Kentucky workers’ comp drug formulary emergency rule filed

Optum for Workers' Compensation
| Jan 03, 2019

To meet an approaching legislative deadline, the Kentucky Department of Workers’ Claims (DWC) filed, over the holidays, a workers’ compensation drug formulary rule through emergency rule-making procedures.

Basis for emergency action
Reform legislation signed earlier in 2018 required DWC to promulgate regulations to implement a formulary on or before December 31, 2018 and medical treatment guidelines on or before December 31, 2019. DWC Commissioner Robert Swisher subsequently established two advisory committees to assist with that process and announced later in the year that he had chosen the Official Disability Guidelines (ODG) for both the formulary and treatment guidelines. What remained was developing the actual rules to implement the formulary and guidelines.

Effective dates
The newly filed formulary rule applies to drugs prescribed or dispensed for outpatient use and contains a delayed, two-phased implementation approach to ensure injured workers are not abruptly cut off from medications. For claims with a date of injury or last exposure on or after January 1, 2019, the formulary will apply to all drugs that are prescribed or dispensed on or after July 1, 2019.

For claims with a date of injury or last exposure prior to January 1, 2019, the formulary will apply either July 1, 2019 (if not a “refill”) or January 1, 2020 (if a “refill”). The rule defines “refill” as a prescription for the same drug, at the same dose or strength, and in the same quantity and frequency, and with the same instructions as was initially prescribed.

Under the formulary rule, preauthorization will be required for both ODG “N” drugs and prescription drugs not listed in the formulary. In addition, both drugs dispensed for outpatient use by anyone other than a pharmacist (physicians and other non-pharmacist practitioners) and all compounds (regardless of ingredient makeup or dispenser type) will also require preauthorization.

An employer or its payment obligor is liable for payment of up to a 7-day supply of a "Y" drug dispensed to or prescribed for an injured employee within 7 days of a work-related injury for treatment of that work-related injury even if the employer ultimately denies liability for the claim. Unless the employer, in good faith, denies the claim as not compensable, “Y” drugs are to be filled without the need for preauthorization and without delay if prescribed for and appropriate for the work injury or occupational disease. Utilization review (UR) is not required for a "Y" drug but may be conducted retrospectively to determine medical reasonableness and necessity. And a denial of a “Y” drug based on retrospective UR review will apply only to refills of that drug after the date of the UR. In addition, non-prescription drugs will not require preauthorization.

Review and disputes
The new formulary rule notes that, consistent with the 2018 reform legislation, requests for preauthorization are subject to UR unless the employer waives UR (they agree the recommended treatment is medically necessary and appropriate). The rule outlines the review, reconsideration and dispute processes for preauthorization requests – relying mostly on existing UR regulations and noting a peer-to-peer review as part of the reconsideration process.

Process changes
Now that the rule has been filed, our The Optum Workers’ Comp and Auto No-fault (OWCA) Regulatory Implementations team will be moving forward with impacted internal departments, including our clinical experts, to implement the new formulary into our processes in anticipation of the initial July 1, 2019 effective date. As the development efforts progress, additional communications keeping our clients updated should follow.

Public input opportunities
In the meantime, we encourage our clients to review the new formulary rule, particularly as it relates to the processes they or their UR vendors are expected to follow when reviewing or reconsidering preauthorization requests and making determinations. A copy of the filed emergency rule can be viewed online here.

Because this has been filed as an emergency regulation, DWC has scheduled a public hearing on February 22 as part of the formal process needed to adopt this as a more permanent regulation. Written comments are also being accepted through February 28. DWC will also be developing rules to adopt the ODG treatment guidelines at a later point to meet the separate December 31, 2019 legislative deadline.

OWCA advises Kentucky DWC
The OWCA Government Affairs team contributed, over the last several months, to the rule development and drafting process leading up to this emergency filing. And we intend to submit comments in general support of the formulary rule as part of this latest formal rule-making phase. We appreciate the research and thought given to selection of the formulary and development of the rule by both Commissioner Swisher and the members of the two advisory committees, particularly given the short turn-around time placed on DWC by the legislature. The commissioner and committee members were very receptive of input and recommendations from stakeholders.

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