Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

D E  T : 

UAL  LIGIBLES RANSITION
P D F  

ART  ORMULARIES
I
NCLUSION OF 

C U D
OMMONLY  SED  RUGS

Daniel R. Levinson

Inspector General 

January 2006

OEI-05-06-00090
 Office of Inspector General 
Office of Inspector General 
http://oig.hhs.gov 
http://oig.hhs.gov
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452,
as amended, is toprotect the integrity ofthe Department of Health and Human Services 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is to 
(HHS)programs, as well as the health and welfare of beneficiariesserved by those 
protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 
health panrodg wraemlfasr. e  Tohf ibse snteaftiucitaorriyes m seisrsvieodn biys cthaorsreie pdroogurta tmhsr.o  uTghhisa s tnaatuttioornyw midises nioent wiso crakrroifeda uoduit ts, 
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operating components: 
Office of Audit Services 
Office of Audit Services 
The Office of Audit Services (OAS) provides all auditing servicesfor HHS, either by
conducting audits with itsown audit resources or by overseeing audit work done by others.
The Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting audits with 
Audits examine the performance of HHS programs and/or its grantees andcontractors
its own audit resources or by overseeing audit work done by others.  Audits examine the performance of 
in carrying outtheir respective responsibilities and are intendedto provide independent
HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are 
assessments ofHHS programs and operationsin order toreduce waste, abuse,and 
intended to provide independent assessments of HHS programs and operations in order to reduce waste, 
abuse, manids mmaisnmaagneamgeenmte annt dan tdo  tpor pormomotoet ee ceocnoonmomy ya nandd e efffifcicieiennccyy t thhrroouugghhoouutt  HHHHSS. .
Office of Evaluation and Inspections
Office of Evaluation and Inspections 
The Office of EvaluationandInspections (OEI) conductsmanagement and program 
The Office of Evaluation and Inspections (OEI) conducts management and program evaluations (called 
evaluations (called inspections) that focus on issuesof concern toHHS,Congress, and 
inspections) that focus on issues of concern to HHS, Congress, and the public.  The findings and 
the public.  The findings and recommendations contained in the inspections generate 
recommendations contained in the inspections generate rapid, accurate, and up-to-date information on the 
rapid, accurate, and up-to-date informationonthe efficiency, vulnerability, and 
efficiency, vulnerability, and effectiveness of departmental programs.  OEI also oversees State Medicaid 
Fraud Cefofnetcrtoivl eUnneistss  wofh dicehp ianrvtemsteingatatel  apnrdo gprraomsesc.u  tOe EfrIa uadls aonodv peartsieeenst aSbtuastee  iMn ethdei cMaiedd Ficraaidu dp rogram. 
Control Units which investigate andprosecute fraud and patient abuse inthe Medicaid
Officep roofg Iranmve. stigations 
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of allegations of 
wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by providers. The 
The Office of Investigations (OI) conducts criminal, civil, and administrative
investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil monetary 
investigationsofallegations of wrongdoingin HHSprograms or to HHSbeneficiaries
penalties. 
and of unjust enrichment byproviders.  The investigativeeffortsof OI lead tocriminal
convictions, administrative sanctions,orcivil monetary penalties.
Office of Counsel to the Inspector General 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support in OIGs internal 
TheOffice of Counsel to the Inspector General (OCIG)providesgeneral legal servicesto
operations. OCIG imposes program exclusions and civil monetary penalties on health care providers and 
OIG, renderingadvice and opinions on HHS programs and operations andproviding all
litigates those actions within HHS. OCIG also represents OIG in the global settlement of cases arising 
legal support in OIG's internal operations. OCIG imposes program exclusions and civil 
under the Civil False Claims Act, develops and monitors corporate integrity agreements, develops 
monetary penaltieson health care providers and litigatesthose actionswithin HHS.
compliance program guidances, renders advisory opinions on OIG sanctions to the health care community, 
OCIG alsorepresents OIG in the global settlement ofcasesarising under the Civil False 
and issues fraud alerts and other industry guidance.  
Claims Act, develops and monitors corporate integrity agreements, develops compliance 
program guidances, renders advisory opinions on OIG sanctions tothe health care
community,and issues fraud alertsand other industryguidance.   E X E C U T I V E   S U M M A R Y  

OBJECTIVE 
To determine the extent to which Medicare prescription drug plan 
formularies include drugs commonly used by dual eligibles under 
Medicaid. 
BACKGROUND 
The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) makes comprehensive prescription drug coverage under 
Medicare Part D available to all Medicare beneficiaries through 
prescription drug plans (PDP) or Medicare Advantage plans.   
More than 6 million Medicare beneficiaries are full benefit dual 
eligibles, i.e., beneficiaries enrolled in both Medicare and Medicaid (for 
brevity, herein referred to as dual eligibles).  Until December 31, 2005, 
dual eligibles received outpatient prescription drug benefits through 
Medicaid. On January 1, 2006, drug coverage for dual eligibles 
switched from Medicaid to Medicare. 
States, Congress, and beneficiary advocates have expressed concern 
that the movement of dual eligibles to Medicare drug coverage presents 
unique challenges given the low income and poor health status that 
characterize this population.  In addition, this population is historically 
hard to reach through outreach and education efforts.  
In light of these concerns and to avoid disruptions in coverage, the 
Centers for Medicare & Medicaid Services (CMS) has randomly 
assigned each dual eligible (except those already enrolled in a Medicare 
Advantage plan) to a PDP, as required by the MMA.  Dual eligibles who 
did not select a drug plan by December 31, 2005, have been 
automatically enrolled in their preassigned plans. 
Medicaid and Medicare drug coverage differ in certain respects.  Drug 
plans under Medicare have more flexibility than State Medicaid 
programs to set their own formularies and limit coverage of drugs 
within broad parameters.  Also, Medicare drug plans are prohibited 
from covering certain categories of drugs (excluded drugs) that 
Medicaid programs may opt to cover. 
We assessed the extent to which PDP formularies include the drugs that 
dual eligibles commonly used under Medicaid, as differences in coverage 
may present challenges during dual eligibles transition to Medicare.  
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  i  E X E C U T I V E   S U M M A R Y  
We did not assess or compare the overall benefits provided to dual 
eligibles under Medicaid versus Medicare.   
We identified 200 of the drugs most highly utilized by the dual eligible 
population in 2005. These drugs account for approximately 78 percent 
of prescriptions dispensed to dual eligibles.  Of these 200 drugs, 178 are 
eligible for PDP coverage and 22 are excluded.  We reviewed the 
formularies of PDPs to which dual eligibles are assigned to determine 
how many of the 178 eligible drugs each formulary includes.  Dual 
eligibles are being assigned to 409 PDPs that use 37 unique formularies.  
We also interviewed 47 State Medicaid representatives regarding their 
Medicaid coverage policies for the 22 excluded drugs.   
FINDINGS 
Prescription drug plan formularies include between 76 and 
100 percent of the commonly used drugs we reviewed.  The PDP 
formularies vary in their inclusion of the 178 common drugs in our 
review that are eligible for PDP coverage.  Therefore, random 
assignment to PDPs may affect the number of dual eligibles who take a 
specific drug that is not included on their PDPs formulary. Formulary 
inclusion of the 178 commonly used drugs ranges from a low of 
135 drugs (76 percent) to a high of 178 drugs (100 percent).  
Nineteen percent of formularies include all 178 of the Part D eligible 
drugs we reviewed; an equal proportion include 151 or fewer (less than 
85 percent).  By formulary, the average rate of inclusion is 92 percent of 
these commonly used drugs.  It is important to note that dual eligibles 
who take drugs not included by their PDPs formulary may obtain a 
prescription for a different drug that treats the same condition, apply 
for an exception if the nonformulary drug is medically necessary, or 
switch to a PDP that includes their drug.  CMS has urged PDPs to cover 
a one-time supply of the nonformulary drug to aid in this transition. 
Nationally, almost one-fifth of dual eligibles (18 percent) are assigned to 
PDPs that include all 178 drugs in our review.  On the other hand, 
almost one-third of dual eligibles (30 percent) are assigned to plans that 
include less than 85 percent (151 or fewer) of the 178 commonly used 
drugs.  In every PDP region, at least one plan uses a formulary that 
includes all 178 of the high utilization drugs in our review.  This means 
that every dual eligible has the opportunity to enroll in a plan that 
includes all of these commonly used drugs.  
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  ii  EEE XXX EEE CCC UUU TTT III VVV EEE     SSS UUU MMM MMM AAA RRR YYY
Approximately half of the 178 commonly used drugs that we 
reviewed were included by all formularies.  Most of the drugs 
reviewed are included by the majority of formularies, and in fact, about 
half of the 178 commonly used drugs (51 percent) are included by all 37 
formularies. By drug, formulary inclusion ranges from 43 percent 
(16 formularies) to 100 percent (37 formularies). The average rate of 
inclusion is 34 out of 37 formularies (92 percent). 
Certain drugs are omitted from formularies more frequently than 
others. Of the 178 drugs, 21 drugs (12 percent) were omitted from at 
least one-fourth of the formularies. CMS staff report that they have 
reviewed each formulary to verify compliance with minimum 
requirements and ensure overall adequacy of each formulary. Dual 
eligibles who are taking a nonformulary drug are therefore able to 
obtain a different drug that treats their condition and is included on 
their PDPs formulary, but they would need to obtain a prescription for 
the new drug from their physician. 
Dual eligibles access under Medicaid will not change in 45 of 
47 States for the 22 drugs we reviewed that are statutorily excluded 
from Medicare Part D coverage. Of the 200 drugs commonly used by 
dual eligibles, 22 drugs fall into categories that are statutorily excluded 
from Medicare Part D coverage. States may cover drugs in these 
categories for dual eligibles under Medicaid. All 47 States interviewed 
currently provide coverage of at least some excluded drugs. In 45 of 
these 47 States, dual eligibles will continue to have access to the same 
drugs currently covered by their Medicaid program after they make the 
transition to Medicare. One State is eliminating Medicaid coverage of 
one category of excluded drugs (for all beneficiaries), and another State 
is eliminating Medicaid coverage of two categories of excluded drugs. 
CONCLUSION 
Our review focused on differences between drugs that dual eligibles 
most commonly used under Medicaid and drugs included in Part D 
formularies, as these differences may affect the ease of dual eligibles 
transition from Medicaid to Medicare. 
We reviewed 200 drugs commonly used by the dual eligible population 
in aggregate. Of the 200 drugs, 22 drugs fall into categories excluded by 
law from PDP coverage, and 178 drugs are eligible for PDP coverage. 
We compared the 178 Part D eligible drugs to PDP formularies and 
found that inclusion of these drugs varies. 
OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  iii  E X E C U T I V E   S U M M A R Y  
Because PDP formularies vary, random assignment to PDPs may affect 
the number of dual eligibles who take a specific drug that is not 
included on their PDPs formulary. Dual eligibles have several options 
to ensure appropriate drug coverage if this occurs.  They can apply for 
an exception for the nonformulary drug.  They can get a new 
prescription from their doctor for a different drug that treats their 
condition and is included on their PDPs formulary.  They may also 
choose to switch plans, with new coverage effective the following month.  
Because each PDP region has at least one plan that includes all 178 
commonly used drugs we reviewed, every dual eligible has the 
opportunity to enroll in a plan that includes all of these drugs.  Finally, 
CMS has urged PDPs to cover a one-time supply of the nonformulary 
drug to aid in this transition. 
Navigating these options requires a dual eligible to have a certain level 
of understanding of the Medicare Part D benefit and take specific 
action.  Given the medical and resource challenges faced by this 
population, dual eligibles may need targeted assistance, in addition to 
the efforts CMS and State Medicaid agencies have already undertaken, 
to successfully navigate the transition from Medicaid to Medicare 
coverage.  Reported experiences of some dual eligibles highlight the 
need for further targeted assistance to this population to ease this 
transition. 
OIG will continue to study issues associated with dual eligibles as they 
make the transition from Medicaid to Medicare Part D. 
Agency Comments 
CMS provided comments on the draft report in which it highlighted its 
concerns with this report.  These concerns fall into two general 
categories: methodology and scope.  CMS also provided its own analysis 
comparing individuals drug histories to PDP formularies for a sample 
of dual eligibles.  Despite the differences in our methodologies, CMSs 
results were remarkably similar to ours and we believe further support 
our conclusions.  Discussion of CMSs comments and OIGs response are 
included in the conclusion, beginning on page 17. CMSs comments and 
analysis are included in Appendix E.  CMS also provided technical 
comments, which we incorporated into the report where appropriate. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  iv    T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
 i 
I N T RO DUC T IO N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

