Statehouse Watch

myMatrixx Statehouse Watch

Welcome to the new myMatrixx Statehouse Watch. Here, we will be featuring current policy developments in workers’ compensation impacting pharmacy in states across the country. Since workers’ compensation is heavily regulated by the individual states, myMatrixx has been active in this process since we were first established. We will be sharing regular new policy updates and insights during the year with our interactive map and commentary on items of interest impacting the PBM Workers’ Compensation market. To the extent workers' compensation is within the scope of any of these state laws, changes could be required to plan design and/or management.

Explained — what is the difference between regulation and legislation?

Learning the difference between these two distinct government actions is essential to understanding the process and meaning of the complex world of insurance services and benefits. This knowledge can help leaders better provide insight and guidance to their companies and clients regarding changes in state law and regulations.


Legislation begins with state elected officials, including representatives and senators, crafting new ideas into bills to take through the legislative process. Once a bill is introduced, it will be assigned to a relevant committee for discussion and testimony in support and opposition from interested parties. These committees are typically where amendments are adopted. Once it passes out of committee, the piece of legislation will move to the floor vote of the chamber, house or senate, and be passed to the second chamber for the same process. Most bills introduced don’t get the needed support and die during this process. If the bill survives it will go to the Governor’s desk for signature, veto or passage without signature.

This process typically takes three to five months. The bill that is first introduced usually has many changes before it reaches the governor. Many bills are also short on detail, resulting in potential confusion on interpretation and how to implement the new law in the industry. If so, this detail can be spelled out in the regulatory process.

After the legislative process is complete, the enacted law is sent to the relevant state agency for rule making. The agency commissioners are typically appointed by the governors. The agencies impacting workers’ compensation can be the Department of Insurance or Department of Labor. Regulations are designed to clarify legislation and help affected parties facilitate necessary changes to comply with the state law. This detail is outlined, proposed, comments are received and then finally adopted. In most states this process typically takes two to three months.

The Division of Insurance is responsible for regulating the business of insurance within its respective state. They have the authority to write and enforce rules. This includes investigations into practices in the claims payment industry. They have a primary responsibility to protect the consumer from fraud.

The role of the workers’ compensation regulator varies by each state, but they are primarily responsible for the administration of workers’ compensation claims, and provide administrative and judicial services to assist in resolving disputes that arise in connection with claims for workers’ compensation benefits. One area of focus for this agency in many states is adoption of drug formularies, which are lists of name brand and generic prescriptions that can be used to treat the claimant, or injured worker. This allows for high quality of medical care and promotes return to work in a timely fashion, all while reducing administrative burden and cost.

Policy Updates


Date: May 24, 2021

The Chair has delayed the implementation of amendments to the following regulations, which were scheduled to become effective on June 7, 2021:...

New effective dates for the amended regulations will coincide with the launch of OnBoard: Limited Release, the first phase of the Workers' Compensation Board's new business information system, which is planned for summer 2021. More information will be shared in the coming weeks.

Please submit comments by emailing regulations@wcb.ny.gov.

The map displayed, created by the National Conference of State Legislators, shows current state Cannabis laws as of April 2021. Given the continuing debate regarding cannabis decriminalization in the United States, myMatrixx is watching its impact to the workers' compensation market. The states of Georgia, Maryland, Minnesota, Montana, New Jersey and New York were actively...
legislating this matter. Since it is on the DEAs drug Schedule I, however, it is under prohibition at the Federal level.

The US House of Representatives passed the Secure and Fair Enforcement Act April 19, 2021. It was also introduced in the US Senate under S910 on March 23, 2021. If this bill were enacted, it would not legalize cannabis. What it would do is prohibit a federal banking regulator from penalizing a depository institution for providing “banking services” to a cannabis related business in states that allow it.

Will it pass? It is hard to predict; however, it is growing in favor. The Senate version has not been scheduled for hearing yet, but is assigned to the Committee on Banking, Housing and Urban Affairs. It is important to note it has 38 co-sponsors. It now has bipartisan support with 8 republicans signing on as co-sponsors. Could 2021 be the year?

Governor Ducey signed AZ SB 1042 on April 9, 2021. Within certain parameters, it allows mail order pharmacies to fill workers' compensation prescriptions, like a local retail pharmacy. Prior to this bill there where regulations that restricted some transactions...
of this type, due to a lack of a pharmacy not to provide ”pubic access”.

This bill will allow for a provider to enter a managed care agreement with a network. It will also keep in place the provision for the self-funded market to direct care through a pharmacy network. This will keep safety measures in place for the injured worker as well as control the rising cost of prescription drugs within workers' compensation.

