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, workers' compensation laws and 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.
On November 1, 2022, the Florida Division of Workers’ Compensation (DWC), Department of Financial Services sponsored a workshop to hear from dispensing physicians, pharmacists, carriers and payers regarding differing opinions and concerns on the practice of physician dispensers in the state. At the meeting, the division distributed drafts of proposed rules to regulate the process. Several points were raised, including those made by our own myMatrixx Clinical team led by Alan Rook, Executive Clinical Consultant. Effectively, Alan highlighted a need for change related to inflated pricing for topical creams dispensed in a doctor’s office. Additionally, he noted the necessary role of pharmacists in ensuring safety guardrails on all prescriptions, since many physicians are not always aware of or licensed to provide that service.
Among the many concerns raised, a powerful message given to regulators was the fact that the state budget is overwhelmed by unreasonably high reimbursement rates and the role of the pharmacist in workers’ compensation is being diminished.
myMatrixx submitted a comment letter to advocate for no change to the current rules or limitations on physician dispensing, by limiting physician dispensing to only the first 14 days after the date of injury.
A new proposed rule was published in December 2022 and a hearing was held on January 13, 2023 in order to hear further comments. Many of these comments were the same as those presented on November 1. myMatrixx will once again comment on behalf of our clients for the Division to focus only on what the statute allows; namely to clarify the administration of physician dispensing and establish reasonable procedures for the prior authorization process in Florida’s workers’ compensation program.
All comments are due to the Division by January 20, 2023. Let us know if you have questions or want to submit your own comments for the Division to consider.
Statehouse Watch will continue to engage and monitor for developments and will provide updates when available.
Pursuant to a petition to invalidate an un-adopted agency rule, the State of FL Division of Workers’ Compensation (DWC) has rescinded a 2020 policy allowing treating dispensing physicians to dispense drugs and compelling payers to reimburse for those drugs. The state law establishes the injured worker has the right to choose a pharmacy of their choice. It does not state that physicians that dispense drugs are considered pharmacists, which this bulletin implies. There is no free and absolute choice of doctor, nurse or practitioner in the statute. The outstanding question is, since state law requires the injured worker be allowed pharmacy of choice, does that extend to prescribing physicians?
In the 2022 Florida administrative hearing of Normandy Insurance Company vs. State of Florida, petitioners assert in an effort to keep cost reasonable, pharmacists and pharmacies must not be displaced from the system. These petitioners wanted this policy invalidated.
This policy stated carriers must authorize practitioner dispensing. Since failure to comply may trigger severe penalties, disagreements were likely. Although this bulletin was rescinded, current law still require payers to be responsive to prior authorization requests.
The FL DWC will hold a workshop in September to draft proposed regulations that will be in scope with what the law allows. myMatrixx will engage throughout the working group process to ensure that any proposed rules are appropriately within the scope of the statute.
If you have questions or comments regarding the Florida rulemaking process, please reach out to your dedicated Account Team representative for additional updates.
Pursuant to the passage of NY SB 3762 & SB 7837, the state has opened a public comment period for interested parties regarding the use of networks to deliver pharmacy services. Since the state currently regulates the designation of pharmacies under the Labor Code 12 NYCRR § 440.3, myMatrixx will be providing comments in an effort to exclude workers’ compensation PBMs from consideration within this rule.
myMatrixx has a robust pharmacy network in New York. As of March 2022, New York has 5,410 registered pharmacies in state with more than 90% of those registered being in our network. In our view, pharmacy access is not a problem in the workers’ compensation industry.
Since utilization of provider networks has improved patient safety and effectively lowers costs for the employers, these contracts add considerable value to the residents of New York. The state needs to hear from employers who have opinions on this topic. If you represent a myMatrixx client for PBM services and are interested in getting involved by submitting commentary to the Department of Financial Services, please contact your Account Executive representative. We are here to help assist in the submission of comments to the state.
State legislatures have been busy this year focusing on PBM activity imposing new regulation within that industry. Most state legislatures have concluded their activity for the year adjourned for 2022. Most impactful from the myMatrixx perspective were trends ranging from:
- PBM licensure
- Therapy mandates
- Medical cannabis and workers’ compensation reimbursement
Following is a summary of workers’ compensation (WC) bills that were enacted, along with proposed bills that failed to pass, however, may be revisited when states reconvene their legislative sessions in 2023.
