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Tiers are categories used by health plans to organize covered medications. Each tier has an assigned copayment or coinsurance amount.
CMS approves formularies but does not decide drug tiers; plans make that decision.
Some generics may appear in higher tiers if other drugs for the same condition offer better value.
“Lesser of” logic: If a generic drug in Tier 3 or 4 costs less than the copay, the member pays the lower cost. This mainly applies to Tier 3 or 4 for MAPD plans and Tier 3 for PDP plans.
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