law, formularies must include both brand name and generic drugs. They also must include choices within commonly prescribed drug categories and classes.
Each plan’s formulary can be different from what is offered by other plans. In addition, formularies can change from year to year and even month to month. This is why it is so important to make sure that the specific drug you are taking, (not just the type of drug) is listed in your plan’s formulary.
Most prescription drug plans divide the drugs they cover into groups called ‘tiers.’ The tier each drug goes into is based on what the plan pays to the pharmaceutical company that makes the drug. If a plan negotiates a lower price on a particular drug, it can pass these savings onto its members so you may pay less for your prescription drugs on one plan over another.
Formularies often change when generic versions of older drugs become available. New prices may be negotiated. Changes like these may lead a plan add or remove a particular drug or move it into a different tier.
You can save money by becoming familiar with your plan’s drug tiers. You can find your plan formulary on your plan website or call your plan to ask. If you’re prescribed a new drug, look for it on the formulary and identify the tier it is in. If the drug is in a higher tier, your doctor may be able to substitute a similar but less expensive drug on a lower tier. You also have the option of filing an exception and asking your plan to allow you to pay a lower cost for the higher tier drug.
For more information, call me a 440-255-5700.