Health Reform WK-EDGE Formularies’ inclusion of drugs commonly used by dual eligibles remains high
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Monday, July 11, 2016

Formularies’ inclusion of drugs commonly used by dual eligibles remains high

By Wolters Kluwer Editorial Staff

The rate of Part D plan formularies’ inclusion of the drugs commonly used by the beneficiaries who are eligible for both Medicare and Medicaid (dual eligibles) is high with some variation, according to an annual report of the HHS Office of Inspector General (OIG). The OIG also found that from 2015 to 2016, the proportion of unique drugs subject to utilization management tools remained relatively the same (OIG Report, No. OEI-05-16-00090, June 30, 2016).

OIG findings. The OIG found that (1) on an average, Part D plan formularies include 96 percent of the commonly used drugs, with the range being from 88 percent to 100 percent; (2) 68 percent of the commonly used drugs are included by all Part D plan formularies; (3) inclusion rates for the 198 drugs commonly used by dual eligibles are largely unchanged compared with those from the OIG’s 2015 report; (4) for each of the nine drugs that the report identifies as being included by less than 75 percent of Part D plan formularies, all Part D plan formularies cover at least one therapeutically alternative drug; (5) on an average, formularies applied utilization management tools to 28 percent of the unique drugs reviewed in 2016, compared to 29 percent of those reviewed in 2015; (6) formularies for Part D plans with premiums below the regional benchmark include the commonly used drugs at a rate similar to that of Part D plan formularies overall; (7) enrollment in plans that cover at least 90 percent of unique drugs increased, with nearly 100 percent of dual eligibles enrolled in such plans in 2016 compared to 94 percent in 2015; and (8) results of its analysis for 2016 are largely unchanged from its findings since 2011.

Dual eligibles. Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173), comprehensive prescription drug coverage under Medicare Part D is available to all Medicare beneficiaries through stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs). For dual eligibles, Medicare covers Part D plan premiums, deductibles, and other cost-sharing up to a determined premium benchmark that varies by region. If dual eligibles enroll in Part D plans with premiums higher than the regional benchmark, they are responsible for paying the premium amounts above that benchmark.

Cost control. To control costs and ensure the safe use of drugs, Part D plans are allowed to establish formularies from which they may omit drugs from prescription coverage and are allowed to control drug utilization through utilization management tools. These tools include prior authorization, quantity limits, and step therapy. 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. By law, Part D plan formularies do not have to include every available drug. Rather, to meet CMS’s formulary requirements, they must include at least two drugs in each therapeutic category or class.

OIG review. To fulfill its annual reporting mandate from Section 3313 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), the OIG reviews the extent to which formularies used by PDPs and MA-PDs under Medicare Part D include drugs commonly used by full-benefit dual-eligible individuals. The OIG also assesses the utilization management tools present in each formulary.

For this report, the OIG determined whether the 374 unique formularies used by the 3,116 Part D plans operating in 2016 cover the 200 drugs most commonly used by dual eligibles. The OIG also determined the extent to which those commonly used drugs are subject to utilization management tools.

The OIG noted that because some variation exists in Part D plan formularies’ inclusion of the commonly used drugs and in their application of utilization management tools to these drugs, some dual eligibles may need to use alternative methods to access the drugs they take. They could appeal prescription drug coverage decisions, switch prescription drugs, or switch Part D plans. These scenarios require additional effort by dual eligibles and may result in administrative barriers to accessing certain prescription drugs.

The report contains no recommendations. It also includes the list of the 200 drugs with the highest utilization by dual eligibles.

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