Medicare Part D Formularies: CMS Conducts Oversight of Mid-Year Changes; Most Mid-Year Changes Were Enhancements: Gao-11-366r
Synopsis "Medicare Part D Formularies: CMS Conducts Oversight of Mid-Year Changes; Most Mid-Year Changes Were Enhancements: Gao-11-366r"
The Medicare voluntary outpatient prescription drug insurance program, known as Medicare Part D, provided prescription drug coverage for about 23 million beneficiaries--eligible individuals 65 years and older and eligible individuals with disabilities--enrolled in the program in 2010. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private companies, known as sponsors, that contract with the Department of Health and Human Services (HHS) Centers for Medicare & Medicaid Services (CMS), the agency that administers the Medicare program. Sponsors may have multiple contracts with CMS to provide drug coverage, with each contract offering one or more distinct Part D plans. Sponsors compete for beneficiary enrollment on the basis of plan premiums and benefit designs. Sponsors also vary in the content of their formularies--the list of covered drugs and associated utilization management (UM) requirements. UM requirements include (1) step therapy, which requires that a beneficiary try lower-cost drugs before a sponsor will cover a more costly drug; (2) prior authorization, which requires a beneficiary to obtain the sponsor's approval before a drug is covered for that individual; and (3) quantity limits, which restrict the dosage or number of units of a drug provided within a certain period of time. Sponsors may design their plans to use the same or different formularies. Sponsors may use their formulary structures to manage beneficiaries' drug spending and utilization, however, sponsors must adhere to a minimum set of formulary requirements established in statute and regulation. In its administration of Part D, CMS is responsible for implementing program requirements and overseeing sponsors' compliance with these requirements. To do so, CMS issued regulations and program guidance addressing classes of drugs that must be covered on sponsors' plan formularies, classes of drugs that may not be covered by Part D, UM program requirements, and annual formulary submission time lines. Medicare beneficiaries may choose to enroll in plans based, in part, on the formularies that sponsors establish for their plans at the beginning of each year. With few exceptions, once beneficiaries enroll in a sponsor's plan, they may not change plans until the next year. However, sponsors may make certain changes to their plans' formularies during the year, known as mid-year formulary changes, provided that their plans' formularies continue to meet certain minimum Part D formulary requirements including those that apply to mid-year changes. Mid-year formulary changes may enhance Part D formularies by adding drugs or removing or loosening UM requirements for drugs, or may restrict formularies by removing drugs or tightening UM requirements for drugs. Mid-year changes affect sponsors' plan formularies and may disrupt beneficiaries' access to certain prescription drugs or make them responsible for new or unexpected costs.