F I N D IN G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

Formularies include between 76 and 100 percent of common drugs .  9 

Half of 178 common drugs included by all PDP formularies . . . . . .  11

Coverage of Part D excluded drugs unchanged in 45 of 47 States. .  14 

CONC LUSION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

Agency Comments andOffice of Inspector General Response . . .  16 

E N D NO T ES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25

A:  DetailedScope andMethodology. . . . . . . . . . . . . . . . . . . . . . . . .  25

B: The 200 Drugs Included in Our Review. . . . . . . . . . . . . . . . . . . .  30

C:  Distribution of DualEligibles AmongFormularies. . . . . . . . . . .  36

D: Medicaid Coverage of Drugs Excluded from Part D........... 38 

E:  AgencyComments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

A C K NO WL E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55
   I N T R O D U C T I O N  

OBJECTIVE 
To determine the extent to which Medicare prescription drug plan 
formularies include drugs commonly used by dual eligibles under 
Medicaid. 
BACKGROUND 
The Medicare Prescription Drug Benefit 
Effective January 1, 2006, the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) made 
comprehensive prescription drug coverage under Medicare Part D 
available to all 43 million Medicare beneficiaries.1  Beneficiaries 
generally have the option to enroll either in a stand-alone prescription 
drug plan (PDP) and receive all other Medicare benefits through fee-for-
service or to enroll in a Medicare Advantage plan (MA plan) and receive 
all Medicare benefits (including drug coverage) through managed care.2 
Private sponsors contract with Medicare to offer PDPs and MA plans in 
one or more of the PDP or MA regions.  The Centers for Medicare & 
Medicaid Services (CMS) has designated 34 PDP regions and 26 MA 
regions.3  Each region covers at a minimum one State, and some regions 
cover multiple States.  Plans must cover the entire region in which they 
are offered.  Many sponsors offer more than one PDP or MA plan. 
Transferring Dual Eligibles from Medicaid to Medicare Drug Coverage 
Over 6 million Medicare beneficiaries are full benefit dual eligibles, i.e., 
beneficiaries enrolled in both Medicare and Medicaid (for brevity, herein 
referred to as dual eligibles).  Until December 31, 2005, dual eligibles 
received outpatient prescription drug benefits through Medicaid.  
However, pursuant to section 1935(c) of the Social Security Act (the 
Act), as amended by the MMA, Federal financial participation ended for 
Medicaid drug coverage for dual eligibles on January 1, 2006.4 Instead, 
dual eligibles now receive drug coverage through either a PDP or an MA 
plan. 
Medicare subsizes Part D coverage for dual eligibles and other 
beneficiaries who meet minimum resource and income requirements. A 
regional low-income premium subsidy amount is calculated for each 
PDP region.  A person with limited resources and means who qualifies 
for extra assistance and who enrolls in a Part D plan will have his or 
her basic Part D premium subsidized up to the regional low-income 
subsidy amount for the region in which he or she resides.  Thus, for dual 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  1  I N T R O D U C T I O N  
eligibles enrolled in PDPs that offer standard benefits (or equivalent) 
with premiums at or below the benchmark, Medicare will pay for drug 
plan premiums, deductibles, and other cost sharing.  Dual eligibles cost 
sharing responsibilities will be limited to copayments of up to $5 per 
prescription.   
States are required to make payments, based on a per-capita 
methodology, to contribute toward dual eligibles drug costs under 
Medicare Part D.  These payments are referred to as the phase-down 
State contribution payments.5 
States, Congress, and beneficiary advocates have expressed concern 
that the movement of dual eligibles to Medicare drug coverage will 
present unique challenges given the fact that dual eligibles have greater 
health and resource challenges than other Medicare beneficiaries.6 
Nearly three-quarters of dual eligibles have an annual income of 
$10,000 or less.  Thirty-eight percent have a cognitive or mental 
impairment. Over a third are disabled.  Less than half have graduated 
from high school.  On average, dual eligibles use at least 10 more 
prescription drugs than nondual eligible beneficiaries. In addition, this 
population is historically hard to reach through outreach and education 
efforts. 
In light of these concerns and to avoid interruptions in coverage, in 
November 2005, CMS randomly assigned most dual eligibles to PDPs 
eligible for the full low-income subsidy.  Random assignment of these 
dual eligibles to PDPs was required by the MMA.7  Dual eligibles who 
were already members of an MA plan (approximately 10 percent of dual 
eligibles) were passively enrolled in that MAs drug plan.  Dual eligibles 
who were assigned to PDPs and did not select a different PDP or MA 
plan prior to December 31, 2005, were automatically enrolled in the 
PDP to which they were randomly assigned.   
Unlike the general Medicare population, dual eligibles are permitted to 
switch plans at any time, with their new plans coverage effective at the 
beginning of the following month.8  This allowance increases dual 
eligibles opportunities to identify and enroll in the plan that best meets 
their prescription drug needs. 
Differences in Medicaid and Medicare Drug Coverage Requirements 
Dual eligibles will encounter some important differences between their 
current Medicaid drug coverage and their new coverage under Medicare. 
Generally, Medicaid is required to cover all drugs except for those that 
fall into a specific list of excludable drug categories.  However, 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  2  I N T R O D U C T I O N  
utilization for Medicaid covered drugs may be controlled by various cost 
containment measures. For example, States may establish preferred 
drug lists and may require prior authorization for nonpreferred drugs or 
step therapy (i.e., requiring a beneficiary to try a less expensive 
therapeutic alternative before covering the more expensive drug). 
Twelve States also limit the number of prescriptions per beneficiary per 
month.9 
In contrast, Medicare drug plans can establish their own formularies, 
excluding drugs from formulary inclusion within broad parameters. 
These parameters are intended to balance beneficiaries needs for 
adequate drug coverage with plans needs to contain costs. The 
minimum statutory requirement is that a formulary must include at 
least two drugs in each approved therapeutic category and class (unless 
only one drug is available for a particular category or class), regardless 
of the drug classification system used.10 CMS may require formulary 
inclusion of more than two drugs per category or class in cases in which 
additional drugs present unique and important therapeutic advantages 
in safety and efficacy, and in which their absence from the plan 
formulary may substantially discourage enrollment in the plan by 
beneficiaries with certain diseases.11  In addition, CMS has designated 
six drug categories for which plans must cover all or substantially all 
of the drugs.12  These six categories are antidepressant, antipsychotic, 
anticonvulsant, anticancer, immunosuppressant, and HIV/AIDS drugs.  
Similar to Medicaid, Medicare drug plans may also control access to 
drugs on their formularies by requiring prior authorization and/or step 
therapy to obtain drugs.  Drug plans may change their formularies but 
must provide beneficiaries with written notice of such changes and must 
obtain approval from CMS before deleting a drug from their approved 
formulary.13 
CMS Efforts to Ensure an Effective Transition and Comprehensive Coverage 
for Dual Eligibles 
Formulary Review.  In the Fall of 2005, CMS completed its review of all 
Medicare drug plan formularies for 2006 to verify that they met 
minimum requirements.  CMS also used narrower drug classifications 
designated by U.S. Pharmacopeia as key drug types to ensure overall 
adequacy of each formulary.14  CMS also reviewed whether each 
formulary is consistent with widely used industry best practices and 
whether benefit management tools (such as step therapy) are applied in 
a clinically appropriate fashion.15 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  3  I N T R O D U C T I O N  
Formulary Exceptions. All beneficiaries have the right to request Part D 
coverage of a nonformulary drug (that is otherwise eligible for Part D 
coverage) and to appeal denials.  A drug plan must provide access to a 
nonformulary drug if the prescribing physician provides a statement 
(and supporting documentation upon request) that the nonformulary 
drug is medically necessary because all drugs on the formulary would 
not be as effective for the enrollee and/or would have adverse effects.16 
CMS has developed procedures intended to ensure that beneficiaries 
receive prompt decisions regarding formulary exceptions.17 
Transition Process.  Drug plan sponsors are required to establish a 
transition process for new enrollees (including dual eligibles) who are in 
transition from other drug coverage to Part D and whose current drug 
therapies may not be included on their drug plans formulary.  CMS 
recommends but does not require that sponsors allow a temporary, one-
time transition supply for new enrollees who are taking a drug that is 
not included by their drug plans formulary.18  This would accommodate 
the beneficiarys immediate drug needs the first time that he or she 
attempts to fill a prescription for a nonformulary drug and allow the 
beneficiary time to work with the prescribing physician to either switch 
drug therapies or request a formulary exception. 
Drugs Excluded From Medicare Part D 
The MMA excludes certain categories of drugs from Medicare Part D 
coverage.  These are the same categories of drugs that States have had 
the option to exclude from their Medicaid program. In 2006, this list 
includes: 
o Agents when used for anorexia, weight loss, or weight gain;  
o Agents when used to promote fertility; 
o Agents when used for cosmetic purposes or hair growth;  
o Agents when used for the symptomatic relief of cough and colds; 
o Prescription vitamins and mineral products, except prenatal 
vitamins and fluoride preparations; 
o Nonprescription drugs; 
o Barbiturates; and 
o Benzodiazepines. 19 
Beginning in 2007, this list will also include agents when used for 
the treatment of sexual or erectile dysfunction, unless such agents are 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  4  I N T R O D U C T I O N  
used to treat a condition, other than sexual or erectile dysfunction, for 
which the agents have been approved by the Food and Drug 
Administration.20 
Drugs that are covered under Medicare Part A or Part B are also 
excluded from coverage under Medicare Part D. 
State Wraparound Coverage Options 
State Medicaid programs can claim Federal matching funds for coverage 
of Part D excluded drugs for dual eligibles.  If a State provides coverage 
of any excluded drugs to its nondual eligible Medicaid population, it 
must provide that same coverage to its dual eligibles. 
In addition, States may use State-only funds to offer wraparound 
coverage to dual eligibles for additional (i.e., nonexcluded) drugs not 
included by Medicare drug plan formularies.  States may provide this 
supplemental coverage through their Medicaid program or through a 
State Pharmaceutical Assistance Program (SPAP).  SPAPs are 
voluntary, State-funded programs and do not receive a Federal match. 
Typically, SPAPs have provided drug coverage assistance to low-income 
seniors and others who did not qualify for Medicaid coverage.  Twenty-
seven States have SPAPs that have either received a transitional grant 
from CMS for MMA or have been recognized by CMS as qualified 
SPAPs.21 
Drug Coverage Notification Process for Dual Eligibles 
In addition to general outreach efforts, CMS has developed a three-
pronged approach to directly notify all dual eligibles of their impending 
transition from Medicaid to Medicare drug coverage.  This involves 
mailing directly to dual eligibles notification letters and other materials 
from CMS, State Medicaid agencies, and the drug plans to which they 
were assigned. 
Many States have sent beneficiaries additional information and 
materials, either with their required official notice of drug coverage 
change or in separate mailings throughout the Fall of 2005.  For 
example, many States have included information about specific features 
of the Medicare Part D benefit and transition (e.g., that the dual eligible 
has a choice of plans) and contact information for sources of assistance 
(e.g., 1-800-MEDICARE).  Some States have taken more proactive steps 
to assist dual eligibles. For example, a few States planned to send dual 
eligibles personalized drug profiles that compare their individual drug 
history to each PDP formulary to help dual eligibles select the plan that 
best meets their drug needs.   
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  5  I N T R O D U C T I O N  
CMS has developed special protocols and is making available specially 
trained operators and casework coordinators to provide targeted 
assistance to dual eligibles.  These efforts are intended to address 
questions or concerns that arise during the transition and respond to 
issues quickly.22 
SCOPE AND METHODOLOGY 
Scope 
Our assessment of drug coverage for dual eligibles under Medicare 
Part D included two components:  determination of PDP formulary 
inclusion of commonly used drugs and review of State wraparound 
coverage policies.  We did not assess or compare the overall benefits 
provided to dual eligibles under Medicaid versus Medicare.  Rather, we 
more narrowly focused our review on dual eligibles transition from 
Medicaid to Medicare. 
See Appendix A for detailed scope and methodology.   
Formulary Inclusion.  We used aggregate drug utilization data to identify 
drugs commonly used by the dually eligible population as a whole.  We 
did not assess individual dual eligibles prescription drug use or 
whether individual dual eligibles are assigned to formularies that 
include the specific drugs that each uses. 
Our analysis assessed only whether PDP formularies include the 
specific drugs in our review.  We did not assess the overall adequacy of 
formularies or whether these formularies comply with mandated 
minimum coverage requirements. 
Our review included 200 of the most commonly used drugs based on the 
estimated number of prescriptions dispensed to dual eligibles under 
Medicaid fee-for-service in the first two quarters of 2005.  These drugs 
account for approximately 78 percent of prescriptions to dual eligibles 
during this period.  Of these 200 drugs, 22 fall into categories excluded 
from Medicare Part D coverage, and 178 are eligible for Part D 
coverage. 
We included these 200 drugs in our review because they are highly 
utilized by the dual eligible population under Medicaid, and therefore, 
their inclusion or noninclusion by PDP formularies may have an impact 
on the ease of the dual eligibles transition from Medicaid to Medicare 
Part D.  We did not assess the clinical value of any of these drugs or of 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  6  II NN TT RR OO DD UU CC TT II OO NN
any therapeutically equivalent drugs that formularies may include 
instead of the particular drugs on this list. 
We included the formularies of all 409 PDPs to which dual eligibles 
have been randomly assigned by CMS for autoenrollment. Many plans 
use the same formulary; these 409 plans use a total of 37 unique 
formularies. We excluded the formularies of MA plans. CMS did not 
assign dual eligibles to an MA drug plan unless they were already 
enrolled in that MA plan for their health care. Approximately 
10 percent of dual eligibles were assigned to MA drug plans. 
State Wraparound Coverage. We interviewed Medicaid representatives 
from 47 (out of 51) States and SPAP representatives from 23 (out of 27) 
States. We inquired about States provision of Medicaid coverage for the 
22 excluded drugs in our review and asked about States plans to use 
State-only funds to provide wraparound coverage to dual eligibles for 
nonformulary drugs. 
This information represents a snapshot at the time of our data 
collection (November and December 2005) and is self-reported data 
from State Medicaid and SPAP representatives. State coverage plans 
are subject to change. 
Methodology 
Commonly Used Drugs. We used aggregated 2005 drug utilization data 
from the Medicaid drug rebate program and 2003 dual eligible-specific 
data from the Medicaid Statistical Information System to estimate 
Medicaid prescriptions dispensed to dual eligibles in the first two 
quarters of 2005. Based on this estimate, we identified 200 highly 
utilized drugs. This list includes 22 drugs that are excluded by law 
from Part D coverage and 178 drugs eligible for PDP coverage. For a 
detailed explanation of how we identified the 200 highly utilized drugs, 
see Appendix A. 
We defined a drug by its active ingredient(s) regardless of specific 
strengths, dosages, manufacturers, or package sizes. For example, a 
multiple-source drug (i.e., a drug with generic equivalents) such as 
fluoxetine HCl (the active ingredient for the multiple-source brand 
name drug Prozac) has only one entry on our list, covering all strengths 
of the brand name drug Prozac, as well as the generic versions of 
fluoxetine HCl available. We also considered similar routes of 
administration (e.g., tablets, pills, and other oral versions) to be the 
same drug, while substantially different routes of administration (e.g., 
oral vs. injection) were treated as different drugs. 
OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  7  I N T R O D U C T I O N  
Because we had to rely on estimates to develop this list, we cannot state 
with confidence that our list of 200 drugs precisely mirrors the actual 
top 200 drugs used by dual eligibles. Additionally, because the list was 
drawn from national aggregate data, it may not exactly reflect the top 
200 drugs used by dual eligibles in a given State due to different patient 
mix and different State policies meant to control utilization and costs. 
However, these drugs account for approximately 78 percent of 
prescriptions dispensed to dual eligibles, and therefore represent the 
actual utilization of a significant number of dual eligibles. The 
200 drugs reviewed are listed in Appendix B. 
Formulary Inclusion.  Our assessments of formulary inclusion considered 
the 178 commonly used drugs that are eligible for PDP coverage.  We 
counted a drug as included if the formulary included the active 
ingredient(s) in any strength, dosage, manufacturer (either brand name 
or generic), or package size of the same general route of administration.  
For consistency with CMS policy regarding minimum formulary 
coverage requirements, we also considered a drug to be included if 
either the standard form or the extended release version of the same 
active ingredient(s) was included in the formulary.  Our determination 
of formulary inclusion was based solely on whether each drug was 
included in the formulary.  We did not consider tier level, prior 
authorization, or step therapy requirements. 
State Wraparound Coverage. For the 22 drugs in categories excluded from 
PDP coverage, we used information from our State interviews to 
determine how many States currently provide coverage for these drug 
categories under Medicaid and whether this coverage will change in any 
State Medicaid programs. We also determined how many States plan to 
offer State-funded wraparound coverage for any nonexcluded drugs that a 
dual eligibles PDP formulary does not include.  
Standards.  This study was conducted in accordance with Quality 
Standards for Inspections issued by the Presidents Council on Integrity 
and Efficiency and the Executive Council on Integrity and Efficiency. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  8    F I N D I N G S

