Closed Formularies Control Drug Utilization

In July of 2012 we took a look at the early results of the prescription drug formulary in Ohio and in Texas.  Both were showing signs of favorable results.

Where do we sit 18 months later?  In a word, progress.

The Ohio Bureau of Workers Compensation has recently reported a reduction in prescription drug costs by $22.2 million (16%) since the formulary went into effect. Included in that curtailment is an 18.1% reduction in narcotic prescriptions and a 36.4 % reduction in skeletal muscle relaxants for the first half of 2013 as compared to the first half of 2012.  (BWC Annual Report)

Texas has seen even greater results between its two categories of claims.  For injured workers’ with dates of injury after September 2011, prescription rates of drugs not recommended by the Texas closed formulary dropped 56% - a number matched by a cost reduction of over 81%.  Legacy Claims posted similar results with a 23 % reduction in prescriptions and a 21% reduction in cost. (TDI, Workers’ Compensation Research and Evaluation Group, 2013.)

While the closed formularies are clearly having a meaningful impact on prescription drug costs in these states, the approaches differ quite drastically.  Ohio, a monopolistic work comp state, has implemented a closed formulary that it developed on its own.  Texas is relying on its well established utilization review process and a third party set of guidelines (ODG’s N drugs) for its implementation of a closed formulary.  Take-away: there are different ways of implementing the concept that have been proven to work.    

Closed formularies aren’t implemented over night.  If other states want to start making meaningful impacts to their prescription drug costs at any point in the near future, decision makers had better have some big plans for their upcoming legislative sessions.

Michael
On Twitter @PRIUM1

Fighting Over Fee Schedules

Referencing a new draft bill in Wisconsin seeking to establish a medical fee schedule for workers’ compensation, Mark M. Grapentine, a senior vice president of government relations for the Wisconsin Medical Society, is on the record as saying, “This will cause a holy war at the capital.”

Might have phrased it differently, but I get his point.  He might not even be far off the mark.  There are some big stakeholders involved and one of them (the physicians) wasn’t invited to the table.

A fee schedule seems like a straightforward way to combat medical inflation and workers’ compensation reimbursement severity, but a glance at price and utilization numbers out of Wisconsin wouldn’t suggest such a legislative move is necessary.  The linked article points out, courtesy of the National Council on Compensation Insurance, Wisconsin ranks in the top third of all states considered with one of the lowest average costs per medical claim filed between 2010 and 2012.  Similarly Wisconsin can boast the fewest work days lost to disability by total disability claim of any state.

To some extent, we know what to expect with the implementation of a fee schedule: a negligible impact on utilization and an inelastic price response.  The recent WCRI study on the impact of a fee schedule adjustment in Illinois serves as an excellent case study.  While there was a 30 percent reduction in the Illinois medical fee schedule enacted in 2011, medical prices on average fell 24 percent.  This was accompanied, however, by more frequent billing of costlier and more complex offices visits.

My guess?  This is a result of income targeting.

An implementation of a fee schedule in Wisconsin might similarly leave providers to pursue income targeting – increasing the amount of services provided to maintain the previous income level.  Or it might cause providers to exit the business.  As always time will tell and hopefully someone’s keeping track.

The economic recovery, while slow, is still ongoing.  As employment numbers rise, so do workers’ compensation claims and expenditures.  A fee schedule is a means of controlling costs, but it may do so at the cost of quality services and overburdened physicians.  And lest we forget, the full impact of the Affordable Care Act has yet to play itself out as well.

I’d be surprised if Wisconsin legislators were eager to move on a new fee schedule.

Michael
On Twitter @PRIUM1

The Truth About Lost Prescriptions

If you live in Stillwater, Oklahoma and you lose your prescription drugs, the police will be happy to help you.  You just have to take a lie detector test first. 


Seriously.


