Benchmarks in Formulary Confirmation Process

For any Managed Care rebating organization, formulary confirmation can mark a massive drain on resources, or simply an overlooked area of financial leakage. There is a wide range of solutions that companies use to work through the logistics and process necessary to adjudicate formulary-based rebates. The process of formulary adjudication is without a doubt the most varied area of managed care in terms of “industry standard.”  While there are some basic aspects that remain similar across organizations, there are several areas that organizations can focus on today to improve process, increase resource efficiency, and capture financial leakage.

By attaining Best Practice in the process of formulary confirmation, an organization can assure efficient use of headcount, prevention of overpaying rebates, and identification of problematic accounts and processes.

Focus on training and re-training resources

We have seen a number of organizations delegate formulary confirmation to areas outside of the rebate analysis group. This could be account management, account directors, or even allowing PBMs, MCOs or any submitting organization to submit their own formulary confirmation.

The problem with this approach revolves around two key points. First, having this process happen outside of the rebating group may allow for conflicting motives in assuring accuracy in formulary analysis. Account facing groups may have motivation for keeping the status quo, and not focusing on instances of non-compliance. We’ve also seen that making a shift to the rebate analysts may reveal a training gap among analysts needing to be trained on formulary interpretation. This training gap can typically be closed fairly quickly with concerted department-wide training.

Focus on capturing timely information

The time with which information is captured can be extremely important in formulary confirmation. Since most organizations no longer provide a hard document, analysts are forced to look at real-time data residing online. Complications can arise out of differences in pay cycles and the cycles that formularies are published.

HighPoint has addressed this issue by implementing a “Formulary Day” in which all formularies are retrieved on the first day of the applicable period. Since payment cycles typically run at least a month behind formulary cycles (assuming 30 day data submission deadline), relevant info may be hard to retrieve at time of payment. Looking at the graphic below, an analyst retrieving an online formulary on April 30th is likely going to be viewing the 2nd Quarter formulary. By syncing these two cycles, rebate analysts are assured of timely and accurate information.

FormularyBlogGraphic.jpg.pngTypical Formulary and Data Schedule


Focus on utilizing third party data

Third party formulary data has become a major resource for pharmaceutical companies. Access to this data commonly resides in-house, but is not utilized by the Managed Care business. While access to this third party data is a huge step toward process improvement, it’s only the first step in integration of data and formulary procedure.

The main challenge in implementing third-party data to the formulary confirmation process is mapping the often complex plan-level info that comes from Pharmacy Benefit Managers and mapping it to third party data that may not share the same naming convention. Typically, data maps can be created and utilized to coordinate the multitude of data sources.

There are options for Manufacturers to use third-party data as a substitute or supplement to existing processes.  Third-Party data can provide key data points that can save time and effort in finding and analyzing formulary position.  If implemented carefully, Third-Party data can afford a manufacturer the luxury of a higher level of due diligence across extensive formulary landscapes.  While utilizing third-party data will still require a great deal of setup and consideration in the beginning, the benefits will be apparent on an ongoing basis.

Focus on incorporating process in to current systems

How an organization chooses to use the data gathered during formulary confirmation is important in terms of auditability, trend analysis, and visibility. Having a timeline of formulary confirmation is important for identifying problematic trends, non-compliance trends, and accuracy of invoiced rebates. Harmonization of this data can further empower an organization to understand where their biggest exposure is. Additionally, it can be determined who the biggest offending organizations are, thus allowing an organization to be sure to focus resources on the most non-compliant submissions.

Determining Optimal Level of Diligence

It has become increasingly difficult for rebate groups to keep pace with the expanding universe of formularies. While historically organizations used “National” formularies, custom and specialized formularies have trended into levels that are increasingly hard to manage. Determining the proper mix of formulary confirmation amongst the top plans within a Managed Care Organization can be the difference between finding savings, and over-investing time and resources in the process.

Finding the optimal overall process for formulary confirmation often requires multiple levels of consideration of available resources and gaps in process. Using these guidelines can start an organization on the path towards maximizing savings and minimizing possible formulary non-compliance leakage.  While the actual process will require a concerted effort, extensive analysis, and a holistic inventory of all in house customers, the rewards will be undeniable.  Finding the right mix of solutions will require a complete inventory of all customers and all iterations of the formulary process.