Prescription drug plan formularies include  Of 200 drugs with high utilization 
between 76 and 100 percent of the commonly  by the dual eligible population, 
178 drugs are eligible for coverage 
used drugs we reviewed 
by PDPs and the other 22 drugs fall 
into categories excluded by law from Part D coverage.  Dual eligibles are 
assigned to 409 PDPs that use a total of 37 unique formularies.  
Because these PDP formularies vary in the number of commonly used 
drugs they include, random assignment to PDPs may affect prescription 
drug coverage.  Formulary inclusion of the 178 commonly used drugs 
ranges from a low of 135 drugs (76 percent) to a high of 178 drugs 
(100 percent). 
Nineteen percent of formularies include all 178 of the Part D eligible 
drugs we reviewed; an equal proportion include 151 or fewer (less than 
85 percent).  By formulary, the average rate of inclusion is 92 percent of 
these commonly used drugs.   
To meet minimum coverage requirements, all formularies must include 
therapeutic alternatives (i.e., drugs that treat the same medical 
condition) for drugs that are not included on the formulary. 
Additionally, CMS staff reported that they had ensured in their 
formulary review that formularies include at least one of each key drug 
type, unless the plan presented reasonable clinical justification for not 
including a key drug type. Dual eligibles who are taking a drug that is 
not included on their PDP formulary should therefore have coverage for 
a different drug that treats their condition.  However, a dual eligible in 
this situation will need to obtain a new prescription from his or her 
doctor before the alternative drug can be dispensed.  
Eighteen percent of dual eligibles were assigned to plans that include of all 
of the 178 commonly used drugs we reviewed 
As of November 2005, almost one-fifth of dual eligibles (18 percent) 
nationally have been assigned to PDPs that use formularies that 
include all 178 drugs in our review. If these dual eligibles took no 
action, they were automatically enrolled in these plans on January 1, 
2006, and maintained formulary inclusion of all of these 178 commonly 
used drugs.  While we reviewed 178 of the most common drugs, any 
individual dual eligible may be taking drugs not included in our review 
that may or may not be included on these formularies. 
Almost one-third of dual eligibles (30 percent) were assigned to plans 
that include less than 85 percent (151 or fewer) of the 178 commonly 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  9  F I N D I N G S  
used drugs.  If these dual eligibles took no action to switch plans, they 
were automatically enrolled in plans with a formulary that omits 15 
percent or more of these common drugs.  An individual dual eligible 
assigned to one of these plans may not take any of the omitted drugs, 
and lack of formulary inclusion of these drugs may not affect that 
individual. However, because our review included drugs with high 
utilization by this population, it is likely that at least some dual 
eligibles assigned to these plans use drugs that are omitted from the 
formulary. If dual eligibles were assigned to a plan that does not 
include a drug they take, they may obtain a new prescription for an 
alternative drug that is included, apply for a formulary exception if the 
nonformulary drug is the only drug that meets their needs, or switch to 
a plan that includes their drug. 
Table 1 breaks out dual eligibles autoassignment by formulary 
inclusion nationally.  Appendix C provides this breakout by PDP region. 
TABLE 1: Random Assignment of Dual Eligibles and Formulary Inclusion of   
Commonly Used Drugs 
Random Assignment to Plans That 
Number of Dual Eligibles*  Percentage of Dual Eligibles 
Include: 
100% of Common Drugs Reviewed 
979,000  18% 
(178 Drugs) 
85% to 99% of Common Drugs Reviewed  
2,892,000  52% 
(152 to 177 drugs) 
Less than 85% of Common Drugs Reviewed 
1,628,000  30% 
(151 or fewer drugs) 
Totals  5,499,000  100% 
* Rounded to the nearest 1,000. 

Source:  Office of Inspector General (OIG) Analysis of Formulary Inclusion of Drugs Commonly Used by Dual Eligibles, 2005.

