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Hospital Accreditation

Medication Formulary Compliance Tips
Posted by
on 7/16/2019 10:00:00 AM
Every hospital has a medication formulary of some sort. CMS has specific requirements in this area. So what does your hospital need to do? The interpretive guidance in Appendix A of the State Operations manual at §482.25(b)(9) forms the basis for this discussion.
The American Society of Health System Pharmacists (ASHP) defines a formulary system as “an ongoing process whereby a health care organization, through its physicians, pharmacists, and other health care professionals, establishes policies on the use of drug products and therapies and identifies drug products and therapies that are the most medically appropriate and cost-effective to best serve the health interests of a given patient population.” There are two basic types of formularies:
  • Open Formulary: A list of medications which has no limitation to access to a medication by a practitioner
  • Closed Formulary: A list of medications which limits access of a practitioner to some medications. A closed formulary may limit drugs to specific physicians, patient care areas, or disease states via formulary restrictions.
Most hospitals have a closed formulary or some variation thereof. This is primarily done for cost-control. It’s unusual in today’s environment to see open formularies. Many hospitals place additional restrictions on closed formularies. This essentially limits the use of specific formulary drugs to specific practitioners based on a variety of factors such as specialty, hospital location, disease presentation, etc.
Establishment of a Formulary System
CMS requires that the medical staff must establish a formulary system. The formulary must list medications for dispensing or administration that your hospital maintains or that are readily available. The medical staff, in consultation with the pharmacy service, should develop written criteria for determining what medications are available for dispensing or administration. The criteria must include at least the following;
  • The indication for use;
  • Effectiveness;
  • Risks (including propensity for medication errors, abuse potential and sentinel events);
  • And costs
Changes to the Formulary
Your hospital should have a formal process to add, modify, or remove drugs from your formulary. Changes should be clearly documented showing collaboration between the medical staff, pharmacy, and other key stakeholders. Documentation should also show that changes to the formulary were based on the criteria noted above.
Use of Non-Formulary Medications
CMS requires that your hospital has a process to approve and procure medications that are not on the formulary. A non-formulary drug usually is a drug that is not included in the formulary because it did not meet established criteria (e.g. was not deemed to be the safest, most effective and/or most economical). Hospitals often permit use of non-formulary drugs for specific patients or to treat a specific condition.
When possible, the decision to use a non-formulary drug should go through the same review and approval process as other medications. Frequently though, the need is emergent in nature. In these cases, your hospital’s policies should permit a rapid review by designees of the medical staff and pharmacy.
Monitoring Patients
Processes and mechanisms should be established to monitor patient responses to a newly added medication before the drug is made available for dispensing or administration within the hospital. This often occurs when a new class or type of medication is added to the formulary. CIHQ recommends that the type, duration, and frequency of monitoring be clearly documented as part of the approval process.
Reviewing the Formulary
CMS requires that your hospital review its formulary “periodically based on emerging safety and efficacy information.” While CMS does not set a minimum frequency of review, CIHQ recommends that such a review occur on an annual basis and as needed.
Shortages and Outages
Your hospital should have processes to address shortages and outages of medications within the formulary. These processes should address at least the following:
  • Communicating with appropriate prescribers and staff;
  • Developing approved substitution protocols;
  • Educating appropriate health care professionals and staff about these protocols; and
  • Obtaining medications in the event of a disaster
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About the Author

Richard Curtis RN, MS, HACP

Richard (Rick) Curtis is the Chief Executive Officer for CIHQ. Rick is nationally recognized as an expert on the Medicare Conditions of Participation and the CMS Certification & Survey Process. As CEO, he successfully guided CIHQ in becoming the nation's 4th CMS approved deeming authority for acute care hospitals.
Rick's clinical background is in critical care nursing with a focus in cardiovascular and trauma service lines. He has held both clinical and executive management level positions in Quality, Risk, Education, Infection Control, and Regulatory Compliance.
Rick is a regular speaker at numerous state and national conferences on the federal regulations and accreditation standards, and is host of CIHQ's popular monthly webinars addressing key compliance challenges in today's environment.
Rick is nationally certified in healthcare accreditation, and serves as Chair of the Board of Examiners for the Healthcare Accreditation Certification Program (HACP). Rick has a degree in Nursing with a Master's Degree in Health Services Administration.
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