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ARC: HOW EMPLOYERS CAN BETTER MANAGE THE PHARMACEUTICAL PORTION OF THEIR WORKERS COMPENSATION PROGRA

Texas cuts prescribing of drugs with closed formulary mandate

Other states investigate use of closed formulary

Texas Mandates Closed Formulary

The success in Texas of mandating a closed formulary that has sharply reduced prescribing drugs considered inappropriate to treat workers compensation claimants is attracting the attention of other states.

The strategy applies to about 150 prescription drugs, dubbed “N-drugs” in Texas, that are not recommended for injured workers in workers comp cases. They include more than 25 brands of opioid pain relievers, several muscle relaxants, antidepressants and cannabinoids, according to the Texas Department of Insurance Division of Workers' Compensation.

Preauthorization by insurers or self-insured employers is required for N-drugs. Without preauthorization, insurers and self-insured employers can deny payment to medical providers who prescribe such drugs or pharmacies that dispense them.

“It has definitely changed prescription patterns and the behavior of treating physicians,” and it is being discussed by regulators in other states, said Rod Bordelon, the Texas workers comp commissioner in Austin, Texas. “They are interested in what we have done in Texas and the success that it is having.”

In July, the Division of Workers' Compensation reported that the first phase of its closed-formulary strategy cut N-drug prescribing by 74% among newer claims. The total spent on N-drugs for those claims dropped 82% to less than $800,000 in 2011 from $4.4 million in 2010 .

In September, Texas began applying its closed-formulary to older legacy claims.

Implementing the plan in two phases — first on Sept. 1, 2011, for injuries occurring on or after that date and then on Sept. 1 of this year for the legacy claims — is among practices that have drawn praise for Texas' effort to reduce drug utilization and costs.

Waiting two years to apply the closed formulary to the legacy claims gave doctors and their patients accustomed to taking N-drugs time to adjust their treatment after seeing how the process worked for new injury cases, sources said.

“That was a very compassionate, appropriate approach,” said Phil Walls, chief clinical and compliance officer at Matrix Healthcare Services Inc., a Tampa, Fla.-based pharmacy benefit manager.

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Spreading word of Texas' success is leading other states to consider legislative or administrative rules that could help them reduce their comp-related prescription drug costs, said Joe Woods, vice president of state government relations in Austin for the Property Casualty Insurers Association of America.

“It's a clear path to success,” Mr. Woods said. “I think it's catching on, and lots of states are looking at it now.”

But other states must understand that Texas' success didn't happen overnight, sources said.

Texas' effort to reduce N-drug prescribing was years in the making and occurred in conjunction with the state's adoption of evidence-based guidelines to treat injured workers. The implementation also was smoothed by existing practices in Texas that helped medical providers understand how the system would function.

Those practices, such as requiring utilization review for services such as physical therapy, may not be in place in other states, said Mark Pew, senior vice president of business development for Prium, a Duluth, Ga.-based workers comp utilization review company.

Other states that have unique workers compensation systems can learn from Texas, Mr. Pew said, but they may have to find their own path to reduce the utilization and cost of drugs they deem inappropriate to treat workers comp injuries.

“They can look at the best practices and some lessons learned in Texas and apply those to their jurisdictions,” Mr. Pew said. “But it is probably going to look different from (the approach in) Texas because each jurisdiction starts at a different baseline.”

While the Texas closed formulary is attracting attention and provides a model for other states to follow, it would not make sense for other states to adopt a closed formulary alone, Mr. Walls said.

Texas' success follows from workers comp reforms its Legislature adopted in 2005, which included requiring medical providers to adhere to disability management guidelines when treating most worker injury cases, Mr. Walls said. In accordance, Texas in 2007 required the use of Official Disability Guidelines published by the Encinitas, Calif.-based Work Loss Data Institute.

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The list of N-drugs comes from ODG's formulary. Because the guidelines address overall medical treatment, and not just medication prescribing, they help discourage physicians from merely substituting other potentially problematic drugs for those on the N-drug list, Mr. Walls and others said.

“If a state wanted to adopt the ODG formulary by itself, that probably would not be a successful model,” Mr. Walls said. “But if they wanted to adopt the guidelines behind (the formulary) as well, that makes sense.”

In addition, adopting a closed formulary or treatment guidelines is not the only route to reduce questionable prescribing practices. Other states have experienced success by requiring utilization review for prescribed drugs and regulating PBM practices, Mr. Walls said.

But “Texas is really the leader when it comes to the use of a formulary,” Mr. Walls said.

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