Every PDP region has at least one plan using a formulary that includes 
all 178 commonly used drugs.  This means that all dual eligibles have 
the opportunity to switch to a plan including all of these 178 drugs.  To 
change PDPs, dual eligibles need to identify which PDP formulary best 
meets their needs and take action to enroll in that plan.  
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  10  FF II NN DD II NN GG SS  
Four States planned to offer wraparound coverage for at least some drugs 
omitted from plan formularies 
At the time of our interviews (November to December 2005), 4 of the 
47 States planned to use State-only Medicaid funds to provide 
wraparound coverage to dual eligibles for drugs that are eligible for 
PDP coverage but are omitted from a plans formulary. Two of these 
States, Connecticut and New York, planned to cover any drugs that are 
not included on a PDPs formulary and that the State covers for its 
nondual eligible Medicaid population. The other two States, New 
Jersey and Vermont, planned to cover a limited group of nonformulary 
drugs. All four States planned to require dual eligibles to exhaust the 
exceptions and appeals process with their PDP before the State will 
provide Medicaid coverage. 
Since the transition of dual eligibles on January 1, 2006, several 
additional States have announced plans to offer temporary safety net 
coverage to dual eligibles in response to problems with the transition. 
States supplemental coverage may apply in a variety of circumstances 
in which dual eligibles are having difficulty obtaining drugs under 
Part D, including but not limited to formulary issues. For example, 
Maine reinstituted State-funded drug coverage for its dual eligible 
population on January 3, 2006. 23 In California, the State passed 
emergency legislation to guarantee medication coverage for dual 
eligibles who have been unable to get their prescriptions filled under the 
new Medicare drug benefit. The bill provides up to $150 million for 
1 month to pay for medications for dual eligibles.24  Numerous other 
States have reported similar actions.25 
Approximately half of the 178 commonly used  Most of the 178 commonly used 
drugs we reviewed were included by all  drugs are included by a large 
percentage of formularies and, in 
formularies 
fact, half of these drugs 
(51 percent) are included by all 37 formularies. Therefore, dual eligibles 
will be assured formulary inclusion of many of the highly utilized drugs 
regardless of the plan to which they were assigned. An additional 27 of 
these highly utilized drugs (15 percent) are included by all but 1 or 2 
formularies. 
By drug, formulary inclusion ranges from 43 percent (i.e., included by 
16 formularies) to 100 percent (37 formularies). However, because most 
of the drugs are included by the vast majority of formularies, the 
OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  11  F I N D I N G S  
average rate of inclusion is relatively high at 34 out of 37 formularies 
(92 percent). Table 2 provides a summary of formulary inclusion by 
drug, and Appendix B provides the number and percentage of 
formularies that include each of the 178 drugs. 
TABLE 2: Formulary Inclusion by Drug 
Drugs Included by...  Percentage of 178 Drugs  
100% of the 37 Formularies 
51% (91 drugs) 
(37 formularies) 
85% to 99% of the 37 Formularies  
29% (52 drugs) 
(32 to 36 formularies) 
75% to 84% of the 37 Formularies 
8% (14 drugs) 
(28 to 31 formularies) 
43% to 75% of the 37 Formularies  
12% (21 drugs) 
(27 or fewer formularies) 
Total  100% (178 drugs) 
Source:  OIG Analysis of Formulary Inclusion of Drugs Commonly Used by Dual Eligibles, 2005. 
Among formularies that do not include all 178 drugs, certain drugs are 
omitted more frequently than others 
Of the 178 common drugs we reviewed, 21 drugs (12 percent) were 
omitted from at least one-fourth of the formularies.  Table 3 lists these 
21 drugs and the percentage of formularies covering each.  All are single 
source drugs, i.e., brand name drugs with no generic equivalents. Six of 
these twenty-one drugs are used to treat high blood pressure.  Three of 
these drugs are used to lower cholesterol and three are used for pain 
relief. 
Minimum formulary coverage guidelines and CMS review should ensure 
that all formularies include a therapeutic alternative for any of these 
omitted drugs. If a dual eligible takes a specific drug that is omitted 
from his or her PDP formulary, obtaining an alternative drug requires 
the dual eligible to get a new prescription from his or her doctor. Dual 
eligibles may also apply for a formulary exception to obtain coverage for 
a nonformulary drug (by submitting a written statement of medical 
necessity from their physician).  Finally, dual eligibles may switch to a 
PDP that includes their drug (with new coverage effective the following 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  12  F I N D I N G S  
month). In the meantime, CMS has urged PDPs to cover a one-time 
transition supply of the nonformulary drug.26 
TABLE 3: Drugs Omitted From at Least 25 Percent of Formularies 
Percentage of 
Formularies 
Drug Brand Name (Generic Name)  Primary Indication(s)27  Omitting 
Mobic (Meloxicam)  Osteoarthritis (pain relief, anti-inflammatory)  57% 
Ulcers, gastroesophageal reflux disease, and 
Aciphex (Rabeprazole sodium)  Zollinger-Ellison syndrome  51% 
Postherpetic neuralgia (relief of pain following 
Lidoderm (Lidocaine patch)  shingles infection)  46% 
Ultracet 
(Tramadol HCl/acetaminophen)  Pain relief  43% 
Lescol (Fluvastatin sodium)  Hyperlipidemia (high cholesterol)  43% 
Lexapro (Escitalopram oxalate)28  Depression, generalized anxiety disorder  41% 
Clarinex (Desloratadine)  Antihistamine (hay fever, hives)  41% 
Pravachol (Pravastatin sodium)  Hyperlipidemia (high cholesterol)  41% 
Cozaar (Losartan potassium)  Hypertension (high blood pressure)  38% 
Hyzaar  
(Losartan potassium/HCTZ)  Hypertension (high blood pressure)  38% 
Crestor (Rosuvastatin)  Hyperlipidemia (high cholesterol)  38% 
Avalide (Irbesartan/HCTZ)  Hypertension (high blood pressure)  38% 
Avapro (Irbesartan)  Hypertension (high blood pressure)  35% 
Benicar (Olmesartan medoxomil)  Hypertension (high blood pressure)  35% 
Razadyne (Galantamine HBr)  Alzheimers disease  32% 
Travatan (Travoprost eye drop)  Glaucoma, ocular hypertension  32% 
Nexium 
(Esomeprazole magnesium)  Gastroesophageal reflux disease  30% 
Levaquin (Levofloxacin)  Antibiotic  27% 
Catapres patch (Clonidine HCl)  Hypertension (high blood pressure)  27% 
Zyrtec (Cetirizine HCl)  Antihistamine (hay fever, allergies, hives)  27% 
Antiplatelet (to prevent excessive clotting and 
Aggrenox  reduce the risk of stroke)   27% 
 Source:  OIG Analysis of Formulary Inclusion of Drugs Commonly Used by Dual Eligibles, 2005. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  13  FF II NN DD II NN GG SS
  
Dual eligibles access under Medicaid will not  Of the 200 commonly used drugs 
we reviewed, 178 are eligible for 
change in 45 of 47 States for the 22 drugs we 
Part D coverage and 
reviewed that are statutorily excluded from 
22 (11 percent) fall into categories 
Medicare Part D coverage 
that are statutorily excluded from 
Part D coverage. Under Medicaid, States have the option to cover or 
exclude these categories of drugs. If States opt to cover these drugs for 
their nondual eligible population, they must also cover them for dual 
eligibles. States will continue to receive Federal matching funds to 
provide coverage of drugs in these excluded categories to dual eligibles. 
These 22 high utilization drugs fall into 5 excluded drug categories: 
o  Nonprescription (i.e., over the counter) drugs (12 drugs), 
o  Benzodiazepines (5 drugs), 
o  Prescription vitamin and mineral products (3 drugs),29 
o  Barbiturates (1 drug), and 
o  Drugs used for symptomatic relief of cough and colds (1 drug). 
All 47 States that we interviewed provided coverage for at least some 
excluded drugs in 2005. Coverage ranged by category. All 47 States 
covered benzodiazepines in 2005, but only 33 of these States covered 
drugs used for symptomatic relief of cough and colds.30 
In 45 of these 47 States, dual eligibles continue to have access to the 
same drugs covered by their Medicaid program in 2005. One State 
(Tennessee) planned to end Medicaid coverage of benzodiazepines and 
barbiturates, accounting for 6 of the 200 highly utilized drugs in our 
review, for all beneficiaries (including dual eligibles). Another State 
(North Dakota) planned to discontinue Medicaid coverage of drugs used 
for symptomatic relief of cough and colds (1 of the 200 drugs reviewed). 
No States we interviewed planned to expand their current coverage of 
excluded drugs. Appendix D summarizes State coverage by category for 
these 22 excluded drugs. 
OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  14    CC OO NN CC LL UU SS II OO NN   

