What are Medicare Part D tiers?


Quick Answer

Medicare Part D tiers are price levels that Medicare prescription drug plans charge depending on the type of drugs enrollees use, reports AARP. The drug plans put lower-priced drugs into lower tiers of copayment or coinsurance to encourage enrollees to purchase them rather than higher-priced alternatives.

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Full Answer

For all prescription drug purchases, those enrolled in Medicare Part D drug plans must pay a copayment, which is a set amount of money, or a coinsurance, which is a percentage of the cost of the drug, explains AARP. The plans put the lowest cost generic drugs into tier one with the lowest copayments or coinsurance so that enrollees use these if possible. In the next tier are preferred brand-name drugs. Higher tiers have more expensive non-preferred or specialty drugs used only for rare illnesses or conditions. After negotiating prices with manufacturers, plans designate drugs as preferred if they can be purchased for low prices and non-preferred if the prices are higher.

Medicare Part D plans can change the tier levels of drugs each year, states AARP. If a healthcare provider prescribes a drug in a higher tier because he believes the drugs in lower tiers would be ineffective, enrollees can request an exception to reduce the price of the drug, according to Medicare.gov. Once a plan has received a coverage determination request, it has 72 hours to inform the enrollee of its decision as of July 2015.

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