In 2019, the Centers for Medicare & Medicaid Services (CMS) began allowing Medicare Advantage plans to use step therapy for Medicare Part B-covered drugs. While this practice was previously prohibited by CMS, the decision was reversed to give plans more flexibility to negotiate lower drug prices from pharmaceutical companies.

What is step therapy in Medicare?

Step therapy is a utilization management tool that allows a plan to require an enrollee to try a different, less expensive drug that treats the same condition before it will cover a more costly drug.

Part B coverage of prescription drugs

Medicare Part D covers most outpatient prescription drugs (drugs received at a pharmacy). However, there are circumstances where drugs are covered under Part B. Medicare Part B covers most drugs administered by a provider or at a dialysis facility, but the provider or facility must supply and administer the drug. The drug cannot be one that is “usually self-administered”—for example, one that is taken orally. Part B also covers some outpatient prescription drugs, mainly oral cancer drugs (chemotherapy).

There are a few drugs that can be covered by either Part B or Part D, depending on the situation.

Step therapy for Part B-covered drugs

Part B step therapy means a plan may require an enrollee to use a plan-preferred Part B drug before using a different Part B drug. Additionally, Medicare Advantage plans that include prescription drug coverage may require an enrollee to use a Part D drug before using a Part B drug (or vice versa). Plans are required to inform enrollees of any Part B step therapy requirements in their Annual Notice of Change (ANOC) and Evidence of Coverage. A plan’s list of drugs that require step therapy may change throughout the coverage period.

A Medicare Advantage plan that chooses to use step therapy for Part B-covered drugs is also required to offer a drug management care coordination program for affected enrollees. These programs must provide:

• Interactive medication review and consultation activities for enrollees
• Educational materials to inform enrollees about drugs within the program
• Medication adherence strategies to help enrollees with their drug treatment

Plans may offer rewards to encourage participation in their drug management program, but enrollees are not required to participate. People who are already taking a Part B-covered medication cannot be required to switch to their plan’s preferred drug. Plans can only impose Part B step therapy when a
current or new enrollee starts a new medication.

What is a step therapy exception request?

Enrollees have the right to request an exception to their Medicare Advantage plan’s step therapy requirement. This allows them to ask their plan to cover their drug as an exception to its rules. If their exception request is denied, they may begin a formal appeal. An enrollee may request their appeal be decided on an expedited timeline if their doctor feels their health could be seriously harmed by waiting the standard amount of time for a decision.

Before enrollees file an appeal, they must first receive an official written decision from their plan, called a Notice of Denial of Medical Coverage. The appeal process can be started by following the instructions on the notice. For additional questions about appeals, enrollees are encouraged to contact their local State Health Insurance Assistance Program (SHIP).