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Consult Formulary Before Making an
ePrescribing Decision
August 25, 2005
HIMSS ePrescribing Webinar Series
Co-presenters:
Sandra White, Vice President
MediMedia Information Technologies
Michael Burger, Sr. Product Analyst
Emdeon Corporation (formerly WebMD)
Presentation Outline
• Formulary overview
– Different Types
– How Constructed
• ePrescribing Overview
• How Formulary Fits within ePrescribing
• Content Supplier-Software Company
Interaction
• Demonstration of Physician View
• Formulary & Medicare Part D
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What is a Formulary?
• A continually updated list of medications that are
covered under a plan or benefit:
–
–
–
–
Managed Care Organizations (MCOs)
Pharmacy Benefit Managers (PBMs)
Hospitals
Group Practices
• Represents the current clinical judgment of
physicians, pharmacists and other experts in the
diagnosis and treatment of disease
• Purpose is to maintain quality patient care while
meeting cost-containment objectives
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Construction Process
• Content springs from recommendations of a
pharmacy and therapeutics committee (P&T
Committee), an independent panel of:
–
–
–
–
Primary care physicians
Specialists
Pharmacists
Other health care professionals
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P&T Committee …
• Objectively appraises, evaluates and selects drugs
• Meets as frequently as necessary to review &
update formulary
• Establishes policies and procedures that educate
and inform providers
• Oversees quality improvement programs
• Implements generic substitution and therapeutic
interchange programs
• Develops protocols and procedures for the use of
and access to non-formulary drugs
Source: Academy of Managed Care Pharmacy, Alliance of Community Health Plans,
American Medical Association, American Society of Health-System Pharmacists,
Department of Veterans Affairs, National Business Coalition on Health, U.S. Pharmacopeia
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Myth: Formularies Are About
Cost-cutting Only
• P&T Committees first look at medications that are
clinically effective.
– Assess peer-reviewed literature
– Compare the efficacy, type and frequency of side
effects, and potential drug interactions
– Evaluate benefits, risks and potential outcomes
• When two or more drugs produce the same clinical
results, the the P&T Committee considers:
– Cost
– Supplier Services
– Ease of Delivery
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Types of Formulary
• There are three formulary categories in today’s
marketplace:
– Open (or voluntary) – includes all drugs, with a
preferred ranking
– Closed (or restricted) – only covers certain drugs;
patient generally pays for non-covered.
– Limited – limiting prescribing choices within
certain therapeutic classes and offering unlimited
choices in the remaining drug classes
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Popular Formulary
•A popular managed program is a “tiered”
formulary. A common construct:
Tier 4
Tier 3
Tier 2
Tier 1
• $5-$10 for 1
month supply
• Generic drugs
• $15-$20 for 1
month supply
• Brand name
drugs with no
generic
equivalent
• $25-$30 for 1
month supply
• Brand name
drugs that have
generic or
therapeutic
equivalents
• Co-payment is
25-50% of drug
cost
• Formerly noncovered drugs
(e.g. gene
therapy) and
lifestyle drugs
Source: AIS, A Guide to Drug Cost Management Strategies
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ePrescribing
Overview
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What is ePrescribing?
EHR
Connected
Medication Mgmt
Prescription Writer w/Data
Stand-alone Prescription Writer
Electronic Reference
.
Source: eHealth Initiative
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Where are we today?
5-18% MDs prescribing electronically
(eHealth Initiative, 2004)
85% pharmacies enabled for ePrescribing
(SureScripts, ProxyMed, Emdeon, eRx Networks)
5% US hospitals using CPOE for Rx orders
(KLAS, 2005)
14-39% Outpatient EMR use
(California Healthcare Foundation, David Brailer, MD, 2004)
$29 billion potential annual ePrescribing savings
(Center for Information Technology Leadership, 2004)
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Benefits: Prescribers

Reduce Cost




Increased quality of care by enabling easy access to
computerized medication history

Decreases potential medication errors due to illegible
prescriptions

Reduced waiting time at pharmacy
Aura of high tech
Improve quality of care
Improve patient
satisfaction
Reduce phone calls
Reduce chart pulls
More time for patient care
Low impact to existing workflow

