Study Shows Part D Plans Ratcheting Up Restrictions on Coverage

A new study from University of Southern California (USC) researchers shows that Medicare Part D plans have been increasingly restricting access to some prescription drugs through the years. Plans have used prior authorization, step therapy, and formulary restrictions to curb beneficiaries’ ability to take certain important prescriptions. The study covered 10 years, from 2011 to 2020, and showed plan adoption of each of these utilization management practices steadily gaining traction.

Plans can exclude some drugs from their formularies entirely, meaning enrollees either must pay out of pocket or try to get an exception by submitting an appeal to the plan. In 2011, plans excluded 20.4% of drugs. By 2020, that number was up to 30.4%, with an even higher 44.7% for brand-name drugs.

Even if drugs are on the formulary, plans can limit access. For example, prior authorization requires prescribers to get plan permission before it will cover a drug, and step therapy requires patients to use one or more other drugs before gaining access to the prescribed drug. In 2011, plans subjected 11.5% of drugs to prior authorization or step-therapy restrictions. By 2020, that number had reached 14%, with a higher 23.7% for brand-name drugs.

These practices can negatively impact beneficiary health and well-being. They force many into the Medicare Part D appeals system, which is outdated and onerous. We often hear from enrollees who are struggling to navigate this overly complex, multi-step process, which can also prove burdensome for pharmacists, plans, and prescribing physicians. This can lead to further care delays, the abandonment of prescribed medications, reduced adherence to treatment protocols, worse health outcomes, and higher costs for the patient and the Medicare program.

The USC report comes as the Inflation Reduction Act (IRA) is changing the structure of Part D payments and plan liabilities. If plan costs increase as a result of the IRA, the plans may respond by pursuing savings elsewhere, including through more aggressive use of formulary exclusions, prior authorization, and step therapy.

At Medicare Rights, we will continue to urge Medicare to ensure people with Medicare have access to needed medications and to conduct aggressive oversight to prevent plans from finding and exploiting loopholes that deny necessary care. While recent rules and proposals aim to curb prior authorization in Medicare Advantage, more must be done in Part D.

Read the study findings.

Read more about the Inflation Reduction Act.

Read more about Part D Appeals.