Health Reform WK-EDGE Formularies include 97% of drugs commonly used by dual eligibles
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Wednesday, July 19, 2017

Formularies include 97% of drugs commonly used by dual eligibles

By Harold Bishop, J.D.

The HHS Office of Inspector General (OIG) reports that the inclusion rates for the 197 drugs commonly used by full-benefit dual-eligible individuals in Medicare Part D formularies are high and largely unchanged compared with the inclusion rates listed in previous reports. The OIG concluded that Part D formularies included 97 percent of the 197 commonly used drugs in 2017, or roughly the same percentage of these commonly used drugs as they did in 2016 (OIG Report, OEI-05-17-00160, July 6, 2017).

Annual study and report requirement. Section 3313 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) requires the OIG to conduct an annual study of the extent to which formularies used by Medicare Part D plans include drugs commonly used by full-benefit dual-eligible individuals (i.e., individuals who are eligible for both Medicare and full Medicaid benefits). These individuals generally get drug coverage through Medicare Part D. Section 3313 requires the OIG to annually issue a report with recommendations as appropriate.

In preparing its 2017 report, the OIG determined: (1) whether 369 unique formularies used by 3,014 Part D plans operating in 2017 cover the 200 drugs most commonly used by dual-eligible individuals; and (2) the extent to which Part D plan formularies applied utilization management tools to those commonly used drugs.

The list of the 200 drugs most commonly used by dual-eligible individuals, was compiled using data from the 2012 Medicare Current Beneficiary Survey. Of the 200 drugs, the OIG found that 197 are eligible for Part D prescription drug coverage, one is excluded from coverage, and one is no longer prescribed in the form taken by beneficiaries. The OIG also found one additional drug that is eligible for Part D prescription drug coverage, but was not included in the OIG’s analysis because it could not confidently project the use of this drug to the entire dual-eligible population.

Findings. The OIG found that Part D plan formularies included between 88 and 100 percent of the 197 drugs commonly used by dual-eligible individuals in 2017.On average, Part D plan formularies included 97 percent of the commonly used drugs, with 70 percent of the commonly used drugs included by all Part D plan formularies. These results are similar to the OIG findings from 2011 through 2016. Of the 369 unique formularies used by Part D plans in 2017, the OIG also found that 14 formularies included 100 percent of the commonly used drugs. At the other end of the inclusion range, four formularies included only 88 percent of the commonly used drugs.

The OIG also found that the percentage of drugs to which plan formularies applied utilization management tools (e.g., quantity limits, prior authorization, or step therapy) remained the same from 2016 to 2017. On average, formularies applied utilization management tools to 28 percent of the unique drugs the OIG reviewed in 2017, the same percentage as in 2016.

Conclusion. The OIG advised that when establishing formularies and applying utilization management tools, Part D plans need to balance Medicare beneficiaries’ needs for adequate prescription drug coverage with the need to contain costs for plan sponsors and for the Part D program.

Because some variation exists in formularies’ inclusion of the drugs commonly used by dual-eligible individuals and in their application of utilization management tools to the drugs, the OIG noted that some dual-eligible individuals may need to make additional efforts to access the drugs they take. For instance, they may need to appeal prescription drug coverage decisions, switch prescription drugs, or switch Part D plans. And because these scenarios require additional effort, they may result in administrative barriers to accessing certain prescription drugs.

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