Texas Closed Formulary

By Stuart D. Colburn, Shareholder, Downs Stanford, PC

The Texas Division of Workers’ Compensation hosted a stakeholder meeting regarding the closed formulary to discuss two issues: (1) should the “initial fill” rules be subject to retrospective review; and (2) should the new closed formulary rules apply at a date certain or should they be phased-in.

By statute, pharmacies are paid for the first seven days of prescriptions.  Pharmacies object to any retrospective review during this “initial pay” period.  Pharmacies’ reason for retrospective review results in more denials and would encourage pharmacies to not fill workers’ compensation prescriptions if there were the possibility they would not be reimbursed.

The applicability question caused greater discussion.  The Division feels a phase-in approach is more appropriate.  Their concern is with the number of pre-authorization disputes that would immediately occur should the rules take effect on a certain date.  The DWC expressed a willingness to listen to other options.

The insurance carrier community believes the closed formulary will especially help legacy claims.  With a phase-in, the claimants that need the benefits of a closed formulary will be deprived of its benefits.

The Legislature required the Division to adopt a closed formulary.  Essentially, the closed formulary would include all FDA approved drugs subject to retrospective review.  Certain drugs require pre-authorization: (1) drugs under investigation or that are experimental, (2) drugs identified in the Official Disability Guidelines (ODG), Appendix A as “N” class drugs, or (3) any compounds with an “N” drug. 

The Medical Advisor reminded stakeholders that a carrier cannot deny prescription medications, including prescriptions for legacy claims, merely because the drug or prescription falls outside the ODG Guidelines.

The Texas Pain Society reminded stakeholders they typically treat only legacy claims.  The Texas Pain Society also believed it was absolutely critical to allow compounding for morphine pain pumps.  Pre-authorization would be an undue burden.  Interestingly, the pharmacist’s organization suggested all drugs should be pre-authorized to guarantee pharmacists will be paid.

The Texas Medical Board recently adopted guidelines indicating dangerous drugs should only be prescribed for chronic conditions, where other treatment has failed, the doctors regularly treated the claimant, documenting improved function as a result of the drug and there was no proof of abuse or diversion.