Your Pharmacy Benefit:

Make it Work for You!

www.YourPharmacyBenefit.org
Table of Contents
Choose Your Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Steps in Choosing Your Pharmacy Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chart: Comparing Your Plan Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Use Your Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
What to Do When Your Prescription Can’t Be Filled . . . . . . . . . . . . . . . . . . .6
Writing a Letter of Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Sample Appeal Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
More Options for People Who are Eligible for Medicare . . . . . . . . .10
Resources for Additional Information . . . . . . . . . . . . . . . . . . . . . . .12
If You Have Private Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
If You Have Medicare Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Index of Definitions
Co-payment (or co-pay) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Co-payment tiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Contraindication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Formulary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Medicare Advantage Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Medicare Prescription Drug Plan (PDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Pharmacy Benefit Manager (PBM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Prior authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Step therapy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
 lmost half of all Americans use some sort of prescription medication each

A month, and many people use more than one. This isn’t surprising since
many conditions that used to be treated in the hospital can now be treated
at home with medicines. But it means that making sure your prescriptions are
covered by your insurance is just as important as knowing that your doctor is
available through the plan.

Figuring out how to choose and join in a health insurance plan can be challenging
enough. But for many people that’s just the beginning. It’s also important to learn
how to effectively use your benefits to pay for the medicines you need to stay
healthy. This booklet provides tips on choosing and using your pharmacy benefits,
whether you have private insurance through your employer or union, or you are
eligible for Medicare Prescription Drug Coverage.

The first section, Choose Your Plan, walks you through the steps in comparing the
benefit options you have for prescriptions and picking the one that meets your
needs. The second section, Use Your Plan, helps you know what to do if you’ve
joined a plan for the year and then run into problems – such as a prescription that
the pharmacist tells you can’t be filled. This section also explains how to file an
appeal to try and get the insurance company to pay for a medicine they wouldn’t
normally cover, but that your doctor feels is medically necessary for you to have.
The third section tells you about additional coverage options for people who are
eligible for Medicare. And finally, the last section gives you a list of resources for
more information about your benefits.

Throughout this guide, you’ll see words in bold letters that you may not know.
These words are often used in health insurance materials, so learning them will help
you understand information you get from your plan. We’ve included definitions of
these terms for you on the edge of the page where they are first used.

Read on to learn how to make your pharmacy benefit work for you!

1
 Choose Your Plan: Make an Informed Decision
Key Questions: You may have access to insurance coverage for your medicines through a
number of sources. One of the most common ways to get coverage for
1) Are there any other
your prescription medicines is through the health insurance plan you join
health insurance
through your employer or union. If you’re retired, you may still receive
plans available to
benefits through your former employer’s plan. If you’re self-employed, you
me?
may buy an individual health insurance policy directly from an insurance
2) Does my current company or through a professional association to which you belong. Or, you
plan provide the best may be covered under your spouse’s plan. But regardless of which options
coverage for my are available to you, there are two basic questions you should always ask
needs? when you have the opportunity to make changes to your insurance
coverage once each year:

If you are eligible for

1) Are there any other health insurance plans available to me?
Medicare, see also:
“Things to Think About
When You Compare 2) If so, does the plan I am currently enrolled in meet my needs or would a
Plans” (Publication 11163) different plan be better for me medically and financially?
from the Centers for
Medicare & Medicaid
Most people have a hard time answering the second question. It’s important
Services. Available at
to note that most health insurance plans are all-in-one plans covering doctor
http://www.medicare.gov/
visits, hospital stays, lab work, and prescription medicines. You usually can’t
publications/pubs/pdf/
pick and choose to have certain services covered and not others. (The
11163.pdf.
exception is that vision and dental coverage are sometimes separate plans.)
You need to look at the whole health insurance plan and choose the one
that gives you the best combination of benefits for your specific health care
needs.

