Formulary Exception Request Procedures

What is a Formulary Exception Request?

A Formulary Exception Request is a request to an insurance company by healthcare providers or doctors to cover a medication not on their approved drug list (formulary) because it is medically necessary for the patient.

Insurance formularies often limit patients' access to necessary medications, reducing their treatment options. When a prescribed medication is not listed on a plan’s formulary, clinicians must submit a formulary exception request to obtain coverage. These requests justify the medical necessity of a non-formulary medication, ensuring that patients receive the best possible care.

Studies show up to 30% of patients prescribed medications outside the formulary may require an exception request to receive appropriate care. Health plans create formularies based on clinical guidelines, population health trends, and cost-effectiveness. 

However, exceptions may be necessary due to patient-specific factors such as allergies, contraindications, or adverse reactions to formulary alternatives. Therefore, patients may face treatment delays, out-of-pocket costs, or suboptimal care without authorization.

A well-structured request should include clinical justification, the patient’s medical history, and supporting documentation. Clear, evidence-based submissions have a higher chance of approval and reduce administrative burdens.

This article will discuss the formulary exception request procedures, the criteria to submit, when to consider, the steps to apply, and how to appeal a denied request. 

Why are Formulary Exception Requests in Healthcare Important?

Formulary restrictions can affect patient care by limiting access to important medications. When these limitations hinder optimal treatment, patient outcomes may suffer due to delays, higher costs, or less effective alternatives.

Formulary exception requests ensure the availability of medically necessary treatments. By addressing individual patient needs, well-crafted exception requests help reduce healthcare disparities. Without these requests, patients may experience disease progression, functional decline, or unnecessary medication changes. To advocate for their patients, clinicians must navigate the exception process effectively.

Key Participants in the Formulary Exception Process

Several key stakeholders influence formulary exception decisions:

• Prescribing Physicians and Physical Therapists – Clinicians initiate requests, document medical necessity, and provide supporting evidence.
• Pharmacists – Assist in communicating with insurers, offer additional clinical insights, and recommend alternatives when needed.
• Insurance Providers and Pharmacy Benefit Managers (PBMs) – Assess requests based on formulary policies, clinical guidelines, and cost considerations.
• Patients – May need to request appeals, provide consent for documentation, or follow up with insurers.

When these stakeholders collaborate effectively, patients receive timely and effective treatment without unnecessary financial burdens, leading to higher approval rates.

What are the Criteria for Formulary Exception Requests?

To ensure approval, clinicians must meet specific requirements when submitting a formulary exception request. Insurance companies evaluate these requests based on treatment history, clinical evidence, and medical necessity.

1. Clinical Justification and Medical Necessity

A clear medical justification is required for formulary exceptions. Prescribers must demonstrate that the patient's condition necessitates the non-formulary medication. Acceptable justifications include:

• Ineffectiveness of formulary alternatives – Previous therapies failed to manage symptoms or slow disease progression.
• Severe adverse reactions or contraindications – The patient experienced significant side effects from formulary medications.
• Special patient-specific factors – Standard options are inappropriate due to age, comorbidities, or genetic conditions.
• Evidence-supported off-label use – Clinical guidelines or peer-reviewed studies support the requested medication for the patient’s condition.

2. History of Previous Treatment and Alternative Failures

Insurers typically require documentation proving that formulary alternatives were unsuccessful, unsafe, or inappropriate. The request should include:

• A history of past prescriptions, including durations and dosages.
• Documented treatment failures, such as hospitalizations or worsening symptoms.
• Adverse reaction reports detailing side effects and their impact on function.

A comprehensive treatment history strengthens the case and minimizes approval delays.

3. Supporting Documentation and Proof

A complete set of supporting documents is crucial for a successful formulary exception request. Key elements include:

• Clinical notes outlining symptoms, diagnosis, and response to treatment.
• Treatment guidelines or peer-reviewed studies validating the medication choice.
• Pharmacist opinions on drug interactions or alternative recommendations.

Providing precise, evidence-based justification increases the likelihood of approval and helps insurers process requests efficiently.

4. Expense and Coverage Considerations

While insurers may assess cost-effectiveness, medical necessity remains the primary factor. Clinicians should be prepared for potential cost-based denials by:

• Highlighting long-term benefits, such as improved function or reduced hospitalizations.
• Explaining financial burdens if formulary alternatives require frequent dose adjustments or monitoring.
• Providing a cost comparison, demonstrating that the requested drug prevents higher long-term costs.

