I recently found myself in a discussion with Mark Pew about the latest version of the proposed New York workers' compensation drug formulary. As is often the case, he had some very good questions. One of those questions really got me thinking: What should payers do — or not do — to get ready for the New York formulary?

After all, the proposed New York formulary would be one of the most nuanced and complicated work comp formularies in the nation — meaning successful implementation will likely require some early planning.  

What’s more, every version of the proposed formulary rules has contemplated that payers will implement the formulary for new fills only six months after the final rules go into effect, meaning payers would have six months to figure out the rules, develop a compliant review process, explain that process to injured workers and prescribers, and prepare for the inevitable confusion that occurs whenever there’s a landmark change to the workers’ compensation system.

While we’re still waiting on the adoption of a final version of the formulary table and regulations, we’ve now had more than a year to watch them develop, submit comments and review the responses from the Workers’ Compensation Board, and to compare what we’ve seen to formularies in other states.

With that in mind, here are five things that payers should consider when preparing for the New York formulary:

1. Don't procrastinate.

There is a lot of temptation to adopt a “wait and see” approach when it comes to the New York formulary, and to be fair, that’s completely understandable. After three (so far) proposed versions and a 13-month (so far) wait, it’s completely understandable that people would be hesitant to start working toward implementation of the formulary when we don’t know exactly what the final rules will say or exactly when they’ll be adopted.

That’s completely understandable, but it’s also wrong.

While we don’t know exactly what the final formulary table and regulations will look like, we do have a pretty good idea.  There are some aspects of the formulary that have remained present in every version, such as the idea of requiring prior authorization for non-formulary drugs, some compound drugs and even some formulary drugs (when prescribed at the wrong time or in an excessive amount). 

There are also some more recent additions — such as the concept of “phases,” introduced in the second version — that have been slightly re-worked and re-defined, but will almost certainly be present in the final version. 

Finally, there are some newer additions that have been challenged by commenters but explicitly defended by the board, such as the lack of a prior authorization requirement for off-label prescription of formulary drugs.

In short, the board is absolutely still making changes to the proposed rules, but at this point those changes are being made with a scalpel, not a sledgehammer.

Also, while we don’t know exactly when the final adopted rules will become effective, comments from the board at the New York Self-Insurers Association have indicated it expects to have final rules in place sometime this year. What’s more, keep in mind that every version of the proposed rules has contained a requirement for payers to notify prescribers and injured workers about the upcoming formulary, and a requirement for prescribers to implement the formulary for new fills within six months of the planned effective date of the rules.

There will absolutely be changes between now and the adoption of the final rules, but expect those changes to affect details of the process (such as what form the board requires to be used to notify prescribers of how the formulary will be implemented in a claim) rather than fundamental aspects of the formulary (such as whether or not prior authorization is required for opioids used to treat chronic/non-acute plain).

Should you keep your implementation plans flexible? Absolutely. But do start planning now if you haven’t already.

2. Don't assume it's the same as the California formulary.

Anyone who is familiar with the California Medical Treatment Utilization Schedule drug list will notice a resemblance when looking at any version of the proposed New York formulary. 

The California and proposed New York formularies have many similarities. Both were developed in consultation with Reed Group (which publishes the American College of Occupational and Environmental Medicine guidelines). Both include recommendations based on the diagnosis/body part at issue. Both address perioperative fills and one-time, seven-day fills. (In fact, the first version of the proposed New York rules even used the California formulary’s term “special fills” to refer to one-time, seven-day fills.) 

They’re certainly similar, but they’re not the same.

For example:

• The California formulary requires prior authorization for off-label prescription of some formulary drugs. The proposed New York formulary does not. (See the board’s explanation here: “The board cannot prohibit medically necessary off-label use of drugs.”)
• The California formulary requires prior authorization of physician dispensing, with some exceptions. The proposed New York formulary doesn’t discuss physician dispensing.
• The California formulary requires prior authorization for all compound drugs. The proposed New York formulary requires prior authorization only for some compound drugs. (See proposed rules 441.1(a) and 441.5(a) here.)
• The California formulary gives a clear “exempt” or “non-exempt” status for each listed drug. The New York proposed formulary assigns each drug to one or more “phases,” with some drugs being subject to additional “special considerations.”
• In short: payers and pharmacy benefit managers that have gone through the work of implementing the MTUS drug list in California claims should be aware that implementing New York’s formulary will be a new experience, even if certain parts of it may feel familiar.

