Why do I Need to Know about Provider Networks and Drugs Formularies?

We explore drug formularies and preferred providers. What are they and why do you need to know about them when choosing a  health insurance plan.

Every insurance plan has a formulary or list of which drugs it will pay for and what it will pay for them. Many people, especially those managing chronic conditions, have certain medications they need.

Insurance plans also have lists of “preferred health care providers,” which is another way of saying these providers accept the insurance plan.

When choosing drug coverage, you will want to pay the most reasonable amount for the medications you need and be able to see your doctors. This is why you need to know which drugs are on the formularies and which health care providers participate in any health insurance you think of buying.

What is a Formulary?

Insurance companies make deals with pharmacy distributors to buy medications for the best possible cost. Once they know what the different medications cost, they divide them into groups or tiers based on cost.

Common generic drugs are usually the least expensive and in tier 1. Tier 1 drugs are often classified as “preferred” and will cost you less than drugs in higher tiers.

Depending on your drug plan, you may have any number of tiers in your formulary. Four or five tiers are common. The most expensive one is a “specialty” tier for high-cost prescriptions which might require special handling or need to be made up by a specially trained compounding pharmacist.

Formularies may change during the year. Some drugs may be excluded or included suddenly.

How do I Choose an Insurance Plan?

One of the best ways to choose a drug plan is to go to the Plan Finder on Medicare.Gov.[1] You will need to enter your personal information and a list of your medications. Once you have entered your prescriptions, the site will show you what your prescription medication costs would be under different plans.

You should consider out-of-pocket spending limits and coverage in and out of networks in addition to prescription coverage. If you have specialized medical needs such as being diabetic or needing an infusion, or ostomy supplies, you need to think about that cost as well.

Can I See My Doctors?

You will need to know if the healthcare providers who are most important to you can be accessed through the same plan that is indicated by cost savings in medication. This may lead to some difficult choices, particularly if you see multiple specialists.

If you see several doctors, you should ask each of them which insurance networks they participate in. If you are lucky, most will participate in a common network. If you cannot find a single network, you should ask the doctors who currently provide your most important care to recommend doctors who are in an available plan’s network. If you are doing this, be prepared to bring a print out of the list of participating physicians to an appointment or email the list to your doctor.

It is possible that you will find it difficult or very expensive to see the specialists you choose or have seen before. If that happens, you might look at major hospital clinics for affordable options for care.

Clinic wait times will be longer than those found in private practice, and you can expect scheduling to be more problematic than you may be used to, but the care itself is usually quality care.

What If I Can’t Afford a Drug I Need?

You may find yourself in the position of needing to buy a health insurance plan because it enables you to see a particular specialist such as a mental health professional or endocrinologist that you have an established relationship with. In this case, you would not be choosing a policy based on your prescriptions and might find that prescriptions you usually take to be expensive or unaffordable.

A lower-cost generic drug might work for you. Talk to your doctor. If generics turn out to be ineffective, sometimes insurance companies will approve a more expensive version of the medication after you have tried certain generics first. You can appeal to insurance companies. Sometimes it works.

You can also apply to the company that makes or markets the drug. Many pharmaceutical companies have programs to supply low-income patients with medication they need.

You can also shop around for a lower retail cost for a medication you have to pay for out-of-pocket. Large chain stores and big box stores might have much more affordable costs than even a preferred pharmacy.

In Summary

Health insurance has become far more complicated over the last few decades. Unless you are among the lucky few with a great plan through an employer, you will need to be prepared to set your priorities and be flexible. By understanding formularies and preferred providers, you will be able to make the best choices possible for your medical care.

Citations

  1. Plan Finder