When you're deciding which medication to prescribe, the right drug isn't always the most effective one on paper. It’s the one your patient can actually afford and get without delays. That’s why checking the formulary - the insurer’s list of covered drugs - isn’t optional. It’s part of responsible prescribing. Skip this step, and you risk a patient walking out with a prescription they can’t fill, or worse, waiting days for prior authorization while their condition worsens.
What Exactly Is a Formulary?
A formulary, also called a Preferred Drug List (PDL), is the official list of medications an insurance plan agrees to cover. It’s not random. Every drug on it has been reviewed by a committee of doctors and pharmacists who look at safety, clinical effectiveness, and cost. These lists are updated regularly - sometimes monthly - and vary by plan, not just by insurer. A drug covered by one Medicare Part D plan might be excluded from another, even if they’re from the same company.
Medicare Part D plans, which cover over 50 million Americans in 2025, are required by CMS to follow strict guidelines. They must include at least two drugs per therapeutic category and offer an exceptions process. Medicaid formularies are state-run and often more restrictive, with 42 states using closed formularies that require prior authorization for any drug not on the list. Commercial plans like UnitedHealthcare or Aetna have their own rules too - some use four tiers, others five. There’s no universal standard, which makes checking each patient’s plan essential.
The Tier System Explained
Most formularies use a tier system to show how much the patient pays. The lower the tier, the cheaper the drug. Here’s how it typically breaks down:
- Tier 1: Preferred generics - often $1 to $5 per prescription. These are the go-to options for chronic conditions like high blood pressure or diabetes.
- Tier 2: Non-preferred generics - slightly higher cost, maybe $10 to $20.
- Tier 3: Preferred brand-name drugs - these are clinically proven and cost-effective. Expect $40 to $60.
- Tier 4: Non-preferred brands - expensive, often $70 to $150. Usually requires prior authorization.
- Tier 5: Specialty drugs - monthly costs over $950. These include cancer therapies, biologics, and rare disease treatments. Patients pay a percentage (coinsurance), not a flat copay.
Don’t assume a drug’s tier is the same across plans. Januvia, for example, might be Tier 3 with no restrictions on one plan, Tier 4 with step therapy on another, and completely excluded on a third. That’s why you can’t rely on memory or past experience. You have to check.
How to Find the Right Formulary
You have three main ways to check a patient’s formulary:
- Insurer’s Website: Most major insurers - Aetna, Humana, UnitedHealthcare, CVS Health - have searchable drug formularies. You’ll need the patient’s plan name and sometimes their county or ZIP code. Aetna’s tool, for instance, shows real-time tier levels and flags drugs requiring prior authorization (PA), step therapy (ST), or quantity limits (QL).
- Electronic Health Record (EHR) Tools: Many large health systems now integrate formulary checks directly into their EHR. Epic’s Formulary Check module, used by Northwestern Medicine, reduced prescription abandonment by 42% after rollout. If your clinic uses Epic, Cerner, or another major system, look for a “Check Coverage” button next to the prescription field.
- CMS Plan Finder: For Medicare patients, the official Medicare Plan Finder covers 99.8% of Part D plans. You can search by drug name, compare plans side-by-side, and see exact out-of-pocket costs.
Bookmark the formulary pages for the top three insurers you see most often. Set calendar reminders for quarterly updates - HealthPartners, for example, releases new formularies in January, April, July, and October. CMS requires 60-day notice for changes that reduce coverage, but that doesn’t mean patients get a heads-up. You need to stay ahead.
Understanding Utilization Management Rules
Even if a drug is on the formulary, it might come with restrictions:
- Prior Authorization (PA): You must submit documentation proving the drug is medically necessary before the plan will pay. Common for high-cost brands or drugs with safety concerns.
- Step Therapy (ST): The patient must try and fail on a cheaper, preferred drug first. For example, you can’t start a patient on a Tier 3 biologic if a Tier 1 generic exists for the same condition.
- Quantity Limit (QL): The plan caps how much of the drug can be dispensed in a given time. A 30-day supply of gabapentin might be limited to 180 pills.
These aren’t just red tape. They’re tools insurers use to control costs - and sometimes, they delay care. A 2024 AMA report found that 88% of physicians have seen treatment delays due to prior authorization. In one case, a cancer patient waited 72 hours for approval, during which their tumor progressed. That’s not hypothetical. That’s happening right now.
Why This Matters More Than Ever in 2025
The Inflation Reduction Act’s $2,000 annual cap on out-of-pocket drug costs for Medicare Part D patients starts in 2025. Insurers are already shifting drugs to lower tiers to help patients hit that cap faster. That means formularies are changing - fast. In 2025, 73% of Medicare Part D formularies will move more drugs to Tier 1 or 2.
