Key takeaways:
A little insurance fluency goes a long way for your patients. Knowing how the major plan types work — and which rejections you can prevent before they happen — keeps a prescription from stalling between your desk and the pharmacy counter.
A rejection is a coverage decision, not a clinical one — and the code tells you which rule the prescription failed. Most of those failures come back to you rather than the pharmacy: non-formulary, step therapy, quantity limits, and DUR alerts.
Manufacturer copay cards are usually off-limits to anyone with government coverage. Those patients need patient assistance programs, charitable foundations, or cash pricing instead.
Write the same prescription for four patients and you can get four different answers. One fills it that afternoon. One needs a prior authorization. One is told the drug isn't covered under their plan at any price. One skips insurance entirely because cash is cheaper than the copay.
The drug didn't change. The coverage did. Prescription benefits run on rules set long before the patient ever reaches your office. And it all comes down to what kind of insurance your patient has.
Types of insurance
Generally speaking, prescription coverage is divided into two buckets:
Government plans, which include Medicare, Medicaid, and Tricare.
Commercial plans, which mostly come from employers or the Affordable Care Act (ACA) marketplace.
This insurance guide is a quick overview of the major plan types, how they cover prescriptions, and other ways patients can save on medication costs.
Medicare
Medicare covers people age 65 and older. It also covers people under 65 years of age if they have a disability, end-stage renal disease (ESRD), or amyotrophic lateral sclerosis (ALS).
Here are the parts of Medicare, briefly:
Part A covers inpatient care.
Part B covers outpatient care, including drugs that aren’t usually self-administered (like infusions).
Part C, or Medicare Advantage, is a private plan paid by Medicare to deliver Part A and Part B benefits. Part D is usually bundled in.
Part D covers outpatient prescription drugs and is run by private plans.
Part B or Part D? Most Medicare drug coverage runs through Part D. But some drugs can fall under either part depending on how they’re used. Some medications could be covered under both: Part B when it’s administered in a clinical setting, or Part D when the patient takes it at home.
Good to know: When a medication can go either way (Part B or Part D), writing the indication on the prescription tells the plan which benefit applies and heads off a prior authorization.
What Part D can’t cover: By law, Part D excludes certain categories of medications no matter how medically necessary. These include OTC products (cough and cold products, most vitamins, etc.) and medications for:
Weight loss and weight gain
Fertility
Cosmetic purposes
Hair growth
Erectile dysfunction
Weight loss is the one to watch. The exclusion still stands, but in July 2026 the Medicare GLP-1 Bridge program was introduced as a pilot program. It covers certain GLP-1s for weight loss at $50 a month for eligible Part D patients. It’s currently set to end December 31, 2027.
Medicaid
Medicaid covers low-income adults and children, pregnant people, people with disabilities, and some older adults. It’s jointly funded by states and the federal government, but administered by states alone. This means preferred drug lists and prior authorization criteria vary — sometimes a lot — across state lines.
Many patients get their benefits through a managed Medicaid plan, in which case the plan’s formulary usually governs, not the state’s. A managed Medicaid card carries the plan's name and its own pharmacy billing information, not the state Medicaid agency's. So if you’re unsure which formulary applies, check the plan card or with the pharmacy.
The rule that matters: Medicaid is the payer of last resort. Every other liable payer — commercial insurance, Medicare, workers’ compensation — has to meet its obligation before Medicaid pays a cent. If your patient has other coverage, that coverage bills first.
Tricare
Tricare covers uniformed service members and their families, along with survivors and certain former spouses. The drug benefit runs on the Department of Defense’s uniform formulary and is administered by Express Scripts (which has a helpful formulary search tool).
Before receiving benefits, patients and their families must be enrolled in the Defense Enrollment Eligibility Reporting System (DEERS).
Good to know: A DEERS problem looks exactly like a coverage denial at the counter, but it isn’t one. It’s a records problem, and the fix is the patient updating DEERS, not writing an appeal.
Commercial plans
Most working-age patients have commercial coverage, through an employer or an ACA marketplace plan. The drug benefit is almost always carved out to a pharmacy benefit manager (PBM). So the PBM’s formulary — not the insurance company on the card — is what your prescription has to satisfy.
Formularies are tiered between:
Generics
Preferred brands
Non-preferred brands
Specialty
The patient’s share of cost rises at each step. There are two consequences of this: The same insurer can tier the same drug differently across its own plans. And formularies often change, usually at the beginning of the plan year. A drug that went through in December can be rejected in January for the same patient.
Comparison
Here’s a quick look at how the different plans break down.
| Plan type | Who has it | Where the drug benefit lives | What trips up new prescribers |
|---|---|---|---|
| Medicare | Adults 65 and older, people under 65 with a qualifying disability, ESRD, or ALS | Part D — either standalone or bundled into a Medicare Advantage plan. Some drugs fall under Part B. |
|
| Medicaid | Low-income adults and children, pregnant patients, people with disabilities, and some older adults | A state list of preferred drugs, or a managed Medicaid plan’s formulary |
|
| Tricare | Uniformed service members and their families | The DoD uniform formulary, administered by Express Scripts |
|
| Commercial | Most working-age adults and their dependents, through an employer or the ACA marketplace | A pharmacy benefit manager’s tiered formulary |
|
How the plan affects prescribing
When your prescription gets to the pharmacy, it’s sent electronically through a “switch” which routes it to the patient’s PBM or plan. The plan applies its rules and answers in seconds: paid, or rejected with a code.
