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Restrictions on Part D Drug Coverage

What do quantity limits, step therapy, and prior authorization mean?

Q. What exactly are quantity limits, step therapy, and prior authorization in Part D drug plans? And what do I need to know about them when choosing a plan or switching from one plan to another?

A. These are all methods that Part D drug plans use to reduce their costs. Medicare calls them “utilization management tools,” but people enrolled in Part D tend to call them a pain in the neck—just more hoops to jump through to get the medications their doctors have prescribed. Still, it’s important to be aware of these restrictions and what they mean when selecting a Part D plan or changing to another.

  • Quantity limits: This means your doctor has prescribed a dosage or quantity of pills that is higher than what the plan considers “normal” to treat your condition. For example, if the doctor prescribes pills to be taken twice a day, when the plan has decided that once a day is the norm, it won’t cover the twice-a-day prescription unless your doctor shows that the higher quantity is necessary for your health. A similar policy applies if you take a higher dosage—for example, 40 milligrams when the plan considers 10 or 20 milligrams to be the standard dose.
  • Step therapy: The plan requires you to take a similar but less expensive drug before it will consider covering the one your doctor has prescribed. Typically this happens when the prescribed brand-name drug has a generic or older version that is much cheaper. To avoid step therapy, your doctor must show that you’ve already tried lower-cost drugs that didn’t work as well for you as the prescribed drug.
  • Prior authorization: The plan requires you to ask its permission before it will consider covering the drug you’ve been prescribed, often for one of two reasons:

1. The drug may be a powerful one that could pose safety concerns if taken inappropriately or for too long. In this case, the plan authorizes coverage only if it accepts your doctor’s statement that this drug is necessary to treat your medical condition effectively. Sometimes the plan may require your doctor to file an exception more than once a year—maybe as often as every three months.

2. This is a drug that could be covered either by Part D, Part B, or even Part A. In this case, the plan needs to know the circumstances in which it was prescribed—for example, as a drug that you take in your own home (Part D), as a treatment administered in a doctor’s office (Part B), or as a therapy administered in a hospital (Part A or Part B). If the plan is satisfied that the treatment falls under Part D, it will cover the drug. If not, your doctor should file your claim with Medicare under Part A or Part B.

How do the restrictions affect my choice of a Part D plan?

Since some of the reasons for these restrictions involve potential safety issues, you might think that Medicare specifies which drugs are subject to them. But that isn’t the case. Each plan decides this for itself. So you could find that one of your drugs is subject to quantity limits and another to step therapy under one plan, while another plan places no restrictions on the drugs. That’s something to look out for when choosing a Part D plan.

Medicare requires every plan to make clear which drugs carry such restrictions—in the plan’s formulary posted on its website or included in its enrollment materials. Medicare’s own website also signals this information on its Plan Finder, which you can use to compare Part D plans.

Usually you’ll see restrictions shown as acronyms alongside the name of the affected drugs: QL for quantity limits, ST for step therapy, and PA for prior authorization. Of these, quantity limits is the most common restriction. It’s worth knowing, however, that just because a drug is listed as having quantity limits doesn’t necessarily mean that you’ll be affected. If you take the lowest possible dose—for example, 10 milligrams of Lipitor once a day—you won’t be subject to the QL restriction.

What happens if any of my drugs is restricted?

You’ll need to talk to your doctor about it. It could be that an equivalent drug on the plan’s formulary that isn’t restricted—a generic, for example—would work just as well for you. And in that case, you’d save money by paying a lower copay, as well as saving yourself some hassle.

Otherwise, your doctor would have to ask the plan for an exception to its rules and show why you need the prescribed medication or dosage for your health. If the plan agrees, it covers the drug. If it turns down the request, you have the right to appeal the decision. Note, however, that you and your doctor can request an exception only after you’re enrolled in a plan, not before you join it.

Must I go through this process every year if I stay in the same plan?

It depends on the plan’s policy. Some plans allow you to carry over coverage granted through an exception from one year to the next. Some require you to request an exception for the same drug annually—or even, in some circumstances, more frequently. If the plan’s policy isn’t clearly explained in its enrollment materials or on its website, call its customer service number to find out.

What if I want to switch to another plan for next year?

If you’ve been granted one or more exceptions by your current plan, and are considering switching to another, one of the factors in your decision to switch should be whether or not the new plan places any restriction on the same drugs.

In the case of a medication you’re already taking, the law allows you the right to coverage for the first 30 days in a new plan (or 90 days if you move into a nursing home), regardless of whether the plan places restrictions on this drug or doesn’t even normally cover it at all. This grace period gives you time to take steps, with your doctor’s help, to change to an alternative drug or to request an exception.

Patricia Barry is a senior editor with the AARP Bulletin.

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