Video: Understanding Medicare Part D Formularies
John Palmer: One big factor in choosing the right Medicare Part D coverage plan is understanding something called the formulary. It's the list of prescription drugs that a particular plan covers. The Retirement Living program, Healthline, recently explored this issue. Here's what they discovered.
Kevin Soden: Welcome back to Healthline ,where we're discussing Medicare Part D with two experts, Nancy O'Connor and Michelle Holzer. One of the first challenges when enrolling in Medicare Part D is the formulary. Can one of you explain what the formulary means?
Nancy O'Connor: Sure, I can explain what a formulary is. Basically it's a list of drugs that the plan covers. And you will have brand name drugs on that list, you'll have generic drugs on the list and you can be sure that every drug on the list has been approved by the FDA, by the Food and Drug Administration, as safe and effective.
Kevin Soden: So, who decides what drugs will be covered by the formulary? It's not the FDA?
Nancy O'Connor: No, basically it's the drug plan. And Medicare requires that drug plans have a Pharmacy and Therapeutics Committee that's comprised of physicians and pharmacists. Some of them have specialties in geriatric medicine. And those folks develop the formulary, or the list of drugs, that the plan will cover. They look at things like cost effectiveness, whether the drug is effective in treating certain conditions, and they also look at safety concerns as well.
Kevin Soden: But if you look at the plans, you see that some of these drugs – some plans cover one set of drugs, some cover another. I mean, does that make any sense at all to you?
Nancy O'Connor: Well, when Medicare looks at the formularies that are being offered by the plans, and we do look at those formularies very carefully, we look at whether drugs are added or taken off of the formulary. We are making sure that a broad range of therapeutic classes and categories of drugs are covered.
Our standard is that every plan has to have at least two drugs in every therapeutic category and class so that beneficiaries have access to the medical treatments that are available. So we want to see a pretty robust formulary that's developed by the plan for our beneficiaries.
Kevin Soden: What kind of drugs would you expect not to be covered in these plans?
Nancy O'Connor: Well the statute, or the law, does exclude some drugs from coverage. These drugs can include drugs to treat anorexia or weight loss, cosmetic drugs, barbiturates, benzodiazepines, over-the-counter non-prescription drugs, drugs that may treat the common cough or cold, fertility drugs are not covered. And also vitamins and minerals aren't covered, so they're the excluded drugs.
But if you have both Medicare and Medicaid, in other words if you're a dual-eligible, then a lot of times your state Medicaid program will cover some of those excluded drugs.
Kevin Soden: How about enrolling? How do you pick a plan based on the formulary, Michelle?
Michelle Holzer: Well, I think it's important to go to the Medicare website, www.medicare.gov, and there's a plan finder. And in the plan finder, if you go through the plan finder, you will be able to go on to some screens that you will actually type in the medications that you're on, the dosage of those medications.
And when you go through the plan finder, plans will come up through the Internet and show you which plans cover which drugs, the cost of those plans and all of the specifics about those plans. So it's a very individualized search that is very important to go through to see what plans cover the most number of the drugs that somebody would be on.
Kevin Soden: Let's assume that I plugged my medicines into the formulary plan finder. You know, what can I do after that?
Michelle Holzer: Well, it's important to sit down with somebody who can help understand and decipher exactly what's said. Now that could be a family member. It could be your grandchild or your son or daughter, or it could be a trained counselor through the SHIP program.
And we can help somebody who may not have family members who are able to help them go through the plan finder, understand your out-of-pocket expenses, understand your responsibilities regarding premiums and co-payments, and, you know, how much you'll be paying for your drugs and what happens if you reach certain points in time how those changes could be – could be changed in terms of your co-pay.
Kevin Soden: Nancy, I plugged my medicines in there and I come up with something that says, “Tier I, Tier II.” What does that mean?
Nancy O'Connor: Well, to lower costs, drug plans put the drugs in different tiers or categories. Tier I drugs are your lowest cost drugs. You have the lowest cost sharing at the Tier I level. A lot of times you'll see generic drugs in that Tier I level.
Tier II are your preferred brand name drugs. A little more expensive, there's more cost sharing there. And then Tier III are usually your non-preferred brand name drugs, your most expensive drugs and the highest level of cost sharing.
Alexis Abramson: That was a lot of very essential information and I just want to re-emphasize the importance of some of the resources that were identified.
If you are computer savvy or have a friend who is and is willing to help you, go to www.medicare.gov and you will find a wealth of information available to you including the plan finder page that helps you compare features and costs of all the plans available.
If computers are not your thing, you can always call your state's SHIP office for assistance. SHIP stands for State Health Insurance Assistance Program. They're there to help you get the best Medicare coverage available. So take advantage of that resource.
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