FARMING OUT PHARMACEUTICALS
By Kevin L. Connors, Esquire
Effective as of December 27, 2014, the Pennsylvania General Assembly, in its infinite wisdom, has grabbed the prescription drug reimbursement bull by the horn, in an Amendment to the Pennsylvania Workers’ Compensation Act, under House Bill No. 1846.
The Amendment is Act 184, signed into law by Governor Corbett on October 27, 2014; this Act amends Section 306 (f.1) (3) (vi) of the Pennsylvania Workers’ Compensation Act.
This Bill, a copy of which can be viewed via the following link, http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2013&sessInd=0&billBody=H&billTyp=B&billNbr=1846&pn=4314 is an attempt to rein prescription drug reimbursement costs, that, unchecked, have exponentially escalated medical costs for workers’ compensation claims.
The substance of the Bill is that prescription drug reimbursements will be limited to 110% of the average wholesale price of the product, calculated on a per unit basis, as of the date that the drug is dispensed.
Any physician seeking reimbursement for dispensed drugs, must include the original manufacturers’ national drug code, as assigned by the FDA.
Physicians may not seek reimbursement in excess of 110% of the average wholesale price (AWP) of the drugs being dispensed. Dispensed drugs must reference the original manufacturer’s national drug code number.
Tackling the uncontrolled calculus of compounded drugs, this Amendment will not allow repackaged national drug code numbers to be used, the same being forever disallowed where the dispensing physician does not reference the original manufacturer’s national drug code number.
Under this Amendment, outpatient providers, and you know who you are, cannot seek reimbursement for the following category of drugs:
• “Controlled Substance, Drug, Device and Cosmetic Act”, which is dispensed in excess of 1 initial 7-day supply, commencing upon the Employee’s initial treatment by a healthcare provider or injury related to a specific workers’ compensation claim, with the Employee being entitled to a 15-day supply if treatment involved surgery;
• “Controlled Substance, Drug, Device and Cosmetic Act”, containing Hydrocodone, dispensed in excess of 1 initial 7-day supply, to commence upon the initial treatment by the healthcare provider, with a 15-day supply being commenced if the treatment involves surgery;
• Seek reimbursement for any other drug dispensed in excess of 1 initial 30-day supply, to commence upon the Employee’s initial treatment by a healthcare provider;
• Seek reimbursement for any drugs dispensed within any period of time in excess of the limitations set forth above; and,
• Providers, other than pharmacies, cannot seek reimbursement for over-the-counter drugs.
This Amendment further empowers the Workers’ Compensation Advisory Council, to annually conduct a study of the impact of this Amendment upon the calculation of the savings achieved by this Amendment in the course of drugs being dispensed for treatment of work injuries.
The Amendment further clarifies, for clinical equivalence, that reference to a drug, means the drug has chemical equivalence, which, when it is administered in the same amounts, provides essentially the same therapeutic effect as measured by the control of a symptom or a disease.
The Amendment further directs the Pennsylvania Compensation Rating Bureau to calculate the savings achieved through the implementation of this Amendment to Section 306 (f.1) (3) (vi) of the Pennsylvania Workers’ Compensation Act.
This Amendment is scheduled to take effect as of December 27, 2014.
Its impact will be immediate and obviously significant, in terms of limiting medical costs for treatment of work injuries.
In a Statement submitted by the American Insurance Association to the Pennsylvania General Assembly, the AIA documented disturbing statistics supporting the necessity of curbing the demonstrable cost-abuse of physician dispensing of repackaged drugs, a practice that has “mushroomed”, perhaps an inappropriate reference in this context, in recent years, resulting in physicians and drug-providing re-packaging middlemen significantly increasing the cost of workers’ compensation medical bills to Pennsylvania Employers and their Insurers.
The AIA submitted that the physician dispensing repackaged drugs was the most significant single medical cost driver in workers’ compensation systems.
The AIA indicated that physician-dispensed medications account for 25% of all workers’ compensation drug-related expenses.
The AIA traced the genesis of physician dispensing of repackaged drugs to Workers’ Compensation Reforms in California in 2003, establishing a pharmacy fee schedule that also allowed physicians to markup drugs.
Supporting House Bill 1846, the AIA indicated that the WCRI estimated that the average price per pill paid for drugs commonly prescribed for workers’ compensation injuries in Pennsylvania was significantly inflated over the same drugs being pharmacy-dispensed, with the following differentials being calculated:
• Motrin-179%;
• Flexeril-76%;
• Tramadol-132%;
• Hydrocodine (Vicodin)-233%;
• Naproxen-87%;
• Mobic-61%;
• Soma-742%;
• Alleve-41%;
• Percocet-289%; and,
• Prilosec-110%.
Citing to patient-safety concerns, the AIA confirmed what most already knew, that is that prolonged consumption of opioids leads to addiction and dependency, delaying recovery, and postponing return-to-work scenarios.
Similar results were tracked with physician-dispensing medications, resulting in higher overall medical costs for the containment of workers’ compensation claims.
Obviously, the longer workers are out of work, the higher indemnity and medical costs become for workers’ compensation claims. The result is an erosion of the ability of Employers and Insurers to effectively manage disability, correctly noted by the AIA, to be the inherent objective of workers’ compensation legislation.
To close, quoting Philip K. Dick, the author of “Androids Dream of Electric Sheep” (Blade Runner), albeit a well-regarded science fiction author, “drug misuse is not a disease, it is a decision, like the decision to step out in front of a moving car. You would not call that a disease, but an error in judgment.”
This Amendment is a long overdue response to physician-dispensing practices that lengthen all costs associated with workers’ compensation claims, and inhibit the ability of Employers and Insurers to promote healthy recovery and facilitate restoration of functional capacity.
ConnorsLaw LLP
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