Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

DUAL ELIGIBLES’ TRANSITION: 


PART D FORMULARIES’ 


INCLUSION OF 


COMMONLY USED DRUGS


Daniel R. Levinson


Inspector General 


January 2006


OEI-05-06-00090

Office of Inspector General 

http://oig.hhs.gov

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452,

as amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components:

Office of Audit Services 

The Office of Audit Services (OAS) provides all auditing services for HHS, either by

conducting audits with its own audit resources or by overseeing audit work done by others.

Audits examine the performance of HHS programs and/or its grantees and contractors

in carrying out their respective responsibilities and are intended to provide independent

assessments of HHS programs and operations in order to reduce waste, abuse, and 

mismanagement and to promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections

The Office of Evaluation and Inspections (OEI) conducts management and program 

evaluations (called inspections) that focus on issues of concern to HHS, Congress, and 

the public. The findings and recommendations contained in the inspections generate 

rapid, accurate, and up-to-date information on the efficiency, vulnerability, and 

effectiveness of departmental programs. OEI also oversees State Medicaid Fraud 

Control Units which investigate and prosecute fraud and patient abuse in the Medicaid

program. 

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 investigative efforts of OI lead to criminal

convictions, administrative sanctions, or civil monetary penalties.

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 OIG's internal operations. OCIG imposes program exclusions and civil 

monetary penalties on health care providers and litigates those actions within HHS.

OCIG also represents OIG in the global settlement of cases arising under the Civil False 

Claims Act, develops and monitors corporate integrity agreements, develops compliance 

program guidances, renders advisory opinions on OIG sanctions to the health care

community, and issues fraud alerts and other industry guidance.

Office of Inspector General 

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is to 

protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 

health and welfare of beneficiaries served by those programs. This statutory mission is carried out 

through a nationwide network of audits, investigations, and inspections conducted by the following 

operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting audits with 

its own audit resources or by overseeing audit work done by others. Audits examine the performance of 

HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are 

intended to provide independent assessments of HHS programs and operations in order to reduce waste, 

abuse, and mismanagement and to promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts management and program evaluations (called 

inspections) that focus on issues of concern to HHS, Congress, and the public. The findings and 

recommendations contained in the inspections generate rapid, accurate, and up-to-date information on the 

efficiency, vulnerability, and effectiveness of departmental programs. OEI also oversees State Medicaid 

Fraud Control Units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

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 

investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil monetary 

penalties. 

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 OIG’s internal 

operations. OCIG imposes program exclusions and civil monetary penalties on health care providers and 

litigates those actions within HHS. OCIG also represents OIG in the global settlement of cases arising 

under the Civil False Claims Act, develops and monitors corporate integrity agreements, develops 

compliance program guidances, renders advisory opinions on OIG sanctions to the health care community, 

and issues fraud alerts and other industry guidance. 
Δ EXECUTIVE SUMMAR 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. 

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EXE CUTIVE S U MMAR 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 PDP’s 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 PDP’s 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. 

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EXE CUTIVE S CUTIVE S U MMAR Y

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 PDP’s 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. 

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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 PDP’s 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 PDP’s 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, CMS’s 

results were remarkably similar to ours and we believe further support 

our conclusions. Discussion of CMS’s comments and OIG’s response are 

included in the conclusion, beginning on page 17. CMS’s comments and 

analysis are included in Appendix E. CMS also provided technical 

comments, which we incorporated into the report where appropriate. 

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i 

Δ T ABLE OF CONTENTS 

EXECUTIVE SUMMARY ....................................

