Closed Formulary: Coming Soon to your State?

Wednesday, March 27, 2013 | 0

There's little doubt that the Texas closed formulary rules (instituted for new injuries as of 9/1/11 and forthcoming for all claims as of 9/1/13) is having it's intended impact.  Opioid scripts have dropped, spending on medication therapy has dropped, and prescription habits are clearly changing.  Washington State and Ohio, both monopolistic work comp systems, have also implemented closed formularies with apparent benefit (both clinical and financial).

A March 21 article in WorkCompCentral on California's forthcoming efforts around prescription drug management opens the door for the concept in California as well. California Insurance Commissioner Dave Jones explicitly suggested that a closed formulary concept should be explored. This would make California only the second non-monopolistic state to adopt such an approach.

Obviously, we're a long way from the state legislature passing and the governor signing any such bill, not to mention the time it would take for the Division of Workers' Compensation to implement such a measure. In Texas, House Bill 7 - which called for the closed formulary to be implemented - was passed and signed in 2005; the rules went into effect in September 2011. Nonetheless, the notion isn't as far-reaching in California as it might appear.

When plotting the potential geographic adoption of closed formulary concepts around the country, my view is that we're most likely to see such rules adopted in states that share several characteristics.

First, closed formularies will be particularly attractive in states that have a significant opioid issue. California certainly fits this criteria.

Second, states that already have medical treatment guidelines with which the provider community is used to complying will find the concept of a closed formulary easier to swallow. When Texas opted to use Appendix A of the Official Disability Guidelines, there was little push back. Official Disability Guidelines have been the guideline set governing care for Texas work comp patients for several years now. California has its own Medical Treatment Utilization Schedule, but these guidelines are weak on opioids. Interestingly, Department of Industrial Relations Director Christine Baker admitted as much to a panel of California lawmakers yesterday. She noted that updating these guidelines is a "top priority" for DWC's panel of medical advisers.

Third, closed formularies will be most easily negotiated in states that already have clearly supportive utilization review (UR) statutes and regulations. I recently reviewed the Texas rules as part of an education session in a non-UR state and suggested that I thought it might be a good idea for this particular state to give it a try. Several audience members reacted quite negatively with one particular gentleman suggesting that all of the state's doctors would immediately cease taking work comp patients. If your state doesn't have experience with UR, jumping right to a closed formulary is a tough sell to the provider community. In California, UR is nothing new, though it's not a mandate like it is in Texas. Nevertheless, I believe it's still a good leading indicator that adoption is possible.

Fourth, the state's politicians must exhibit the political will to adopt measures that are clinically and financially necessary, but not necessarily popular - particularly among physicians.  There are others in our industry who know far more about California politics than I, but I'm not convinced that a closed formulary concept wouldn't be changed beyond all recognition as it worked it's way through the deal making, negotiating, and bargaining that is a matter of course in Sacramento (and in many other state capitals around the country).

California lines up well with respect to recognizing the opioid issue, moving toward more effective guidelines, and having plenty of experience with utilization review. The open question: will the politics allow it to happen?

<i>Michael Gavin is chief strategy officer for Prium, a managed care firm based in Duluth, Ga. This column was reprinted with his permission from the firm's Evidence Based blog.</i>