Step therapy is a policy used by Medicare plans that requires you to try a less expensive medication before the plan will cover a more expensive one. Sometimes called “fail first,” it means your plan won’t pay for the drug your doctor initially prescribed until you’ve used a cheaper alternative and shown it doesn’t work for you. Both Medicare Part D prescription drug plans and Medicare Advantage plans can apply step therapy requirements.
How Step Therapy Works
The basic idea is straightforward. Your doctor prescribes a medication, but your Medicare plan requires you to start with a different, lower-cost drug first. If that first drug doesn’t adequately treat your condition, causes side effects, or fails in some other way, the plan then allows you to move to the originally prescribed medication. In some cases, you may need to try two or even three alternatives before the plan covers the drug your doctor wanted.
CMS, the federal agency overseeing Medicare, describes step therapy as a process that “begins medication for a medical condition with the most preferred drug therapy and progresses to other therapies only if necessary.” The “most preferred” drug is typically the cheapest option or a generic, not necessarily the one your doctor considers most effective for your particular situation.
Where You’ll Encounter It
Step therapy shows up in two parts of Medicare. Under Part D, which covers prescriptions you fill at a pharmacy, plans have long been able to impose step therapy on their drug formularies. If you see a medication listed with a step therapy requirement on your plan’s formulary, you’ll need to try the plan’s preferred alternative before getting coverage for that drug.
Under Part B, which covers drugs administered by a doctor (like infusions or injections given in a clinic), Medicare Advantage plans gained the option to apply step therapy starting January 1, 2019. Original Medicare (traditional fee-for-service) does not use step therapy for Part B drugs. This is an important distinction: if you’re in Original Medicare, your doctor can prescribe Part B drugs without step therapy restrictions. If you’re in a Medicare Advantage plan, your plan may require you to try a preferred drug first.
There is one significant protection for Medicare Advantage enrollees. Step therapy can only be applied to new prescriptions. If you’re already receiving a Part B drug, your plan cannot force you to switch to a cheaper alternative. This means no one currently on an infusion therapy or other physician-administered treatment will have their existing medication disrupted by a new step therapy policy.
The Real-World Impact on Treatment
Step therapy is designed to reduce healthcare spending, but the tradeoff is treatment delay. Research on step therapy across various conditions paints a consistent picture of that cost. In one study of patients with the skin condition atopic dermatitis, step therapy caused an average treatment delay of over four months and required an average of 1.4 additional doctor appointments before the needed medication could be started. Patients subject to step therapy needed an additional 112 days of treatment before their symptoms improved compared to patients without those restrictions.
For inflammatory conditions like rheumatoid arthritis and psoriatic arthritis, patients facing step therapy restrictions had 27% lower odds of effective treatment and 29% lower odds of sticking with their medication compared to patients without restrictions. Among patients with psoriasis, a review of 194 step therapy protocols found that none aligned with current clinical treatment guidelines, and 99.4% were more stringent than what guidelines recommend.
The mental health toll is real too. In one survey, 52% of patients who faced step therapy reported extremely negative effects on their mental health. The experience of watching your condition worsen while waiting to “fail” on a drug you and your doctor already know is unlikely to work can feel deeply frustrating. And notably, the cost savings that step therapy is supposed to deliver remain theoretical. No studies have definitively shown that it reduces overall healthcare spending.
How to Request an Exception
You are not locked into step therapy with no recourse. Both Part D and Medicare Advantage plans allow you to request an exception to skip ahead to the drug your doctor recommends. The process requires your prescribing doctor to submit a supporting statement to the plan. That statement needs to make one of three arguments:
- Medical necessity: Your condition requires the prescribed drug, and the plan’s preferred alternatives would not be as effective.
- Adverse effects: The lower-cost drug is likely to cause harmful side effects for you.
- Ineffectiveness: The alternative drug would be less effective for treating your specific situation.
Your doctor can submit this statement on a standard CMS form, on the plan’s own exception request form, or simply as a written letter. There’s no single required format. What matters is that the clinical reasoning is clearly laid out.
Timelines for Decisions and Appeals
Once you submit an exception request, your plan has a set window to respond. For standard requests, the plan must make a decision within 72 hours. If your health could be seriously harmed by waiting, you or your doctor can ask for an expedited exception, which also has a 72-hour deadline.
If the plan denies your exception, you can appeal. Standard appeals must be decided within 7 days for benefit disputes and 14 days for payment disputes. Fast appeals, for situations where your health is at risk, require a decision within 72 hours. If the plan upholds the denial, your case automatically goes to an Independent Review Entity (IRE), which operates on the same timelines: 7 days for standard benefit appeals, 72 hours for expedited ones. You do not need to do anything extra to trigger this second level of review.
Comparing Original Medicare and Medicare Advantage
The step therapy landscape differs significantly depending on which type of Medicare you have. Original Medicare does not impose step therapy on Part B drugs. Your doctor prescribes a physician-administered drug, and Medicare covers it according to its standard rules. If you add a standalone Part D plan for pharmacy prescriptions, that plan can include step therapy in its formulary rules, but Part B remains unrestricted.
Medicare Advantage plans, by contrast, can apply step therapy to both Part B and Part D drugs. This is one of the tradeoffs of Medicare Advantage: you often get lower premiums and additional benefits like dental or vision, but the plan has more tools to manage which drugs you receive and in what order. When comparing plans during open enrollment, checking the formulary for step therapy requirements on any medications you currently take, or are likely to need, is worth the effort. Plans are required to make this information available before you enroll.
How Drug Price Negotiation Affects Access
The Inflation Reduction Act of 2022 introduced Medicare’s ability to directly negotiate prices for certain high-cost drugs that have no generic or biosimilar competition. Starting with the first round of negotiated prices taking effect in 2026, Medicare prescription drug plans are required to include these negotiated drugs on their formularies. CMS has stated it will use its formulary review process to assess any practices that may “undermine access to negotiated prices” for these drugs. While this doesn’t eliminate step therapy, it signals that CMS is watching whether plans use step therapy or other restrictions to steer patients away from drugs whose prices Medicare has negotiated down. For enrollees, this could mean smoother access to certain high-cost medications in the coming years.