"Unlike under the tiering exceptions process, the regulations do not specify what level of cost sharing applies when an exception is approved under the formulary exceptions process. Instead, a plan sponsor has the flexibility to determine what level of cost sharing will apply for non-formulary drugs approved under the exceptions process. However, a plan sponsor is limited to choosing a single cost-sharing level that applies to one of its existing formulary tiers. Plans may also elect to apply a second less expensive level of cost sharing for approved formulary exceptions for generic drugs, so long as the second level of cost sharing is associated with an existing formulary tier and is uniformly applied to all approved formulary exceptions for generic drugs" [emphasis added]Accordingly, the government's Model Evidence of Coverage document provides Medicare drug plans with a very broad template when explaining cost-sharing for the coverage of non-formulary drugs.
"Section 6.2 What is an exception?However, as noted above, although provided with broad and flexible guidance, you may find that many Medicare Part D drug plans follow the same convention and cover a non-formulary drug (using the Formulary Exception request process) as a Non-Preferred drug at a higher-costing formulary tier (just below the Specialty Drug Tier) and you probably will pay 25% to 50% of the drug's retail cost.
. . .
1. Covering a Part D drug for you that is not on our List of Covered Drugs (Formulary). (We call it the “Drug List” for short.)
. . .
If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to [insert as appropriate: all of our drugs OR drugs in [insert exceptions tier] OR drugs in [insert exceptions tier] for brand name drugs or [insert exceptions tier] for generic drugs]. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug." [emphasis added]
“If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to drugs in Tier 4 [assuming a 5-tier formulary]. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the [coverage of a non-formulary] drug.” [emphasis added]or you may read something such as:
"If we agree to make an exception and cover a drug that is not in the Drug Guide, you will need to pay the cost-sharing amount that applies to drugs in Cost-Sharing Tier 4 - Non-Preferred Drug. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug."
. . . or a slight variation . . .
"If we agree to make an exception and cover a drug that is not on the Drug List, you will need to pay the cost-sharing amount that applies to drugs in Cost-Sharing Tier 3: Non-Preferred Drug. You cannot ask for an exception to the copayment or coinsurance amount we require you to pay for the drug."You can then look on your plan's formulary and see the cost-sharing for Tier 3 or 4 Non-Preferred drugs (for example, 25% or 33% or $50). We also have all formulary cost-sharing information online in our Medicare Part D plan finder (PDP-Finder.com) and our in our Medicare Advantage plan finder (MA-Finder.com)
Question: So, will I always pay more for coverage of a non-formulary drug as compared to similar formulary drugs?
Not necessarily. When a non-formulary drug is covered by your
drug plan (even as a Tier 4 drug), you will not necessarily pay more for
the drug than similar
drugs on the plan’s formulary. The cost difference will depend on the
non-formulary drug's retail price, the placement of the similar drugs on
the plan's formulary, and your Medicare Part D plan's cost-sharing
structure (for example, Tier 1 drugs cost $1 and Tier 2 drugs cost $10).
As a general example, if the plan covers “Drug ABC” as a Tier 3 drug
with a $40 co-pay and you use a similar non-formulary drug “Drug XYZ”
that has a retail cost of $100 and the plan agrees to cover this
non-formulary drug on Tier 4, you may pay 33% co-insurance for the drug
or $33 (depending on your plan) -- and this is less than the $40 you
would have paid for the similar Tier 3 drug.