2026 Southeastern Residency Conference

Title: Outpatient Medical (OPM) Drug Formulary Expansion to Optimize Margin
Authors: William Siders, David Collette
Background:
Drug formularies for the Centers of Medicare & Medicaid Services and commercial insurers are updated regularly, which can create reimbursement challenges related to misalignment between prescribed therapies and payer-specific formulary preferences. Administering non-preferred agents can result in claim denials and increased administrative burden for providers and pharmacy staff. At Huntsville Hospital Outpatient Medical Services, variability in insurance coverage across commercial and government payers highlighted the need for a standardized approach to formulary management. The purpose of this pharmacoeconomics project was to expand and standardize the outpatient medical drug formulary to align with current insurance preferences and maximize reimbursement.
Methodology:
A comprehensive review of our current formulary workhorse agents along with formulary requirements and coverage criteria across major commercial and government insurers was conducted. Based on this review, the Outpatient Medical Services drug formulary was updated to reflect payer-preferred agents by insurance type. Standardized, provider-facing communications were developed, including formal educational letters distributed to providers outlining formulary changes and payer-specific drug preferences. Educational efforts emphasized appropriate product selection at the time of prescribing and appropriate documentation to ensure alignment with each patient’s insurance coverage. Additionally, education was also provided to administrative staff to reduce the number of denial claims through changes in the prior authorization process. The project team also worked in conjunction with the Finance and Information Technology teams at Huntsville Hospital to ensure appropriate billing codes were being used for each product. Pharmacy services were designated as a centralized resource to support therapeutic interchange, prior authorization confirmation, and transition planning during implementation.
Results:
In 2025, a total of 499 denial claims were identified, representing a potential loss of $402,832. The most common reasons for denial included submission or billing errors (n=157), lack of medical necessity (n=103), and duplication of payments (n=32). In 2026, only one denial claim had occurred as of March 1, 2026. Formulary optimization identified certain brands of ustekinumab, infliximab, and tocilizumab as the largest negative margin products. Transitioning to payer-preferred agents and biosimilars (Yesintek/Wezlana, Avsola/Inflectra, and Tofidence) resulted in a projected margin improvement of approximately $350,000 for 2026. The most profitable products included IVIG, bevacizumab, and rituximab. Overall, the total projected margin increase for outpatient medical services in 2026 is estimated at 7-10%.

Conclusion:
Implementation of an insurance-aligned outpatient formulary was associated with improved projected reimbursement margins and a marked reduction in claim denials. Alignment with payer-preferred agents and improved documentation contributed to decreased denial rates and an increase in overall margin. This pharmacist-supported, multidisciplinary approach may enhance financial stability and operational efficiency in outpatient infusion practices.