Payers in the workers’ compensation system across multiple states are seeing notable increases in out-of-network pharmacy charges, often due to a rise in physician dispensing and use of non-traditional pharmacies. A category of medications driving these increases is topical medications, which are being dispensed through these channels at significantly marked-up rates while often using the exact same ingredients as other widely available products.
MyMatrixx by Evernorth has had conversations with several states on this issue and how they are addressing this challenge.
Capping reimbursement through regulatory changes
Colorado, Georgia, Michigan, and South Carolina are some of the states that have addressed topical medications through regulatory changes. These states have some form of reimbursement cap or multiple caps in place based on set dollar amounts or the provider’s acquisition cost. Colorado also tied in a prior authorization requirement when the cost reaches a certain threshold. Earlier this year, Idaho turned to regulatory changes by adopting a reimbursement cap on all physician dispensed medications, including topicals, based on the lowest cost therapeutic equivalent.
Gathering and reviewing data to form a plan
MyMatrixx is providing insight and support to several other states, including Arizona, Pennsylvania and Texas, who are working to determine ways to address the impact of topical medications in their systems. While allowing workers’ compensation payers to use enforceable pharmacy networks may be a more long-term approach to addressing high-cost medications like topicals, these states do not permit that legally. In lieu of that, fee schedule caps on these costs are perhaps the next best route.
Arizona: In response to the rising levels of prescription topical medications in their system, the Arizona Industrial Commission held a public stakeholder meeting in June. MyMatrixx, with data that identifies a steady increase in the average cost of prescription topicals over the last several years and more than doubling over the last three years, participated in the meeting. As a follow up, the MyMatrixx Regulatory Affairs and clinical teams have engaged with the Commission to provide suggestions on adjusting their fee schedule to further control the costs of topical medications.
The Commission also engaged a consultant to report on and analyze the prescription topicals used in the system. Another public stakeholder meeting has been scheduled for October 2, and MyMatrixx will participate.
Texas: The Texas Division of Workers’ Compensation is looking at its data on topical and compounded medications. The Division has noted a utilization uptick in their data, and MyMatrixx data shows an upward trend in costs for topicals dispensed by out-of-network pharmacies in the state. MyMatrixx has provided the Division examples of other state actions to address topicals in their regulations along with insight on which of the approaches might be more effective and feasible to implement. Our trade association, AAPAN, also submitted recommendations to the Division to study topicals and other related drug cost topics.
Pennsylvania: State regulators in Pennsylvania have expressed concerns on the impact of topical medications. Workers’ Compensation Research Institute (WCRI) data showed that dermatological agents represented as much as 55% of all prescription payments in Pennsylvania, the highest percentage among the states studied. Some stakeholders are forecasting there may need to be legislative ‘fix’ to the fee schedule in response to pending litigation related to the state agency’s use of Redbook Average Wholesale Price (AWP) that may overhaul the structure of the fee schedule beyond just topical medications.
For our part, MyMatrixx has:
- Provided the state with information on what other states have done to tackle this cost concern
- Engaged with state industry groups and legislative staff as they review pharmaceutical costs in light of the pending AWP source litigation.
MyMatrixx multi-pronged toolset
MyMatrixx has developed a multi-pronged toolset based on data analysis and clinical intervention to combat physician dispensing, the use of non-traditional pharmacies and high-cost topical medications. We work closely with our clients to monitor and mitigate their pharmacy costs.
However, the best opportunity for topical intervention is often to work directly with regulators and legislators to examine market dynamics and change regulations to ensure an equitable balance for providers, pharmacies, employers and insurers. We are committed to a strategy of ongoing legislative and regulatory advocacy combined with a proprietary topical intervention toolset to mitigate cost outliers for our clients.
Send your regulatory or public policy questions on this topic or others to our Regulatory Affairs team at MMXRegulatoryAffairs@MyMatrixx.com. MyMatrixx clients seeking information on their own experience with these medications should reach out to their MyMatrixx account team. For more information on policy developments in workers’ compensation impacting pharmacy across the country, please visit and bookmark Statehouse Watch at MyMatrixx.com.