New York Prescription Drug Formulary Reform Implementation

Chartwell Law

New York’s 2017-2018 Executive Budget, enacted effective April 10, 2017, included significant reforms to the Workers’ Compensation Law (WCL). This update discusses the Board’s implementation of the prescription drug formulary, which will start impacting claims by year-end.

The April 2017 reform legislation amended WCL § 13-p to mandate that the chair of the Workers’ Compensation Board adopt a comprehensive prescription drug formulary, which the legislature directed “include a tiered list of high-quality, cost-effective medications that are pre-approved to be prescribed and dispensed, as well as additional non-preferred drugs that can be prescribed with prior approval.” Although delayed, the chair adopted a Drug Formulary on June 5, 2019, which applies in all claims, including controverted claims, regardless of the date of accident or disablement, and regardless of where the claimant lives. The formulary will be updated at least annually to account for changes to medications available on the market.

The formulary will apply to new prescriptions effective December 5, 2019, and to refill and renewal prescriptions effective June 5, 2020. A “new” prescription is a prescription for a drug that the claimant is not currently taking (different drug or different strength or frequency). A “renewal” is a newly-written prescription for continuation/renewal of a drug (same drug, strength, and frequency) that the claimant has been taking, but for which there are no available refills. A “refill” is any subsequent fill of a prescription when the number of refills is explicitly included in the original prescription. As of December 5, 2019, any new prescription must be for a formulary drug, and a provider must obtain prior authorization for any non-formulary drug prior to writing a new prescription. Prior to June 5, 2020, providers and claimants must plan for a transition to a formulary drug. If such a transition is considered not medically appropriate, the provider must obtain prior authorization for a refill or renewal of a non-formulary drug well in advance of June 5, 2020. On or after June 5, 2020, all refills or renewals of prescriptions must use a formulary drug unless prior authorization has been obtained before the date of the refill or renewal.

With regard to refills and renewals, carrier, self-insured employers (SIEs), and third-party administrators (TPAs) are required to notify claimants and providers by December 5, 2019 if a currently prescribed drug is not included on the formulary. The chair has specified the required format for such notifications: Injured Worker Formulary Notification and Provider Formulary Notification.

Formulary Drugs

Formulary drugs do not require prior authorization, and are designated as either “Phase A,” “Phase B,” or “Perioperative.” Phase A drugs may be prescribed/dispensed within the first 30 days following an accident/injury or until the carrier accepts or the board establishes the claim, whichever occurs sooner, for up to a 30-day supply. Phase B drugs may be prescribed/dispensed after 30 days following an accident/injury or when the carrier has accepted or the Board has established the claim, whichever occurs sooner, for up to a 90-day supply. However, when a body part/illness has been accepted (with or without liability) or established, Phase B drugs must be prescribed in accordance with, as applicable, the adopted Medical Treatment Guidelines (MTG). Phase B drugs designated as “2nd” line therapy may only be prescribed/dispensed following an unsuccessful trial of a first-line drug prescribed in accordance with Phase B and, as applicable, the adopted MTG. Perioperative drugs may be prescribed/dispensed during the perioperative period (4 days before through 4 days after the claimant goes into the hospital, clinic, or doctor’s office for surgery, with the day of surgery being day 0). Accordingly, carriers and SIEs should advise their pharmacy networks, including pharmacy benefit managers, when surgery has been authorized or scheduled.

Some formulary drugs – namely, certain controlled substances, muscle relaxants, and anti-infectives, including antibiotics and post-exposure medications – are further marked with a “Special Consideration” indication (1, 2, or 3), which, when applicable, limit the drug’s prescription and dispensing (1) to one time only without a prior authorization, for a maximum of a 7-day supply, during the phase of the formulary under which it is contained; (2) during the applicable phase of the formulary, for the quantity indicated by the prescriber; and/or (3) to the short acting formulation of the product.

In the event that a conflict exists between the Board’s MTGs and the formulary, the provisions of the MTGs shall prevail, unless the drug was prescribed in accordance with Phase A or Phase B of the formulary.

Non-Formulary Drugs

Prior authorization is required for: (1) prescription/dispensing of a drug other than as described in the formulary; (2) drugs not listed on the formulary; (3) a formulary brand name drug, when a generic is available; (4) combination products, unless specifically listed in the formulary; (5) a brand name drug when a generic version with the same active ingredient(s) is commercially available in a different strength/ dosage; and (6) compound drugs. The requirement of prior authorization for prescription/dispensing of compound drugs was specifically directed by the April 2017 reform legislation. If prior authorization is not obtained prior to the dispensing of a drug when required, payment for the drug may be denied. When responsibility for payment is apportioned between more than one carrier or SIE, the provider must seek prior authorization from each carrier and SIE.

