Why Checking Formularies Before Prescribing Matters
Every time you write a prescription, you’re not just choosing a drug-you’re choosing a cost for your patient. A medication that costs $5 at Tier 1 could cost $60 at Tier 4. That’s not just a difference in price; it’s a difference in whether the patient fills the script at all. According to a 2024 AMA report, 88% of physicians have seen delays in care because a drug wasn’t covered, and 34% say those delays led to serious health consequences. Formularies aren’t just administrative paperwork-they directly impact patient outcomes.
Formularies, or Preferred Drug Lists (PDLs), are the official lists of medications covered by a patient’s insurance plan. These lists are created by teams of doctors and pharmacists who evaluate drugs based on safety, effectiveness, and cost. Medicare Part D plans, Medicaid programs, and commercial insurers all use them-but they’re not the same. What’s covered under one plan might be denied under another, even for the same patient. And these lists change. Often.
How Formularies Are Structured: The Tier System Explained
Most formularies use a tiered system to control costs. The most common structure has five tiers, especially in Medicare Part D plans:
- Tier 1: Preferred generics. These are the cheapest options-often $1 to $5 per prescription.
- Tier 2: Non-preferred generics. Slightly higher cost, maybe $10-$20.
- Tier 3: Preferred brand-name drugs. These are brand-name medications that insurers have negotiated lower prices for. Expect $40-$70.
- Tier 4: Non-preferred brands. These are expensive drugs with no cost-sharing deals. Patients often pay $80-$150 per script.
- Tier 5: Specialty drugs. These are high-cost medications, usually over $950 per month. Patients pay a percentage (coinsurance), not a flat copay.
But here’s the catch: not every insurer uses five tiers. UnitedHealthcare’s commercial plans, for example, use four tiers. Medicaid formularies vary by state. And some plans don’t list tiers at all-they just say "covered" or "requires prior authorization." You can’t assume. You have to check.
What Those Abbreviations Mean: PA, ST, QL
When you look at a formulary, you’ll see letters next to drug names: PA, ST, QL. These aren’t random codes. They’re rules that control access.
- PA (Prior Authorization): You must get approval from the insurer before the drug is covered. This often means filling out a form, providing lab results, or proving other drugs failed.
- ST (Step Therapy): The patient must try and fail on a cheaper, preferred drug first. For example, you can’t prescribe Ozempic right away-you might need to try metformin and sitagliptin first.
- QL (Quantity Limit): The insurer caps how much of the drug the patient can get in a certain time. A 30-day supply might be limited to 15 tablets.
These rules aren’t just bureaucratic hurdles. A 2023 JAMA study found that 32% of prior authorization requests for cancer drugs took longer than 48 hours to process. For a patient with aggressive disease, that delay can be life-threatening.
Where to Check Formularies: Tools and Resources
You don’t have to guess. There are reliable, free tools built for this exact purpose.
- Insurer websites: Most major insurers-Aetna, UnitedHealthcare, Humana, CVS Health-have searchable formulary tools on their provider portals. You need the patient’s plan name and sometimes their county. Aetna’s tool, for example, shows tier level and restrictions in real time. In a 2024 MGMA survey, 74% of providers called it "very helpful."
- CMS Plan Finder: For Medicare patients, this is your go-to. It covers 99.8% of Part D plans and lets you search by drug name, compare plans, and see exact out-of-pocket costs. It’s updated monthly.
- EHR-integrated tools: Systems like Epic’s Formulary Check module pull real-time formulary data directly into your workflow. Northwestern Medicine cut prescription abandonment by 42% after implementing this in late 2023.
- Printed guides: Still used by 41% of rural practices. Download the PDF from the insurer’s provider site and keep it handy. But remember: these are outdated the moment they’re printed.
Bookmark the direct links. Set calendar reminders for quarterly updates. HealthPartners, for example, releases new formularies in January, April, July, and October. CMS requires 60 days’ notice for changes that hurt coverage-but that’s still 60 days of confusion for patients.
Differences Between Medicare, Medicaid, and Commercial Plans
Don’t treat them the same.
Medicare Part D plans must follow strict federal rules: five tiers, coverage of at least two drugs per therapeutic category, and a formal exceptions process. Insurers must respond to prior authorization requests within 72 hours (24 hours for urgent cases). These are standardized, but still vary by plan.
Medicaid formularies are state-run. 42 states use closed formularies, meaning if a drug isn’t on the list, you need prior authorization-even if it’s the only effective option. Minnesota’s DHS, for example, created a single PDL for all Medicaid members after consulting a state formulary committee. This saves money but reduces flexibility.
Commercial plans (like those from employers) are the wild west. UnitedHealthcare might use four tiers. Blue Cross might require step therapy for insulin. There’s no national standard. You can’t rely on past experience. A drug covered last year might be dropped this year.