The information in this section is designed to help you evaluate the pharmacy part
of your benefits to figure out which plan gives you the best coverage of the
prescription medicines you—and anyone else in your family who is covered by the
same plan—are currently taking. You should weigh this information along with
factors such as access to your preferred doctors and hospitals, and the types of
medical services that are covered, to find a plan that meets your needs.

2
 Key Questions:
1) Is there a list of prescription medicines the plan will cover?
2) What is the process for filing an appeal and how long does it take?
3) How much must you pay when you fill a prescription?
4) Must the plan approve some prescriptions before it will pay?
5) Will you have to use a mail order service or can you fill prescriptions at a local pharmacy if you prefer?

Steps in Choosing Your Pharmacy Benefits

■ Step 1: Ask if the plan has a list of prescription medicines that will be Formulary: A list

covered. This is known as a formulary. If you regularly take medications established by a plan to

for an illness, such as high blood pressure, asthma, or diabetes, be sure indicate which medicines

those medicines are on the formulary before you select that plan. If they they cover and at what

aren’t, you will be expected to switch to different medications or pay the level of co-payment.

full cost yourself.

Co-payment (or co-
pay): A fixed amount, for
■ Step 2: Ask about the process for filing an appeal if the plan will not pay
example $10, that an
for the medicine you need. If a medicine you need is not on the formulary,
insured individual pays for
you have the right to file an appeal with the plan to ask that they pay for it
health services or
anyway. You might not be told about your right to appeal when you are
medicines, regardless of
told that the plan will not pay, so it is important to know how to appeal on
the actual cost of that
your own and how long you can expect it to take. A plan is only likely to
service or medicine. See
grant your appeal if your doctor convinces them that the medicine you
also "Co-payment tiers."
were prescribed is absolutely medically necessary for you or that no other
medicine that is on the formulary will work as well for you.
Co-payment tiers:
A co-payment that varies
■ Step 3: Ask how much you have to pay when you fill a prescription. Most
depending on the
plans require a co-payment for each prescription. Many plans have
medication, rather than a
three or even four levels of co-payments that apply to different medicines.
fixed amount. Usually, each
These are often called co-payment tiers or preferred drug levels. To
medicine is assigned to a
find out what co-payment level applies to each of your medications, call
tier by the plan. There are
the plan or look at their Web site. If it is more than you can afford, you
usually 2, 3, or 4 tiers, each
may want to ask your doctor if there is a generic version of your medicine
with a different co-payment
or if there are other medicines at a lower cost that would be appropriate
amount. This design is
for you.
intended to encourage the
use of medicines that are in
the less expensive tiers.

3
Comparing Your Plan Options

Plan 1

Name of Plan
Considerations Medicine 1 Medicine 2 Medicine 3 Medicine 1
Is the medicine on
the plan’s formulary?
(yes/no)

How long can I

expect the appeal
process to take?
How much will I
have to pay monthly
for this medicine?
Does this medicine
require prior
authorization?
(yes/no)
Must I use mail
order for this
medicine? (yes/no)

Prior authorization: A
■ Step 4: Ask if the plan has to pre-approve certain medications before you
requirement that a doctor
can fill the prescription. Some plans require your doctor to get prior
get approval from the
authorization for certain medicines before it will pay for them. That
insurance company
means your doctor or pharmacist must call the plan for permission to
before the plan will pay
prescribe these medications. Some plans require you to try a less
for the medicine.
expensive medicine before they will pay for the one your doctor might
otherwise recommend. This is called step therapy. The less expensive
medicine will likely be a different medication that is used to treat the
Step therapy: A same medical condition, and for which the insurance company
requirement to try a less negotiated a lower price. Also, some plans will only pay for a limited
expensive medicine first number of doses of a certain medicine per month, regardless of how
to see if it works before many you really need. For example, they may only cover six doses of a
the plan will pay for a medicine for a migraine headache. If you need a certain medication for a
more expensive valid medical reason, you may be able to get it covered by asking for an
medication. exception to the rule or filing an appeal (see Step 2). If you can’t wait for

4
 Plan 2 Plan 3

Medicine 2 Medicine 3 Medicine 1 Medicine 2 Medicine 3

the appeal process to finish, you may need to pay for the medicine yourself and
then file an appeal to be paid back by the plan.

