A Healthesystems publication

Spring 2013

PDMPs: Treatment Guidelines & Closed Formularies

Treatment Guidelines & Closed Formularies Can Control Overutilization if (choose one)

A. National standards were utilized

B. Compliance was mandatory

C. Payers/providers “buy in” to evidence-based medicine

D. All of the above

As you may have guessed, the answer is D - all of the above. As of April 2013, all but one state (Missouri) have legislation which establishes, and in some cases mandates, use of a statewide PDMP program. At least half of the states’ workers’ compensation systems have adopted treatment guidelines of some kind, and four jurisdictions (Ohio, North Dakota, Texas and Washington) have preferred or closed formulary plans in place. So why is it, with all these available tools, that our workers’ compensation system struggles to hold down costs and improve medical outcomes? The answer is complex and indicative of a system that is in a state of constant change.

PDMPs Offer Promise, But There Are Obstacles

The previous article in this journal, The Game Changer, addresses the potential of PDMPs to control prescription drug abuse. It references two state PDMP programs in New York and Kentucky that hold promise and are a step in the right direction for establishing the guidelines of a national solution.

In 2011, Arizona’s legislature passed a law that required physicians treating injured workers to check PDMPs and report data when certain criteria were met. According to the Arizona Criminal Justice Commission1 as of July 2012, only 22% of Arizona physicians are using the PDMPs on a regular basis, since this program is not mandated. As a result, opioid prescribing is still a challenge in this state. As previously discussed, PDMPs hold promise for curbing abuse and diversion, but mandated use is a critical step.

Treatment Guidelines

For as long as physicians have been practicing medicine, evidence based treatment guidelines have been published. Treatment guidelines are byproducts of a medical field that thrives on research methodologies and clinical investigation. It would be easy to assume there is a single source of research that compiles all the data into an easy to understand “cookbook” for treating most types of injuries. However, the ingredients for successful medical outcomes can be as complex and unique as the injured worker themselves, and no such cookbook exists. Numerous compilations of research and data are assembled by organizations such as the Work Loss Data Institute, publisher of the Official Disability Guides, and the American College of Occupational and Environmental Medicine (ACOEM). While these guidelines are popular in the workers’ compensation industry, there are a dozen or more state specific, “consensus based” versions of medical treatment guidelines in existence. In addition to these workers’ compensation specific treatment guidelines, the National Institute of Health has published their own studies and guidelines for over one hundred years.2

Despite this wealth of guidance and research, it is not an easy task for physicians and payers to agree on what constitutes appropriate medical care. With each patient, there is a unique medical history, and though the experts may agree on the symptoms, there is less agreement among doctors on how to treat those symptoms. Often, claims professionals find themselves asking “What, if any, guideline was this treatment plan based upon?” Once the guideline is determined, the claims professional then has to reference the appropriate set of guidelines for that state and discern if the care is in accordance with the guideline and if not, what options they can pursue to resolve the conflict. For national insurers and employers with workers in many states, this is one of the many challenges in managing medical treatments and costs. Visit the IAIABC website to view the states and the various medical treatment guidelines.

Drug Formularies

In recent years, state workers’ compensation systems have begun to embrace the idea of implementing closed formularies similar to the way group health plans offer “tiered” coverage plans. Monopolistic states (states with special legislation requiring workers’ compensation coverage be provided exclusively by the state’s designated program) were early adopters of formularies. Washington State and Ohio periodically update their drug formularies with prior authorization requirements for some classes of drugs and for off label use. Texas took a different approach and adopted the ODG guidelines as the basis of their closed formulary, where designated “N” drugs require the prescribing physician to complete a letter of medical necessity. Formularies are another mechanism to ensure better oversight and monitoring by both the payer and the provider. Early results from the Texas system indicate the closed formulary system has made a positive, measurable impact on the overall quality and cost of health care delivery to Texas injured workers.3

As long as PBMs have been serving workers’ compensation payers, they have offered similar types of tools to help manage pharmacy costs. Texas is the first free market system to adopt a closed formulary, but other states are examining these results and considering a similar approach. New Hampshire’s legislature considered a bill earlier this year which would have implemented a closed formulary similar to Texas and made generic drugs mandatory. Though the state ultimately removed that measure from the bill, other states may decide to follow the closed formulary tactic given the positive results to date in Texas.

Putting it All Together

For seasoned claim and medical professionals, closed formularies and medical treatment guidelines are just two of the many ingredients needed to manage claim outcomes and reduce costs. The potential to add PDMP access in the future is still unknown, since privacy issues, data sharing concerns and funding challenges exist. In the meantime, employing the tools that do exist is important. Pharmacy benefit managers can successfully manage medication plans, and facilitate access to valuable data, so that informed and timely claims decisions are made. Coupled with consistent communication among all parties – payers, providers, injured workers and PBMs – creates the most reliable recipe for successful outcomes.

Click here for a list of State PDMP Wesbites



1 -Arizona Substance Abuse Partnership. Prescription Drug Abuse in Arizona; Using Data to Understand the Problem and Guide the Development of Solutions. July 20, 2012. Assessed 4/8/13. http://cabhp.asu.edu/events/si-session-54
2 -National Institutes of Health. Assessed 4/8/13. http://www.nlm.nih.gov/
3 -Texas Department of Insurance. Fewer Texas Workers’ Compensation Claims Include Opioids and Not-Recommended Prescriptions. June 19, 2012. Assessed 4/8/13. http://www.tdi.texas.gov/news/2012/news201225.html
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