Our assessment of drug coverage for dual eligibles under Medicare 
Part D included two components:  determination of PDP formulary 
inclusion of commonly used drugs and review of State wraparound 
coverage policies.  We did not assess or compare the overall benefits 
provided to dual eligibles under Medicaid versus Medicare.  Rather, our 
review focused on differences between the drugs that the dual eligible 
population used under Medicaid and the drugs included in PDP 
formularies, as these differences may affect the ease of dual eligibles 
transition from Medicaid to Medicare. 
We reviewed 200 drugs commonly used by the dual eligible population 
in aggregate.  We did not assess individual dual eligibles prescription 
drug use or whether individual dual eligibles are assigned to 
formularies that include the specific drugs they use. Of the 
200 commonly used drugs, 22 drugs fall into categories excluded by law 
from PDP coverage and 178 drugs are eligible for PDP coverage. 
We determined whether these 178 Part D eligible drugs were included 
on each PDP formulary and found that formulary inclusion varies. 
Some plans use formularies that include all 178 of these highly utilized 
drugs; other plans use formularies that include as few as 
135 (76 percent) of these drugs.   
Because PDP formularies vary, random assignment to PDPs may affect 
the number of dual eligibles who take a specific drug that is not 
included on their PDPs formulary. Dual eligibles have several options 
to ensure appropriate drug coverage if this occurs.  They may apply for 
an exception for the nonformulary drug.  They may get a new 
prescription from their doctor for a different drug that treats their 
condition.  They may also choose to switch plans on a monthly basis.  
Because each PDP region has at least one plan that includes all 178 
commonly used drugs we reviewed, every dual eligible has the 
opportunity to enroll in a plan covering all of these drugs.  Finally, CMS 
has urged plans to provide a one-time supply of the nonformulary drug 
to aid in this transition.   
However, navigating these options requires a dual eligible to have a 
certain level of understanding of the Medicare Part D benefit and take 
specific action.  At a basic level, the dual eligible must be aware that 
formularies vary by plan and that CMS and State agencies have created 
options to ease the transition.  Next, the dual eligible must make 
proactive efforts to ensure his or her drug needs are met as outlined 
above.  These actions may present a minor administrative obstacle to 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  15  C O N C L U S I O N  
some and a major barrier to others given the fact that dual eligibles face 
greater health and resource challenges than other Medicare 
beneficiaries.31  Thirty-eight percent of dual eligibles have cognitive or 
mental impairments.  Over a third are disabled. On average, dual 
eligibles use at least ten more prescription drugs than nondual eligible 
beneficiaries. 
Given the variation we found in PDP formularies inclusion of 
178 commonly used drugs, as well as the medical and resource 
challenges faced by this population, dual eligibles may need targeted 
assistance to navigate the transition from Medicaid to Medicare 
coverage. CMS has undertaken efforts to educate and assist dual 
eligibles and to incorporate safeguards into the program to ensure 
access to needed drugs.  Some State Medicaid agencies have also taken 
the initiative to educate dual eligibles and a few are directly assisting 
dual eligibles to identify which PDP formulary offers optimal coverage 
for their needs to make the transition as seamless as possible. 
However, reported experiences of some dual eligibles highlight the need 
for further targeted assistance to this population to ease this 
transition.32 
OIG will continue to study issues associated with dual eligibles as they 
make the transition from Medicaid to Medicare Part D. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS provided comments on the draft report in which it highlighted its 
concerns with this report.  These concerns fall into two general 
categories: methodology and scope.  CMSs comments are included in 
Appendix E.  CMS also provided technical comments, which we 
incorporated into the report where appropriate. 
Methodology Concerns and Response 
CMS contended that this study has significant methodological flaws, 
primarily because we used a national list of 178 drugs commonly used 
by the dual eligible population.  CMS favors a methodology that 
analyzes drug histories and formulary assignment for individual 
beneficiaries. 
We disagree that our study has significant flaws.  We are confident that 
our analysis provides an appropriate measure of potential 
vulnerabilities that dual eligibles face while making the transition from 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  16  C O N C L U S I O N  
Medicaid to Medicare. Our national list of drugs represents the top 
drugs that the dual eligible population actually used under Medicaid, 
accounting for approximately 78 percent of all Medicaid prescriptions 
dispensed to dual eligibles.  For the Part D eligible drugs in our review, 
we determined whether each drug was included on each formulary of 
the PDPs in which dual eligibles were automatically enrolled.  
Differences between the list of drugs that dual eligibles commonly use 
and the drugs on PDP formularies signal potential challenges for dual 
eligibles during the transition. 
While we used one methodological approach, CMS advocated another 
approach that measures formulary coverage at the beneficiary level. 
CMS provided its own analysis comparing individuals drug histories to 
PDP formularies for a sample of dual eligibles.  This analysis is included 
in Appendix E. 
In fact, CMSs results were remarkably similar to ours and we believe 
further support our conclusions.  In our study, we found that, on 
average, PDP formularies include 92 percent of the 178 Part D eligible 
drugs we reviewed. In its analysis, CMS found that, on average, PDP 
formularies include 92.8 percent of the prescriptions of the individual 
dual eligibles it sampled. Our report concluded that, given the variation 
in PDP formularies, random assignment to PDPs may affect the number 
of dual eligibles who take specific drugs that are not included on their 
PDP formulary.  CMSs analysis found that 31.8 percent of the dual 
eligibles in its sample took at least one drug that is not covered by their 
randomly assigned PDP formulary. The fact that CMS and OIG 
conducted independent analyses, using different methodologies, and 
found very similar results further strengthens our confidence in our 
findings and conclusions. 
Scope Concerns and Response 
CMSs other concerns generally relate to the scope of our review and, 
specifically, to issues we do not address in this study.  Our review 
determined the extent to which PDP formularies include drugs 
commonly used by dual eligibles under Medicaid, as differences in 
coverage may present challenges during dual eligibles transition to 
Part D.  We did not assess or compare the overall benefits provided to 
dual eligibles under Medicaid versus Medicare.  While CMSs concerns 
about Medicaid drug restrictions and whether beneficiaries have better 
coverage under Part D are important issues, they are outside the scope 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  17  C O N C L U S I O N  
of this review, which focused on assessing challenges during the 
transition. 
Consistent with our goal to assess dual eligibles transition to the 
Part D benefit, we assessed only whether PDP formularies include the 
specific highly utilized drugs in our review.  We did not assess the 
clinical quality of PDP formularies, the clinical value of the drugs in our 
review, or their therapeutic alternatives.  For the purposes of this study, 
we presumed that CMS ensures that PDP formularies meet minimum 
statutory requirements and provide adequate coverage from a clinical 
perspective. 
However, as CMS explains in its comments, a formulary can meet 
minimum coverage requirements without covering all drugs.  CMS 
provided the example of Crestor and Lipitor (two drugs used to lower 
cholesterol) and explained that the plans would generally choose to 
include only one of these two drugs on their formularies for cost 
containment purposes. 
While we make no assessment of the relative clinical values of Crestor 
and Lipitor, we point out that a dual eligible who is taking Crestor may 
be autoenrolled in a plan that covers only Lipitor and vice versa.  In this 
situation, the dual eligible must take action to maintain access to any 
drug to treat his or her condition.  The dual eligible must contact a 
physician to switch the prescription to the formulary drug, apply for an 
exception to continue taking the nonformulary drug, or switch to a plan 
that covers the specific drug.  Dual eligibles may need assistance 
navigating these options.  Ideally, CMS and other stakeholders could 
assist dual eligibles to understand their PDP formularies and encourage 
them to take proactive steps (e.g., contacting their physician to change 
prescriptions), if needed, before the beneficiary arrives at the pharmacy 
counter. 
We hope that the information in this report, in conjunction with CMSs 
own analysis, helps CMS and other stakeholders to assist dual eligibles 
who may be experiencing challenges in the transition to their Part D 
formularies. OIG will also continue to study issues associated with dual 
eligibles as they make the transition from Medicaid to Medicare Part D. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  18    E N D N O T E S  

1 Public Law 108-173. 
2 In addition to these two primary options, there can be beneficiaries 
who enrolled in PDPs who receive their benefits through cost plans or 
private fee-for-service plans, as well as other beneficiaries who receive 
Part D through PACE organizations. 
3 CMS. MA & PDP Regions: State by State Summary Table.  
Available online at 
http://www.cms.hhs.gov/medicarereform/mmaregions/pdpmaosum.asp, accessed 
October 20, 2005. 
4 Federal financial participation is available for Medicaid coverage of 
any of the Medicaid excludable drugs, which are excluded by law from 
Medicare Part D coverage. 
5 Section 1935(c) of the Social Security Act, as amended by Public Law 
108-173. 
6 GAO. Contingency Plans to Address Potential Problems With the 
Transition of Dual-Eligible Beneficiaries From Medicaid to Medicare 
Drug Coverage. 2005.  Available online at 
http://www.gao.gov/new.items/d06278r.pdf, accessed December 29, 2005. 
Elliot, Rachel, et al. Benefits and Consequences for the Poor and the 
Disabled. New England Journal of Medicine. 353:26, pp. 2793-2741. 
December 29, 2005. 
Kaiser Commission on Medicaid and the Uninsured. Resources on 
Dual Eligibles and Issues Related to Their Transition to the New 
Medicare Drug Benefit. Available online at 
http://www.kff.org/medicaid/dualsrx.cfm, accessed December 29, 2005. 
Nemore, Patricia. Medicare Part D:  Issues for Dual Eligibles on the 
Eve of Implementation. Kaiser Family Foundation.  November 2005. 
Available online at https://www.kff.org/medicare/upload/Medicare-Part-D-Issues-
for-Dual-Eligibles-on-the-Eve-of-Implementation-Issue-Brief.pdf, accessed 
December 29, 2005. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  19  7 Section 1860D-1(b)(1)(C) of the Social Security Act, as amended by 
Public Law 108-173. 
8 42 CFR  423.38(c)(4) and 423.40(c).  Nondual eligibles may only 
change their plan selections during the open enrollment period, unless 
they meet specific criteria for a Special Election Period.  For 2006, the 
open enrollment period began on November 15, 2005, and continues 
through May 15, 2006.  In future years, the open enrollment period will 
begin on November 15 and end on December 31. 
9 National Pharmaceutical Council.  Pharmaceutical Benefits Under 
Medicaid 2004.  2005. Available online at 
http://www.npcnow.org/resources/PharmBenefitsMedicaid.asp, accessed 
December 30, 2005. 
10 Section 1860D-4(b)(3)(C)(ii) of the Social Security Act, as amended by 
Public Law 108-73, required that CMS request the U.S. Pharmacopeia 
(USP) to develop model guidelines that PDP sponsors could use to 
develop their formularies.  The USP guidelines include 41 therapeutic 
categories. Of these, 32 categories also have associated pharmacologic 
classes (total of 137 classes).  For example, the USP guidelines include 
the therapeutic category of Blood Glucose Regulators and three 
pharmacologic classes (Antihypoglycemics; Hypoglycemics, Oral; and 
Insulins) associated with that category.  USP, Medicare Prescription 
Drug Benefit Model Guidelines, December 31, 2004.  Available online at 
http://www.usp.org/pdf/EN/mmg/finalModelGuidelines2004-12-31.pdf, accessed 
October 27, 2005. 
11 CMS, A Strategy for Transitioning Dual Eligibles from Medicaid to 
Medicare Prescription Drug Coverage, May 2, 2005, page 5.  Available 
online at http://www.cms.hhs.gov/medicarereform/strategyforduals.pdf, accessed 
October 21, 2005. 
12 Substantially all means that all drugs in these categories are 
expected to be included in plan formularies with a few specified 
exceptions.  CMS Special Guidance Materials, Clarification:  Formulary 
Review, updated June 16, 2005.  Available online at 
http://www.cms.hhs.gov/pdps/formularyqafinalmmrevised.pdf, accessed 
October 19, 2005. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  20  13 Section 1860D-4(b)(3)(E) of the Social Security Act, as amended by 
Public Law 108-173. 
14 USP created key drug types to aid CMS review of formularies for 
overall adequacy of coverage.  Key drug types are more specific than 
categories or classes.  For the review of PDP formularies for 2006, USPs 
list identified 118 key drug types.  For 2007, USPs proposed list has 
expanded to include 170 key drug types.  USP, Preamble to the Proposed 
Revisions to the USP Model Guidelines.  Available online at   
http://www.usp.org/healthcareInfo/mmg/phase2/preamble.html, accessed 
December 19, 2005; USP, Draft Drug Listing, available online at 
http://www.usp.org/pdf/EN/mmg/draftDrugListingV2.0-2005-12-09.pdf, accessed 
December 19, 2005. 
15 CMS. Fact Sheet:  Ensuring an Effective Transition of Dual 
Eligibles from Medicaid to Medicare Part D.  December 1, 2005.  
16 CMS, Prescription Drug Benefit Manual, Chapter 18:  Enrollee 
Grievance, Coverage Determinations, and Appeals.  Available online at 
http://www.cms.hhs.gov/pdps/part_d_manualappeals20051130.pdf, accessed 
December 2, 2005. 
17 CMS, Fact Sheet:  Ensuring an Effective Transition of Dual 
Eligibles from Medicaid to Medicare Part D.  December 1, 2005. 
18 CMS, Information for Part D Sponsors on Requirements for a 
Transition Process, March 16, 2005.  Available online at 
www.cms.hhs.gov/pdps/specguidncmaterials.asp, accessed December 2, 2005. 
19 42 U.S.C.  1396r-8(d)(2). 
20 Public Law 109-91  104(a) added the category of drugs used for 
sexual or erectile dysfunction, applicable to drugs dispensed on or after 
January 1, 2007. 
21 The 21 States that received grants are CT, DE, IL, IN, KS, MA, MD, 
ME, MI, MN, MO, NC, NJ, NV, NY, PA, RI, TX, VT, WI, and WY.  CMS, 
State Pharmaceutical Assistance Program Transitional Grant 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  21  Distribution Awards, October 2004.  Available online at 
http://www.cms.hhs.gov/medicarereform/spap_state_awards.pdf, accessed 
November 17, 2005.  
Qualified SPAPs are eligible for certain benefits in coordinating 
coverage with Medicare Part D.  These 25 States are AK, CA, CT, DE, 
FL, IL, IN, MA, MD, ME, MI, MO, MN, MT, NC, NJ, NV, NY, RI, SC, TX, 
VT, WA, WI, and WY.  CMS, Qualified SPAP List, November 8, 2005.  
Available online at 
http://www.cms.hhs.gov/medicarereform/states/qual_spap_list.pdf, accessed 
November 17, 2005. 
22 CMS, Fact Sheet:  Ensuring an Effective Transition of Dual 
Eligibles from Medicaid to Medicare Part D.  December 1, 2005. 
23 BNA. Dual Eligibles:  Low Income Seniors Denied Benefits in 
Transition to Medicare Part D, Groups Say.  January 13, 2005. 
24 San Francisco Chronicle.  Move to Cover Drug Benefits:  Legislature 
Steps in on Prescriptions for Medicare Patients.  January 20, 2006. 
25 Kaisernetwork.  Kaiser Daily Health Policy Report Highlights News 
of State Actions Related to Launch of Medicare Drug Benefit, January 
11, 2006; and More States Take Emergency Measures To Provide Rx 
Drugs to Medicare Beneficiaries, January 13, 2006.  Available online at 
http://www.kaisernetwork.org/daily_reports/rep_index.cfm?hint=3&DR_ID=34786, 
accessed January 20, 2005. 
26 CMS, Memorandums to Medicare Part D Sponsors, issued January 
13 and January 18, 2006. 
27 Information on indications from MedlinePlus, a service of the U.S. 
National Library of Medicine and the National Institutes of Health.  
Available online at http://www.nlm.nih.gov/medlineplus/druginformation.html, 
accessed November 30, 2005.    
28 Although Lexapro (escitalopram oxalate) is in one of CMSs protected 
categories, i.e., antidepressants, it falls under one of the substantially 
all exceptions.  This exception is that formularies must cover either 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  22  escitalopram oxalate or citalopram.  Therefore, those formularies that 
omit escitalopram oxylate must cover citalopram. 
29 Prenatal vitamins and fluoride preparations are exceptions to this 
exclusion. 
30 These States may restrict their coverage within these categories 
(e.g., requiring prior authorization, only covering certain drugs in a 
category), but all States provide at least some coverage of drugs in the 
category.  
31 GAO. Contingency Plans to Address Potential Problems with the 
Transition of Dual-Eligible Beneficiaries from Medicaid to Medicare Drug 
Coverage. 2005. Available online at 
http://www.gao.gov/new.items/d06278r.pdf, accessed December 29, 2005. 
Elliot, Rachel, et al. Benefits and Consequences for the Poor and the 
Disabled. New England Journal of Medicine. 353:26, pp. 2793-2741. 
December 29, 2005. 
Kaiser Commission on Medicaid and the Uninsured. Resources on 
Dual Eligibles and Issues Related to Their Transition to the New 
Medicare Drug Benefit.  Available online at 
http://www.kff.org/medicaid/dualsrx.cfm, accessed December 29, 2005. 
Nemore, Patricia. Medicare Part D:  Issues for Dual Eligibles on the 
Eve of Implementation. Kaiser Family Foundation.  November 2005. 
Available online at https://www.kff.org/medicare/upload/Medicare-Part-D-Issues-
for-Dual-Eligibles-on-the-Eve-of-Implementation-Issue-Brief.pdf, accessed 
December 29, 2005. 
32 CBS News.  Medicare Reality Check.  Available online at 
http://www.cbsnews.com/stories/2006/01/06/eveningnews/main1185180.shtml, 
accessed January 13, 2006. 
Detroit Free Press.  Seniors Drugs Held Up in Drug Plan Switch.  
Available online at www.freep.com, accessed January 10, 2005. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  23  USA Today.  Medicare Drug Benefit Costly for Some Poor.  Available 
online at http://www.usatoday.com/news/health/2006-01-12-medicare-poor_x.htm, 
accessed January 13, 2006. 
USA Today.  Seniors Denied Rx Drug Benefits.  Available online at 
http://www.usatoday.com/news/health/2006-01-12-seniors-medicare_x.htm, 
accessed January 13, 2006. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  24  A P P E N D I X   ~   A  
  A P P E N D I X   ~   A  

