MEMBER SATISFACTION

Improving Practices and Processes Related to Nonformulary Medications

During the Fall 1995 open enrollment period, and into early 1996, the plan noticed a sharp increase in members' questions about the formulary and the process for exceptions. This increase caused the plan to look more closely at its complaint data.

A preliminary review showed that complaints regarding formulary issues had nearly tripled in the first three months of 1996 as compared to 1995. Members complained not only to the plan, but also directly to their employers. The sales department began hearing complaints from employer groups calling on behalf of employees with formulary concerns.

The plan performed an analysis of its own formulary, and the drugs not included. Deciding that action needed to be taken, the plan appointed an administrative work group to address what was needed to improve service in the area of nonformulary medicines.

This activity potentially targeted all members. Directly affected were those members receiving nonformulary medicines.

The plan used its customer service department to enter data on complaints as they came in. The plan's systems allowed for tracking of complaints by type and number. The plan picked the number of member complaints regarding nonformulary medicines as its quantifiable measure; it reported it both as a raw number, and as a rate per 10,000 members. The plan used data from the first six months of 1996 as its baseline.

SHORT CYCLE TIMES Many quality improvement activities move on an annual cycle. HEDIS results are reported annually, as are surveys and other measures. In this case, the plan used a six-month cycle time. This was appropriate because of the rapidly changing nature of the organization, the rapid rate of increase in complaints, and the rapid response by the plan. Where the situation is not changing as quickly, or when repeat barrier analysis and prioritization of interventions is not occurring between measurements, a longer cycle time may be appropriate.

The plan set several goals, based on its baseline performance. It sought to reduce the number of complaints in the last half of 1996 by at least 50 percent. It sought to reduce the annual complaint level for the years 1997 and 1998 to no more than 50 percent of the 1996 annual level: 45 complaints or 0.93 complaints per 10,000 members.

It also sought to reduce employer concern, and the negative feedback employers were hearing from their employees about the plan formulary.

The work group analyzing the data consisted of the plan's medical directors, pharmacists, pharmacy administration and administrative support staff. Comparing 1996 complaint rates to 1995 levels, the group found that it had only 62 complaints regarding the formulary in the entire previous year. The plan had already seen more than that number in the first half of 1996.

The work group examined a two-month sample of rejected pharmacy claims. Nearly 60 percent of rejected claims were for non-covered drugs. 160 medications across 11 categories of drugs accounted for 88 percent of the rejections.

MERGING PROVIDER NETWORKS This plan had just been formed as the result of a merger of two separate managed care organizations. A staff model plan with wholly-owned clinics and employee physicians merged with a group model plan that used contracted medical groups. The combined entity used the more restrictive closed formulary from the staff model parent. The members of the contracted groups were unfamiliar with the closed formulary in use by the staff model HMO and, when this formulary was used for the combined entity, the change in prescribing practices may have contributed to increased complaints in 1996.

The work group benchmarked its formulary against three local competitors. It appeared that the plan's formulary was more closed and restrictive than those of its competition.

With the formulary clearly impacting members, the plan made a conscious decision to remove the members from the middle. The solution had to make the formulary a non-issue for the members (Table 1).

The plan came up with an immediate short-term solution: it would add some 180 drugs to a "secondary formulary" list. This list would be driven by physician preference. The plan's pharmacy and therapeutics committee reviewed this secondary formulary list for safety and efficacy concerns. The expanded formulary was communicated to providers, pharmacies and internal plan staff. The plan used newsletters, direct letters to physicians, and meetings to ensure that word got out.

It began to explore more long-term solutions such as educating providers on formulary compliance, or introducing a variable member benefit to accommodate member preference for a particular drug.

It implemented an internal monitoring system to review rejected claims and use of the secondary formulary.

The first remeasurement was based on data from July 1996 through December 1996:

*per 6-month period

The plan met its performance goal of reducing complaints by half. This was a statistically significant decrease. (The complaint rate was even lower than the rate seen in the last half of 1995.)

The plan felt that, although its quick fix had eliminated the special cause of increased formulary complaints seen in early 1996, further investigation was needed. The plan needed to evaluate longer-term options for solving formulary issues without adversely impacting members.

It held four member focus groups regarding various aspects of the drug formulary. It discovered that members by and large were unfamiliar with the drug formulary. They wanted more information about how the formulary benefited them. They disliked the notion of a variable co-payment for prescription drugs. As a result, the plan decided not to implement a variable co-payment in 1997.

The second remeasurement used data from 1997 (Table 2):

*per 6-month period

The plan met its performance goal for 1997. The 1997 complaint rate was significantly lower than any of the previous rates. Anecdotally, employers had fewer concerns. Sales felt that the formulary was no longer an issue.

The plan decided to pilot a program that would help transition new members who were currently on a nonpreferred drug. The program classified medications into three categories:

• Automatically grandfathered medications - these included drugs to treat stable chronic conditions such as diabetes, depression and asthma
• Medications with similar formulary alternatives: a 60-day supply was given along with a follow-up letter to the practitioner requesting a transition to a formulary drug
• All other nonformulary requests required prior authorization

The plan held four additional focus groups. These groups investigated members' perceptions about formulary issues such as lifestyle drugs.

An article in the member newsletter explained the rationale for the formulary, including the benefit of having a list of drugs which protects members from unsafe products and helps use their premium dollars wisely.

The plan made its formulary widely available, both in printed form and on the Internet.

Remeasurement number three used 1998 data (Table 3).

*per 6-month period

The plan met its performance goals, and felt that its results showed sustained improvement.

The plan noted that the number of complaints has remained small, with no further formal measurement of formulary denial problems. It dropped the secondary formulary in early 2000. The drugs previously on it were either incorporated into the preferred formulary, or dealt with through provider education.

When there is dissatisfaction with the formulary, the plan continues to offer, on an employer-specific basis, its program to help transition new members.

The plan continues to look at new issues such as lifestyle drugs and extended indications for drugs. In an era of increasing pharmacy costs, direct-to-consumer advertising, and differing member and physician incentives, this plan wants to be aware of the changing environment. It intends to be prepared to address new issues as needs arise.