Midyear Formulary (Covered Drugs) Changes

By the GWAAR Legal Services Team

Each Medicare drug plan has its own list of covered drugs (called a formulary). Many Medicare drug plans place drugs into different "tiers" on their formularies. Drugs in each tier have a different cost. During open enrollment, Medicare beneficiaries may pick a Medicare drug plan based on the drug plan’s formulary and what drugs are in each tier.

Typically, clients must make this decision from October 15 – December 7. Then, they have the drug plan throughout the upcoming year. However, what happens if — in the middle of the year — a Medicare drug plan wants to change its formulary, change the drug tier, or place restrictions on the use of a drug? A Medicare drug plan can make some changes to its formulary during the year, yet, the Centers for Medicare & Medicaid Services (CMS) does restrict what changes a Medicare drug plan may make midyear. For example:

(A) Changes not Caused by Medicare Part D Drug Plan – A Medicare drug plan may remove a drug from its formulary at any time if the Food and Drug Administration deems a drug unsafe or a manufacturer removes a drug from the market.

(B) Positive Changes for Beneficiaries – A Medicare drug plan may add drugs to its formulary, place a drug on a lower cost-sharing tier, or remove restrictions on the use of a drug at any time.

(C) Negative Changes for Beneficiaries —

1. Until March 1 of any given year, a Medicare drug plan may not remove a covered Part D drug from its formulary or change what tier the Medicare drug plan placed a drug.

 2. After March 1, a Medicare drug plan may make the following two types of changes :

• Maintenance changes to its formulary, such as replacing brand name drugs with new generic drugs, or modifying its formulary because of new information on drug safety or effectiveness; and
• More substantial changes, including the following:
  • Remove a drug from its formulary;
  • Move a covered Part D drug to a less preferred tier status; or
  • Place restrictions on the use of a drug. For instance, a Medicare drug plan may add limits on how often a beneficiary may use a drug.

For these more substantial changes, CMS requires a Medicare drug plan to comply with the following protections:

(1) The Medicare drug plan cannot implement the change until CMS approves the change; and

(2) If a beneficiary has a Medicare drug plan and is currently taking the affected drug, the beneficiary is exempt from the change until January 1 of the next year. This, of course, would provide even more incentive to shop around during the annual open enrollment period.

Copyright GWAAR Legal Services Team, 2018