That answer is a coverage decision, not a clinical one. The pharmacist didn’t make it and usually can’t reverse it.
What the plan is checking, in effect is:
Is this patient eligible today?
Is this drug on the formulary, and on what tier?
Does it need a prior authorization?
Is the quantity within limits?
Is it too soon to refill?
Does the patient’s claims history raise a safety flag?
When it rejects, the message tells you which of those failed — and, usually, whose problem it is. You can learn more about common medication-related rejections here, but here’s a quick summary:
What you hear from the pharmacy | What it means | Who resolves it |
|---|---|---|
Prior authorization required | The plan will cover it, but wants clinical justification first. | You, by providing clinical justification |
Not covered / non-formulary | The plan doesn’t cover this drug under this benefit. | You, by switching medications, or requesting an exception |
Step therapy required | The plan wants a preferred drug tried first. | You, by switching medications, or documenting the trial or intolerance |
Quantity limit exceeded | The quantity or days’ supply exceeds the plan’s cap. | You, by adjusting quantity, or requesting an exception |
Refill too soon | The prescription was filled too early against the last claim. | The pharmacy, often with an override |
Out-of-network pharmacy | This pharmacy isn’t in the plan’s network for this drug. | You, by resending to an in-network or specialty pharmacy |
Drug utilization review (DUR) alert | The plan’s claims data flagged a safety concern. | You, by reviewing the safety issue |
DUR rejections deserve an extra word. They’re clinical alerts built from the plan’s claims history — an interaction, a dose that looks too high, an overlapping opioid and benzodiazepine — and they’re the one category that shouldn’t be delegated.
Other ways patients can save on prescription costs
The good news is that, in addition to the coverages mentioned above, there are a few ways patients can save on their prescription costs.
Copay cards
Manufacturer copay cards are a great way for patients to save money on prescriptions. But they’re usually more helpful for people with commercial insurance due to eligibility restrictions.
A copay coupon is something of value offered to steer a patient toward a specific product. But when a federal health care program (like Medicare, Medicaid, or Tricare) might pay any part of that bill, the federal Anti-Kickback Statute is in play. That’s why nearly every manufacturer copay card carries fine print excluding federal beneficiaries, and why pharmacies that accept them from those patients can be sanctioned, too.
To summarize: for patients with commercial insurance, the copay card is on the table. For those with Medicare, Medicaid, or Tricare, it isn’t.
There’s one exception, though. If Part D can’t cover the drug (for example, a weight-loss drug, an ED drug, etc) then no federal program is paying, and the concern falls away.
Free trials and vouchers
A voucher for a free trial gets the patient the first fill free. It tells you nothing about the second one. Starting someone on a medication their plan won’t cover is a common, avoidable trap: the trial ends, the prior authorization was never done, and the patient stops the medication.
Here’s a tip: If you use a voucher, spend the free month getting coverage settled.
GoodRx coupons
GoodRx coupons help lower the price of many medications, including exclusive deals on certain brand-name medications. They’re a useful option especially for those who are uninsured, facing an insurance denial, or dealing with a high copay.
GoodRx can’t be used with insurance, but comparing prices can help patients choose whichever option — coupon or insurance — gives them the lowest cost for each fill.
Other options
If none of the above are available, consider these options:
Patient assistance programs: These programs are run by manufacturers, and they typically supply free or discounted drugs to uninsured or underinsured patients under an income threshold.
Independent charitable foundations: These organizations assist based on disease, not on a particular product, so they aren’t a problem for the federal Anti-Kickback Statute.
Extra Medicare assistance: Options include the Medicare low-income subsidy, for Part D cost sharing, and the Medicare Prescription Payment Plan, to spread the year’s out-of-pocket costs into level monthly payments.
Cash price: For older generics, cash with a discount card sometimes beats the copay. It won’t count toward the deductible, but for a $10 drug, that’s rarely a problem.
The bottom line
Prescription coverage isn’t a black box you hand off to the pharmacy. It’s a set of rules applied to your prescription in about two seconds, and most of the friction traces back to a handful of things you can influence: what you wrote in the script, whether the drug is covered under that benefit, and what you put on the prescription. If you get a rejection, start with the plan type. It answers more questions than anything else on the card.
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References
CMS.gov. (2026). Medicare prescription payment plan. Centers for Medicare & Medicaid Services.
Medicaid.gov. (n.a.). Coordination of benefits & third party liability. Centers for Medicare & Medicaid Services.
Medicare.gov. (n.a.). Get started with Medicare. Centers for Medicare & Medicaid Services.
Medicare Learning Network. (2006). Medicare Part B versus Part D drug coverage determinations. Centers for Medicare & Medicaid Services.
Office of Inspector General. (2014). Special advisory bulletin: Pharmaceutical manufacturer copayment coupons. U.S. Department of Health and Human Services.
Office of Inspector General. (2016). Advisory opinion 16-07. U.S. Department of Health and Human Services.
