Formulary and tiering exceptions, and the deadlines plans must meet

When a Medicare drug plan receives a prescriber's statement supporting an exception request, it has 72 hours to decide, or 24 hours if the request is expedited, according to CMS guidance on Part D exceptions¹. If the plan misses the deadline, federal rules treat the silence as a denial. Under 42 CFR 423.578(c)(2)⁵, the plan must then forward the case to an independent review entity within 24 hours.

An exception is the formal way to ask a plan to cover a drug it otherwise would not, or to cover it at a lower cost-sharing tier. KFF's review of 2026 Part D plans¹¹ shows what is at stake on the tier side. The median coinsurance for non-preferred drugs was 34 percent in stand-alone drug plans and 38 percent in Medicare Advantage drug plans, while most national stand-alone plans charged a median $0 copay for preferred generics. Our explainer on deductibles, copays and coinsurance shows how those percentages turn into dollars.

This piece lays out the two kinds of exception in Medicare Part D, the deadlines, the limits that apply when generics are the alternative, and the parallel rules for marketplace plans. It describes the rules only. Whether a request makes sense for a particular person is a question for the prescriber, the pharmacist and the plan.

Two kinds of exception in Medicare Part D

A formulary exception asks a plan to cover a drug that is not on its formulary, or to waive a utilization rule. The regulation, 42 CFR 423.578(b)⁵, counts step therapy, dose restrictions (including the dosage form) and therapeutic substitution as part of the formulary, so an exception can lift those limits too. The prescriber's supporting statement must say the drug is medically necessary because the covered alternatives on any tier would be less effective or cause adverse effects, because the step-therapy alternatives have failed or are likely to, or because the dose limit has been or is likely to be ineffective.

A tiering exception, under section 423.578(a)⁵, asks the plan to cover a non-preferred drug at the cost sharing that applies to preferred alternatives. The prescriber's statement must say the preferred drugs would be less effective for the patient, would cause adverse effects, or both.

Either request is a coverage determination, the first step in the Part D appeals system. The CMS coverage determination page² says an enrollee, a prescriber or a representative may file one, by phone or in writing, using CMS's model request form, a plan's form or a letter. Medicare.gov¹⁰ adds that for an exception "your prescriber must provide a statement explaining the medical reason." A supporting statement does not guarantee approval, a point the regulation makes in paragraph (f).

Where generics limit a tiering exception

The rule lets plans close off some tiering requests. Under 423.578(a)(6)⁵, a plan may design its process so that no tiering exception is approvable to cover a brand-name drug at a preferred cost-sharing level that applies only to generic drugs approved under section 505(j) of the Food, Drug, and Cosmetic Act or to authorized generics. Plans may likewise refuse tiering exceptions that would move a biological product to a level holding no biological alternatives, and, since January 1, 2022, may bar exceptions that would move a drug from a specialty tier to a non-specialty tier.

When a tiering exception is approved, the plan must charge the cost sharing of the preferred alternatives, and if those alternatives sit on several tiers, "cost-sharing must be assigned at the lowest applicable tier." For a non-formulary drug approved by exception, the plan may not create a special tier for it, the enrollee may not then ask for a tiering exception on it, and what the enrollee pays counts toward the annual out-of-pocket threshold. More on how tiers are built is in tiered formularies explained and authorized generics.

The deadlines

For exceptions, the Part D clock starts when the plan receives the prescriber's supporting statement, under 423.568(b)⁶ and 423.572(a)⁷. A request is expedited when the plan finds, or the prescriber says, that waiting "may seriously jeopardize your life, health, or ability to regain maximum function," in Medicare.gov's words. The later appeal levels, including the independent review entity and the Office of Medicare Hearings and Appeals, are covered in how to appeal a drug coverage denial.

How long an approval lasts

In Part D, an approved exception carries through refills and new prescriptions for the rest of the plan year, as long as the prescriber keeps prescribing the drug and it is still considered safe for the condition, according to 423.578(c)(3) and (c)(4)⁵. A plan may choose to continue it into the next year.

Several rules soften midyear changes. Under 42 CFR 423.120(b)(3)⁸, someone new to a plan can get a one-time temporary supply of at least a month of a non-formulary drug during the first 90 days. CMS's appeals guidance⁴ adds that if someone in that window files an exception and the plan misses its deadline or fails to forward the case, the plan must keep providing a temporary supply, when not medically contraindicated, until the case is resolved. When a plan makes other negative formulary changes, the same section generally requires 30 days' notice or a month's supply at the refill, and the tiering exception procedures must address tier changes during the year.

The rules make one carve-out that matters for generics. A plan may remove a brand-name drug or move it to a worse tier within 30 days of adding a corresponding generic on the same or a lower tier with the same or looser restrictions, if the generic was not on the market when the plan submitted its formulary, under the "immediate substitutions" provision of 423.120(e)⁸. Questions about what that switch means for one person's prescription belong with the pharmacist, who can explain how generic substitution works.

Exceptions in marketplace plans

Plans that must cover the ACA's essential health benefits, which include marketplace plans, follow 45 CFR 156.122(c)⁹. They must let an enrollee, a designee or the prescriber request a drug the plan does not cover. A standard request gets a decision within 72 hours, and a granted standard exception covers the drug "for the duration of the prescription, including refills." Expedited review applies in exigent circumstances, defined to include a condition that may seriously jeopardize life or health and a current course of treatment with a non-formulary drug, with a 24-hour deadline and coverage for the length of the exigency.

If the plan says no, the enrollee can ask an independent review organization to look at the request, again on a 72-hour or 24-hour clock. A granted exception counts as an essential health benefit, so the cost sharing counts toward the plan's annual out-of-pocket limit. States may substitute their own appeals laws if those are at least as protective and as fast. Employer plans outside these rules follow their own claims procedures, which are described in each plan's benefits documents.

Prior authorization for drugs may get faster rails. In an April 2026 proposed rule¹², CMS proposed requiring Medicare Advantage plans, Medicaid and CHIP programs and their managed care plans, and federal marketplace insurers to support electronic prior authorization for all drugs beginning October 1, 2027. The proposal noted that Part D plans already must support an NCPDP standard for electronic prior authorization. As of early November 2026 the rule had not been finalized; CMS's Part D appeals page³ carries the current guidance in the meantime. For how these requests start at the pharmacy, see how a pharmacy claim is processed and prior authorization and step therapy.