DETAILED SCOPE AND METHODOLOGY 
Scope of Inspection 
Our assessment of drug coverage for dual eligibles under Medicare 
Part D included two components. Primarily, we determined whether 
PDP formularies include (nonexcluded) drugs that were highly utilized 
by dual eligibles under Medicaid.  Secondarily, we identified how many 
States plan to offer wraparound drug coverage for excluded drugs 
and/or nonformulary drugs for dual eligibles. 
Our study focused on the transition of dual eligibles from Medicaid to 
Medicare Part D drug coverage. We assessed the extent to which PDP 
formularies include the drugs that dual eligibles commonly used under 
Medicaid, as differences in coverage may affect the ease of dual 
eligibles transition to Medicare. We did not assess or compare the 
overall benefits provided to dual eligibles under Medicaid versus 
Medicare. 
Our review included 200 of the most commonly used drugs based on the 
number of prescriptions dispensed to dual eligibles under Medicaid 
fee-for-service in the first two quarters of 2005.  These drugs account for 
approximately 78 percent of prescriptions to dual eligibles during this 
period. Of these 200 drugs, 22 fall into categories excluded from 
Medicare Part D coverage, and 178 are eligible for Part D coverage.  
We included these 200 drugs in our review because they are highly 
utilized by the dual eligible population under Medicaid and, therefore, 
their inclusion or noninclusion by PDP formularies may have an impact 
on the ease of the dual eligibles transition from Medicaid to Medicare 
Part D.  We did not assess the clinical value of any of these drugs or of 
any therapeutically equivalent drugs that formularies may include 
instead of particular drugs on this list. 
We used aggregate drug utilization data to identify drugs commonly 
used by the dual eligible population as a whole.  We did not assess 
individual dual eligibles prescription drug use or whether individual 
dual eligibles are assigned to formularies that include the specific drugs 
that each uses. 
Our review included 200 of the most commonly used drugs based on 
estimated utilization among dual eligibles under Medicaid 
fee-for-service in the first two quarters of 2005.  Of these 200 drugs, 22 
are excluded from Medicare Part D coverage.  
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  25  A P P E N D I X   ~   A  
Formulary Inclusion.  Our determinations of formulary inclusion 
considered the 178 nonexcluded drugs from our list of 200 drugs with 
high dual eligible utilization. 
We included the formularies of all PDPs to which dual eligibles have 
been randomly assigned by CMS for autoenrollment, i.e., PDPs offering 
standard benefits (or equivalent) with premiums at or below the 
regional benchmark cost.  In total, 409 PDPs (offered by 60 PDP 
sponsors) met these criteria.  Many plans use the same drug 
formularies; these 409 plans use a total of 37 unique formularies. 
We excluded the formularies of PDP plans with enhanced benefits 
and/or with premiums above the regional benchmark because dual 
eligibles will face additional cost-sharing requirements if they enroll in 
such plans. We also excluded the formularies of MA plans.  While dual 
eligibles may opt to enroll in an MA plan, this decision affects their 
entire health care delivery system by enrolling them in managed care, 
and therefore includes many important considerations beyond drug 
coverage. CMS did not assign dual eligibles to an MA drug plan unless 
they were already enrolled in that MA plan for their health care. 
Approximately 10 percent of dual eligibles were assigned to MA drug 
plans. 
Our analysis of PDP formularies assessed only whether they include 
the specific drugs in our review.  We did not assess the overall adequacy 
of the PDP formularies or whether these formularies comply with 
mandated minimum coverage requirements. 
State Wraparound Coverage.  Our inquiry into State wraparound 
coverage considered two issues.  The first was States provision of 
Medicaid coverage (with Federal matching funds) for the 22 excluded 
drugs on our list of 200 drugs commonly utilized by dual eligibles.  The 
second was States plans to use State-only funds to provide wraparound 
coverage to dual eligibles for nonformulary drugs. 
We contacted the Medicaid programs of all States and the District of 
Columbia. Forty-six States responded.  We inquired about current 
Medicaid coverage of excludable drugs, as well as wraparound policies 
States planned to have in place in January 2006 to cover excluded 
drugs and/or nonformulary drugs. We also contacted the 27 States with 
SPAPs that were either recognized as qualified SPAPs by CMS or 
received transitional grants from CMS to inquire about wraparound 
coverage for dual eligibles.  Twenty-three States with SPAPs responded. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  26  A P P E N D I X   ~   A  
This information represents a snapshot at the time of our data 
collection (November and December 2005) and is self-reported data 
from States; we did not independently verify States responses.  We did 
not assess sources outside of the State Medicaid programs or SPAPs 
that could potentially offer dual eligibles access to excluded drugs or 
nonformulary drugs. 
Methodology 
Data Sources for Formulary Comparisons 
Data sources for the comparison of formularies to dual eligibles 
commonly used drugs included:  
o  Medicaid Drug Rebate (MDR) program drug utilization data from 
the first two quarters of 2005, 
o  Medicaid Statistical Information System (MSIS) data from 2003 
(the most recent year available), 
o First Databank drug product data, 
o  Medispan drug product data, 
o  Redbook drug product data, and 
o  PDP formulary information. 
Identifying 200 Drugs With High Utilization by Dual Eligibles 
We identified 200 highly utilized drugs using the estimated number of 
prescriptions dispensed to dual eligibles in the first two quarters of 
2005. To do so, we used MSIS data to calculate the proportion of 
prescriptions for each drug that was dispensed to dual eligibles in 2003.  
We applied these proportions to MDR drug utilization data from 2005.  
When MSIS data were not available for a specific drug, we applied the 
average proportion of prescriptions written to dual eligibles for drugs in 
the same therapeutic class in that State.  Our list of 200 drugs highly 
utilized by dual eligibles is based on the compilation of dual eligibles 
drug utilization in the 2003 MSIS data (32 States) and 2005 MDR 
utilization data (43 States, January through June 2005).  This list 
includes 22 drugs that are excluded by law from Part D coverage that 
most Medicaid programs had opted to cover in 2005. 
Because we had to rely on estimates to develop this list, we cannot state 
with confidence that our list of 200 drugs precisely mirrors the actual 
top 200 drugs used by dual eligibles. Additionally, because this list was 
developed from aggregate national data, it may not exactly reflect the 
top 200 drugs used by dual eligibles in a given State.  However, we 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  27  A P P E N D I X   ~   A  
conducted a preliminary comparison of the top National Drug Codes 
(NDCs) by dual eligibles utilization nationally and the top NDCs by 
dual eligibles utilization in 10 States of varying regions, population 
densities, and Medicaid policies.  We found only minimal differences 
between the national and State lists of highly utilized drugs. 
The 200 drugs on our list account for approximately 78 percent of 
prescriptions dispensed to dual eligibles.  Consequently, the inclusion or 
noninclusion of these drugs on Part D formularies is likely to affect 
significant numbers of dual eligibles.  We are therefore confident that 
our national list of 200 highly utilized drugs is a good proxy by which to 
assess potential disruptions in dual eligibles prescription drug access 
during the transition process. These 200 drugs are listed in 
Appendix B. 
Determining Formulary Inclusion 
We defined each drug by its active ingredient(s) regardless of specific 
strengths, dosages, manufacturers, or package sizes.  For example, a 
single source drug (i.e., a drug with no generic equivalents), such as 
Lipitor, appears only once on our list of 200 drugs; we did not include 
separate entries for Lipitor 10-mg strength and Lipitor 20-mg strength.  
A multiple-source drug such as fluoxetine HCl (the active ingredient for 
the multiple-source brand name drug Prozac) has only one entry on our 
list, covering all strengths of the brand name drug Prozac, as well as the 
generic versions of fluoxetine HCl available.  We considered the 
standard form and extended release version of the same active 
ingredient(s) to be the same drug. We also considered similar routes of 
administration (e.g., oral) to be the same drug, while substantially 
different routes of administration were treated as different drugs. For 
example, if the same active ingredient was available in caplets, tablets, 
and oral liquids, we considered these versions to be the same drug.  
However, the same active ingredient in a nonoral form, such as an 
injection, would be considered a different drug. 
A drug was considered to be included by the formulary if the active 
ingredient was included in any strength, dosage, manufacturer, or 
package size of the same general route of administration.  When a drug 
included multiple ingredients that could be dispensed separately and 
combined by the patient to the same effect as the combined drug, then 
the drug was treated as included when the ingredients were included in 
the formulary either separately or in combination.  For example, one 
drug on our list is Vytorin (ezetimibe/simvastatin), a combination of 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  28  A P P E N D I X   ~   A  
Zetia (ezetimibe) and Zocor (simvastatin).  If the formulary included 
both Zetia and Zocor, then we considered Vytorin to be included. 
Once we made formulary inclusion determinations for each of the 
nonexcluded drugs, we analyzed these results.  For each formulary, we 
calculated the percentage of the 178 drugs (i.e., the 200 drugs minus the 
22 drugs excluded by law from coverage) that are included in the plan 
formulary. For each of the 178 nonexcluded drugs, we calculated the 
percentage of formularies that include that drug. 
Identifying State Medicaid and SPAP Wraparound Coverage 
We called all State Medicaid directors and the directors of 26 of the 
27 CMS-recognized and/or grantee SPAPs to identify whether these 
programs are planning to offer wraparound coverage of excluded and/or 
nonformulary drugs. Forty-six State Medicaid programs and 23 SPAPs 
responded. 
For the 22 drugs that fell into categories excluded from Medicare Part 
D coverage, we used our information from State interviews to 
determine how many States currently provide coverage for these drug 
categories under Medicaid and whether this coverage will change in 
any State Medicaid programs. 
We also determined how many States will offer State-funded 
wraparound coverage for any nonexcluded drugs that a dual eligibles 
PDP formulary does not include. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  29    A P P E N D I X   ~   B  