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Benefits: Payers/PBMs

Decreases potential medication errors due to illegible
prescriptions

Reduced phone calls
Better utilization of cost-effective alternatives
Improve quality of care
Reduce cost


Improve customer
satisfaction


Employers: lower premium growth due to reduced drug
spend
Prescribers: Fewer hassles over coverage and prior
authorization
Consumer: Reduced wait time at pharmacy
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Benefits: Pharmacies

Reduce Cost



Improve quality of care


Improve customer
satisfaction & care

Reduce telephone calls
Automate manual processes
Reduce multiple eligibility inquiries
Decreases potential medication errors due to illegible
prescriptions
Provides more time for patient counseling
Patient: Reduce wait time
Prescriber: Fewer interactions over coverage and prior
authorization
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Current, Paper Rx Process
• Physician often prescribes medication
unaware of drug’s formulary status or
coverage information
• Pharmacist alerted to formulary status upon
submitting claim to payer
• Pharmacist must call physician and request
alternative; physician still unaware of status
or coverage
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The Electronic Prescription
• Prescriber makes fully informed decision as
he or she is presented with status and
coverage information before selecting a
medication
• Prescriber can counsel patient before
receiving medication
• Pharmacist receives prescription with
prescribers’ decision fully documented;
claim adjudicated without alert
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Formulary
& ePrescribing
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Point-of-Care Formulary
•
There are four sources of formulary
information at the point of care:
1.
2.
3.
4.
Formulary booklets
Web sites
Reference Sources
ePrescribing
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Electronic Prescribing and
Formulary Databases
EMR
Connected
Formulary
Database
Medication Mgmt
Prescription Writer w/Data
Stand-alone Prescription Writer
Electronic Reference
.
Source: eHealth Initiative
To Bring value, formulary information should cover 70% of a prescriber’s patients
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Key Decision-support Tool
Electronic formulary databases provide:
• Status of medications
– On/off/preferred
– Prior authorization
– Tier
• Preferred alternatives
• Coverage information
–
–
–
–
Co-payments
Relative cost
Restrictions (age, quantity, etc)
Step therapy
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Get It Right The First Time!
• Formulary within the context of ePrescribing
reduces telephone calls back to the prescriber:
Formulary
Management
Calls
Rx Clarification
Calls
DUR
Calls
RDUR
Prior
Authorization
Calls
Renewal
Requests
Formulary
Compliance
Mailings
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• In a 2003 study, Medco found
a 42% reduction in pharmacy
calls to practices.
• In July 2002, Aetna found a
53% reduction in calls from,
and 62% reduction in calls to,
the retail pharmacy.
• In 2002, Tufts saw a 35%
reduction in calls between
participating physician and
pharmacists and found that
physicians saved 2 hours per
day.
Formulary Aggregators
Aggregator
Type of Data
Data for
Comments
MediMedia
status, alternatives,
relative cost,
restrictions,
Health plans, PBMs
Employer Groups,
Medicare, Medicaid
Mapped to 3700 plan, PBM &
employer names; normalized
file structure.
RxHub
status, alternatives
PBMs
Only CareMark, Express
Scripts and Medco; requires
real-time interface
CAQH
status, alternatives
Health plans
Distributes data through
RxHub; only the top 25 health
plans
Health plans, PBMs
Employer Groups
Availibility on a plan-by-plan
basis
Off-line reference
ePocrates
status
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Formulary Databases Operate
Behind the Scenes
Plan, PBM or Employer
A
Extracts data,
transmits to
aggregator via flat
file, Excel, MS Word,
fax, eMail, CD-Rom
Formulary
Database
B
C
Extracts plan &
PBM demographic
identifiers from
POMIS
Transmits data
to software partner
weekly, monthly via
CD-Rom or FTP
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D
E
Aggregator normalizes
files for comprehension,
ease of use
Aggregator maps
data to formulary files
Formulary Databases Seamlessly
Fit into the Office Workflow
A
Practice collects
health or PBM
card from patient,
inputs into
POMIS or EMR
POMIS
B
Data shared with
EMR, ePrescribing
system in real-time,