■ Step 5: Ask if you must use a mail order service. Many plans have a mail order
option for medicines, but some may require you to use it for medicines that you
take regularly rather than getting them from a local pharmacy.

Most people with private insurance can choose a different plan (if one is offered)
once a year. Your benefits administrator at work or at your union can tell you
when you can change and give you information about other plan options. Fill in
the chart above to help you compare the pharmacy benefits offered by the plans
you’re considering.

5
 Use Your Plan: Troubleshoot Problems Filling
Your Prescriptions
Pharmacy Benefit Once you join a plan, you may not be able to change to a different plan
Manager (PBM): A until the next, year so it’s important to know how to make best use of the
company that manages benefits offered by the plan you have. This is especially important for people
pharmacy benefits. They who can only get coverage through one plan. You need to know the rules!
aren’t insurance
companies, but they are Each plan is different. You can learn more about your specific plan by
often subcontracted by reading the materials your employer and health insurance plan provide. If
health insurers or you don’t already have a copy, ask your employer or health insurance plan
employers to manage the for one. Use your brochure, handbook, plan Web site or other information
prescription drug portion of provided to answer important questions about your pharmacy benefits. If
the health insurance plan. you still have questions, don’t give up; call the member services
department of your health plan or pharmacy benefit manager. The best
telephone number for you to call should be on the back of the pharmacy
benefit ID card that was sent to you when you joined the plan.

Why can’t my
What to Do When Your Prescription Can’t Be Filled
prescription be When you’re told there’s a problem filling your prescription, ask why. There
filled? are several common explanations and a number of actions you can take to
- Incorrect Information
try to fix the problem.
- Timing ■ Incorrect Information: The information the pharmacy has about your plan
- Drug Interactions may not match what is on your pharmacy benefit ID card. It may appear
- Prior Approval to the pharmacist that you are not covered by the plan because the ID
- Not Covered number has been entered incorrectly, or because you have changed to a
different plan. A quick double-check of the information on your pharmacy
benefit ID card may allow you to find and fix the problem. If correcting a
mistake in the ID number doesn’t fix the problem, call the member
services phone number on the back of your pharmacy benefit ID card.

■ Timing: It may be too soon to refill the prescription. Most plans don’t allow refills
too soon—a prescription for a month’s worth of pills can’t be refilled after only
two weeks, for example. Sometimes, however, plans make allowances for people
who are about to go on a long trip or have other reasons they need an early refill.
You can find out about your early refill options by calling the member services
number on your pharmacy benefit ID card.

6
■ Drug Interactions: The medicine may be flagged because it may react badly with
another medication you’re taking or because of another medical condition you
have. This is called a contraindication. If this is the reason your plan
Contraindication: Also
won’t pay for the medicine, don’t pay for it yourself! If the pharmacist
called "drug interaction"
hasn’t already done so, contact your doctor immediately to make sure
or "adverse event." A
that he or she knows about the potential contraindication. Your doctor
warning that a medicine
may want you to take that medicine anyway, but it's best to double
may react badly with
check. If your doctor does want you to take that medicine anyway, you
another medication you’re
should ask what side effects the medicine will have. If it doesn’t do what
taking or because of
your doctor tells you it should do, or if there are different side effects you
another medical condition
weren’t expecting, contact your doctor’s office immediately.
you have.