PBM Licensure bills
- IA HB 2384
Effective June 13, 2022, Iowa has new requirements for PBMs to implement regarding state reporting and enhanced duties of PBMs. Although WC applicability remains unclear, we anticipate the Department of Insurance will draft rules this year to guide the industry through the new law.
- NE L 767
Enacted in the spring of 2022, this new law will require myMatrixx to be licensed in the state of Nebraska as a PBM. Effective 1/1/2023, this PBM licensure bill also applies to WC and requires reporting to the Department of Insurance, mandated pharmacy contracting provisions, and a requirement to update MAC pricing every 7 business days. It requires that PBMs provide a right to appeal MAC pricing within 15 business days, and that they investigate and resolve appeals within 7 business days. The law requires that any accredited specialty pharmacy willing to accept a network’s terms and conditions be permitted to participate.
- NY SB 3762 & SB 7837
For the first time, PBMs are required to register with the state for licensure. myMatrixx has submitted the required PBM application and annual report for state approval. The new law grants authority to the superintendent to prescribe rules concerning PBM pricing models, state reporting and duties.
The state has announced it will work with interested parties over the next few months to promulgate rules, which will likely be adopted by 4th quarter 2022. myMatrixx is engaged with the state to offer input.
Pharmacy reimbursement mandates were heavily debated in states this session. Provisions that were considered typically took the form of prohibiting requiring reimbursements no less than NADAC, a set dispensing fee, or both. A number of states also considered spread pricing bans. Note these bills failed to pass and or alter pricing methodology.
- CO HB 1122
Enacted - It initially proposed PBM pricing must contain NADAC floor pricing. This was not supported by the Governor as written. The Legislature passed an amended version omitting that section.
- IA HSB 623
Failed - Requirements were NADAC floor pricing and higher dispensing fee.
- KY HB 203
Failed - Mandated NADAC floor pricing + $10.64 dispensing fee.
- MD HB 1009
Failed - Mandated NADAC floor pricing + Medicaid dispensing fee.
- MD HB 755
Failed - Prohibition of spread pricing.
- SD SB 163
Failed - Mandated NADAC floor pricing + $10.50 dispensing fee
Step Therapy & Prior Authorization Transparency
Another State legislation trend in 2022 included step therapy processes. Providers are interested in seeing clarity in the specific rules and documentation necessary for a prior authorization request to be granted. The solution they legislated is to provide those protocols on a website, giving the provider easy access to the process.
- KY SB 140
Enacted – effective date 1/1/23 – Requires Disclosure of Step Therapy protocols for all prescribing providers on a website.
- ME HB 453
Failed – Would have required transparency of protocols on a website.
- NJ AB 1255
This bill is currently moving through the legislative process and seeks to require increased transparency including specific online reporting.
- NY SB 8798
Working through the legislative process – Would require transparency of protocols on a website
Medical Cannabis and Workers’ Compensation
For over a decade, state legislatures have debated medical cannabis regulation including claims reimbursement for medical use. With cannabis still considered illegal on the federal level, states grapple with how to legitimize this alternative treatment for all patients, including the injured worker treated under a workers’ compensation program.
- ME HB 1391
Failed - Allows an insurance company, to reimburse a qualifying patient for costs associated with the medical use of marijuana.
- MS HB 194
Failed - Allows state chartered financial institutions to provide financial services to licensed cannabis institutions registered with the state Department of Health.
- NJ AB 3511
This bill is still moving through the legislative process. Under the bill, an employer or workers' compensation insurance carrier/private passenger automobile insurance carrier shall provide coverage for costs associated with the medical use of cannabis except upon intervention by the federal government to enforce the "Controlled Substances Act“.
- NY AB 242
Working through the legislative process. This bill, if passed, will compel coverage of Medical Marijuana as a prescription drug which includes applicability to WC.
- SD SB 17
Enacted - Clarifies carriers and payers including WC, are not compelled to reimburse a person for costs associated with the medical use of cannabis.