Prior Authorization Process

First Level Review: The provider shall submit a request for prior authorization, in the manner prescribed by the chair, to the carrier, SIE, or, when designated, the pharmacy benefits manager (PBM). The request may include the quantity to be prescribed and number of refills or duration of the prescription. If the duration is not stated, the default is 30 days; the prior authorization request may not exceed 365 days. The carrier, SIE, or PBM must approve, partially approve, or deny the prior authorization request within 4 calendar days. Failure to timely respond within 4 calendar days may result in the request being deemed approved as prescribed via Order of the chair. A “partial approval” authorizes the requested drug, but limits the length of time, quantity prescribed, or number of refills from that requested by prescriber. A partial approval or denial must provide a specific reason for such response with reference to the specific request made by the prescriber, and provide information regarding how to request review of the denial/partial approval from the carrier or SIE’s physician, which is defined as a physician or physicians, licensed by New York State or the state where he/she practices, who is: (1) employed or contracted by the carrier or SIE; or (2) is employed by a URAC-accredited company retained by the carrier or SIE through a contract to review claims requests for non-formulary agents and advise the carrier or SIE; and (3) is not employed or contracted by the carrier or SIE’s pharmacy benefits network.

Second Level Review: Within 10 calendar days of a denial or partial approval, the prescriber may request review by the carrier/SIE’s physician. Such request for review must include: (1) all information submitted by the prescriber for the First Level Review; (2) the response from the carrier, SIE, or PBM; (3) all information provided to the prescriber related to the First Level Review denial or partial approval; and (4) additional information from the prescriber further justifying the need for the requested non-formulary drug, responding to the reason(s) stated in the First Level Denial. The carrier/SIE’s physician must approve, partially approve, or deny the prior authorization request within 4 calendar days. Failure to timely respond may result in the request being deemed approved as prescribed via Order of the chair.

Third Level Review: Within 10 calendar days of a denial or partial approval by the carrier/SIE’s physician of a Second Level Review, the prescriber may request review by the Board’s Medical Director’s Office. Such request for review must include: (1) all documentation submitted in support of the First and Second Level Reviews; (2) all information associated with the denial or partial approval issued from the First and Second Level Reviews; (3) the prescriber’s response to the reason(s) stated in the Second Level Denial; and (4) additional information from the prescriber further justifying the need for the requested non-formulary drug, responding to the reason(s) stated in the Second Level Denial. The decision by the Medical Director’s Office is final and binding on all parties. If a Third Level Review is denied, the prescriber may not submit a request for prior authorization for the same medication unless he/she submits evidence that there has been a change in claimant’s medical condition that renders the denial of the request for prior authorization no longer applicable to the claimant’s current medical condition.

Carriers, SIEs, and TPAs were required to provide the Board, in the manner prescribed by the chair, with the name and contact information for the point(s) of contact for the First and Second Level Review by July 4, 2019, but no later than December 5, 2019, and are required to keep such information up-to-date thereafter. Failure to provide the Board with such name and contact information by December 5, 2019, or to keep such information up-to-date thereafter, may subject the carrier/SIE/TPA to Orders of the chair approving Prior Authorization requests and penalties pursuant to WCL § 114-a(3) for every case where Prior Authorization was requested. However, the chair has yet to specify the manner in which such name and contact information is to be provided, or the manner in which requests for prior authorization shall be submitted by providers. It is expected that the Board will make further announcements regarding the prior authorization process by December 5, 2019.

Chartwell Commentary

The formulary is expected to reduce medical exposure, particularly in older claims where claimants are currently prescribed narcotics/opioids, due to its restrictions on the prescription and dispensing of narcotics/opioids. The State, and in turn the Board, have demonstrated a keen interest in reducing ongoing opioid use in recent years. In the New York State Department of Health’s 2018 Opioid Annual Data Report, it was noted that opioid overdose deaths among New York State residents nearly tripled from 2010 to 2016 (from 5.4 deaths per 100,000 population in 2010 to 15.1 deaths per 100,000 in 2016). Public Health Law § 3309(5) requires that the State publish this report on statewide opioid overdose data annually to “assist agencies and programs across the state in planning and tailoring interventions to address the ongoing opioid crisis.”

Reflecting the Board’s effort to combat the increased reliance on opioid medications by workers’ compensations claimants, the drug formulary does not allow for prescription of narcotics after the first 30 days following an injury, except in the immediate pre- and post-operative periods, unless prior authorization is obtained. Furthermore, on or after December 5, 2019, during the 30 days following an injury, narcotics may not exceed a single 7-day supply. As for claimants who are already on long-term opioids, they and their providers must plan for a transition to a drug formulary medication prior to June 5, 2020. If a provider considers such a transition not medically appropriate, the provider must obtain prior authorization for a refill or renewal of a non-formulary narcotic well in advance of June 5, 2020.

Despite the anticipated benefits, the 4-calendar-day response time for prior authorization requests is unreasonably short – particularly where a request is received late on a Friday before a long weekend – and places another heavy administrative burden on payors. Therefore, the actual benefit remains to be seen, since failure to timely respond will result in the request being deemed approved as prescribed, and procedures need to be put into place as soon as possible to ensure timely responses.

In sum, to take advantage of the formulary’s restrictions on prescription medications, it is important that payors: (1) notify claimants and providers by December 5, 2019 if a currently prescribed drug is not included on the formulary, (2) provide the Board with the name and contact information for the point(s) of contact for First and Second Level Reviews no later than December 5, 2019; and (3) timely and properly respond to all provider requests for prior authorization.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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