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Limits on Prescription Drug Coverage

October 6, 2016

Prior Authorization, Quantity Limits, & Step Therapy

Sometimes when an insurance company offers coverage for a specific medication, the insurers place conditions, or limits, on the prescription drug coverage.

These prescription drug limits are sometimes called “cost utilization measures.” Prescription drug limits are normally set on individual medications rather than on every medication covered by the insurance plan’s formulary. The three main categories of drug limits are:

  • Quantity Limits
  • Prior Authorization
  • Step Therapy

Taking too much medicine or taking it too often may worsen your health condition and increase your health care costs. For these reasons, private health insurance companies that offer prescription drug coverage sometimes set quantity limits. When a covered medication has quantity limits, the plan will cover only a set amount of the medication within a set period of time. For example, the plan may limit coverage of a particular prescription drug to 30 tablets within a 30-day period. If you attempt to refill a prescription before the end of the 30-day period or your doctor prescribes an amount higher than the limit, your prescription drug costs will not be covered by your plan.

Certain drugs are more expensive than others and have more side effects, while others may have restrictions on how long they can be taken. To ensure that medications are used correctly, some plans require prior authorization. This refers to the procedure by which a prescribing doctor or pharmacist must first request approval for coverage of a particular medication The pre-authorization process permits the prescribing physician and plan’s clinical staff to exchange information about the health condition the prescription drug is intended to treat, and, if applicable, other medications commonly used to treat the condition. The purpose of prior authorization is to verify the medical appropriateness of the prescription drug in making a coverage determination. If an insurance company requires prior authorization on a specific medication and you do not receive this authorization before you get the prescription filled, you would be responsible for paying the full retail price of the medication.

Step therapy is a prescription drug limit in which one or more less expensive medicines must first be demonstrated as ineffective for a beneficiary’s medical condition before the beneficiary qualified for coverage of a more expensive medication for the same condition. This program was designed for people with conditions such as high blood pressure and high cholesterol that requires them to take certain medications daily. In Step therapy, prescription drugs are grouped into categories based on cost: front-line drugs and back-up drugs. The front-line drugs are the generic, affordable drugs that should be tried first because they typically provide the same clinical benefits as the more expensive brand name medications.

The plan’s formulary can change from one year to the next, which means that a prescription drug you take may have one or more of these restrictions one year and not have the restriction(s) another year. You will be notified by your plan if a change affects you. Furthermore, you will be notified by your plan each fall of benefit changes in a mailing that includes the plan’s Annual Notice of Changes and Evidence of Coverage documents.

This information is provided for educational purposes only. It is not to be used for medical advice, diagnosis or treatment. Consult your doctor if you have questions or concerns.