Closed Formulary, Part Two
By Amy Lynn Sorrel Texas Medicine February 2013

Workers' Comp to Require Preauthorization for "Legacies" 

 Texas Medicine Logo 

Tex Med. 2013;109(2):41-47.

By Amy Lynn Sorrel 
Associate Editor 

Legislation aiming to reduce overuse of pain medications and other addictive and expensive drugs within the workers' compensation program appears to be achieving that goal through stepped implementation of a closed formulary. With phase two of the process set to take effect this September, leaders at the Texas Medical Association and the Texas Department of Insurance Division of Workers' Compensation (DWC) say physicians should prepare now for what could be the more challenging part of the transition.

Under the closed formulary, mandated by the legislature in 2005, physicians must obtain preauthorization from workers' compensation insurance carriers before prescribing roughly 90 different medications. The so-called "N drugs" not in the formulary include mostly opioids, analgesics, muscle relaxants, and antidepressants.

Until now, the preapproval process applied only to patients injured on or after Sept. 1, 2011. Part two of the schedule kicks in on Sept. 1 of this year, when physicians also must obtain N-drug preauthorization for patients with workplace injuries before Sept. 1, 2011, the so-called "legacy patients."

That next step likely will involve meeting with carriers to move injured patients already taking N drugs to alternative therapies, says Bernard T. Swift Jr., DO, chair of TMA's Council on Socioeconomics. That means doctors and carriers must prepare and collaborate sooner, not later.

"It all sounds great from a policy perspective to get people off narcotic pain medications. But the fact of the matter is, as treating physicians, it is in some cases very difficult when confronted with patients who may be very angry if asked to discontinue a drug they believe they need," the San Antonio occupational medicine specialist warned.

Despite the added administrative hoop, however, the system appears to be working "pretty well" so far, Dr. Swift says.

"Given the high level of abuse of prescription drugs across the state, this was a step in the right direction toward getting the problem under control, and it makes [physicians and patients] think twice about prescribing a potentially addictive drug over a long period of time," he said. "The question is, Is this an administrative burden we want to keep? And I think the answer is yes. This is a purposeful administrative burden and probably one that is not entirely inappropriate, given the situation."

TMA and DWC officials do not expect the process to be overly burdensome, but are working together to ensure that it's not. Over the past several months, agency representatives met with stakeholders, including TMA, the Texas Pain Society, and insurers, to discuss the rules and educational outreach so both doctors and carriers involved can help each other transition injured patients.

"The intent of the rule isn't to say everybody has to be off these N drugs, but [for doctors and carriers] to have peer-to-peer discussions and come to an agreement, if possible, on the continued coverage of that N drug," said Matt Zurek, DWC executive deputy commissioner for health care management. Come Sept. 1, however, "if patients are still on those drugs, and physicians have not reached an agreement with the carrier, those drugs will require preauthorization."

 So Far, So Good 

Recent DWC statistics show that from September to November 2011, N-drug costs dropped by 75 percent, or $841,000. When compared with the same period in 2010, total prescription drug costs fell 26 percent, or $1.4 million. The frequency of all N-drug prescriptions also decreased 65 percent, while the rate and expense of opioid prescriptions decreased by 10 and 17 percent, respectively.

Dr. Swift saw similar outcomes in the dozen or so Texas MedClinic urgent care clinics he runs as chief executive officer, where workers' compensation patients make up about 25 percent of the caseload. While N-drugs make up only 1 percent of all clinic prescriptions, that number still dropped by 40 percent in the last six months or so.

As a primary care facility that does not treat long-term pain, for the 52 legacy claims in his clinics, "it behooves us to look at why those prescriptions are being written," Dr. Swift said.

The closed formulary includes all Food and Drug Administration-approved drugs with the exception of: 

  • Drugs with "N" status identified in Appendix A of the Official Disability Guidelines— Treatment in Workers' Comp (ODG);
  • Compounds that contain an "N" drug; and
  • Any investigational or experimental drugs. 

The list of N drugs includes certain antidepressants, antiepileptic drugs, asthma medications, muscle relaxants, nonsteroidal anti-inflammatory drugs, opioids, sedative-hypnotics, topical analgesics, and more. Physicians can view the most current list and DWC closed formulary rules online

Despite some initial confusion over the list, Round Rock pain management specialist Graves T. Owen, MD, says he encountered no problems finding alternatives to excluded drugs. Workers' compensation officials "have not limited a whole class of drugs. What they did was change access to 'not recommended' drugs, by requiring preauthorization."

Some of the nonformulary medications, for example, may have unproven effects or even be dangerous. The muscle relaxant Soma (carisoprodol) was excluded because it lacked sufficient scientific proof of medical efficacy and because it carried added risks of abuse due to a euphoric effect when mixed with other drugs. Dr. Graves has since seen fewer new patients referred to him on the questionable drug.

