July 8, 2019

NCCI Examines Impact of the ODG Formulary in Arizona and Tennessee

The National Council on Compensation Insurance (NCCI) released Formulary Implementations and Initial Impacts on Workers’ Compensation, a new report that investigates the impact of the Official Disability Guidelines (ODG) formulary in Arizona and Tennessee.

This report utilized the NCCI Medical Data Call, a database of paid medical transactions reported by all workers’ comp carriers, focusing on calendar years 2014-2017, excluding Texas and Oklahoma.

Key findings within the report included:

  • Prescription drug utilization decreased across all drug categories, regardless of if they did or did not require prior authorization. Furthermore, this occurred in other states without closed formularies
  • The utilization of topical and compound drugs in Tennessee decreased dramatically after formulary implementation
  • Opioid utilization fell 16% in Tennessee and 22% in Arizona
  • 80% of opioid prescriptions prior to formulary implementation were for drugs which the formularies ended up categorizing as pre-approved
  • Though drug utilization decreased, there’s little evidence that the ODG formulary led to physician services, such as physical medicine, substituting prescription drugs
  • The formulary had limited impact on opioid utilization

News publications such as WorkCompCentral reported on the story, speaking with industry experts about the report, including Healthesystems’ Chief Medical Officer, Robert Goldberg, MD, FACOEM.

Dr. Goldberg listed several factors that could explain the ODG’s lack of impact on opioid utilization, primarily the fact that the formulary includes many commonly prescribed opioids as Y drugs. The NCCI study reports that 80% of opioid prescriptions prior to formulary implementation were for drugs that were later categorized as pre-approved by the formulary. Because of this, it would stand to reason that most opioid prescriptions could still be dispensed in accordance with these formulary guidelines.

Furthermore, Dr. Goldberg noted that while the formulary labels certain drugs as N for pre-authorization, that doesn’t guarantee the drug will be denied, as this depends on the practice of claims organizations and individual adjusters.

“That happens no matter what state or what formulary is being implemented,” said Dr. Goldberg, who went on to state, “You’ve got some megatrends that are also pushing down opioid prescribing,” which does align with the overall decrease in opioid utilization seen even in states without formularies.

Formularies are still a useful tool in curbing problematic prescription drug use when their structure is designed in way to effectively reduce opioid use.

For example, a recent study published by the Journal of Occupational and Environmental Medicine (JOEM) examined the impact that adhering to the American College of Occupational and Environmental Medicine’s (ACOEM) evidence-based medicine guidelines had on low-back pain claims in workers’ comp.

This study collected data from the Workers’ Compensation Fund Insurance of Utah, covering 50% of the workers’ comp market of Utah. The data included medical records, treatment instructions, claim duration and cost, and more. One hundred random cases of acute low-back pain were analyzed, with treatment at first appointments abstracted and two scoring tools used to asses each patient’s treatment plan.

The study found a significant trend between increased compliance to ACOEM guidelines and decreasing costs. Medical and total costs trended lower by an average $352.90 and $586.20 per unit of compliance score respectively.

The ACOEM guidelines are used to direct various workers’ compensation programs, including the California workers’ comp formulary, and so far, clinical reports have found that the formulary has made significant impacts on workers’ comp claims.

As the reports for different formulary types differ, it is critical that payers understand the effectiveness of diverse guidelines and formularies in order to provide optimal patient care.

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