■ Prior Approval: Prior authorization may be required. Sometimes a pharmacist may

only fill a prescription if your doctor has already gotten approval from your
plan. If this is the problem, you can get approval if the pharmacist contacts
If you are eligible for
the doctor who prescribed the medicine and then submits the necessary
Medicare, see also:
information to the plan.
“Your Medicare Rights and
Protections” (Publication
■ Not Covered: The medicine prescribed by your doctor may not be on the 10112) from the Centers
formulary, so it is not covered by the plan. If this is the problem, ask your for Medicare & Medicaid
doctor if a different medicine—one your plan will pay for—will work for Services. Available at
you. If not, you and your doctor can appeal to try to get the prescribed http://www.medicare.gov/
medicine covered. (See “Steps in Choosing Your Pharmacy Benefits: publications/pubs/pdf/
Step 2” on page 3.) 10112.pdf.

Writing a Letter of Appeal

If your insurance company will not pay for a medicine that your doctor feels is
medically necessary for you, you have a right to appeal. If you have coverage through
an individual policy or a plan you joined through your employer or union, you can find
out about your appeal rights and how to file an appeal by contacting your health plan
or your state department of insurance. You can find contact information for your
state’s department of insurance at www.naic.org/state_web_map.htm, or in the blue
pages of your phone book. If you join a Medicare Prescription Drug Plan, the plan will
send you materials about complaint and appeal procedures.

7
Generally, your doctor or pharmacist can ask the plan to pay for a medication your
insurance would not normally cover by making a phone call or sending a fax to the
plan explaining why your prescription is medically necessary. The plan will respond
within a few days at the most, to let you know if they will cover the medication. If
your request for an exception is denied, then you can pursue a formal appeal. It’s
best to submit your appeal in writing. This way you also have a written record of the
actions you took and the dates on which you took them. Be sure to keep a copy
for yourself.

It is best to ask your doctor’s office to take the Regardless of whether you
first step in filing an appeal, or to give you a or your doctor’s office files
written explanation of the problem that you can the appeal, you are
include in your letter. But it’s important to
responsible for following it
remember that regardless of whether you
through.
or your doctor’s office files the appeal,
you are responsible for following it
through. The pharmacy may not tell your doctor’s office that the medication
isn’t covered, so if you need help from your doctor’s office to solve the
problem, you must ask them directly. Be sure to follow up at each step of
the process because the insurance company may not send your doctor’s
office copies of letters that you receive regarding your appeal.

Here are some suggestions on what to include in your appeal letter:

■ Your name
■ Your address
■ Your phone number
■ Your health plan and/or Medicare ID number
■ The date you are writing the letter
■ The date you sought to fill the prescription
■ The name and address of the pharmacy where you tried to fill the prescription
■ The name, address, and phone number of the doctor who wrote the prescription

8
Sample Appeal Letter*

[Your Name]
[Your Address]
[City, State ZIP]
[Your Phone Number]
[Your ID Number]
DOB: [Your Date of Birth]
You can find this
Date information on the back
of your pharmacy benefit
Health Plan or Pharmacy Benefit Management Plan Name ID card - the one you use
Plan Address when you pick up your
City, State ZIP prescriptions.

To Whom It May Concern:

Your ID number is on the
I am writing to formally appeal denial of drug coverage. I am covered front of your pharmacy
under your plan and my ID number is [ID number]. On [date], I attempted benefit ID card.
to fill a prescription for [name of medicine] at the [pharmacy name]
Pharmacy located at [pharmacy address]. I was told by the pharmacist that
[reason for denial]. I decided to [action taken]. For example, did you
pay for the medicine
My contact information is above, and contact information for Dr. [name of yourself? Did you decide
physician who wrote prescription], is listed below. not to fill the
prescription?
[Name of Doctor Who Wrote Prescription]
[Doctor’s Address]
If you don't have a copy
[City, State ZIP]
of the written
[Doctor’s Phone Number]
prescription or the
pharmacy receipt, list the
Dr. [name of physician] wrote the prescription, and you may contact
name of the medication
him/her if medical information is needed for consideration of my appeal. I
and the dose that you
have included a copy of the [prescription or receipt] for your consideration.
were prescribed. Double
check with your
Please provide me with a written explanation of any additional steps I must
pharmacist to make sure
take for you to process my appeal, as well as a written explanation of the
that you have spelled
basis for your decision about my claim.
everything correctly
since the names of many
Sincerely,
medications are similar.
[Your Name]

* This sample appeal letter is provided for informational purposes only. Every plan has different rules and procedures for
appeals, and this sample letter may not meet the requirements of your plan. DO NOT USE THIS LETTER WITHOUT
FIRST CHECKING THE SPECIFIC PROCEDURES OF YOUR PLAN FOR APPEAL LETTERS.