A well-balanced case that includes medical urgency, supporting evidence, and cost considerations increases the likelihood of approval and ensures continuous patient care.

Up to 98% more formulary exception requests are approved when healthcare providers use platforms like Spry to expedite the process. Spry accelerates the submission of required clinical justification and supporting documentation, reducing manual errors by 80% through automated document collection and submission. Try a free Demo here! 

When to Consider a Formulary Exception?

When standard formulary medications do not meet a patient’s needs, clinicians should consider submitting a formulary exception request. Several clinical situations justify such a request, all emphasizing the importance of providing the best possible care.

1. Formulary Medication Failure

A formulary exception request is necessary if patients struggle to control their symptoms or do not respond to formulary alternatives. This is particularly relevant in the following situations:

• First-line treatments are ineffective in managing the patient’s condition.
• Second-line options are less effective or pose higher risks due to comorbidities.
• Treatment failure leads to hospitalizations, functional impairment, or disease progression.

Documentation of prior treatment attempts, dosages, and the resulting lack of improvement strengthens the case for requesting an exception.

2. Contraindications or Adverse Reactions

Formulary exception requests are necessary when patients experience contraindications or adverse reactions to formulary medications, requiring a safer, more effective alternative. Examples include:

• Allergic reactions, such as anaphylaxis, breathing difficulties, or rashes.
• Serious adverse effects include cardiovascular issues, gastrointestinal distress, or liver toxicity.
• Drug interactions that reduce the effectiveness of formulary options or increase risk.

The request should include detailed reports of the patient’s response to formulary medications and the clinical rationale for an alternative treatment.

3. Special Patient-Specific Factors

For patients with unique medical needs—such as complex comorbidities, rare conditions, or genetic predispositions—a non-formulary medication may be required for optimal treatment outcomes. Clinicians should submit a formulary exception request when:

• The patient’s condition is rare or complicated, and formulary options are insufficient.
• Patient-specific factors, such as age-related concerns or genetic disorders, affect the safety or efficacy of standard medications.
• Therapeutic necessity requires a specialized medication to provide the best possible care.

To improve approval chances, clinicians should provide a detailed clinical explanation supported by research or medical literature.

4. Off-Label Use Supported by Evidence

In some cases, drugs with proven efficacy but used off-label are not included in formularies for specific indications. A clinician should consider requesting a formulary exception when:

• Clinical evidence supports the off-label use of a formulary medication for a patient’s condition.
• Guidelines or studies from reputable sources recommend off-label use.

Including relevant research and a clear justification for off-label use strengthens the request.

5. Lack of Alternative Therapies

In some cases, no appropriate alternatives exist on the formulary for the patient’s condition. A formulary exception request is to prevent treatment delays when:

• No other medications are approved for the condition, or available alternatives are ineffective or inappropriate.
• First-line medications fail, and second-line options are unfeasible.

Clinicians must provide compelling evidence that the requested medication is the best choice for the patient and highlight the absence of suitable alternatives.

By recognizing these circumstances and submitting well-documented formulary exception requests, clinicians can ensure patients receive the necessary treatments without unnecessary delays or complications.

What is the Formulary Exception Request Process? 

A formulary exception process includes a methodical approach when submitting the request to ensure the patient receives the necessary medication on time. Clinicians must adhere to specific guidelines to expedite the process, supply the necessary documentation, and increase the likelihood of approval.

1. Determine If an Exception Is Necessary

Clinicians should thoroughly evaluate the patient's medical history and current treatment plan before requesting a formulary exception. It is important to determine why formulary medications have failed.

• Ineffectiveness: Despite using formulary options, there is no symptom control, and disease progression remains unchecked.
• Adverse Reactions: Risky drug interactions or severe side effects make formulary options unsuitable.
• Distinct Patient Requirements: Rare diseases, comorbidities, or genetic disorders may require a specific medication.

Clinicians must assess whether a formulary exception is necessary when standard medications are inadequate or unsuitable.

