Medicare Part D - Cost Utilization

Cost Utilization

Medicare Part D Cost Utilization Measures refer to limitations placed on medications covered in a specific insurer's formulary for a prescription drug plan or Medicare Advantage with prescription drug coverage. Cost utilization consists of techniques that are implemented to reduce the cost to insurers. The three main cost utilization measures are quantity limits, prior authorization, and step therapy.

Quantity limits refer to the maximum amount of a medication that may be dispensed during a given calendar period. For example, a Medicare Part D plan may dictate that it will only cover 90 pills of a given drug within a 30-day period.

A prior authorization requirement is a measure that requires a health care worker to receive formal approval from a plan before it will cover a specific drug. This may be used by insurers for drugs that are often misused or used inappropriately. Prior authorization also helps ensure that patients receive correct medications.

Step therapy is a process whereby a plan requires an individual to try, and prove ineffective, one or more specified lower cost drugs before a higher cost drug in the same therapeutic class is approved.