Wednesday, January 8, 2014

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.

On Twitter @PRIUM1

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