Two bills –NY SB 1026 & NY HB 1013- in the state of New York are working through the legislative process. SB 1026 passed out of the state Senate this month and is being debated in the House. If enacted it would prohibit employers/insurers from practicing managed care by requiring injured workers to only utilize in network pharmacies. It will permit the employee their choice of pharmacy. While this seems harmless, unfortunately it would remove...
safety checks for drug utilization in the process, negatively impacting the employee and the employer would also have to pay for higher drug costs.

If you have workers' compensation business in New York and determine this bill may be problematic, you should contact the House bill sponsor, Assembly Member Harry Bronson, Phone:518/455-4527. Since it does have unintended consequences, he should be made aware of your concerns.

The NAIC Draft Pharmacy Benefit Manager Model Act in 2020, considered by the Health Insurance and Managed Care (B) Committee, did not get enough support to pass the next level of approval at the organization. It focused on prescription drug pricing and cost
...
transparency. This version did not impact the workers' compensation PBM industry. Regulators want to continue discussions and modification will be under consideration.
The National Association of Insurance Commissioners (NAIC) drafted a new Pharmacy Benefit Manager Model Act in 2020. This was adopted by the Pharmacy Benefit Manager Regulatory Issues Subgroup (the Subgroup) and is currently...
under review and accepting comments to be considered for adoption by this subgroup until December 22. The Subgroup may consider including provisions on PBM prescription drug pricing and cost transparency in the new NAIC model. Progress on this act will continue throughout 2021. The model currently does not impact the workers’ compensation PBM industry.
New York Notice

For the latest updates on the New York Workers’ Compensation OnBoard modernization, please click on the link below.

OnBoard: Building A New Web-Based Claims System (ny.gov)

Physician dispensing refers to the practice where doctors dispense repackaged medication out of their office directly to patients. Repackaging is the act of taking a finished drug product from its original container and placing it in a different...
container without manipulating the drug itself. Repackaging can be done for a variety of reasons; to reduce medication errors, for convenience or to distribute a large quantity of bulk medication into smaller tubes or packages.

States recognize physician dispensed drugs as a way to ensure that patients pick up prescriptions or can get medication, such as when there is a lack of pharmacy access in rural areas. However, there are also physicians who take advantage of repackaging to inflate the price of the drugs dispensed. To combat these practices, states have or may pass regulations controlling physician dispensing.

Generally, regulations restricting physician dispensing fall under three categories:

  1. States require repackaged medication to be billed under the original manufacturers National Drug Code (NDC). This prevents repackaged drugs from being billed at a new inflated NDC.
  2. States prohibit doctors from collecting the dispensing fee, which is generally allowed by the state fee schedule for drugs dispensed at pharmacies.
  3. States may prohibit physicians from dispensing medications from their office unless it is an emergency, or the patient lives in a rural area where it is not practical to have the medication dispensed from a pharmacy.

While there are legitimate reasons for physician dispensing, it is important for insurers to educate their injured workers about filling prescriptions through pharmacies so they can be consulted by a pharmacist and to avoid potentially dangerous drug interactions. Employers and insurers want an injured worker to have the appropriate treatments necessary for recovery. In workers’ compensation, overutilization and lack of justification of medical necessity are areas of concern potentially impacting the workers’ health as well as adding an inflated cost to that care.

It appears that the self-funded market in this state is coming under scrutiny. Oregon General Assembly introduced SB 801 to conduct a study through the Department of Consumer and Business Services looking for insights into the claims...
process. They seek to determine if self-insured employers respond in a timely manner to submitted claims. The study will require witness interviews and the production of documents and records. Self-insured employers will be compelled to cooperate or be subject to civil penalties. If disparities are uncovered by the data, expect new enforcement measures to be the result. To see the progress of this bill, use our interactive map for further details.
As many are aware, the New York State Workers’ Compensation Board (WCB) established a prescription drug formulary in 2019. Regulations regarding the refills and renewals for that formulary originally had a compliance date of June 2020....
Due to the Covid-19 pandemic, the WCB recently extended the effective date again to June 7, 2021.

According to the WCB, insurers, self-insured employers and third-party administrators must notify health care providers and claimants of the new effective date on or before April 1, 2021. On or after June 7, 2021, all refills or renewals of prescriptions must use a drug formulary medication unless prior authorization has been obtained before the date of the refill or renewal.

A refill means any subsequent fill of a prescription when the number of refills is explicitly included in the original prescription. A renewal means a prescription that the injured worker has been taking, but which there are no available refills.

Over the last few years, there have been major concerns over the high cost of prescription drugs. Managed care programs are one tool to help make prescriptions affordable to consumers as well as payers. This type of cost control is currently...
used in all 50 states for employee benefit plans and public health plans. This is not the case with workers’ compensation.

