What Is Step Therapy?

These plans now are allowed to apply what’s known as step therapy to prescription drugs prescribed by a physician that are covered by the Medicare Advantage plans.

The reason, according to CMS, is to introduce “much-needed competition and negotiation into the market … that will result in better deals and lower drug costs for patients.” That’s because the Medicare Advantage plans are required to pass their savings from this cost management program on to beneficiaries in lower copayments and coinsurance requirements.

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What Is Step Therapy for Drugs?

Step therapy is a system for obtaining prior authorization for drugs and helping plan beneficiaries get the best medication treatment at the lowest price possible. It mandates that drug treatments for a medical condition progress in steps.

• The first step authorizes the most preferred and least costly drug therapy.
  
  
• If that treatment doesn’t work, it then progresses to other therapies, if necessary, using different and perhaps more costly medications as determined by your doctor.

The goal is to promote better clinical decisions.

CMS provides the following example: Say you are newly diagnosed with a medical condition like high cholesterol.

By using step therapy, doctors would initiate treatment with a cost-effective, generic-type biosimilar medication before progressing to a more expensive medication if the first step therapy is not effective.

Step therapy, when used alongside care coordination and drug adherence programs, will help lower costs and improve the quality of care for Medicare Advantage plan members, CMS says.

Which Drugs Are In Step Therapy?

Medications that may typically be included as a part of step therapy are drugs used to treat the most common medical conditions, such as:

• Allergies.
• Asthma.
• COPD.
• Cardiovascular health.
• Diabetes.
• High cholesterol.
• Mental health issues.
• Bladder problems.
• Acid reflux and heartburn.

This is because these conditions are most likely to have generic drug options that work very well for the majority of patients and cost upwards of 85% less than their brand-name equivalents.

Drugs for many other health conditions are not required to follow step therapy. Popular options for step therapy include Ozempic and Mounjaro.

What About Pre-existing Conditions?

If you are already taking a more expensive medication for a certain health condition at the time you join a Medicare Advantage plan with drug coverage, you may still be covered for that drug if you have already tried the lower-cost, first step drug.

Let’s say you were diagnosed with high cholesterol at age 55. You have tried lower-cost generic drugs, but they didn’t work effectively in treating your condition. In this case, your doctor may have you try a drug considered on a higher step by Medicare.

In this example, let’s consider you go on to join a Medicare Advantage plan when you turn 65. If the higher-step drugs you’re taking to treat your high cholesterol are part of your plan’s step therapy program, the plan will reach out to your doctor to confirm that you have tried a lower-priced drug.

Because in this example you have already tried the lower-priced (lower step) drug and found it to be ineffective, the plan will cover the cost of your current higher-step drug.

On the other hand, if your never tried the lower step drug options, your current drug may not be covered, or your plan may require a higher copayment.

Check Your Plan’s Formulary Carefully Before Enrolling (or Re-Enrolling in the Same Plan Next Year)

When you enroll in a Medicare Advantage plan for the first time, or if you are considering changing plans, be sure to understand if any plan you are thinking of joining follows step therapy guidelines.

To do so, check the plan’s formulary, which is the list of drugs they cover and the price tiers they are grouped into. Find the prescription or prescriptions you need, and if you see the code “ST” next to it or any other indication that it requires step therapy.