The fourth article in the aakpRENALIFE series on the Medicare prescription drug benefit.

Medicare drug plans have arrived! On January 1, 2006, the Medicare drug benefit opened for business. For the first time, Medicare beneficiaries who signed up for one of the new Medicare drug plans could visit a drug store and have a prescription covered by their plan. In December, Medicare reported about 12 million Medicare beneficiaries had signed up for a Medicare prescription drug plan – about 1 million enrolled in a “stand alone” drug plan and another 11 million were “auto-enrolled” in a drug plan as either Medicaid recipients (“dual eligibles”) or Medicare managed care members (“Medicare Advantage”).

But some Medicare beneficiaries may find their drug plan does not cover a particular drug prescribed by their doctor – or that their drug plan has “utilization management” restrictions. These restrictions include prior authorization (doctor must get permission from the plan to prescribe a drug); quantity limits (amount or length of time a drug may be prescribed); and step therapy (you are required to try another drug first).

What to do? If your doctor believes you need a drug not covered by your plan, or that utilization management rules are not consistent with your best medical care, Medicare rules allow you, your doctor, or a representative on your behalf to ask your plan for an “exception.” And if the plan refuses, you can appeal to the Medicare program – and even go to court (as the last resort)!

Here’s the background. All Medicare drug plans – as is typical with most private health insurance plans – use a “formulary.” A formulary is simply a list of the drugs covered by a drug plan. You can get a copy of your plan’s formulary by calling its toll-free number or going online to the plan Web site.

A formulary usually has between one and four “tiers” or co-pay levels. For example, the first tier is typically “generic” drugs, and generic drugs have the lowest co-pay. The next tier is “preferred brand name” drugs. These are branded drugs where perhaps the plan may have received a good price from the drug manufacturer and can pass the savings on to you with a lower co-pay than the next tier, “non-preferred brand name” drugs. The “specialty tier” is often high cost, injectable “biotech” drugs.

Each Medicare beneficiary has the choice of many prescription drug plans – and plans vary in the co-pay amounts. But, by way of illustration, one plan we examined has a $7 co-pay for any generic drug; $30 co-pay for preferred brand name drug; $60 co-pay for non-preferred brand; and 25 percent co-pay for “specialty drugs.” (The design of Medicare drug plans is discussed in earlier articles in this series, which are available on the AAKP Web site at www.aakp.org/AAKP/Advocacy/partd.htm. These co-pays are for the initial tier of plan coverage; up to $2,250. There is a coverage gap, and then above $3,600 in total out-of-pocket costs, you would pay 5 percent co-pay for each prescription.)

You (your authorized representative, or in some cases your doctor) can ask your plan for an “exception” to improve your drug plan coverage. Exceptions include asking your plan to: 

• pay for a drug that your doctor says you need but is not included on your plan’s formulary;

• provide a non-preferred brand name drug at the same co-pay amount as a preferred brand name drug; and

• waive any utilization management restrictions – such as prior authorization or step therapy.

You should receive from your prescription drug plan after you sign up information about the plan’s exceptions and appeal procedures.

Exception requests to your plan can be made either by phone or in writing. Your drug plan must make a decision about your exception request as fast as your health condition requires, but no later than 24 hours for an “expedited” decision (if you suffer from a serious health condition) or three days (72 hours) for a “standard decision.”

If your plan denies your exception request, you or your authorized representative (or, in expedited cases, your doctor) may appeal the plan's decision.

Your first level of appeal is to your drug plan – you may ask your plan for a “redetermination.” Your plan has up to one week (seven days) to review its decision (or three days if a faster, expedited appeal is requested). Again, your drug plan information materials should explain the plan appeals process and provide the plan’s toll-free number.

If your drug plan also denies your redetermination appeal, Medicare has hired a special arbitrator (called an “independent review entity”) to provide an independent review. The “independent review entity” (IRE) will make a decision within seven days for a standard appeal, and as fast as required, but no later than within three days, for an expedited appeal. If the IRE’s decision is favorable to you, your plan must provide the drug coverage you requested within three days.

If the IRE decision is also negative, you have other appeal rights – you can appeal to an Administrative Law Judge (ALJ), the Medicare Appeals Council (MAC), or take your case to a Federal District Court. Hopefully, these appeals won’t be needed!

This is a quick summary of your appeals rights. For more information and to talk to a live person, you can call Medicare 24 hours a day, seven days a week, at 1-800-MEDICARE (1-800-633-4227); TTY: 1-877-486-2048. Or go online to the Medicare homepage. Click here.

This article originally appeared in the March 2006 issue of aakpRENALIFE, Vol. 21, No. 5.

Back