9
 More Options for People Who are
Eligible for Medicare
Medicare Prescription Beginning January 1, 2006, Medicare will offer prescription drug coverage
Drug Plan (PDP): to people with Medicare. For the first time, you can choose coverage for
Stand-alone drug plan, this important health need, and Medicare will help pay for it. Medicare
offered by insurance and prescription drug coverage is insurance that covers both brand-name and
other private companies to generic prescription drugs at participating pharmacies in your area. A typical
add prescription drug person with Medicare and no drug coverage could see total drug costs
coverage to the Original drop by about 50%. Should prescription drug costs dramatically increase,
Medicare Plan, Medicare Medicare will pay up to 95% of these costs after you spend $3,600 out-of-
Private Fee-for-Service pocket in a year. Extra help is available for people with limited income and
Plans without prescription resources. To get Medicare prescription drug coverage, you must choose
drug coverage, and and join a Medicare drug plan.
Medicare Cost Plans.
Joining a Medicare plan that covers prescription drugs is your choice. If you
want coverage, you must choose to join a plan to receive it. You can join as
Medicare Advantage
early as November 15, 2005 for coverage starting January 1, 2006. Just
Plan: Medicare is working
like other insurance, if you choose not to join when you are first eligible and
with Medicare Advantage
later change your mind, you may have to pay a late enrollment penalty.
and other Medicare Health
Plans to help them provide
even more coverage If you have Original Medicare only, or Original Medicare and a Medigap
and/or lower costs. Your (‘Supplement’) Policy without drug coverage, you can join a Medicare
plan will let you know Prescription Drug Plan that covers prescription drugs only and keep your
about the prescription drug Original Medicare coverage the way it is. Or you can join a Medicare
options they will offer. Advantage Plan or other Medicare Health Plan that covers doctor and
hospital care as well as prescriptions. If you do not opt for prescription drug
coverage by May 15, 2006, you will have to pay a late enrollment penalty to
get drug coverage later.

10
If you have Original Medicare and a Medigap (‘Supplement’) Policy with drug See also: “What
coverage, you will need to decide between keeping your Medigap policy with Medicare Prescription
drug coverage or joining a Medicare plan that offers prescription coverage. Drug Coverage Means to
Look for more information from Medicare and the plans offering drug coverage You: A Guide to Getting
in your area in the fall, and compare the drug coverage from your Medigap Started” (Publication
plan to the new Medicare coverage. Unlike Medigap, most of the cost of 11146) from the Centers
Medicare drug coverage is paid by Medicare, and will never run out if you have for Medicare & Medicaid
high drug costs. Also, if you do not join a Medicare Drug Plan or a Medicare Services. Available at
Advantage Plan that offers prescription drug coverage by May 15, 2006, you http://www.medicare.gov/
will have to pay a late enrollment penalty to get drug coverage later. publications/pubs/pdf/
11146.pdf.
If you are a retiree and have drug coverage through your (or your spouse’s)
former employer or union, look for information coming from your former
employer or union this fall. This information will explain how they will work
with Medicare on prescription drug coverage and what decisions you will
have to make. If you do not hear from them, visit their Web site or call your
benefits administrator.

If you have a Medicare Advantage Plan (like an HMO or PPO) or other

Medicare Health Plan, look for information in the mail in October explaining
any additional prescription drug coverage your plan will offer.