INTR O D U C T I ON ........................................... 1

FINDI NGS ................................................. 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 

CON C L U SION ............................................ 15

Agency Comments and Office of Inspector General Response . . . 16 

ENDN OTE S ............................................... 19

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

A: Detailed Scope and Methodology ......................... 25

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

C: Distribution of Dual Eligibles Among Formularies........... 36

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

E: Agency Comments .................................... 39

ACKN O W LEDGMENTS .................................... 55
Δ INTRODU C TION 

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-forservice 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 

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INTROD UCT ION 

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 MA’s 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 plan’s 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, 

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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 

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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 plan’s formulary. CMS 

recommends but does not require that sponsors allow a temporary, onetime transition supply for new enrollees who are taking a drug that is 

not included by their drug plan’s formulary.18 This would accommodate 

the beneficiary’s 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 

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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. Twentyseven 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 threepronged 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. 

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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 

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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. 

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INTROD UCT ION 

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 eligible’s PDP formulary does not include. 

Standards. This study was conducted in accordance with “Quality 

Standards for Inspections” issued by the President’s Council on Integrity 

and Efficiency and the Executive Council on Integrity and Efficiency. 

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Δ FINDINGS

Prescription drug plan formularies include 

between 76 and 100 percent of the commonly 

used drugs we reviewed 

Of 200 drugs with high utilization 

by the dual eligible population, 

178 drugs are eligible for coverage 

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 

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F I NDING 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 

Include: Number of Dual Eligibles* Percentage of Dual Eligibles 

100% of Common Drugs Reviewed 

(178 Drugs) 979,000 18% 

85% to 99% of Common Drugs Reviewed 

(152 to 177 drugs) 2,892,000 52% 

Less than 85% of Common Drugs Reviewed 

(151 or fewer drugs) 1,628,000 30% 

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. 

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F I NDING S 

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 plan’s formulary. Two of these 

States, Connecticut and New York, planned to cover any drugs that are 

not included on a PDP’s 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 

drugs we reviewed were included by all 

formularies 

Most of the 178 commonly used 

drugs are included by a large 

percentage of formularies and, in 

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 

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F I NDING 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 

(37 formularies) 51% (91 drugs) 

85% to 99% of the 37 Formularies 

(32 to 36 formularies) 29% (52 drugs) 

75% to 84% of the 37 Formularies 

(28 to 31 formularies) 8% (14 drugs) 

43% to 75% of the 37 Formularies 

(27 or fewer formularies) 12% (21 drugs) 

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 

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F I NDING 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 

Drug Brand Name (Generic Name) Primary Indication(s)27 

Percentage of 

Formularies 

Omitting 

Mobic (Meloxicam) Osteoarthritis (pain relief, anti-inflammatory) 57% 

Aciphex (Rabeprazole sodium) 

Ulcers, gastroesophageal reflux disease, and 

Zollinger-Ellison syndrome 51% 

Lidoderm (Lidocaine patch) 

Postherpetic neuralgia (relief of pain following 

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) Alzheimer’s 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% 

Aggrenox 

Antiplatelet (to prevent excessive clotting and 

reduce the risk of stroke) 27% 

 Source: OIG Analysis of Formulary Inclusion of Drugs Commonly Used by Dual Eligibles, 2005. 

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F I NDING S 

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 commonly used drugs 

we reviewed, 178 are eligible for 

Part D coverage and 

22 (11 percent) fall into categories 

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. 

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Δ CONCLUSION 

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 PDP’s 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 

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C O NCL USIO 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. CMS’s 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 

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C O NCL USIO 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, CMS’s 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. CMS’s 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 

CMS’s 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 CMS’s concerns 

about Medicaid drug restrictions and whether beneficiaries have better 

coverage under Part D are important issues, they are outside the scope 

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C O NCL USIO 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 CMS’s 

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. 

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Δ ENDNOTE 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-Issuesfor-Dual-Eligibles-on-the-Eve-of-Implementation-Issue-Brief.pdf, accessed 

December 29, 2005. 

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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. 

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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, USP’s 

list identified 118 key drug types. For 2007, USP’s 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 

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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 CMS’s protected 

categories, i.e., antidepressants, it falls under one of the “substantially 

all” exceptions. This exception is that formularies must cover either 

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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-Issuesfor-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. 

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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. 

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ΔAPP E N D I X ~ A 

 APPENDIX ~ 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. 

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APP 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. 