The pain medication oxycodone, also prone to abuse, was excluded, too, while morphine, a potential substitute, was not.

"The sooner we prepare, the better, because this is not about just getting people off addictive drugs, it's about making sure people are obtaining a therapeutic benefit [as defined by ODG] on the drugs they are prescribed," said Dr. Owen, president of the Texas Pain Society, part of TMA's House of Delegates.  

Next Steps 

That could take time and help from insurance carriers in managing the roughly 15,000 legacy claims in the system, which DWC factored into the bifurcated implementation schedule and the transition rules, Mr. Zurek says.

The regulations require physicians and carriers to formally discuss the pharmacological management of these patients. Ideally, the two parties would agree before Sept. 1 on how to proceed. That agreement could include a weaning schedule, a plan to continue the patient on the N drug, or other alternatives.

"We didn't want to get into prescribing what the agreement should be, and there is very broad language in the closed formulary rules that leaves it in hands of professionals," Mr. Zurek said.

To initiate that process, insurance carriers must notify physicians, injured workers, and pharmacies in writing by March 1 of any legacy patients for whom an N drug was prescribed after Sept. 1, 2012.

Physicians should expect those letters, and possibly phone calls, and contact carriers, who are obligated to provide a physician peer, such as a medical director or utilization review representative.

For the physician and carrier to agree to continue a patient on an N drug for any length of time, doctors will have to verify the medical necessity of the medication. The agreement would prevent doctors from having to produce proof repeatedly and ensure payment for the drug based on the agreed-upon plan and timeframe, Mr. Zurek says.

Beginning in October 2012, Texas Mutual Insurance Company, the state's largest workers' compensation carrier, reached out to physicians by phone and by mail. As of December, it had scheduled roughly 400 peer-to-peer discussions between prescribing doctors and the company's medical director.

Of those conversations, more than 90 percent ended in agreements, says Kim Haugaard, vice president of network and medical operations.

He called the negotiations "multifaceted," adding that they ranged in scope and duration, depending, for example, on the patient's condition and other drugs he or she was taking. Such complicated treatment decisions "can't be considered in a vacuum."

In some cases, patients were weaned off narcotics right away, while for others that process did not work and the physician and carrier remain in conversation. Still others agreed to test an alternative drug therapy for a period of time, and some agreements simply stated that the patient would continue taking an N drug, and the physician and carrier would check back in a year.

The carrier continues to revise the process based on physician feedback, Mr. Haugaard says. If needed, for example, Texas Mutual could help provide additional support, such as a rehabilitation specialist, although to date that has not come up.

"This really has turned into a very good relationship-enhancing dialogue. This is not us telling doctors what they must do. We know that won't work," he said.

Of the peer-to-peer discussions held so far, a small percentage of physicians opted to wait until closer to the Sept. 1 deadline to decide on a transition plan, while a few were unreceptive to Texas Mutual's outreach efforts.

"We will continue to reach out to providers in order to facilitate the process as much as possible. It is our preference that as many claims as possible are addressed via a letter of agreement instead of through the preauthorization process," Mr. Haugaard said.

 Protective Measures 

Should the physician and carrier remain at odds over a patient's treatment, the doctor still can prescribe the drug, but would have to document medical necessity within the preauthorization request for the prescription.

If the carrier still denies the request, DWC rules include what Mr. Zurek describes as a "fail-safe" mechanism, known as a medical interlocutory order (MIO). The appeal process allows physicians to challenge a carrier's denial and to maintain the status quo while going through a dispute.

But Mr. Zurek cautioned that the process is not meant to be an easy out or a guarantee of approval, just because an insurer declined to grant a physician's preauthorization request.

Upon filing an MIO, physicians must certify that without the N drug, a patient could experience a medical emergency. In addition, "a doctor has to be willing to take this to a [formal] independent review, and further, if needed," he said. "I recommend doctors get very familiar with this rule."  

Log on to the TMA website for information on MIOs. 

No one used the MIO process during the first phase of the closed formulary, Mr. Zurek says. "What this tells us is that if somebody needs the drug, they are getting it; or [physician and carriers] are working it out, and the need to have the DWC intercede hasn't occurred."

Mr. Zurek acknowledged that any transition can be difficult, and administrative hurdles can sometimes dissuade physicians from participating in the workers' compensation system.

But he noted that all of the 15,000 legacy patients have a doctor caring for them. And by providing a list of approved drugs for physicians to choose from and due-process protections, DWC hopes to minimize any undue difficulties with the closed formulary.

The agency also has a process in place to hold insurance carriers accountable for contacting physicians regarding agreement discussions.

"What we hope for is that everybody takes this seriously, and does so early to work through all of the various situations, so on Sept. 1, 2013, the vast majority of injured employees will get the drugs they need without any kind of delay or process restrictions," Mr. Zurek said. 

Amy Lynn Sorrel can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email. 

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Last Updated On

May 13, 2016