Police in Stillwater have begun keeping a database of any citizen reporting lost prescription drugs.  Turns out that local doctors are refusing to replace lost prescriptions without a police report detailing the theft of the original prescription.  And some citizens have apparently filed false police reports in order to secure additional prescriptions.  Now, if you've already filed one report, police will require a polygraph test before any subsequent police report can be made. 


While I'm honestly ambivalent, this policy highlights one of the key factors we often gloss over in the public discussion of prescription drug misuse and abuse: community risk.  Often, our dialog, debate, and discourse are focused on individual patient risk and the clinical safety, or lack thereof, of long term opioid use for chronic non-cancer pain.  Policies such as Stillwater's place appropriate emphasis on the overall risk to the community of over-prescribing opioids. 


The two most common inconsistencies we see from drug test results on our files are a) too much of a particular medication or b) a medication that's supposed to show up that doesn't.  Whenever we see "a", we worry about the clinical risk to the patient.  Whenever we see "b", we worry about the risk to that patient's community, including their immediate family.  Let's face it, those drugs are likely going somewhere.  Even if the injured worker isn't engaged in illegal activity (most often, they're not), those medications not consumed by the injured worker can end up in the hands of friends, neighbors, children, or spouses.  This puts our communities at risk. 


I suspect Stillwater won't be the last place we see this policy enacted.
So... should police require polygraph tests to file a police report for prescription drugs?   
Or have they gone a step too far?


Michael
On Twitter @PRIUM1 

Closed Formularies: Not All Created Equal

Oklahoma is getting ready to launch a "closed formulary."  Among the many reasons Oklahoma is pursuing this regulatory change must be the success enjoyed by its neighbor Texas. 


Texas has seen an 80% drop in the cost of "N" drugs for new injuries as of September 1, 2011.  For those injuries that occurred prior to September of 2011 (referred to as "legacy claims" in the rules), Texas provided for a two year remediation period (September of 2011 to September of 2013) for payers and providers to communicate with one another regarding the applicability of the closed formulary on a claim by claim basis.  This process led to the weaning/discontinuation of "N" drugs on 47% of legacy claims.  Impressive. 


Unfortunately, Oklahoma's version of the closed formulary has zero chance of replicating these results. 


To quote from PRIUM's public comments, submitted to the Oklahoma Workers' Compensation Commission last week:


"The proposed rules identify two groups of claims that will be subject to the closed formulary rules: 
            1.)  Those with a date of injury on or after 11/1/14, and
            2.)  “Legacy claims” – those with a date of injury on or after 2/1/14, but
                   before 11/1/14.

It appears that claims with a date of injury prior to 2/1/14 will not be governed by the closed formulary rules.  If this is the case, this distinction will effectively create two standards of care for injured workers based on their date of injury. 

Other states have countered this problem by applying new laws retroactively with a sufficient transition period for older claims (often referred to as “legacy claims”).  While the proposed rules do identify a particular group of claims as “legacy claims” and allow these claims to benefit from a transition period before they are subject to the closed formulary rules, claims with a date of injury prior to 2/1/14 do not fall within the proposed definition of “legacy claims” and are not made subject to the closed formulary rules.   Because of this, the inclusion of a transition period for legacy claims fails to remedy the problem of disparate standards of care, as older claims (those with a date of injury prior to 2/1/14) do not become subject to the closed formulary rules at any point, not even after legacy claims have become subject to the closed formulary rules on 11/1/16.

We acknowledge that the Administrative Workers’ Compensation Act limits the authority of the Commission, but we sincerely hope that legislature will either authorize the Workers’ Compensation Court of Existing Claims to adopt the Commission’s closed formulary rules, or that the legislature will authorize the Commission to extend the closed formulary rules to affect claims with a date of injury prior to 2/1/14."

So don't get your hopes up regarding the Oklahoma closed formulary.  They have a long way to go, legislatively speaking, before the state can claim to have adequately addressed the problem of prescription drug misuse and abuse within the work comp system.


Michael
On Twitter @PRIUM1