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APP 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 

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APP 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 

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APP 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 eligible’s 

PDP formulary does not include. 

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Δ APPENDIX ~ 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. 

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APP E N D I X ~ B 

TABLE 4: 200 Commonly Utilized Drugs by Dual Eligibles 

Rank Generic Name Brand Name Formulary 

Inclusion (of 37) 

Percentage 

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% 

37 Propoxyphene Nap/ 

Acetaminophen Darvocet 31 84% 

38 Gabapentin Neurontin 37 100% 

39 Trazodone Desyrel 37 100% 

40 Clonazepam Klonopin Excluded 

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APP E N D I X ~ B 

200 Commonly Utilized Drugs by Dual Eligibles, Continued

Rank Generic Name Brand Name Formulary 

Inclusion (of 37) 

Percentage 

Included 

41 Valsartan Diovan 34 92% 

42 Risedronate sodium Actonel 36 97% 

43 Rosiglitazone maleate Avandia 37 100% 

44 Azithromycin oral Zithromax 36 97% 

45 Salmeterol xinafoate/ Fluticasone propionate 

xinafoate/Fluticasone propionate Advair Diskus 36 97% 

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% 

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APP E N D I X ~ B 

200 Commonly Utilized Drugs by Dual Eligibles, Continued

Rank Generic Name Brand Name Formulary 

Inclusion 

Percentage 

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 

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APP E N D I X ~ B 

200 Commonly Utilized Drugs by Dual Eligibles, Continued

Rank Generic Name Brand Name Formulary 

Inclusion 

Percentage 

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% 

141 Balsam peru/Castor oil USPNF/Trypsin USL TBC Aero 31 84% 

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% 

149 Tramadol HCl/ 

Acetaminophen Ultracet 21 57% 

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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APP E N D I X ~ B 

200 Commonly Utilized Drugs by Dual Eligibles, Continued

Rank Generic Name Brand Name Formulary 

Inclusion 

Percentage 

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 

166 Cyanocobalamin (synthetic 

vitamin B12) injectable Nascobal Excluded 

167 Fluticasone propionate 

inhaled Flovent 34 92% 

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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Δ APPENDIX ~ C 

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 

Region State(s) Dual Eligibles Autoassigned 

100% of 

Commonly Used Drugs 

Less Than 85% 

of Commonly Used Drugs 

1 Maine, New Hampshire 63,290 18% 18% 

2 

Connecticut, Massachusetts, 

Rhode Island, Vermont 

289,849 17% 39% 

3 New York 499,708 23% 32% 

4 New Jersey 135,498 25% 25% 

5 

Delaware, Maryland, 

Washington, D.C. 81,176 14% 21% 

6 

Pennsylvania, 

West Virginia 175,674 14% 29% 

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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APP E N D I X ~ C 

Random Assignment of Dual Eligibles and Formulary Inclusion of Commonly Used Drugs, Continued

Percentage of Dual Eligibles Randomly Assigned to PDPs That Include: 

PDP 

Region State(s) Dual Eligibles Autoassigned 

100% of 

Commonly Used Drugs 

Less Than 85% 

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% 

25 

Iowa, Minnesota, Montana, 

Nebraska, North Dakota, 

South Dakota, Wyoming 

185,129 9% 18% 

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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Δ APPENDIX ~ 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 

Category of Excluded Drugs 

# of Drugs (of 200 

Commonly Used) 

States Currently 

Covering (of 47) 

States Planning to 

Cover in 2006 (of 47) 

Nonprescription drugs 

Benzodiazepines 

Prescription vitamins and mineral products 

Barbiturates 

Drugs for symptomatic relief of cough and colds 

12 

5 

3 

1 

1 

45 

47 

35 

46 

33 

45 

46 

35 

45 

32 

Source: OIG Interviews With States and Analysis of Formulary Inclusion of Common Drugs for Dual Eligibles, 2005. 

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Δ APPENDIX ~ E 

AGENCY COMMENTS 

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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Δ ACKNOWLEDGMENTS 

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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