On the tech side, real-time benefit tools (RTBT) will be mandatory for all Medicare Part D plans by January 1, 2026. These tools will show you the patient’s exact cost and coverage status before you even hit “send” on the prescription. Some EHRs already have them - Epic’s FormularyAI, launched in August 2024, predicts coverage likelihood with 87% accuracy by analyzing 10 million historical prior authorization decisions.
But until then, you’re still doing this manually. And that’s why time matters. A 2023 Sermo survey found physicians spend 10 to 20 minutes per patient just verifying coverage. Primary care doctors spend nearly 19 minutes. That’s 100+ minutes a day. That’s time you could spend with patients - if you had better systems.
What to Do When the Drug Isn’t Covered
When you find a drug isn’t on the formulary, don’t just pick the next one. Consider:
- Is there a therapeutic equivalent on Tier 1 or 2? Sometimes a different drug in the same class works just as well.
- Can you file a prior authorization? Some insurers have online portals where you can submit requests in under five minutes.
- Does the patient qualify for a manufacturer’s patient assistance program? Many drugmakers offer free or low-cost meds to those who qualify.
- Is this a case for an exception? Medicare Part D plans must respond to standard prior authorization requests within 72 hours - and within 24 hours if it’s an urgent situation.
Call the insurer’s provider line. 98% of Medicare Part D plans offer 24/7 access. Have the patient’s ID, drug name, and diagnosis code ready. Sometimes, a quick call can get you a formulary exception or temporary override.
Common Mistakes and How to Avoid Them
Here’s what goes wrong - and how to fix it:
- Mistake: Assuming all plans from the same insurer have the same formulary. Fix: Always verify by plan name. A Humana Gold Plus plan in Florida is not the same as one in Texas.
- Mistake: Using last year’s formulary. Fix: Check the effective date. Medicare 2024 formularies run Jan 1-Dec 31, 2024. 2025 versions are already live.
- Mistake: Not documenting the reason for choosing a non-formulary drug. Fix: Note in the chart why you chose the drug - and if you filed a prior authorization, attach the confirmation number.
- Mistake: Waiting until the patient is at the pharmacy to check. Fix: Do it during the visit. Use a tablet or laptop. Make it part of your workflow.
Small practices are at the highest risk. Only 38% of small practices have formal formulary checking protocols, compared to 79% of large health systems. If you’re in a solo practice, set up a simple checklist: Plan? Drug? Tier? PA? ST? QL? Done before you write the script.
Final Thoughts
Checking formularies isn’t about being a billing clerk. It’s about being a good doctor. A drug that’s perfect on paper means nothing if the patient can’t get it. The system is broken in places - the delays, the complexity, the lack of standardization. But you can still win by being proactive. Know your insurers. Know your tools. Know your patient’s plan. And never assume.
Formularies control $601 billion in U.S. drug spending. They’re not going away. The question isn’t whether you’ll check them - it’s whether you’ll check them before or after your patient leaves your office.
What’s the difference between a formulary and a preferred drug list (PDL)?
They’re the same thing. "Formulary" is the general term used by Medicare and commercial insurers. "Preferred Drug List" (PDL) is what Medicaid programs and some state agencies call it. Both are lists of covered medications selected based on clinical evidence and cost.
Can I prescribe a drug not on the formulary?
Yes, but the patient will likely pay full price unless you get prior authorization. For Medicare Part D, you can request an exception if the drug is medically necessary and alternatives have failed. Medicaid and commercial plans have similar processes, but approval isn’t guaranteed.
How often are formularies updated?
Medicare Part D plans must notify patients 60 days before removing or restricting a drug. Many insurers update quarterly - HealthPartners, for example, releases updates in January, April, July, and October. Commercial plans vary, but changes happen often. Always check the effective date on the formulary document.
Do all insurance plans use the same tier system?
No. Medicare Part D uses a standard five-tier system. Commercial plans often use four tiers. Medicaid varies by state. Some plans don’t use tiers at all - they use flat copays or coinsurance. Always check the specific plan’s structure.
What should I do if a patient’s drug is removed from the formulary mid-year?
First, confirm the change with the insurer’s provider portal or hotline. Then, check if the patient qualifies for a transition fill - most plans allow a 30- to 90-day supply of the old drug while you switch. File a prior authorization if needed. If the drug is critical and no alternative exists, request an exception based on medical necessity.
Are there tools that automate formulary checks?
Yes. EHR-integrated tools like Epic’s Formulary Check and FormularyAI (launched in 2024) show real-time coverage and cost data. Medicare Advantage plans are required to offer real-time benefit tools (RTBT) by January 2026. Until then, insurer websites and CMS Plan Finder are your best options.
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