In workers’ compensation, the ability for a carrier to establish provider networks not only helps keep medical expenses in check, they also provide for safety measures for injured workers. Some states have prohibitions on these programs. Currently, more states have introduced legislation that, if enacted, will limit or stop direction of care programs from going forward. During the states’ 2021 legislative cycle, the states of Arizona, California, Kansas, Montana, New York, New Jersey, Oklahoma and West Virginia have introduced new bills attacking provider networks. These bills range from onerous operational requirements, higher prescription reimbursement, reporting regulations for Medical Provider Networks, direct prohibition of a managed care network and higher reimbursement protections for out-of-state mail order pharmacies.

The viability of all of these changes is unclear. myMatrixx is actively advocating with those state legislators and regulators in support of direction of care. If you seek more detail regarding these bills, use our interactive map and download a report on the topic by selecting “Direction of Care.”

New York Workers' Compensation Board announces a new business information system, OnBoard, to increase efficiency and transition to a paperless system. It is anticipated the limited first phase to include Prior Authorization process will roll out...
in the Spring of 2021. The final launch scheduled for 2023 will introduce the Board’s web-based claim’s platform to replace the legacy, paper based systems.

For more information see the states link OnBoard: Building A New Web-Based Claims System (ny.gov) This will include more information on upcoming webinars and included FAQs and Fact sheets.

In 2020, nine states introduced new legislation directly impacting PBM licensure. Five failed and four were enacted. Three of those enacted, Idaho, Mississippi and Virginia, are applicable to workers’ compensation. myMatrixx is currently reviewing for any...
necessary internal action and awaiting regulations from the states in order to comply with any new requirement.

Other states have pending regulations to adopt new rules for prior legislative actions. Currently under our review for compliance is the state of Kentucky and Missouri for licensure or registration requirements. These two state regulatory requirements are not applicable to the workers’ compensation market.

This year, the state of Delaware attempted to change their law regulating PBMs. That legislation failed in 2020, however, it is anticipated a similar bill will be introduced in 2021. Even if these bills fail, legislators may redraft the old bill text and move forward with it the following legislative cycle.

In 2020 there have been states regulating fee schedule changes and California stands out as worth noting, even though California Assembly Bill 2294 failed to pass. Titled the Medical Provider Network Transparency Act of 2020, it addressed changes...
that included:
  • Adoption of a pharmacy fee schedule with not less than 120% of fees prescribed in Medicare and 100% of cost paid to physician plus $250
  • Fee Schedule adjusted to conform to Medicare and Medi-Cal payment
  • New reimbursement and billing formula for Compounded Drugs based on sum of allowable fee per ingredient, plus dispensing fee allowed by Medi-Cal. If physician-dispensed maximum not to exceed 300% of documented paid costs and not more than $20 above documented paid costs

Several insurers, as well as myMatrixx, submitted comments expressing concerns with the legislation. This bill did not get the legislative support it required to survive the process.

Unfortunately, the opioid crisis in this country continues to be a problem. Among other actions, states are busy adopting new regulations in an attempt to limit fraudulent activity from either the provider or patient. Since workers’ compensation claims...
frequently include pain medications, this type of regulation is one we closely monitor. Over the past few months, 10 states have been working on adoption of new rules regulating the handling of opioids and other controlled substances, further tightening the use and distribution for those prescriptions.

One method of control is to require electronic prescribing for these substances. Since June of 2020, the states of Colorado, Tennessee, Texas, Virginia and Wyoming have been drafting and adopting new regulations mandating e-prescribing for opioids and benzodiazepines. State-based exceptions include cancer treatment, palliative care, end-of-life care and provider economic hardship. Visit our interactive Map to view the details.

Medical Marijuana and Workers Compensation in New Jersey is being discussed and legislated in NJ AB 1708. If passed as written, it will provide for payment by Workers Compensation insurers or employers for medical treatment using marijuana...
associated with a WC injury. The bill allows the employer or carrier to pay the employee directly for costs with the proper receipt from that employee if they are barred from paying the dispensary directly.

This bill allows the federal “Controlled Substance Act” (CSA) to prohibit the payment for this treatment. The CSA regulates the manufacture and distribution of controlled substances such as hallucinogens, narcotics, depressants and stimulants. Marijuana is currently listed along with heroin as a controlled substance, a Schedule I drug, meaning it has a high chance for abuse and no medical benefit. In a 2016 analysis conducted by the DEA, they state there is also evidence of pharmacological effect and a risk to public health.

For the first time in history, on December 4, 2020, The U.S. House of Representatives voted 228 to 164, to decriminalize marijuana. The states have been challenging this currently with 45 states adopting decriminalization and/or allowing medical marijuana as a treatment in 2020. The mention of the CSA may be a way to move forward quickly with insurer claim payment, if congress is successful in removing this drug from the schedule I, or if federal regulators continue to not enforce this section of the Act.

Disclaimer

The information which is provided herein and links to other related web sites are offered as a courtesy to our clients. All material is intended for informational purposes only and is not considered a recommendation or legal advice. myMatrixx accepts no liability for the consequences of any actions taken on the basis of the information provided.