Phase One (3/7/22): Medication PAR & Form HP-1.0
- Medication PARs will be used for medication requests (replacing the current New York Workers’ Compensation Drug Formulary [Drug Formulary] prior authorization request process). With the implementation of OnBoard: Limited Release Phase One, medical marijuana will also be requested via a Medication PAR, which will replace the current process using the Attending Doctor’s Request for Approval of Variance and Carrier's Response (Form MG-2).
It is important to note that the current Drug Formulary application within the Medical Portal will not be accessible as of 5 p.m. on Friday, March 4, 2022, but will be available again as “read-only” on March 7, 2022, so that previously approved medication requests may be reviewed. All prior authorization requests that are in progress as of 5 p.m. on March 4, 2022, will be suspended and converted to a Medication PAR within OnBoard: Limited Release. Processing will continue in OBLR as of 7 a.m. on Monday, March 7, 2022.
Refills and renewals of prescription medications must comply with the Drug Formulary as of March 7, 2022, when the OBLR Medication PAR process takes effect. As communicated in Subject Number 046-1408, the effective dates were previously amended to coincide with the launch of OnBoard: Limited Release.
Bills are still being introduced in the 2022 state legislative sessions. For perspective, the State House Watch team reviews hundreds of bills per week for potential impact to the workers’ compensation and/or pharmacy benefit manager industry. Trending policy issues this year in workers’ compensation are:
- Pharmacy reimbursement
- PBM licensure
- Pharmacy contracting mandates
- Pharmacy any willing provider requirements
- Pharmacy appeals procedures
- Medical Marijuana regulations
View the 2022 State Legislative Session Calendar.
NADAC pricing continues to be a method state legislatures are willing to pursue for pharmacy reimbursement. Enacted bills in West Virginia and Delaware in 2021 have passed and are being implemented in those states this year. In 2022, the states of Colorado, Iowa, Kentucky, Maryland, Mississippi, New Hampshire, Oklahoma, South Dakota and Wyoming have introduced bills that will require NADAC be established as the lowest pricing methodology for pharmacy reimbursement and/or reporting of NADAC pricing to the Division of Insurance. Most of the legislation requiring NADAC reimbursement levels also mandates the payment of dispensing fees at the state’s Medicaid rate. This rate in most states range from $11 to $10 per script. All of these bills have potential to impact the workers’ compensation market.
While it is still early in most state sessions, one item to make note is that PBM licensure is a very popular idea nationally. To date, there are 12 states with active PBM licensure or new regulation requiring licensure, registration or state reporting mandates which will potentially impact WC PBMs. In most cases, state lawmakers are attempting to regulate or license PBMs that are operating in the health insurance space.
However, other lines of business can be caught up in the process and it’s been difficult to engage policy makers on what may be the unintended consequences of PBM regulation in the WC arena. . Some regulators consistently try to apply the rules of health insurance to workers’ compensation issues even though it may not be necessarily consistent with the underlying goals of their regulatory efforts.. The following outlines some major differences in these two insurance products:
- Health plan coverage is designed to protect the consumer from the high cost of health care. Typically, both the employer and employee pay the insurance premiums. Cost sharing is a universally used tool by the commercial health plan industry for the purpose of keeping costs of medical services lower. Health insurance is part of the employee compensation package. This coverage benefits the plan member, not the employer directly. In most cases, employers are not required to provide it by law.
- Workers’ compensation coverage is designed to pay medical costs for treatment of “on the job” injuries of a worker and protect the employer from the cost of law suits for negligence contributing to the worker’s injury. Deductibles, co-insurance or any injured worker out-of-pocket expenses are not imposed in workers’ compensation. Only the employer pays the insurance premiums. It is property casualty insurance. It is important to note, employers in most states are required by law to provide it.
By viewing these two very different insurance products as the same is problematic. Adding contracting mandates, state reporting, penalties and administration add up to more administrative burden for the employer and increase in price for the delivered service to injured workers. In the workers’ compensation business these added regulations do not benefit the insurer, employer or injured worker and may unnecessarily lead to higher costs for all parties.