Real-World Problems and How to Solve Them
Here’s what actually happens in clinics:
- A patient comes in with Type 2 diabetes. You want to prescribe Januvia. You check three different Medicare plans in your practice: one has it as Tier 3, one as Tier 4, and one requires step therapy first. You spend 15 minutes verifying each one.
- A cancer patient needs a targeted therapy. It’s on the formulary-but requires prior authorization. You submit the paperwork. Three days later, you get a denial because the patient didn’t try a different drug first. You restart the process.
- A senior switches plans mid-year. The new plan doesn’t cover their long-time blood pressure med. They stop taking it. Two weeks later, they’re in the ER.
Solutions? Start small. Dedicate 3-5 minutes per patient during medication selection. Use EHR tools when available. If you’re in a small practice without tech support, keep a printed formulary guide for your top 10 most-prescribed drugs-and update it every quarter.
Also, talk to your pharmacy. Many pharmacies now have formulary checkers built into their systems. Ask them to flag coverage issues before the script is sent.
What’s Changing in 2025 and Beyond
Big changes are coming. The Inflation Reduction Act’s $2,000 annual cap on out-of-pocket drug costs for Medicare Part D patients starts in 2025. That’s forcing insurers to move more drugs to lower tiers. By October 2024, 73% of 2025 Medicare formularies had already adjusted to reduce patient costs.
By January 1, 2026, Medicare Part D plans must implement Real-Time Benefit Tools (RTBT) that show cost and coverage details directly in your EHR. This will cut down on guesswork. Epic’s FormularyAI, launched in August 2024, already predicts coverage likelihood with 87% accuracy by analyzing 10 million past prior authorization decisions.
But the problems won’t disappear overnight. A 2023 GAO report found that 28% of Medicare beneficiaries still face mid-year formulary changes. Patients don’t get notified. Providers don’t know. And the result? Medication non-adherence, ER visits, and avoidable hospitalizations.
Bottom Line: Make Formulary Checks Part of Your Routine
Checking formularies isn’t optional anymore. It’s part of prescribing. Just like you check for allergies or kidney function, you need to check coverage. Use the tools. Know the tiers. Understand PA, ST, and QL. Save your patients time, money, and risk.
The best prescribers aren’t the ones who know the most drugs. They’re the ones who know which drugs their patients can actually afford and access.
What is a formulary and why does it matter for prescribing?
A formulary, also called a Preferred Drug List (PDL), is the official list of medications covered by a patient’s health insurance plan. It’s created by doctors and pharmacists who evaluate drugs for safety, effectiveness, and cost. It matters because if a drug isn’t on the list-or requires prior authorization-the patient may not be able to fill the prescription, or may face a very high out-of-pocket cost. This can lead to patients skipping doses or stopping treatment entirely.
How do I find out which tier a drug is on?
Use the insurer’s online formulary search tool. Most major insurers like Aetna, Humana, and UnitedHealthcare have searchable databases on their provider websites. You’ll need the patient’s plan name and sometimes their zip code. Medicare patients can use the CMS Plan Finder. The tool will show the tier (1 through 5), whether prior authorization is needed, and the estimated patient cost. Don’t rely on memory-formularies change every quarter.
What do PA, ST, and QL mean on a drug list?
PA means Prior Authorization-you must get approval from the insurer before the drug is covered. ST means Step Therapy-the patient must try and fail on a cheaper, preferred drug first. QL means Quantity Limit-the insurer limits how much of the drug can be dispensed in a given time (like 15 tablets instead of 30). These are coverage rules, not medical ones, and they can delay treatment.
Do Medicare and Medicaid formularies work the same way?
No. Medicare Part D plans follow federal rules with five tiers and standardized prior authorization rules. Medicaid formularies are controlled by individual states-42 states use closed formularies, meaning non-listed drugs require prior authorization even if they’re the only effective option. Medicaid rules vary widely by state, while Medicare rules are consistent nationwide (though plan-to-plan costs differ).
Can I prescribe a drug that’s not on the formulary?
Yes, but it’s harder. You’ll need to submit a prior authorization request, often with clinical documentation proving the patient tried and failed other options or has a medical reason the formulary drug won’t work. Some plans allow exceptions for rare conditions or if the drug is the only one that works. But the process takes time-and patients often give up before it’s approved.
How often do formularies change?
Formularies change at least quarterly. HealthPartners, for example, updates its Medicare formulary in January, April, July, and October. Medicare Part D plans must give 60 days’ notice before removing a drug or increasing cost-sharing. But many changes happen without clear communication to providers. Always verify coverage at the time of prescribing-not based on last year’s list.
Are there tools that automate formulary checks?
Yes. EHR systems like Epic and Cerner now integrate real-time formulary data. Epic’s Formulary Check tool, for example, shows coverage and cost before you even finish writing the prescription. Some commercial vendors, like FormularyAI, use AI to predict approval likelihood with 87% accuracy. By 2026, Medicare Part D plans will be required to connect their formulary data directly to EHRs through Real-Time Benefit Tools (RTBT).