THE 200 DRUGS INCLUDED IN OUR REVIEW 
Our review included 200 of the most commonly used drugs based on the 
number of prescriptions dispensed to dual eligibles under Medicaid 
fee-for-service in the first two quarters of 2005.  We included these 
particular drugs in our review because they are highly utilized by the 
dual eligible population under Medicaid and, therefore, their inclusion 
or noninclusion by formularies may have an impact on the ease of the 
dual eligibles transition from Medicaid to Medicare Part D. We did not 
assess the clinical value of any of these drugs or of any therapeutically 
alternative drugs that formularies may include instead of particular 
drugs on this list.  CMS has reviewed all PDP formularies to verify that 
they meet minimum requirements and to ensure overall adequacy of 
each formulary.  
We used aggregated 2005 MDR drug utilization data and 2003 dual 
eligible-specific data from the MSIS to estimate Medicaid prescriptions 
dispensed to dual eligibles in the first two quarters of 2005.  Based on 
these estimates, we identified 200 highly utilized drugs.  Because we 
had to rely on estimates to develop this list, we cannot state with 
confidence that our list of 200 drugs exactly mirrors the actual top 
200 drugs used by dual eligibles. However, these drugs account for 
approximately 78 percent of prescriptions to dual eligibles, and 
therefore represent the actual utilization patterns of a significant 
number of dual eligibles. 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  30  A P P E N D I X   ~   B  

TABLE 4: 200 Commonly Utilized Drugs by Dual Eligibles 
Formulary  Percentage 
Rank  Generic Name  Brand Name 
Inclusion (of 37)  Included 
1  Furosemide  Lasix  37  100% 
2  Atorvastatin  Lipitor  35  95% 
3  Potassium chloride oral  Klotrix  37  100% 
4  Metoprolol  Lopressor  37  100% 
5  Lansoprazole SR  Prevacid  29  78% 
6  Amlodipine Besylate  Norvasc  35  95% 
7  Levothyroxine sodium  Levoxyl  37  100 % 
8  Lisinopril  Prinivil  37  100% 
9  Hydrocodone/APAP  Vicodin  36  97% 
10  Clopidogrel bisulfate  Plavix  37  100% 
11  Warfarin sodium  Coumadin  37  100% 
12  Atenolol  Tenormin  37  100% 
13  Olanzapine  Zyprexa  37  100% 
14  Risperidone  Risperdal  37  100% 
15  Hydrochlorothiazide  Microzide  37  100% 
16  Sertraline  Zoloft  37  100% 
17  Quetiapine  Seroquel  37  100% 
18  Simvastatin  Zocor  31  84% 
19  Aspirin  Bayer  Excluded 
20  Lorazepam  Ativan  Excluded 
21  Ranitidine  Zantac  37  100% 
22  Metformin HCL  Glucophage  37  100% 
23  Digoxin  Digitek  37  100% 
24  Divalproex sodium  Depakote  37  100% 
25  Donepezil  Aricept  37  100% 
26  Esomeprazole magnesium  Nexium  26  70% 
27  Zolpidem tartrate  Ambien  36  97% 
28  Escitalopram oxalate  Lexapro  22  59% 
29  Phenytoin sodium  Dilantin  37  100% 
30  Alendronate sodium  Fosamax  35  95% 
31  Alprazolam  Xanax  Excluded 
32  Albuterol inhaler  Ventolin  37  100% 
33  Pantoprazole  Protonix  30  81% 
34  Celecoxib  Celebrex  33  89% 
35  Glipizide  Glucotrol  37  100% 
36  Isosorbide mononitrate  Ismo  37  100% 
Propoxyphene Nap/ 
37  Darvocet  31  84% 
Acetaminophen 
38  Gabapentin  Neurontin  37  100% 
39  Trazodone  Desyrel  37  100% 
40  Clonazepam  Klonopin  Excluded 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  31  A P P E N D I X   ~   B  

200 Commonly Utilized Drugs by Dual Eligibles, Continued 
Formulary  Percentage 
Rank  Generic Name  Brand Name 
Inclusion (of 37)  Included 
41  Valsartan  Diovan  34  92% 
42  Risedronate sodium  Actonel  36  97% 
43  Rosiglitazone maleate  Avandia  37  100% 
44  Azithromycin oral  Zithromax  36  97% 
Salmeterol xinafoate/ Fluticasone propionate 
45  Advair Diskus  36  97% 
xinafoate/Fluticasone propionate 
46  Pioglitazone  Actos  35  95% 
47  Montelukast sodium  Singulair  37  100% 
48  Paroxitine HCL  Paxil  37  100% 
49  Omeprazole SA  Prilosec  Excluded 
50  Levofloxacin  Levaquin  27  73% 
51  Tramadol  Ultram  35  95% 
52  Carvedilol  Coreg  36  97% 
53  Tolterodine tartrate  Detrol  34  92% 
54  Venlafaxine HCL  Effexor  37  100% 
55  Loratadine  Claritin  Excluded 
56  Triamterene/HCTZ  Dyazide  37  100% 
57  Folic acid  Folic acid  Excluded 
58  Docusate sodium  Colace  Excluded 
59  Clonidine HCL  Catapres  37  100% 
60  Insulin 70/30  Humulin  34  92% 
61  Tamsulosin HCl  Flomax  32  86% 
62  Losartan potassium  Cozaar  23  62% 
63  Albuterol/Ipratropium  Combivent  35  95% 
64  Fluoxetine HCL  Prozac  37  100% 
65  Amlodipine/Benazepril  Lotrel  31  84% 
66  Prednisone  Deltasone  37  100% 
67  Pravastatin sodium  Pravachol  22  59% 
68  Glyburide  Micronase  37  100% 
69  Nifedipine  Adalat  37  100% 
70  Latanoprost  Xalatan  32  86% 
71  Clozapine  Clozaril  37  100% 
72  Famotidine  Pepcid  36  97% 
73  Fluticasone propionate nasal spray  Flonase  34  92% 
74  Metoclopramide  Reglan  37  100% 
75  Diltiazem  Cartia XT  37  100% 
76  Valsartan/HCT  Diovan HCT  35  95% 
77  Temazepam  Restoril  Excluded 
78  Oxybutynin chloride  Ditropan  37  100% 
79  Oxycodone/Acetaminophen  Endocet  37  100% 
80  Acetaminophen/Codeine  Tylenol #3  37  100% 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  32  A P P E N D I X   ~   B  

200 Commonly Utilized Drugs by Dual Eligibles, Continued 
Formulary  Percentage 
Rank  Generic Name  Brand Name 
Inclusion  Included 
81  Ibuprofen  Advil  37  100% 
82  Insulin N, Insulin NPH  Humulin N  37  100% 
83  Amoxicillin oral  Amoxil  37  100% 
84  Polyethylene glycol 3350  Miralax  34  92% 
85  Meloxicam  Mobic  16  43% 
86  Aripiprazole  Abilify  37  100% 
87  Insulin R, Insulin Regular  Humulin R  37  100% 
88  Benztropine mesylate  Cogentin  37  100% 
89  Estrogens conjugated oral  Premarin  36  97% 
90  Amitriptyline HCL  Elavil  37  100% 
91  Cephalexin  Keflex  37  100% 
92  Ramipril  Altace  28  76% 
93  Oxycodone  OxyContin  36  97% 
94  Bupropion  Wellbutrin  37  100% 
95  Fentanyl transdermal  Duragesic  32  86% 
96  Ezetimibe  Zetia  35  95% 
97  Spironolactone  Aldactone  37  100% 
98  Meclizine  Antivert  33  89% 
99  Cyclobenzaprine  Flexeril  33  89% 
100  Mirtazapine  Remeron  37  100% 
101  Sulfamethoxazole/TMP  Bactrim  37  100% 
102  Glimepiride  Amaryl  31  84% 
103  Nitrofurantoin MCR  Macrobid  37  100% 
104  Lovastatin  Mevacor  37  100% 
105  Fenofibrate  Tricor  33  89% 
106  Topiramate  Topamax  37  100% 
107  Carbidopa/Levodopa  Sinemet  37  100% 
108  Diazepam  Valium  Excluded 
109  Enalapril maleate  Vasotec  36  97% 
110  Quinine  Quinine SO4  32  86% 
111  Raloxifene  Evista  37  100% 
112  Nitroglycerin patch  Nitrodur  37  100% 
113  Multivitamin  Thera-vite  Excluded 
114  Promethazine  Phenergan  37  100% 
115  Acetaminophen  Tylenol  Excluded 
116  Losartan potassium/HCTZ  Hyzaar  23  62% 
117  Nitroglycerin tablet  Nitroquick  37  100% 
118  Verapamil  Verelan  37  100% 
119  Diphenhydramine  Benadryl  Excluded 
  OEI-05-06-00090  DUAL ELIGIBLES TRANSITION:  PART D FORMULARIES INCLUSION OF COMMONLY USED DRUGS  33  A P P E N D I X   ~   B  

