This report provided an examination of public and private sector formulary and classification schemes compared with USP Model Formulary and CMS formulary approval guidance. It used data from the Medicare Current Beneficiary Survey (MCBS) to develop a simulation model of the cost impacts of formulary changes. One finding was that without modification, some formularies that existed prior to the implementation of Part D would have failed CMS' rules for formulary approval. Another finding suggested that some formularies could have been approved although they did not include some popular drugs.
Neither finding accounted for the potential effect of market competition that would be expected to provide incentives for plans to offer richer benefit packages. The simulation model suggests that co- insurance provides patients with stronger behavioral incentives than does co-payments, and tiered cost sharing can strengthen those incentives.
PIC ID: 8254; Agency Sponsor: ASPE-OHP, Office of Health Policy; Federal Contact: Sheingold, Steven, 202-690-7387; Performer: National Opinion Research Center (NORC), Washington, DC