Coverage landscape overview / Medical vs pharmacy benefits

Specialty drugs may be covered as a medical benefit, pharmacy benefit, or both¹

Specialty drugs are used to treat complex and/or chronic conditions and may require special handling and administration
Depending on the mode of administration, specialty drugs may be covered by a health plan as a medical benefit, pharmacy benefit, or both
While Medicare is clear whether a drug is covered under the medical benefit or pharmacy benefit, commercial plans can vary in their benefit coverage decisions

Type of drug
covered

Medicare

Commercial

Medical benefit

HCP-administered specialty drugs²

Medicare Part B (fee-for-service)

Medicare covers 80% of office-administered products under Part B. If patients have supplemental insurance, their supplemental coverage may pick up the additional 20%
80% of patients with Medicare Part B also have supplemental insurance³
- Medigap is insurance by a private health plan that provides additional payments after Medicare has issued payment³
- Secondary insurance is private health insurance where Medicare is the next payer after another health plan issued payment⁴
Requires benefits verification

Medicare Part C (Medicare Advantage [MA])

Manages all Medicare Parts A and B benefits under one policy and may include Part D benefits³
MA enrollees are not eligible for Medigap⁵

Covered differently depending on health plan design and generally includes deductible, co-pay, and/or coinsurance; generally subject to utilization management⁶

Type of drug
covered

Medicare

Commercial

Pharmacy benefit

Self-administered specialty drugs³

Medicare Part D³

Provided through private plans approved by the federal government
Two types of plans are available:
- A standalone prescription drug plan (PDP), for patients with original Medicare (Parts A and B)
- Medicare Advantage prescription drug plan (MAPD), multifaceted plans that cover all Medicare benefits
Requires several steps, including a prior authorization (PA), before drug is distributed

Prescription drug coverage is subject to formulary tiers⁷

Many specialty drugs are Tier 4 (most restricted)

Nearly half of specialty drugs are covered under the medical benefit⁸

References: 1. HealthInsurance.org. Accessed June 21, 2020. https://www.healthinsurance.org/glossary/specialty-drug 2. Medicare.gov. Accessed June 21, 2020. https://www.medicare.gov/coverage/prescription-drugs-outpatient 3. Kaiser Family Foundation. Accessed June 21, 2020. http://files.kff.org/attachment/issue-brief-an-overview-of-medicare 4. Noridian Healthcare Solutions. Accessed June 21, 2020. https://med.noridianmedicare.com/web/jea/topics/msp/bcrc-ghp/supplemental-insurance-vs-secondary-insurance 5. Medicare.gov. Accessed June 21, 2020. https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-medicare-advantage-plans 6. Tikkanen R et al. Published June 5, 2020. Accessed June 21, 2020. https://www.commonwealthfund.org/international-health-policy-center/countries/united-states 7. Ivey AG. Published December 11, 2019. Accessed June 21, 2020. https://www.goodrx.com/blog/guide-to-medication-formulary 8. CVS Health. Accessed June 21, 2020. https://payorsolutions.cvshealth.com/sites/default/files/cvs-health-payor-solutions-feature-managing-specialty-drug-spend-under-the-medical-benefit-mar-2017.pdf

Specialty drugs may be covered as a medical benefit, pharmacy benefit, or both1

Medical benefit

Pharmacy benefit

Specialty drugs may be covered as a medical benefit, pharmacy benefit, or both¹