How a Part D Plan Decides a Request for a Drug

Answer first: the decision has a name, and the name sets the clock

A Medicare Part D plan's decision about whether it will cover a drug is called a coverage determination. The term is defined by regulation rather than by the plan, and 42 CFR 423.566(b) lists what counts as one: a decision not to provide or pay for a Part D drug — including because the drug is not on the plan's formulary, because it is determined not to be medically necessary, because it is furnished by an out-of-network pharmacy, or because the sponsor determines it is otherwise excludable; a failure to provide a coverage determination in a timely manner where a delay would adversely affect the enrollee's health; a decision on either type of exceptions request; and a decision on the amount of cost sharing for a drug.

That list matters because the label attaches the deadlines. Once a request is a coverage determination, § 423.568 and § 423.572 govern how long the sponsor has, and § 423.578 governs the specific subtype called an exception.

Three parties can start the process. Under § 423.566(c), a standard or expedited coverage determination may be requested by the enrollee, by the enrollee's representative on the enrollee's behalf, or by the prescribing physician or other prescriber on the enrollee's behalf. The regulation also requires that a request may be made orally or in writing, except that requests for payment must be in writing unless the sponsor has adopted a voluntary policy of accepting oral payment requests, and that the sponsor must document and retain all oral requests.

Standard and expedited requests run on different clocks

For a standard request for a drug benefit, § 423.568(b) requires the sponsor to notify the enrollee — and the prescriber, as appropriate — of its determination "as expeditiously as the enrollee's health condition requires, but no later than 72 hours after receipt of the request." A request for payment is different: § 423.568(c) gives the sponsor 14 calendar days from receipt.

Exceptions requests have their own trigger, and it is not the date of the request. The 72-hour clock for an exception runs from receipt of the prescriber's supporting statement. The regulation then closes the loop so the clock cannot be left open indefinitely: if a supporting statement is not received by the end of 14 calendar days from receipt of the exceptions request, the sponsor must notify the enrollee no later than 72 hours from the end of that 14-day period.

The expedited track is governed by § 423.572. Where the sponsor approves a request for an expedited determination, it must decide and notify "as expeditiously as the enrollee's health condition requires, but no later than 24 hours after receiving the request" — and, for an exception, no later than 24 hours after receipt of the supporting statement, with the same 14-day backstop. Section 423.566(a) explains what the expedited route is for: situations in which applying the standard procedure may seriously jeopardize the enrollee's life, health, or ability to regain maximum function.

Notices may start orally. Under both sections, where the sponsor first notifies orally it must send written confirmation within 3 calendar days of the oral notification.

An exception is a request to be treated differently from the formulary

Section 423.578 sets out two distinct exception types, and they answer different questions.

A tiering exception, under paragraph (a), asks for a drug to be charged at a more favorable cost-sharing tier. A sponsor that manages its benefit through a tiered formulary must establish and maintain reasonable and complete exceptions procedures subject to CMS approval, and the rule states that the sponsor "grants an exception whenever it determines that the requested non-preferred drug for treatment of the enrollee's condition is medically necessary, consistent with the physician's or other prescriber's statement." The prescriber's supporting statement must say that the preferred drug or drugs for the enrollee's condition would not be as effective for the enrollee as the requested drug, would have adverse effects for the enrollee, or both.

A formulary exception, under paragraph (b), asks for coverage of a drug that is off formulary — and the rule defines that term broadly. "Formulary use includes the application of cost utilization tools, such as a dose restriction, including the dosage form, that causes a particular Part D drug not to be covered for the number of doses prescribed or a step therapy requirement that causes a particular Part D drug not to be covered until the requirements of the plan's coverage policy are met, or a therapeutic substitution requirement." A quantity limit or a step-therapy requirement is therefore something the exceptions process can be aimed at, not merely a rule to be complied with.

The sponsor's formulary-exception criteria must include a description of the criteria used to evaluate the prescriber's determination, a process for gathering and comparing applicable medical and scientific evidence on the safety and effectiveness of the requested non-formulary drug against the formulary drug for the enrollee, including safety information generated by an authoritative government body, and a description of the cost-sharing scheme that will apply when a non-formulary drug is covered. Paragraph (b)(3) adds a consequence that is easy to miss: if the sponsor covers a non-formulary drug, the enrollee's costs for that drug are treated as included for purposes of calculating and meeting the annual out-of-pocket threshold.

