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Sams: Formularies Grow in Popularity, but Which One to Use?

By Jim Sams (Senior Editor)

Monday, May 22, 2017 | 856 | 0 | min read

A familiar labor vs. management battleground has sprung around the latest cost-control trend in workers’ comp: drug formularies. 

Jim Sams

Jim Sams

Some media reports portray formularies as a means of combating opioid abuse. The Associated Press reported that under a Louisiana formulary bill, workers “would have a tougher time getting opioids” in a state with the seventh-highest opioid and benzodiazepine sedative prescription rate in the U.S. Labor says insurers are just trying to cut costs.

In New York, the coverage focused mainly on potential cost savings in the nation’s third-most expensive comp system. Critics bemoaned state regulations that take decisions away from doctors.

There’s nothing misleading about either approach. The press tends to focus on the most topical angle. 

But the coverage so far has missed an aspect that likely has far more relevance to the workers’ compensation industry. That is, in addition to the question of whether to adopt a formulary, there’s the question of which formulary to adopt.

That issue spawned a war of words in the professional columns section of WorkCompCentral last week. 

The Reed Group’s governmental affairs manager, Carlos Luna, took the first swipe last Monday with an assertion that the Work Loss Data Institute’s Official Disability Guidelines formulary was not developed with the same academic rigor as the formulary written by the American College of Occupational and Environmental Medicine. The Reed Group bought publishing rights for the ACOEM formulary and its treatment guidelines in 2013, and made it a part of its MDGuidelines product.

WLDI shot back in a rebuttal by ODG Managing Director Phil LeFevre on Tuesday. His main point was that it is hard to argue with success: The ODG formulary (actually Appendix A to the company’s treatment guidelines) has been adopted by Ohio, Texas, Oklahoma, Arizona and Tennessee, with results proven by research. Fewer injured workers using opioids. Lower costs. LeFevre argued that Reed Group’s “misleading and inaccurate” negativity harms the evidence-based medicine movement. 

Texas Workers’ Compensation Commissioner Ryan Brannan joined the fray in a column posted Wednesday. While not mentioning ODG specifically, he said “our formulary” has been a “resounding success” that ensures injured workers do not get excessive or unnecessary prescriptions. 

The disagreement between the Reed Group and the Work Loss Data Institute revolves mainly around an issue only a wonk could love: the standards set by the National Guideline Clearinghouse

The clearinghouse, administered by the federal Agency for Healthcare Research Quality,  implemented six strict criteria for inclusion of clinical practice guidelines in 2014. 

ODG does not meet that criteria, which were developed by the Institute of Medicine. Work Loss Data Institute does not state how it selected the various clinical studies it uses to determine best treatment practices, or the criteria it uses to determine the importance of those studies. WorkCompCentral’s medical and business reporter, Elaine Goodman, reported on this last June.

WLDI says exclusion from the clearinghouse is no big deal. ODG is continuously updated, so it doesn’t fit a review process that can take years. That is why other commercial guidelines, such as those published by McKesson and Milliman, aren’t included in the clearinghouse, either.

Of course, Reed Group disagrees and touts ACOEM’s formulary as the only one built on rigorous academic research with a transparent methodology. While ODG is a simple list of drugs listed as either “yes” or “no,” the ACOEM formulary recommends drugs not only according to the diagnosis but according to the stage of the condition, whether chronic, acute or sub-acute. Where evidence is lacking, ACOEM offers no recommendation at all.

Maybe simplicity sells. ODG has been on a roll with state legislatures around the country since the Texas Legislature mandated its adoption in 2007. Tennessee, Oklahoma and Arizona followed.

Louisiana lawmakers introduced two formulary bills this year; one would require the use of ODG, and the other leaves that choice to regulators. But it is the ODG bill that has moved toward a vote on the House of Representatives floor. It remains to be seen whether the Republican-majority Legislature can get the bill past Democrat governor John Bel Edwards, a former plaintiff’s attorney.

Reed Group, a relative newcomer in the formulary field, has had less success. Nevada quietly adopted ACOEM in 2015 and sang the praises of its “rigorous strength-of-evidence rating system” in this newsletter

I say quietly because WorkCompCentral missed that story, as did the rest of the media. And “adopted” may be too strong a word because Nevada’s guidelines are voluntary for payers.

But the California Division of Workers’ Compensation will likely give the Reed Group a more clear victory by basing its proposed formulary entirely on ACOEM. Mark Pew, senior vice president for managed-care provider Prium, told WorkCompCentral’s Greg Jones in March that the ACOEM-based formulary is “unique to California.”

Leave it to California to be unique. I suspect that politics plays a role on which formulary is chosen. All of the state legislatures that have adopted ODG are controlled by Republicans. California is most definitely not.

Two big blue states joined the formulary movement in recent months. The New York Legislature directed the State Workers’ Compensation Board to adopt a formulary as part of a budget bill passed in April. In Illinois, Democratic lawmakers have proposed a formulary as part of a “grand bargain” to break a two-year budget stalemate. 

Both the New York and Illinois legislation leave it up to regulators to decide which formulary to use. With a Jan. 1 deadline in the budget bill, New York is going to have to act fast. Whether Illinois ever passes a work comp reform bill remains to be seen.

In the meantime, I’m curious to see if a pattern develops. Will work comp pharmaceutical management develop into a two-formulary system — one for red states and one for blue?

Jim Sams is senior editor for WorkCompCentral.

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