Medicare Part D Formularies: CMS Conducts Oversight of Mid-Year Changes; Most Mid-Year Changes Were Enhancements

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Correspondence issued by the Government Accountability Office with an abstract that begins "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 ... continued below

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United States. Government Accountability Office. June 30, 2011.

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Correspondence issued by the Government Accountability Office with an abstract that begins "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. Congress asked us to review mid-year formulary changes in the context of CMS's oversight and the potential effect of mid-year changes on beneficiaries. In this report, we describe (1) the actions CMS has taken to oversee sponsors' compliance with mid-year formulary change requirements; and (2) the mid-year formulary changes sponsors made for their plans in 2008 and 2009 and how many beneficiaries filled a prescription for a drug later affected by a negative mid-year formulary change in 2008."

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Government Accountability Office Reports

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for the U.S. Congress investigating how the federal government spends taxpayers' money. Its goal is to increase accountability and improve the performance of the federal government. The Government Accountability Office Reports Collection consists of over 13,000 documents on a variety of topics ranging from fiscal issues to international affairs.

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  • June 30, 2011

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  • June 12, 2014, 7:50 p.m.

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United States. Government Accountability Office. Medicare Part D Formularies: CMS Conducts Oversight of Mid-Year Changes; Most Mid-Year Changes Were Enhancements, text, June 30, 2011; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc298585/: accessed May 27, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.