10 Reasons Why You May Be Paying Full Price For Your Medications - 8. Referenced-Based Pricing

(8) Referenced-Based Pricing – If you find that your medications are costing much more than you expected, you may find that you are purchasing medications under a Part D plan’s Referenced-Based Pricing policy. Reference-based pricing also falls under the subject of utilization management (like Step Therapy, Prior Authorization, or Quantity Limits) and even though CMS proposes its elimination in 2010, about 10% of the 2009 Part D plans are implementing this policy (for example, HealthNet, SilverScript and Sterling). Referenced-based pricing is a little-known practice that was intended to promote the use of generic medications. Medicare beneficiaries will pay not only the cost-sharing (co-payment or co-insurance) fee for their medication, but also an additional fee that is calculated as the difference between the retail brand medication price and the generic equivalent price. Unfortunately, Medicare is unable to configure their online Medicare Prescription Drug Plan Finder to display referenced-based pricing so many people are unaware of the policy before paying full-price or a premium for their drugs.

How does this work? An example provided by the Centers for Medicare Advocacy use the purchase of Cardizem under the SilverScript plan. The drug is considered a Tier 3 medication with a $98 co-payment. The retail cost of the drug is $109.61. The cost of the generic equivalent is $17.57. The cost-sharing amount to the Medicare Part D beneficiary is $190.04. The calculation is the co-payment + the retail difference between brand-name and generic drug or $98 + ($109.61 – $17.57) = $190.04.

Also See:
1. Member ID Card Problems
2. Still in Initial Deductible
3. Non-Covered Prescription
4. Retail Price Less than Co-Payment
5. In the Donut Hole
6. Quantity Limit Exceeded
8. Referenced-Based Pricing
9. Out of Network Purchase
10. No Prescription is on File