batch or one-time.
Formulary
Database
Demographic
Database
C
Practice
“Source of
Truth”
Formulary linked
to health or PBM
identifiers
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Demonstration
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Formulary &
Medicare Part D
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Medicare Act of 2003
• Directs HHS to conduct a voluntary electronic prescription pilot
project in 2006, unless there is already adequate experience.
• Establishes a real-time ePrescribing program to be used by
prescribers, pharmacies and pharmacists who serve Medicare
patients
– No mandate, but if used, standards must be followed
– Standards via National Committee on Vital and Health Stats
• Information provided electronically includes:
– Benefits, formularies and tiering and coverage limitations
– Information on drug being prescribed, patient’s history, DUR
– Information on therapeutic alternatives
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Medicare Part D (cont.)
• Other components:
– Discretionary grants to be made available to prescribers
– Plans, hospitals, groups may purchase hardware for MDs
– Plans may pay additional fees for reduced medication errors,
improved formulary compliance & fewer adverse drug events
Deadline for
Secretary to
develop
ePrescribing
Standards
Sept 1, 2005
Launch 1-yr
voluntary
ePrescribing
pilot program;
plans can offer
P4P
Jan 1, 2006
Evaluation
results of pilot
program due to
Congress
Apr 1, 2007
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Deadline for
Secretary to
finalize and
release
standards
Apr 1, 2008
All Medicare
providers using
ePrescribing
must adopt
finalized
standards
April 2009
Proposed ePrescribing Rules
• Final rules due in September
• Names 3 foundation standards (asserting they
have adequate industry experience):
– NCPDP SCRIPT (sans Fill Status)
– X12N 270/271 Eligibility (between Provider & PDP)
– NCPDP Telecom (between pharmacy & PDP)
• Plans two formats as foundation standards
– Drug History
– Formulary & Benefits
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Components of Formulary & Benefit
Standard
•
•
•
•
Product Name (Health Plan)
Formulary Status List
Preferred Alternatives
Coverage List
–
–
–
–
–
–
–
Product Exclusions
Prior Authorization
Medical Necessity
Step Therapy
Age, Quantity, Gender Limits
Resource Link
Text Messages
• Copay Lists
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What’s next?
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Trends in electronic formulary
•
•
•
•
Integrated data vs reference
Increased inclusion of Medicare formularies
More plans making formularies available
Deeper data sets mirroring more complex
pharmacy benefits
• Automating related processes
– E.g. prior authorization
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Task Group Overview
• Task Group Name:
– Prior Authorization Workflow-to-Transactions
• Date Task Group Formed:
– November 18, 2004
• Task Group Participants:
• Objectives:
– Promote standardized automated adjudication of prior
authorization
– Coordinate the further development and alignment of standards
– Identify additional needed standards
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Proposed workflow
PATIENT
Visits Physician
PRESCRIBER
• Writes Prescription
• Completes a structured Q&A
• Submits PA Request
• Transmits Prescription
Drugs can be flagged
as requiring PA, and
simple rules applied
via NCPDP
Formulary & Benefit
Standard
PAYER
•
•
•
•
Submit Required
Patient Information
via
X12N-278
X12N-275 with HL7
Attachment
Prescriptions are
submitted via
NCPDP SCRIPT
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Determines PA Status
Compiles PA clinical rules
Processes PA Requests
Processes Drug Claims
Drug Claims are
Submitted via
NCPDP Telecommunication
PHARMACY
• Dispense Drugs
• Files Drug Claims
In Summary
• A formulary is a continually updated list of drugs whose
purpose is to maintain quality while containing costs
• Electronic prescribing is gaining marketshare
• Integrated within the electronic prescribing process,
formulary provides a great deal of value as a decisionsupport tool that helps you “get it right the first time.”
• Formularies are considered a critical component of the
Medicare Part D benefit, as plans and coalitions are
distributing their formularies through aggregators
• Electronic formularies are becoming more comprehensive
and providing more data
• There is a trend to automate processes tangential to
formulary such as prior authorization
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