Tiering Exceptions for Medicare Part D

As we head into the Centers for Medicare & Medicaid Services (CMS) program audits, it’s important for Part D plan sponsors to review their tiering exception policies. Many plans get tripped up in Coverage Determinations, Appeals, and Grievances (CDAG) cases due to tiering exception findings. Chapter 18 of the Prescription Drug Benefit Manual, Section 30.2.1 – Tiering Exception, allows enrollees to obtain a non-preferred drug in a higher cost-sharing tier at the more favorable cost-sharing terms applicable to drugs in a lower cost-sharing tier. Non-formulary drugs are not eligible for a tiering exception.

Also, Chapter 18, Section – Approval of a Request, explains tiering exceptions granted by the Part D plan sponsor may be limited. A Part D plan sponsor is not required to approve a tiering exception for a drug in a higher cost-sharing tier at the generic tier cost-sharing level if the plan maintains a separate tier that only includes generic drugs as defined in 42 CFR § 447.506. CMS has previously defined a generic-only tier as a tier including drugs approved under the Abbreviated New Drug Application (ANDA). However, some plan sponsor’s generic tiers also included drugs approved under a New Drug Application (NDA) but marketed as generics. This resulted in some plan sponsor tiers that were created as “generic only” tiers being viewed as “mixed” tiers by CMS, and, therefore, NDA generics could not be excluded from the tiering exception process.

In the 2018 Final Call Letter, CMS clarified generic-only tiers may include generics and “other drugs that are comparable to generics, such as authorized generics.”

It is important for plan sponsors to review their tier structure and included drugs on each tier. For example, we found one plan sponsor unintentionally included NDA (brand) Klor-Con with the other ANDA Klor-Con products on a tier intended to be a generic-only tier. The tier is now considered a mixed tier due to the brand product inclusion. Unintentionally including a brand medication, other than an NDA generic, will result in a “mixed” tier that is eligible for a tiering exception. Any tier that includes both NDA brand medications and ANDA generic medications is considered a “mixed” tier and is eligible for a tiering exception, regardless of whether the tier is labeled a “generic” tier or a “brand” tier.

Check your tiering exception decisions to ensure they follow CMS guidance.




Gorman Health Group’s summary and analysis of the 2019 Advance Notice and Draft Call Letter for Medicare Advantage and Part D is now available. Download now

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