Understanding your Prescription Insurance: DAW and other Penalties
Prescription plans have penalties?!
The answer to that exclamation is YES. Some plans do, in fact, have penalties. Penalty is a dirty word, and one that I am sure, thows up your defenses. This is not something new to prescription plans and I definitely understand your concern. In this economy, everyone is trying to stretch their dollar.
This is about protecting your money. Why pay penalties when you don't have to. Find out from your prescription benefit manager or consult your prescription plan booklet to see if you have penalties in your future.
There are many types of penalties, but I will be focusing on the following:
- DAW penalties
- Retail penalties
- Annual fill limits
Hubs in Prescription Insurance Series
Dispense as Written Penalties - This is subject to your plan's guidelines and you will want to research your own plan to see what it means for your individual plan. If you see this anywhere on your plan, you should find out the details.
Definition: Difference in price between the "brand" drug dispensed by the pharmacy and a "generic" drug that was available and could have been dispensed. This amount is paid by the cardholder as a penalty for not taking the "generic" drug.
In a nutshell, this penalty means that if you or your doctor insist on taking the brand name drug when there is a direct generic available for the drug, you will pay more for that brand name drug.
Example: Your doctor says you must take Coumadin, but there is a generic called Warfarin.
Your plan usually stipulates what the penalty will be and how it will affect your overall prescription coverages. Usually you pay the retail cost difference between that brand and generic drug, which can range into the hundreds of dollars. The plan you are with will determine if they only want to charge this penalty if you, the member, decide not to take the generic, or if your doctor says you are not to take the generic.
Some plans will allow you to appeal the decision, you can learn about the appeals program from the hub Quantity Limits and Prior Authorization. Some plans have certain conditions that trigger this penalty, like if more than one manufacturer makes that specific generic, basically stating that you should try a different manufacturer.
I know that most people have 1 local retail pharmacy that they are loyal to and that they do not want to change. Sometimes, a prescription plan will stipulate that you get your maintenance drugs for 90 days at a time. Most plans will not allow a retail pharmacy to dispense more than 30 days supply.
This puts you in a bit of a pickle.
It is good to check and see if your prescription plan has any sort of retail penalty built into it. Usually this means that you are welcome to continue to get 30 days at a time(locally) but at a higher price. They will usually charge your copay plus a fee. This fee could be in the form of a flat fee each time or a percentage.
Remember that every plan is different and it is good to scan over your benefits booklet or call your prescription benefit manager to determine if this kind of penalty will affect you. Depending on the amount of the penalty, it may make a significant different on the money in your pocket.
Annual Fill Limits
If your plan has an annual fill limit built into it, this will again affect where you go to get your prescription. It's a different way to get you to get 90 days supply on your maintenance medications. Keep in mind that most plans make it more cost effective to get 90 days supply than 30 days.
An annual fill limit is the amount of times your prescription plan will allow you fill at a local pharmacy. It is important to know if this is something that will affect you, so that you don't go to the pharmacy and get turned away. If your prescription plan has a mail order option for 90 day supplies, its possible that you have an annual fill limit and you should call your prescription benefit manager to check.
There's no standard on how many fills are allowed, but it boils down to a cut and dried result. Once you reach your limit, you are required to get 90 days supply to get coverage on your prescription.
It is not fun when you have three pills left and you didn't know about your annual fill limit. So be prepared and make sure you know your plan restrictions.