The Arizona Industrial Commission recently reversed a proposed rule change to the State Workers’ Compensation Fee Schedule. The changes were potentially problematic, as it would have based pricing on the national average drug acquisition cost, or NADAC, which is a methodology designed for Medicaid. myMatrixx opposed this change along with others in the industry. Our objection was that this method is not an accurate reflection of drug reimbursement, since less than 25% of pharmacies solicited actually responded to the survey sent by CMS. It was encouraging to learn that our concerns were considered by the Commission, and they subsequently reversed their proposed rule.
The final Fee Schedule adopted rule, effective October 1, 2021, is as follows:
Brand Drugs: Average Wholesale Price (AWP) -15% +$7.00 dispensing fee
(New) Generic Drugs: AWP-25%+$7.00 dispensing fee
(New) Reimbursement for over-the-counter medications not commercially available may not exceed:
- $30 for a 30-day supply for a topical cream or lotion
- $75 for a 30-day supply for topical patches
- Maximum reimbursement for a topical compound medication shall be lesser of:
- $200 for a 30-day supply; or
- Reimbursement value of the compound medication.
Sometimes change can trigger unintended consequences. In this situation, we firmly believed the proposed rule changes would have resulted in drug prices that did not accurately reflect market value. These adopted changes will help keep drug pricing reasonable. We are thankful to the state of Arizona for soliciting comments and being willing to hear from every side. myMatrixx/Express Scripts systems have been updated accordingly to ensure compliance with this change.
See the attached link for the state fee schedule details: 2021-arizona-physicians-fee-schedule | Industrial Commission of Arizona (azica.gov)
This year, the states have been very active regarding legislation in the pharmacy benefit management (PBM) industry. myMatrixx has been monitoring movement from 32 states in 56 different state bills imposing new restrictions on PBMs. Out of those 32 states, there were 10 that would impact workers’ compensation pharmacy services. Out of those 10, two bills were enacted, one is on the Governor’s desk for action and one was vetoed.
Below are four that are worth noting:
- West Virginia HB 2263 was enacted. This bill creates pharmacy choice for the injured worker, changes pricing methodology, mandates the offering of a transparent contract model and PBM state reporting.
- Wisconsin SB 3 generally requires pharmacy benefit managers to be licensed with the commissioner of insurance or to have an employee benefit plan administrator license under current law.
- Delaware HB 219 has passed both chambers and is now on the Governor’s desk for a signature. The expectation is it will be enacted. If so, it will make changes to pricing methodology, contracting models, post adjudication reimbursement adjustment and PBM reporting.
- OK SB 737 passed the state House and Senate, but was vetoed by the Governor. If enacted, it would have prohibited direction of care for pharmacy.
See the Policy Tracking Map for further details regarding these enacted and pending bills.
myMatrixx has always supported state laws allowing managed care simply because it is the most effective tool to keep pharmacy costs affordable, promote patient safety, maintain efficacy, offer clinical services and control fraud, waste and abuse. Directing care through health plan networks is an accepted tool in the commercial marketplace. In workers compensation, is it time to eliminate what is not working and move to managed care?
In 2021, nine states have attempted to alter requirements related to pharmacy networks that manage care through directing care through networks. The states of Arizona, California, Kansas, Minnesota, New York, Oklahoma, Tennessee, West Virginia and Wyoming all tried their version of new legislation and/or regulation with varying degrees of change and success.
West Virginia HB 2263 will change this state’s position on directing care for pharmacy within workers compensation in 2022. Another “Any Willing Provider” statute, it allows patients freedom to use their pharmacy of choice so long as it follows the terms offered by the insurer. It will also require PBM reporting, with the provision that pharmacy reimbursement must not be below the National Average Drug Acquisition Cost (NADAC) recommended dispensing fee of $10.49. The state will publish an informational bulletin on the rule implementation specifics in 2021.
myMatrixx was actively monitoring legislation with changes in this category in 11 states this year. Some are still moving through the process. Some of those of interest are outlined below:
- MO HB 438 failed the legislative process, however it may return in 2022. It would have required the Department of Health to promulgate rules and regulations regarding opioid prescriptions for all health care professionals with the authority to prescribe opioids. These rules would be consistent with the Centers for Disease Control and Prevention (CDC) Guidelines for Prescribing Opioids for Chronic Pain. This would include instruction on when to initiate or continue opioids for chronic pain, selection of opioid type, dosage and duration of use of opioids. It is helpful to note that in 2021, Missouri was the last state in the country to adopt the requirement for establishing a prescription drug monitoring program under SB 63.
