A Healthesystems publication

Spring 2013

State of the States



New Data Call

The Texas Department of Insurance (TDI), Division of Workers’ Compensation has issued an April 1, 2013, deadline for designated carriers to demonstrate compliance with provisions related to the final stages of the ODG closed formulary implementation. TDI has asked carriers to submit data to the department via a form designed by the Workers’ Compensation Research and Evaluation Group. The data call is intended to ensure carrier compliance for legacy claims; that is - claims with injury dates prior to September 1, 2011. Claims included in the data call were identified by having at least one “N” drug from the ODG closed formulary dispensed between September 1, 2012, and March 1, 2013.

Early analysis of the closed formulary impact indicates opioid prescriptions and costs have decreased since the formulary was implemented in 2011. TDI will continue to assess the formulary’s efficacy going forward. Part of the analysis will involve data from legacy claims, once those claims become subject to the closed formulary on or before September 1, 2013. For further information, please refer to TDI’s data call instructions.


Governor Signs Changes to Pill Mill Law

Kentucky’s Governor signed House Bill 217 into law on March 4, 2013, amending last year’s pill mill law and fortifying reporting rules for pharmacies and prescribers of certain drugs. The new law requires physicians to assess a patient’s mental condition, and check the state’s prescription drug monitoring database (KASPER) for the previous 12 months before prescribing any Schedule II or III drugs. Previously, physicians were only required to assess the patient’s physical condition, and the law did not specify the length of the patient’s drug history that physicians were required to review. Additionally, physicians must now conduct patient drug history reviews and modify or terminate prescriptions as needed based on the review. This new process is specific to certain patients receiving Schedule II or III drugs with hydrocodone as a single ingredient or component of another drug, such as hydrocodone with acetaminophen. The law will also require the state licensing boards to conduct criminal background checks for license applicants who want to prescribe or dispense controlled substances.

Since taking effect on July 20, 2012, Kentucky’s landmark pill mill law (2012 HB1) has demonstrated success in combating prescription drug abuse in the state. According to the Governor’s Office, the pill mill law reduced total doses of all controlled substances by 10.4% after six months, however stakeholders agree the law needs some changes. In regards to the new legislation (HB 217) Governor Beshear’s office released the following statement: “Unlicensed pain management clinics have closed up shop and prescriptions for the most addictive drugs have dropped every month since implementation.” Some patient advocate groups and the Kentucky Medical Association voiced concerns during the legislative session regarding patient difficulty in accessing medical care following the law change in 2012, and the imposition of physician liability for physicians who are treating patients with long term chronic pain symptoms. It is still too soon to fully understand how or if these concerns will be resolved by the 2013 revisions to law.


Legislature Approves Pharmacy Fee Schedule

In late 2012, the Idaho Industrial Commission proposed a workers’ compensation pharmacy fee schedule, which has recently been approved by the state’s legislature. The fee schedule will become effective on July 1, 2013, and addresses reimbursement for brand, generic, repackaged and compound drugs. Particularly, repackaged drugs will be reimbursed based on average wholesale price of the original NDC and compound drugs will be reimbursed at the ingredient level. Legislative approval was contingent upon an agreement that the Commission consider testimony from the Idaho Pharmacy Association (IPA) regarding the adequacy of a $5.00 dispense fee for brand and generic drugs. The Commission has indicated its intent to adopt a temporary rule which will address the IPA concerns, and is expected to occur prior to the effective date of the new fee schedule. The determination of the dispense fees has not been decided.


Medical State Reporting and Electronic Billing Rules

The Oregon Workers’ Compensation Division (WCD) is preparing to adopt a new set of rules in response to the recently updated Medical EDI standards, now available through the IAIABC. The new standards were approved in late 2012 and include a new EDI Implementation Guide for Medical Bill Payment Records (Release version 2.0, 2012 edition) and a new Medical Payment Reporting Supplement (Release 2.0 - 2012 edition). Since the IAIABC’s adoption of the Implementation Guide and the Reporting Supplement, Oregon’s WCD has begun to plan for the adoption of these new standards, as well as their e-billing rules. EDI Medical Release 2.0 will now allow for more robust information, such as compound ingredients, to be sent via electronic data interchange (EDI) transactions. Several attendees requested that the Rules Advisory Committee push the proposed EDI 2.0 implementation deadline back to early 2014 to give participants more time to prepare their systems for implementation. The Rules Advisory Committee also discussed consolidating different sections of rules to harmonize the EDI rule and the draft e-bill rules. The Oregon E-billing Advisory Committee will continue to meet until a proposed draft is ready for stakeholder comment. For more information on e-billing or medical state reporting in Oregon, or to sign up for the rules advisory committee meetings or minutes, please contact fred.h.bruyns@state.or.us at the WCD.


Debate on Drug Reimbursement Continues

Florida lawmakers are contemplating legislation to close an existing loophole which requires payers to reimburse repackaged, physician dispensed medications at rates that are sometimes up to 1000% greater than identical drugs dispensed in a pharmacy setting. This is the fourth consecutive year the legislature has debated this issue, but this year presents a unique issue. Opponents to closing this costly loophole have introduced legislation of their own, which could have a devastating impact on overall pharmacy spend in the state. The opponent’s strategy is to pass legislation which would prohibit payers from de-authorizing care with a physician on the basis that the physician is dispensing medications to injured workers in office, and would also repeal language in existing law which permits a payer to reduce out-of-network pharmacy transactions to in-network rates, when the injured worker fails to obtain their medications within the pharmacy network.


Healthesystems Supports Legislation to Eliminate Requirement to Attach Prescriptions to Pharmacy Bills

Healthesystems has demonstrated support of California Senate Bill 146, which would eliminate the requirement that providers attach prescriptions to each pharmacy bill in order to establish eligibility for reimbursement. The need for SB 146 grew out of the broad workers’ compensation reform legislation passed in 2012, and the Division of Workers’ Compensation Medical Billing and Payment Guide, which require prescriptions or referrals to be attached to a bill if the services are provided by someone other than the primary treating physician.

However, the Division’s adopted electronic billing standard for pharmacy bills (NCPDP Telecommunications Standard Version D.0) does not currently support the inclusion of attachments, making pharmacy billers incapable of compliance and subject to denials. If this billing issue is not addressed, a pharmacy’s ability to fill workers’ compensation prescriptions will be affected, which may limit access to necessary medication. As SB 146 continues to move through the legislative process, Healthesystems will continue to communicate its support of the bill to state legislators.



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