2. Assemble Clinical Documentation to Support the Request

Strong supporting documentation is for the approval of a formulary exception request. Important documents include:

• Medical Records: A detailed account of the patient’s condition, diagnosis, and treatment attempts.
• Previous Treatment History: Records of all formulary medications used, including dosages, durations, and results. Any adverse reactions or side effects to formulary drugs should also be documented.
• Adverse Reaction Reports: If applicable, record any adverse effects experienced with formulary drugs.
• Clinical Rationale: A written justification backed by peer-reviewed research or clinical guidelines explaining the necessity of the requested medication.

Ensuring that all documentation is accurate and thorough helps speed up the approval process.

3 .Complete the Request Form

Pharmacy benefit managers (PBMs) and insurance companies typically require a formulary exception request form. This form collects the patient's details, prescribed medication, and clinical justification. Key sections include:

• Patient Information: Name, insurance details, and diagnosis.
• Medication Information: Name, dosage, and frequency of the requested medication.
• Reason for the Request: An explanation of the medical necessity of the non-formulary drug.
• Treatment History: A log of the patient's past prescriptions and responses.

Ensure all required fields are completed accurately. Incomplete or incorrect forms may cause delays.

4. Submit the Request to the PBM or Insurance Provider

Once the formulary exception request form is completed, submit it to the patient's PBM or insurance company. Some plans support electronic submission, while others require fax or mail. Ensure that all supporting documents, such as lab results, clinical notes, and adverse reaction reports, are included in the submission.

Verify receipt of the request by contacting the PBM or insurer. Many insurance companies provide a case number or acknowledgment receipt for tracking purposes.

5. Respond to Requests for Additional Information and Await a Decision

After submission, the PBM or insurer will review the request based on medical necessity standards and formulary guidelines. The approval process may take several days to weeks, depending on the plan and case complexity.

If additional information is requested, respond promptly. This may include providing more detailed treatment histories, clinical data, or expert opinions to strengthen the request.

6. Appeal a Denied Request

If the formulary exception request is denied, clinicians have the right to appeal. The appeals process typically involves several steps:

• Review the Reason for Denial: Insurance companies often provide explanations such as insufficient medical necessity or non-compliance with guidelines.
• Provide Additional Documentation: Submit new or clarifying information addressing the reasons for denial, such as more detailed medical records or peer-reviewed evidence supporting the medication's effectiveness.
• Seek Expert Opinions: Obtain support from clinical experts or specialists to further validate the request.

Appeals must be submitted within the insurer’s specified deadline. Staying organized and maintaining clear communication with the insurance provider throughout the process is crucial.

7. Monitor and Track the Request Status

Throughout the formulary exception request process, clinicians should actively monitor the submission's progress and follow up as needed. Respond promptly to any requests for additional information and keep the patient informed.

Tracking the request helps identify delays or issues early, allowing them to be addressed without compromising patient care.

By following this structured approach, clinicians can handle formulary exception requests more efficiently, increasing the likelihood of approval and ensuring that patients receive treatments on time.

Spry improves the formulary exception request process, resulting in up to 98% approval rates and 80% fewer errors. It ensures smooth workflows and the required documentation to expedite requests, for fewer delays and faster approvals. Spry also reduces administrative work, increasing operational efficiency by as much as 40%.

Evaluation and Decision-Making

After a thorough review, formulary exception requests are evaluated and decided upon by pharmacy benefit managers (PBMs) or insurance companies. The criteria and timelines for these decisions help clinicians anticipate possible outcomes and take appropriate actions to support their patients.

1. Requirements for Evaluation

PBMs and insurance companies assess formulary exception requests based on several key factors. These criteria ensure that the prescribed drug meets the patient’s clinical needs while complying with the health plan’s policies.

• Medical Necessity – The request must demonstrate that the non-formulary medication is medically necessary and that formulary alternatives are unsafe, ineffective, or inappropriate for the patient’s condition. The insurer will review the patient’s medical history, including prior attempts with formulary drugs and documented reasons for their failure (e.g., ineffectiveness, adverse effects, or contraindications).
• Clinical Guidelines – The request is evaluated based on established clinical guidelines and evidence-based practices supporting the use of the non-formulary medication for the patient’s condition.
• Cost-Effectiveness – While clinical necessity is the primary factor, insurers also consider the cost of the requested medication compared to formulary alternatives. To improve the likelihood of approval, clinicians must provide comprehensive documentation explaining why the non-formulary medication is the best option for the patient.