3. Don't be afraid to talk to your PBM about implementation plans.

One of the factors that has remained consistent across all versions of the proposed New York formulary is that there is a lot of nuance.

In the first version, each drug had a preferred or non-preferred status, a special fill and perioperative eligibility status, and several diagnosis-specific subsequent fill statuses that could impact whether the drug was eligible as a first-line or second-line course of therapy. 

In the second version, preferred and non-preferred statuses were replaced by a Phase A, Phase B and Phase C status (with Phase A replacing the old special fill status).

Now, in the third version, there is a new Phase A, a new Phase B and two categories of special considerations, a perioperative status, along with multiple diagnosis-specific limitations on eligibility as a first-line course of treatment. 

If you didn’t understand all of that after reading it once, imagine trying to explain it to a pharmacist at implementation or, for that matter, to an injured worker.

Additionally, prescribing doctors will need to be instructed as well, and even the most work-comp-savvy physician may not immediately understand what’s required if he wishes to prescribe a Phase A medication with a special consideration “1” designation for a diagnosis under which the medication is designated as “2nd" rather than “yes.” (Note: I didn’t make this up. This description applies to five out of the six skeletal muscle relaxants listed on the current proposed formulary table.)

One of the biggest implementation challenges for payers and PBMs is going to be communicating with prescribers in a way that helps them to understand the requirements of the formulary and how the it will impact availability of certain drugs in their patient’s claim. A miscommunication could easily result in a prescriber failing to request authorization, which may result in a denied fill and, possibly, litigation of the denial.  

4. Evaluate peer review options outside of your PBM's UR/DUR process.

One of the questions that you may want to discuss with your PBM is how best to handle "second level" reviews.

In many formulary states, a request for authorization of a drug goes through a utilization review (UR) or drug utilization review (DUR) process before there is a decision to approve or deny the request. In many cases, the PBM has its own UR/DUR process or uses a contracted vendor to perform it.

The proposed New York rules place some limits on just how involved a PBM can be in the review process.

Under the proposed rules, payers have to provide a first level and second level review process for requests for authorization of a drug. If a request is denied (or partially denied) within a first level review, the payer has to provide the opportunity for a second level review.

That should sound familiar to anyone who is familiar with the world of UR. Most UR companies (or PBMs with their own UR/DUR process) offer an opportunity for reconsideration or appeal of a denial. However, the proposed New York rules are clear that a second level review has to be performed by a “carrier’s physician,” and the proposed rules are also clear that the carrier’s physician cannot be employed by or contracted with the PBM.

This restriction was in both the previous and the current versions of the proposed rules, so it’s unlikely that the board is going to remove it. In fact, in its response to comments on the last version of the proposed rules, the board explicitly stated that it would be keeping this restriction in the final rules “due to conflict of interest concerns.”

5. Keep the lines of communication open.

Regardless of what small changes we see prior to final adoption of the formulary, this will not be a plug-and-play formulary as we’ve seen in some jurisdictions. Whether or not a drug requires prior authorization will often depend on several factors specific to each claim — such as the accepted diagnosis (or diagnoses), the applicable phase of treatment and, in some cases, whether or not the patient has failed a trial of a different medication.

In many cases, that information is not immediately available to the pharmacist or the PBM when deciding how to handle a prescription at the pharmacy.

There will be instances of confusion. Some prescribers will forget to request authorization. Some injured workers (and their attorneys) will perceive valid denials as invalid denials. Some payers will forget to notify their PBMs that a surgery has been scheduled, meaning a perioperative period is about to begin.

The best way to avoid that sort of confusion is to make sure that all players involved in the claim have an up-to-date understanding of how the formulary is being applied. Changes in the claim (such as a new accepted diagnosis), changes in the treatment (such as a failed trial of a first-line drug) and, of course, updates to the formulary itself can all determine whether a medication is immediately available to that workers’ compensation patient or whether the prescriber has to request authorization.

The bottom line is this: New York is about to embark upon a journey that is still filled with unknowns but is guaranteed to be different than any prior journeys. With layers of complexity and nuance, time is of the essence to start drawing up your plans.

Waiting until the final regulations are published will be too late.

David Price is director of government affairs at Preferred Medical. This post is republished with permission from his LinkedIn blog.