If you have Medicare and Medicaid, and currently get your drug coverage from
Medicaid, starting January 1, 2006, you will get your prescription drug coverage
from Medicare instead of Medicaid. That means that in the fall, you will need to
decide which Medicare plan that offers prescription drug coverage you would like. If
you do not sign up for a plan, Medicare will sign you up for one to make sure you
do not miss a day of coverage. You can switch to a different plan if you choose.

11
Resources for Additional Information
If You Have Private Insurance
Many people have insurance through their employer or union. Some people may
also purchase this kind of insurance individually for themselves. If you have
questions about how to use this kind of insurance:
■ Contact membership services. You can find this number by looking at your
insurance card and finding the phone number (typically a toll-free number) that
will take you to a member support person who can answer your questions about
how to use your benefits.

■ Contact your state department of insurance for information on your rights and
how to file a complaint. You can find contact information for your state’s
department of insurance at www.naic.org/state_web_map.htm, or in the blue
pages of your phone book.

■ Go to www.YourPharmacyBenefit.org for information to help answer your

questions about how to choose coverage that is right for your family’s needs
and how to make the best use of the coverage you have. This Web site is
sponsored by a group of health care organizations, working together to provide
tips and tools to help consumers make the best personal decisions about their
pharmacy benefits.

■ Contact your local Area Agency on Aging. You can find contact information for
your local Area Agency on Aging at www.eldercare.gov, or in the blue pages of
your phone book.

■ Contact the Administration on Aging (AoA) at www.aoa.gov or call

1-202-619-0724. The AoA serves as the Federal focal point and
advocate agency for older persons and their concerns. The AoA's
mission is to promote the dignity and independence of older persons
and to help society prepare for an aging population.

12
If You Have Medicare Coverage
This is a program designed for people 65 or older, some people under 65 with
permanent disabilities, and people with End-Stage Renal Disease requiring dialysis
or a kidney transplant. To learn more about how to use your Medicare benefits:
■ For more information on Medicare prescription drug coverage, read the
“Medicare & You 2006” handbook mailed to you in October 2005. It lists the
specific plans available in your area. After October 2005, if you need help visit
www.medicare.gov and get personalized information, or call 1-800-MEDICARE
(1-800-633-4227). TTY users should call 1-877-486-2048.

■ Call your State Health Insurance Assistance Program (SHIP) for free, personalized
health insurance counseling. See page 86 of the “Medicare & You 2006”
handbook for your state’s SHIP telephone number, or visit
www.medicare.gov/contacts/static/allStateContacts.asp.

■ Go to www.YourPharmacyBenefit.org for information to help answer your

questions about how to choose coverage that is right for your family’s needs
and how to make the best use of the coverage you have. This Web site is
sponsored by a group of health care organizations, working together to provide
tips and tools to help consumers make the best personal decisions about their
pharmacy benefits.

■ Check for local events for help enrolling in a drug plan. Contact your local Area
Agency on Aging. You can find contact information for your local Area Agency on
Aging at www.eldercare.gov, or in the blue pages of your phone book.

■ Contact the Administration on Aging (AoA) at

www.aoa.gov or call 1-202-619-0724. The AoA serves
as the Federal focal point and advocate agency for older
persons and their concerns. The AoA's mission is to
promote the dignity and independence of older persons
and to help society prepare for an aging population.

13
The U.S. Department of Health and Human Services' Administration on Aging has
reviewed this publication, which is produced by the National Pharmaceutical
Council (NPC). The U.S. Department of Health and Human Services' Centers for
Medicare & Medicaid Services has reviewed the information regarding the
Medicare program. NPC is a nonprofit, research-based association that advances
the appropriate use of pharmaceuticals for the betterment of human health. This
publication may be reprinted for educational and nonprofit purposes.

To request additional copies of this booklet, write to:

Federal Citizen Information Center
#524N
Pueblo, CO 81009

or go to www.pueblo.gsa.gov

The National Pharmaceutical Council

1894 Preston White Drive
Reston, VA 20191-5433

703.620.6390

www.npcnow.org
www.YourPharmacyBenefit.org

1PTC0061105