2. Health Plan or PBM Review Process

PBMs and health plans follow a structured review process to determine the validity of formulary exception requests. This process typically includes:

• Initial Review – The insurer or PBM conducts a preliminary review, assessing the patient’s clinical information and submitted documentation.
• Clinical Review – In some cases, a medical professional, such as a physician or specialist from the insurer’s network, evaluates the clinical rationale provided by the requesting clinician.
• Formulary Analysis – The insurer considers the patient’s treatment history, alternative therapies, and formulary options to determine whether the requested medication meets formulary criteria.
• Consultation with Pharmacy Experts – PBM or health plan pharmacists may provide guidance on the medication’s efficacy, safety, and potential interactions with other drugs.

The entire process aims to balance clinical effectiveness and cost considerations while ensuring the patient receives optimal care.

3. Decision Timelines

Decision timelines for formulary exception requests vary by insurer and plan but generally fall within these ranges:

• Non-Urgent Requests – The typical processing time for a standard request is five to ten business days. During this period, the insurer evaluates the supporting documentation to determine whether the medication meets the criteria.
• Urgent Requests – If a request is classified as urgent due to the patient’s medical condition, insurers must render a decision within 72 hours.
• Appeal Decisions – If a request is denied and appealed, health plans typically decide within 30 to 60 days, though specific timeframes may vary by state or insurer.

To prevent unnecessary delays, clinicians must stay informed about the expected decision timeline and follow up accordingly.

4. Notification of Decision Outcomes

Once a decision is made, health plans or PBMs notify the patient and the requesting clinician. Notifications typically include:

• Approval Notifications – If the request is approved, the clinician and patient receive confirmation, including details about the approved medication, dosage, and any required follow-up actions. Additional instructions for dispensing the medication may also be provided.
• Denial Explanations – If the request is denied, the insurer provides a detailed explanation outlining the specific reasons for rejection. Common reasons include insufficient clinical evidence, failure to meet medical necessity requirements, or the availability of formulary alternatives.
• Appeal Instructions – If the request is denied, the notification typically includes guidance on the appeals process. Clinicians may need to submit additional documentation or reassess available treatment options.

Prompt and clear communication of decision outcomes allows clinicians to adjust treatment plans efficiently, whether by initiating an appeal or considering alternative therapies.

Through these evaluation and decision-making processes, clinicians can better navigate formulary exceptions and advocate effectively for their patients, ensuring they receive the most appropriate and effective medications.

Appealing a Denied Exception Request

Clinicians have the option to appeal a formulary exception request that has been rejected. Healthcare professionals can contest denials based on medical necessity, treatment failure, or the patient’s particular needs through the appeals process. Clinicians can increase the likelihood of their patients receiving the requested medication.

1. Recognize the Justification for Rejection

Examining the denial letter from the insurer in detail is the first step in contesting a denied formulary exception request. The letter typically outlines the specific reasons for the denial, such as:

• Medical necessity: Based on formulary requirements or clinical guidelines, the insurer may determine that the requested medication does not meet medical necessity criteria. The denial may state that the patient has suitable formulary alternatives.
• Lack of supporting evidence: The clinical documentation provided may be insufficient for the insurer to approve the non-formulary medication.
• Formulary restrictions: The drug may not be included in the formulary due to cost-effectiveness considerations or formulary management guidelines.

The rationale behind the denial allows clinicians to craft a focused appeal addressing these specific issues.

2. Gather Additional Supporting Documentation

A successful appeal often requires additional supporting documentation to strengthen the case. Documents include:

• Updated clinical notes: Provide detailed records of the patient’s current health, past treatments, and responses, emphasizing why formulary alternatives are unsuitable or ineffective.
• Letter of medical necessity: Explain why the patient requires the non-formulary medication, citing peer-reviewed studies, clinical guidelines, or professional opinions. If applicable, include a statement from a specialist supporting the medication's necessity.
• Laboratory results: Attach relevant diagnostic reports, imaging, or lab results demonstrating the progression of the condition or the inefficacy of formulary medications.

By including comprehensive evidence, clinicians improve their chances of overturning the denial.