What the exception process cannot be used for

Paragraph (a)(6) permits a sponsor to design its tiering exceptions procedures so that an exception is not approvable in stated circumstances. A sponsor may decline to cover a brand name drug at a preferred cost-sharing level that applies only to alternative drugs that are generic drugs approved under section 505(j) of the Federal Food, Drug, and Cosmetic Act, or authorized generics as defined in section 505(t)(3). It may decline to cover a biological product licensed under section 351 of the Public Health Service Act at a preferred level that does not contain any alternative drugs that are biological products.

It may also, beginning January 1, 2022, where it maintains one or two specialty tiers as defined in § 423.104, design its exception process so that drugs on the specialty tier or tiers are not eligible for tiering exceptions to non-specialty tiers.

These are limits on the tiering route only. They do not by their terms remove a drug from the separate formulary-exception process in paragraph (b), which asks a different question — whether the drug is covered at all rather than at what tier.

One further rule is worth stating because it removes a recurring source of friction. Where a tiering exception is approved, the sponsor may not require the enrollee to request approval for a refill, or a new prescription, in order to continue using the drug for the remainder of the period described in the regulation.

A missed deadline is treated as a denial, not as silence

This is the structural feature that distinguishes the Part D process from an ordinary customer-service queue. Section 423.568(h) states that if the sponsor fails to notify the enrollee within the applicable timeframe, "the failure constitutes an adverse coverage determination, and the plan sponsor must forward the enrollee's request to the IRE within 24 hours of the expiration of the adjudication timeframe." Section 423.572(d) says the same for expedited determinations, and § 423.578(c)(2) repeats it for exceptions requests.

The IRE is the independent review entity that sits outside the plan. The regulation does not leave the file with the sponsor after a missed deadline; it requires the sponsor to hand it onward, within a day, without the enrollee having to do anything to trigger that.

The same design continues at the next level. A redetermination is the sponsor's own reconsideration of an adverse coverage determination. Under § 423.590(a), the sponsor must notify the enrollee in writing of a standard redetermination "as expeditiously as the enrollee's health condition requires, but no later than 7 calendar days" from receiving the request, whether the outcome is favorable or adverse; a redetermination on a payment request runs to 14 calendar days. An expedited redetermination must be completed and noticed no later than 72 hours after receipt. Missing any of those timeframes again constitutes an adverse decision, with the same 24-hour obligation to forward the request to the IRE.

Who is required to look at the file

The regulation places conditions on the reviewer as well as on the clock.

At the coverage-determination stage, § 423.566(d) provides that if the sponsor expects to issue a partially or fully adverse medical necessity decision based on its initial review, the determination "must be reviewed by a physician or other appropriate health care professional with sufficient medical and other expertise, including knowledge of Medicare coverage criteria, before the Part D plan sponsor issues the coverage determination decision." That professional must hold a current and unrestricted license to practice within the scope of their profession in a state, territory, the Commonwealth of Puerto Rico, or the District of Columbia.

At the redetermination stage the requirement tightens. Under § 423.590(f), the redetermination must be conducted by a person or persons who were not involved in making the coverage determination. Where the issue is a denial of coverage based on lack of medical necessity, the redetermination "must be made by a physician with expertise in the field of medicine that is appropriate for the services at issue," though the regulation adds that this physician need not in all cases be of the same specialty or subspecialty as the prescriber.

The denial notices carry their own content requirements. A denial notice under § 423.568(g) must use approved notice language in a readable and understandable form, state the specific reasons for the denial, describe both the standard and expedited redetermination processes including the right to and conditions for an expedited redetermination and the rest of the appeals process, and inform the enrollee of the right to a redetermination. An adverse redetermination notice under § 423.590(g) must do the equivalent for the next stage, informing the enrollee of the right to a reconsideration and describing how to obtain one.

None of this predicts a result. What it establishes is that at each stage the regulation names a decision-maker, a deadline, and a consequence for missing it — which is a different thing from a plan being free to decide when and by whom a request gets read.