A Healthesystems publication

Fall 2012

The State of the States



On September 19, 2012 the state passed a widesweeping workers’ compensation reform bill. The largest effects of the new law will hit health care and home health areas, but the impact for workers’ comp will be in the yet-to-be-written rules. Some of the key provisions in the new law include increased benefits for permanently injured workers, and reduced systems costs.


With the implementation of Preferred Provider Program regulations in a workers’ comp setting, the Department of Insurance has created a maelstrom of controversy. The criticism comes in various forms, one of which questions why the Department was charged with creating the regulations when the job would have been better suited to the Workers’ Compensation Commission. The key issues were not cleared up, so the Joint Committee on Administrative Rule kicked it back to the Department for a second attempt.

It appears Illinois is effectively addressing repackaged drug regulations with a current proposal that would amend the reimbursement of repackaged drugs in the development process. In July 2012, Illinois Workers’ Compensation Commission suggested rule changes that would require prescriptions filled and dispensed outside a licensed pharmacy to be billed at the average wholesale price (AWP) for the underlying drug. The dispensing fee would be limited to $4.18.

This would be a big victory for Illinois. Currently, physician dispensed drugs make up 43 percent of all prescriptions dispensed in the state; likewise, the costs of these drugs make up 63 percent of all prescription payments in the state1.


Michigan is joining Illinois in attempting to curb physician dispensing and reimbursement. While not as costly and prevalent in Michigan as it is in Illinois, the practice has caught the attention of regulators. Michigan’s proposed average wholesale price formula is $3.50 for brands $5.50 for generics.

North Carolina and Oregon

Both states are proposing rules that establish electronic billing rules in workers’ compensation application. The states are expecting to help payers and carriers improve efficiencies, speed up processes, track medical costs, and deliver more accuracy with regard to rate setting.



1 -Donchung Wang. Physician Dispensing in Workers’ Compensation, Workers Compensation Research Institute, July 2012.
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