The quandary of compounding for MCOs: administrative costs, risks, and waste.

PURPOSE Pharmacy compounding of prescription therapies that do not have Food and Drug Administration (FDA) approval increases administrative costs to managed care organizations and may also place members at risk for poor outcomes. This paper provides health care administrators with information and tools that can be used to manage risk-encouraged practices from pharmacy compounders, and suggests methods for evaluating the medical appropriateness and benefit of such compounds. STUDY DESIGN Experiential findings. RESULTS Methods indicate an effective way to manage this emerging pharmacy practice based on safety, risk avoidance, and outcomes. CONCLUSION Focused management efforts can reduce the burden of reimbursement for compounding practices that are likely to present a greater risk of medical errors than commercially prepared medications. The use of existing terms in plan contracts, such as "experimental treatments or medications," "medical necessity," or "non-FDA approved agents," can enable an editing process that provides for appropriate benefit enforcement and control.