3. Follow Appeal Guidelines and Deadlines

To ensure a smooth appeals process, clinicians must strictly follow the specific guidelines provided by the patient’s health plan or pharmacy benefit manager (PBM). These guidelines typically include:

• Appeal format: Some insurers require online submissions, while others accept documents via mail or fax. Follow the preferred submission format.
• Deadlines: Most insurers require appeals to be filed within 30 to 60 days of the denial notice.
• Multiple appeal levels: If the initial appeal is denied, clinicians may escalate the case to a higher-level review, such as an external independent panel.

Adhering to these rules ensures the appeal is processed promptly without missing critical deadlines.

4. Request an Expedited Appeal for Urgent Cases

In urgent situations where a patient’s health is at risk without the medication, clinicians can request an expedited appeal. These appeals receive priority processing. To support an expedited request, include:

• Urgency documentation: Clearly outline the patient’s condition, potential health risks, and medical evidence demonstrating the need for immediate approval.
• Specialist statements: If applicable, include a statement from a medical specialist confirming the medication's urgency.

Expedited appeals typically require a faster turnaround, often within 72 hours.

5. Follow Up and Stay Persistent

Appeal decisions can take weeks. Clinicians must take a proactive approach to ensure timely processing. Steps to follow up effectively include:

• Regular contact: Call or email the insurer to track the appeal’s status. Some health plans provide a case number for easy tracking.
• Prompt responses: If the insurer requests additional information, submit it immediately to prevent unnecessary delays.

Persistence and proactive communication can help avoid long wait times and ensure a timely resolution.

6. Consider External Appeals or Legal Action

If the internal appeal is unsuccessful, clinicians may explore external appeal options. Some insurers allow a third-party review conducted by an independent medical board.

• Independent medical review: A panel of impartial medical professionals assesses the case and makes a binding decision.
• Legal action: If an appeal is unfairly denied, patients and providers may seek legal counsel to explore potential recourse under healthcare regulations.

Although legal action is a last resort, it may be necessary when a patient’s access to medication is unjustly denied.

7. Communicate the Outcome to the Patient

Once the appeal process is complete, clinicians should inform the patient of the outcome in a clear and timely manner.

• If approved: Confirm the medication approval and guide how to obtain it.
• If denied: Discuss alternative treatments, additional appeal options, or legal rights.

By taking a methodical approach and submitting well-documented appeals, clinicians can significantly improve the chances of overturning a formulary exception denial and ensuring optimal care for their patients.

Spry streamlines the formulary exception appeal process by reducing paperwork and accelerating approvals. Its automated workflows help providers cut submission times by 60% and increase approval rates by more than 98%. Integrate with Spry today. 

Challenges and Considerations in Formulary Exception Procedures

Both patients and providers may find managing paperwork and meeting deadlines time-consuming due to administrative burdens and time constraints. To expedite the process, arrange paperwork, become acquainted with insurer requirements, and establish internal deadlines.

• Ambiguous or Complicated Guidelines: Different insurer criteria may cause confusion. Use standardized templates for quick submissions and stay aware of each insurer’s specific requirements.
• Lack of Clear Communication: Approvals may be delayed due to unclear communication with insurers. For timely processing, make direct contact, confirm documentation requirements, and follow up frequently.
• Balancing Medical Necessity and Financial Constraints: To balance medical necessity with cost considerations, highlight health outcomes and provide solid clinical evidence to support medication requests.
• Managing Appeals and Denials: Denials are frequent, but the chances of successful appeals increase by reviewing the reasons and offering solid proof. Knowledge of the appeals process and perseverance are essential.
• Ethical and Legal Considerations: Handle ethical and legal issues by being aware of patient rights and advocating for required treatments in accordance with the law and patient care.

The impact of delays and denials on patient satisfaction is significant. To reduce frustration, keep patients updated, offer alternatives when needed, and provide support throughout the process.   

Conclusion

When formulary options are insufficient, petitions for formulary exceptions ensure that patients receive the most appropriate prescription drugs. Thorough documentation that clearly demonstrates medical necessity is crucial for formulary exception requests to succeed. Maintaining open communication with insurers and filing appeals when necessary can also improve the chances of a successful outcome.

Spry reduces the manual labor required to process formulary exceptions by up to 60% by automating prior authorization submissions. Furthermore, Spry’s real-time insurance verification ensures accurate coverage details, improves financial outcomes, and prevents claim denials. Schedule a demo with Spry today.