200 Commonly Utilized Drugs by Dual Eligibles, Continued 
Formulary  Percentage 
Rank  Generic Name  Brand Name 
Inclusion  Included 
120  Allopurinol  Zyloprim  37  100% 
121  Lamotrigine  Lamictal  37  100% 
122  Brimonidine tartrate  Alphagan  37  100% 
123  Ferrous sulfate  Feosol  Excluded 
124  Gemfibrozil  Lopid  37  100% 
125  Lidocaine patch  Lidoderm  20  54% 
126  Carbamazepine  Carbatrol  37  100% 
127  Olopatadine HCl eye drops  Patanol  30  81% 
128  Naproxen  Naprosyn  37  100% 
129  Irbesartan  Avapro  24  65% 
130  Clonidine HCL patch  Catapres patch  27  73% 
131  Cetirizine HCL  Zyrtec  27  73% 
132  Dorzolamide/Timolol maleate  Cosopt  32  86% 
133  Oyster shell/vitamin D  Oscal-D  Excluded 
134  Galantamine HBr  Razadyne  25  68% 
135  Ziprasidone  Geodon  37  100% 
136  Hydroxyzine HCL  Atarax  35  95% 
137  Fexofenadine  Allegra  29  78% 
138  Mupirocin  Bactroban  37  100% 
139  Mometasone furoate nasal  Nasonex  36  97 % 
140  Oxcarbazepine  Trileptal  37  100% 
Balsam peru/Castor oil USP-
141  TBC Aero  31  84% 
NF/Trypsin USL 
142  Rivastigmine tartrate  Exelon  37  100% 
143  Amox TR-K CLV oral  Augmentin  37  100% 
144  Glyburide/Metformin  Glucovance  37  100% 
145  Metolazone  Zaroxolyn  37  100% 
146  Nabumetone  Relafen  34  92% 
147  Timolol optic  Timoptic  37  100% 
148  Enulose  Lactulose  37  100% 
Tramadol HCl/ 
149  Ultracet  21  57% 
Acetaminophen 
150  Duloxetine hydrochloride*  Cymbalta  31  84% 
151  Rosuvastatin  Crestor  23  62% 
152  Theophylline  Theo-dur  37  100% 
153  Ipratropium bromide inhaled  Atrovent inhaler  36  97% 
154  Baclofen  Lioresal  36  97% 
155  Pentoxifylline  Trental  34  92% 
156  Rabeprazole sodium  Aciphex  18  49% 
157  Diphenoxylate/Atropine  Lomotil  34  92% 
158  Fosinopril sodium  Monopril  32  86% 
159  Memantine hydrochloride  Namenda  37  100% 
* This drug falls into a protected category that should be included by all formularies.  CMS is working to 
ensure that all plans include this drug as required. 
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200 Commonly Utilized Drugs by Dual Eligibles, Continued 
Formulary  Percentage 
Rank  Generic Name  Brand Name 
Inclusion  Included 
160  Fluvastatin sodium  Lescol  21  57% 
161  Megestrol acetate oral*  Megace  36  97% 
162  Calcium carbonate  Oyst-cal  Excluded 
163  Sevelamer HCL  Renagel  31  84% 
164  Promethazine/Codeine  Phenergan w/ codeine  Excluded 
165  Senna  Senokot  Excluded 
Cyanocobalamin (synthetic 
166  Nascobal  Excluded 
vitamin B12) injectable 
Fluticasone propionate 
167  Flovent  34  92% 
inhaled 
168  Travoprost eye drop  Travatan  25  68% 
169  Ezetimibe/Simvastatin  Vytorin  31  84% 
170  Citalopram HBR  Celexa  37  100% 
171  Propranolol  Inderal  37  100% 
172  Clotrimazole/Betamethasone  Lotrisone  32  86% 
173  Triamcinolone cream  Aristo  37  100% 
174  Olmesartan medoxomil  Benicar  24  65% 
175  Felodipine  Plendile  35  95% 
176  Carisoprodol  Soma  32  86% 
177  Phenobarbital  Luminal  Excluded 
178  Lithium carbonate  Eskalith  37  100% 
179  Prednisolone solution  Prelone  37  100% 
180  Terazosin  Hytrin  37  100% 
181  Bimatoprost eye drops  Lumigan  34  92% 
182  Moxifloxacin HCl  Avelox ABC  32  86% 
183  Desloratadine  Clarinex  22  59 % 
184  Torsemide  Demadex  35  95% 
185  Haloperidol  Haldol  37  100% 
186  Irbesartan/HCTZ  Avalide  23  62% 
187  Loperamide  Immodium  Excluded 
188  Buspirone  Buspar  37  100% 
189  Finasteride  Proscar  35  95% 
190  Hydralazine  Apresoline  37  100% 
191  Cefdinir  Omnicef  28  76% 
192  Amiodarone HCL  Cordarone  37  100% 
193  Cilostazol  Pletal  32  86% 
194  Levetiracetam  Keppra  37  100% 
195  Calcitonin salmon  Miacalcin  35  95% 
196  Tiotropium  Spiriva  37  100% 
197  Prednisolone AC eye drop  Pred-Forte  37  100% 
198  Dipyridamole/Aspirin  Aggrenox  27  73% 
199  Methadone  Methadose  34  92% 
200  Clotrimazole cream  Lotrimin  Excluded 
* This drug falls into a protected category that should be included by all formularies.  CMS is working to ensure 
that all plans include this drug as required. 
Source:  OIG Analysis of Formulary Inclusion of Drugs Commonly Used by Dual Eligibles, 2005. 
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DISTRIBUTION OF DUAL ELIGIBLES AMONG FORMULARIES 
Dual eligibles were randomly assigned to PDPs for autoenrollment 
(unless they were among the approximately 10 percent of dual eligibles 
who were members of an MA plan).  Individuals were allocated equally 
among plan sponsors in a PDP region.  If a sponsor offered more than 
one eligible plan, dual eligibles assigned to that sponsor were allocated 
equally to each plan. The same formulary is often used by many plans, 
even those with different sponsors. 
For each PDP region, we determined the percentage of dual eligibles 
that will be covered by each formulary based on random assignment. 
Table 5 shows the percentage of dual eligibles whose formulary 
inclusion of commonly used drugs will be most broad (covering all 178 of 
the most commonly used nonexcluded drugs) or more restricted 
(covering less than 85 percent of these drugs). 
TABLE 5: Random Assignment of Dual Eligibles and Formulary Inclusion of Commonly Used Drugs 
Percentage of Dual Eligibles Randomly Assigned to PDPs That Include: 
PDP  Dual Eligibles  100% of  Less Than 85% 
State(s) 
Region  Autoassigned  Commonly Used Drugs  of Commonly Used Drugs 
1  Maine, New Hampshire  63,290  18%  18% 
Connecticut, Massachusetts,  
2  289,849  17%  39% 
Rhode Island, Vermont 
3  New York  499,708  23%  32% 
4  New Jersey  135,498  25%  25% 
Delaware, Maryland, 
5  81,176  14%  21% 
Washington, D.C. 
Pennsylvania,  
6  175,674  14%  29% 
West Virginia 
7  Virginia  101,352  15%  23% 
8  North Carolina  216,703  9%  18% 
9  South Carolina  110, 530  15%  15% 
10  Georgia  135,599  8%  25% 
11  Florida  326,139  17%  33% 
12  Alabama, Tennessee  295,262  25%  25% 
13  Michigan  185,486  15%  15% 
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Random Assignment of Dual Eligibles and Formulary Inclusion of Commonly Used Drugs, Continued 
Percentage of Dual Eligibles Randomly Assigned to PDPs That Include: 
PDP  Dual Eligibles  100% of  Less Than 85% 
State(s) 
Region  Autoassigned  Commonly Used Drugs  of Commonly Used Drugs 
14  Ohio  169,704  25%  25% 
15  Indiana, Kentucky  169,660  18%  18% 
16  Wisconsin  109,024  17%  17% 
17  Illinois  247,254  17%  25% 
18  Missouri  144,243  25%  25% 
19  Arkansas  60,770  8%  17% 
20  Mississippi  129,988  9%  18% 
21  Louisiana  89,493  10%  20% 
22  Texas  294,295  14%  29% 
23  Oklahoma  72,880  20%  20% 
24  Kansas  38,828  10%  30% 
Iowa, Minnesota, Montana, 
25  Nebraska, North Dakota,   185,129  9%  18% 
South Dakota, Wyoming 
26  New Mexico  31,082  13%  38% 
27  Colorado  37,342  11%  33% 
28  Arizona  44,413  30%  50% 
29  Nevada  16,895  17%  50% 
30  Oregon, Washington  125,190  21%  29% 
31  Idaho, Utah  37,018  17%  25% 
32  California  847,996  21%  50% 
33  Hawaii  22,460  14%  29% 
34  Alaska  10,674  14%  29% 
Source:   OIG Analysis of Formulary Inclusion of Drugs Commonly Used by Dual Eligibles, 2005. 
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   A P P E N D I X   ~   D  

MEDICAID COVERAGE OF DRUGS EXCLUDED FROM PART D 
Of the 200 drugs commonly used by dual eligibles, 22 fall into categories 
that are statutorily excluded from Medicare Part D coverage. State 
Medicaid programs have the option to cover drugs in these categories.  
Table 6 summarizes these 22 drugs, including their categories and the 
number of State Medicaid programs (of 47 States interviewed) that 
currently cover and/or plan to cover drugs in these categories. 
TABLE 6: State Medicaid Coverage of Excluded Drugs 
# of Drugs (of 200  States Currently  States Planning to 
Category of Excluded Drugs  Commonly Used)   Covering (of 47)  Cover in 2006 (of 47) 
Nonprescription drugs  12  45  45 
Benzodiazepines  5  47  46 
Prescription vitamins and mineral products  3  35  35 
Barbiturates  1  46  45 
Drugs for symptomatic relief of cough and colds  1  33  32 
Source:  OIG Interviews With States and Analysis of Formulary Inclusion of Common Drugs for Dual Eligibles, 2005. 
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AGENCY COMMENTS 

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This report was prepared under the direction of Ann Maxwell, Regional 
Inspector General for Evaluation and Inspections in the Chicago 
regional office.  Other principal Office of Evaluation and Inspections 
staff who contributed include: 
Erin Lemire, Project Leader 
Louise Schoggen, Program Analyst 
Mark Stiglitz, Program Analyst 
Janet Kilian, Intern 
Linda Boone Abbott, Program Specialist 
Tricia Davis, Director, Medicare and Medicaid Branch 
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