We are now a year removed from Indiana’s adoption of the (the “Formulary”) and its overall impact on worker’s compensation claims remains somewhat uncertain.  This is true as it relates to litigating disputes over prescription drug approval and the broader impact on overall costs associated with worker’s compensation claims and reducing the opioid epidemic.

In January of 2019, Indiana adopted the Official Disability Guidelines (ODG) Worker’s Compensation Drug Formulary (see Indiana Code 22-3-3-4.7).  The general purpose of the ODG is to provide evidence-based treatment guidelines and return-to-work guidelines for treatment of common workplace injuries and conditions.  The ODG Drug Formulary utilizes the same evidence-based approach for prescribing medications commonly used in worker’s compensation claims.

The Formulary marks the drugs as preferred drugs (identified by a “Y”) or not recommended drugs (commonly referred to as “N” drugs).  As a general rule, reimbursement is not permitted for an “N” drug that is prescribed for use by an employee who filed a notice of injury under the Act.  Essentially, an employee can fill the prescription, but must do so out-of-pocket.

Of course, there are exceptions to the general rule against reimbursement.  The exceptions that permit reimbursement for “N” drugs include medical emergencies (as defined in IC 22-3-3-4.7(b)) and a “grandfathering” provision.  The “grandfathering” provision permitted reimbursement for “N” drugs if the employee began use before July 1, 2018, and the use continued after January 1, 2019.  However, such reimbursements were only permitted through January 1, 2020.  Accordingly, the “grandfathering” exception no longer applies and prescriptions for “N” drugs in these situations are now subject to the general rule against reimbursement.

From a procedural standpoint, adoption of the Formulary resulted in imposition of new procedures and strict time limits for responding to requests from medical providers to permit use of “N” drugs.  Failure to follow the proper procedures within the specified time limits is deemed an approval of the “N” drug and the costs associated with same.  For this reason, employers and claim handlers should be familiar with the rules and time limits contained below for responding to requests for “N” drugs:

• If a medical provider wants to prescribe an “N” drug, the provider must first contact the “payer” (e.g., case manager, adjuster, TPA, or employer) to determine if the drug will be covered.
• If the “N” drug is approved, the approval is only effective for that single prescription order unless otherwise indicated.
• If the “N” drug is not approved, the employer shall:
  • Notify the provider and employee of the denial and pending review;
  • Submit the request to a third party certified by the Utilization Review Accreditation Commission (URAC) to evaluate the request; and
  • Notify the provider and employee of the third party’s determination within five (5) business days after receiving the request (note: written notice is required, per the Board).
• If the “payer” fails to provide notice of the third party’s determination within five (5) business days, then the request for the “N” drug is considered approved and reimbursement is authorized.
• If the third party determines that the request for the “N” drug should be denied and proper notice is given, the employee may petition the Board for a final determination.
• According to the Board, a denial should not be issued based on a lack of information from the prescribing doctor.  Instead, questions should be directed to the provider and the 5-day response period begins to run once sufficient answers have been received from the provider.

The above procedures and time limits are derived from both the Act (IC 22-3-3-7.4) and the Board’s Guidelines for Implementation of the Formulary (the “Guidelines”).  The Board recognized that adoption of the Formulary might result in some confusion about proper procedures, so the Board has maintained a copy of the Guidelines on its website (available HERE).  It should be noted that the Guidelines are neither law nor formal regulation.  But, adhering to these recommendations is important because disputes will ultimately be heard by a member of the Board.

When the Formulary was first adopted in Indiana, one of its stated purposes was to combat the opioid problem throughout the state.  In addition, some studies suggested that adopting the ODG could result in improved outcomes in worker’s compensation claims by decreasing medical and prescription costs, shortening the duration of claims, and lowering premiums.  At this time, we are not aware of any data or published studies examining the impact on overall claim costs.  Accordingly, it remains to be seen if employers and carriers will realize any such benefit from Indiana’s adoption of the Formulary.

From a litigation standpoint, when the Formulary was first adopted, there were some concerns about hearing procedures and increases in litigation related to “N” drug disputes.  However, since the adoption, there is no indication that said concerns have come to fruition.  To that end, it seems that few disputes regarding “N” drugs have made their way to either single hearing members or the Board.  Likewise, there have been no published decisions rendered by the Indiana Court of Appeals examining disputes related to the Formulary.

Given that the utilization review process plays a prominent role in evaluating prescriptions for “N” drugs, adoption of the Formulary also gave rise to questions about whether we might see a change in the Board’s views toward utilization review determinations.  Historically, the Board has given little weight to utilization review, which has minimized the value and usefulness of utilization review determinations in denying treatment and defending worker’s compensation claims.  Unfortunately, we have not seen a shift in the Board’s treatment of utilization review determinations that would benefit the defense.

Although it has been a year since Indiana’s adoption of the ODG Drug Formulary, it seems that the Formulary has not had as much of an immediate impact on worker’s compensation claims as some anticipated.  Havin said that, the changes are still relatively new, so we will continue to monitor this topic as it evolves.  Please continue to follow our blog for further updates and do not hesitate to contact us to discuss your concerns about this or any other issues involving your worker’s compensation claims in Indiana.

Thanks to attorney Dane Kurth for this important Indiana update. Dane represents Indiana and Illinois employers from the firm’s Indianapolis office.