- ME SB 496a was not enacted during the 2021 regular session. If enacted, it would have established a regulatory framework to provide psilocybin products to Mainers. This bill has been carried over to the next session. Similar to the new law in Oregon, it would allow those over the age of 21 to purchase psilocybin products and consume them under the supervision of a licensed psilocybin service facilitator. This substance has been used to treat mental health disorders such as depression, and anxiety.
- NE L 583 as enacted states that effective January 1, 2022, no prescriber shall issue any prescription for a controlled substance unless such prescription is issued using electronic prescription technology.
- NH H 143 is on the Governor’s desk for enactment. If it passes it will be effective January 10, 2022. Under the bill, a patient shall be entitled to receive a paper prescription instead of an oral or electronically transmitted prescription, except prescriptions for controlled drugs.
- UT HB 15 as enacted, modifies the Utah Controlled Substances Act. It removes an exception to the limit on prescriptions for certain controlled substances after a surgery. It also requires a practitioner to check the controlled substance database and consult with other practitioners when issuing a long-term prescription for an opiate or a benzodiazepine under certain circumstances.
- UT HB 265 was enacted and will be effective January 1, 2022. It amends current the provision and requires a controlled substance be transmitted electronically unless certain exemptions apply.
Most states have adjourned for the year of 2021. As of August 16, states with active legislative sessions are California, District of Columbia, Massachusetts, Michigan, North Carolina, Ohio, Pennsylvania, Wisconsin and Texas (Special Session). Those in recess are Arkansas, Delaware, Idaho, Indiana, New Jersey and New York. Most state legislatures will need to return for a Special Session in the fall or early winter to review updated census numbers and develop new redistricting maps for the 2022 election cycle.
The state agencies are now becoming more active, given the outcome of the volume of PBM legislation that passed this year. They will be very busy working on the detail of the rules for those new laws.
In the 2021 Legislative cycle, the National Average Drug Acquisition Cost (NADAC) has been proposed as a state solution for a pharmacy pricing solution in the states of Arizona, West Virginia and Oklahoma. NADAC is the result of a survey process the Centers for Medicare and Medicaid Services (CMS) use to estimate pharmacy pricing for drugs acquired by retail pharmacies and dispensed to patients. State Medicaid programs can utilize this information to determine the reimbursement rates to pharmacy providers. Unfortunately, this pricing method does not show the true average cost of pharmacy pricing today.
CMS issues a voluntary survey to 2,500 randomly selected retail community pharmacies across the country. A small group of pharmacies determines the NADAC benchmark since the typical response rate is 18-24%, or 450 to 600 responding pharmacies.
Not included in the survey results are rebates and off-invoice discounts pharmacies get from suppliers. Also, the submitted data is not verified and validated. Larger retail pharmacies tend to abstain from responding to the survey. The majority of the respondents to the survey are independent pharmacies and they set this benchmark.
Larger chain pharmacies typically are better able to leverage purchasing power with the drug wholesaler to gain a lower drug acquisition price. Since this is not true for smaller pharmacies, not only will they be getting a higher reimbursement for their drugs, so will the chain pharmacies, since their lower pricing only gives them more margin. This higher price will be invoiced to the payers or patients and the benchmark removes incentives for pharmacies to acquire drugs at the lowest costs available, potentially stifling competition in the market. With the rising cost of health care and the drive to make prescriptions affordable, this method of pricing should be avoided.
The Chair has delayed the implementation of amendments to the following regulations, which were scheduled to become effective on June 7, 2021:
- Official New York Workers' Compensation Durable Medical Equipment (DME) Fee Schedule
- Prior Authorization Requests
- New York Workers' Compensation Drug Formulary
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 email@example.com.
This map, 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.
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:
- 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.
- States prohibit doctors from collecting the dispensing fee, which is generally allowed by the state fee schedule for drugs dispensed at pharmacies.
- 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.