National Alliance on Mental Illness
page printed from
(800) 950-NAMI;

Medicare Drug Benefit Update:  Extended Transition Period Set to Expire on March 31; Prior Authorization and Step Therapy Will Begin on Some Medications

March 27, 2006

Initial transition rules for the Medicare Part D drug benefit will expire on March 31, allowing Prescription Drug Plans (PDPs) to begin imposing restrictions on access to some medications on their preferred drug lists (also known as formularies).  The transition rules set forth by the Centers for Medicare and Medicaid Services (CMS) have required PDPs to cover any and all medications that were prescribed to an enrollee as of January 1, 2006.  Specifically, if a beneficiary was prescribed a medication (including a psychotropic medication) upon enrollment, they were presumed to be stable on that medication and their drug plan was required to cover any refill. 

This transition requirement was supposed to have expired at the end of January.  However, in response to a difficult initial transition period, CMS extended the transition policy requirement through March 31.  More information on the CMS transition policy is available online, including a news alert and a physician Q&A.

Beneficiaries May Need to Seek an Exception

Under the transition policy, drug plans are supposed to have been providing notices to beneficiaries, doctors, and pharmacists that a specific refill was covered under the transition policy and that the particular medication is either:

  • not on the PDP's formulary (although this should not be occurring with anti-psychotics, antidepressants or anti-convulsants as plans are required to cover "all or substantially all" of these medications),
  • subject to a prior authorization requirement (where the drug plan requires prior clearance before a prescription is filled),
  • subject to a step therapy edit (where the drug plan requires the enrollee to first try a preferred drug alternative),
  • subject to a mandatory generic substitution requirement, or
  • subject to a dosage limitation (the dosage or volume of pills prescribed is above the plans recommended limits).    

Most Medicare drug plans have some of these restrictions on access as part of their coverage.  A report issued last week by the House Government Reform Committee Minority Staff found that 97 percent of the Medicare drug plans place prior authorization or step therapy on at least one of the 100 most prescribed medications.  A copy of this report can be viewed online.

In each of these instances (formulary exclusion, prior authorization, step therapy, dosage limitation, etc.), beneficiaries have the ability to seek an "exception" from their drug plan's policy.  This is an administrative procedure whereby an enrollee requests that the plan make an exception to the coverage restriction based upon the individual's unique circumstances.  Because the grounds for granting an exception are the individual enrollee's clinical status and treatment history, the active involvement of the prescribing physician is essential in the process.

A critical step for some Medicare beneficiaries will be contacting their drug plan and/or their physician to find out if their medications have thus far been refilled in accordance with the plan's transition policy.  The rules for Medicare Part D allow drug plans to require that requests for exception be made in writing by the prescribing physician.  Each Medicare drug is allowed to have their own written form for exceptions, although CMS has established a model form that has been recommended to all plans.  More importantly, Medicare drug plans are required to respond to an exception request within 72 hours – and as quickly as 24 hours in certain emergencies.  If an exception is denied, plan enrollees can appeal to an Independent Review Entity (IRE) that is outside of the drug plan's influence.

More information on how to seek an exception or seek an administrative appeal is available online.

Overall Part D Enrollment Tops 27 Million

The past month has seen a surge in enrollment in the new Medicare drug benefit, with 2 million beneficiaries signing up in the past month.  The number of beneficiaries who have individually enrolled now exceeds 7.2 million.  The other nearly 20 million enrollees were automatically enrolled through other programs or are retirees whose former employers are receiving subsidies under the program. 

Of particular concern are the more than 7 million low-income Medicare beneficiaries projected to be eligible for a generous subsidy (as much as $4,000 annually) in order to afford drug coverage.  Thus far, less than 2 million beneficiaries have been signed up for the subsidy.  It should be noted that all of these low-income beneficiaries are above Medicaid eligibility and as a result most did not have coverage prior to the new drug benefit.  NAMI is currently working with CMS and a broad coalition of national organizations (including the National Council on Aging, AARP, and others) to develop strategies to help reach these beneficiaries before the May 15, 2006 deadline for open enrollment. 

Beneficiaries must separately apply for the low-income subsidy (LIS), also known as "extra help" through the Social Security Administration (SSA).  The application is available online.   

To receive E-News Alerts directly in your inbox, visit, sign in, and check the box next to E-News.