A Healthesystems publication

Summer 2016

State of the States


Payment Data Changes – IAIABC

The Division of Workers’ Compensation (DWC) recently implemented medical state reporting changes, effective April 6, 2016. All carriers and claims administrators must transmit medical payment data in an updated standard, based upon the IAIABC Medical 2.0 Implementation Guide. The changes were originally adopted in April 2015 to allow reporting entities a full year to code and test the new requirements. Recently, the state proposed a number of technical updates which are currently the subject of rulemaking. These changes are needed in order to conform to the updated IAIABC standards for the reporting of repackaged and compounded medications.

Workers’ Comp Formulary

California will soon release a draft proposal of formulary rules as required by Assembly Bill 1124. The DWC has held a number of public meetings to gain input from the stakeholder community on the construct of the closed formulary. Consistent themes include:

  • The inclusion of medications dispensed from both pharmacies and physician’s offices
  • A phased-in implementation timeframe for new and legacy claims
  • Better controls around compound and physician-dispensed medications
  • The adoption of a nationally recognized formulary over a “do it yourself” version

Some have raised concerns about utilization review for medications which would not require preauthorization, and others have suggested allowing only the lowest cost equivalent for generic drugs. The California Workers’ Compensation Institute delivered its report to a Joint Committee on March 2 about the implementation of a closed formulary, projecting up to a half billion dollars in savings on overall drug costs if the formulary is developed taking these principles into consideration.

The new formulary is required to be implemented by July 1, 2017, and rulemaking is expected to begin in May 2016. Healthesystems has been a frequent visitor to the DWC offices, providing both clinical and regulatory perspectives on how the formulary construct could drive the best patient outcomes while balancing cost and efficiency. We will continue to be very involved in discussions with the DWC and the medical community to ensure the formulary rule adopted will complement the existing regulatory framework while delivering the best patient outcomes.

The California DWC is also working on regulations which would implement Home Health and Interpreter fee schedules, updates to the Medical Treatment Utilization Schedule, and state reporting data quality penalties. View the report


New Standards for Pharmaceutical Payment Data

Starting in July, payers will begin testing a new reporting platform with the DWC, which will allow the state to capture more robust pharmaceutical payment data. All reporting entities are expected to move to the new reporting platform upon successful completion of testing before November 29, 2016. The state has also recently changed its provider fee dispute process, impacting how providers and payers respond to Petitions for Dispute Resolution. The new rules will specifically exclude any dispute arising from a provider-payer contract. The rules will also require physician dispensers to supply proof of their paid cost for medications along with NDC pedigree information, and extend the timeframe for both filing a reimbursement dispute petition (45 days) and answering a petition (30 days).


Medical Marijuana Reimbursement

A recent fee schedule change has taken place, incorporating a requirement for insurers to reimburse injured workers for medical marijuana. The new requirement has many experts concerned about how this will play out in the political environment, as well as the injured worker communities. A bill which would have banned medical marijuana from the Workers’ Compensation fee schedule failed to be considered in 2016. Some think this opens the door for other states to adopt a similar approach. Insurers and employers are highly concerned about the consequences of this action. It remains to be seen how other states workers’ compensation systems will respond, or if the New Mexico legislature will revisit this issue in 2017. Twenty-three states have adopted medical marijuana laws, and four states and the District of Columbia have legalized marijuana for recreational use. Fortune magazine recently reported that legal marijuana sales could hit $6.7 billion in 2016.


Considering a Closed Formulary

State regulators are expected to report how a closed formulary could impact workers’ comp claim outcomes and costs. Healthesystems has been in discussions with regulators about the topic. Stakeholders are not united on the need to incorporate a state-mandated formulary for all employees, but in the prior year budget bill lawmakers have authorized a study on how a formulary would affect state employee claims. Recent changes in the leadership at the industrial commission may have an impact on the speed of this effort; enabling legislation is likely to be considered in 2017. More specifics will be available in the report to the legislature, expected to be delivered by the Industrial Commission in April.


Legislation for Mandatory PDMP Use for Opioids

Narcotics Use Ad-Hoc Committee (NUAC) released its report to the Workers’ Compensation Commissioner Chair in February. The report highlights the recommendations of the committee, following a two-year project during which they studied the impact of narcotics in workers’ compensation claims. NUAC recommended the commission support efforts to enact mandatory use of the state’s prescription drug monitoring program (SCRIPTs) by opioid prescribers, the enforcement of specialized educational requirements, and standard-of-care guidelines as set forth by the Board of Medicine for prescribers of narcotic medications, except for acute pain care. NUAC also recommended that the commission, to the extent possible, extend access of SCRIPTs data to pharmacy benefit managers. NUAC members included insurers, self-insured employers, physicians, several attorneys, pharmacy benefit managers, and members of the business community. The report may set a foundation for legislative recommendations during the 2017 session. View the report


Closed Formulary and Medical Treatment Guidelines Enacted

Tennessee has adopted Medical Treatment Guidelines and a closed formulary. The treatment guidelines consist of the Official Disability Guides (ODG) and the Chronic Pain Guidelines developed and maintained by the Tennessee Department of Health. The new rules went into effect on February 28, 2016, following a year-long stakeholder outreach process. The closed formulary component of the treatment guidelines goes into effect at the end of August 2016. The closed formulary incorporates a staggered implementation timeframe for dates of injury before and after January 1, 2016. This is similar to what has been done in other states that adopt formularies. The staggered implementation timeframe is intended to ensure continuity of care for injured workers who may need to be transitioned to other types of medications. The state has posted a new webpage with information about the new treatment guidelines and formulary implementation here.


Fee Schedule Coming Soon

State regulators will soon be developing the state’s first ever medical fee schedule. This mandate comes after years of debate by legislators and will include fee caps on all professional services, hospital, pharmacy, and DME. Commission staff has done some formal outreach to stakeholders and is gathering feedback in order to develop its draft regulation, though rule development has not yet begun. The fee schedule is projected to become effective by the January 1, 2018 deadline, as is required by the legislature. Virginia regulators are also in the process of drafting e-billing rules which are required by statute to become effective before December 2018.


ODG Drug Formulary Changes Impact Texas and Oklahoma Injured Workers

For many injured workers in Texas and Oklahoma, a change in medication therapies may be coming as a result of updates to ODG, Appendix A Closed Formulary. Texas and Oklahoma currently require providers to obtain preauthorization for all of the approximately 175 medications designated as “N” drugs, across multiple drug classes. Starting February 1, 2016, four long-acting opioids which previously did not appear on the “N” list, will now require an adjuster’s approval prior to dispensing. The four medications are: Fentanyl transdermal patches, MS-Contin, Levorphanol (Levo-Dromoran), and Morphine ER/Naltrexone (Embeda). The ODG guidelines now list these long-acting opioids as “not recommended” as a first line therapy for pain management. Per a public notice, distributed by the Texas Division of Workers’ Compensation, system participants are encouraged to work together to discuss and coordinate the ongoing needs of individual patients if any of these four medications are currently prescribed. Healthesystems’ clinical staff has been working closely with our customers to assist in the coordination of discussions with prescribers since these changes were first announced in October 2015. The public notice is available online.



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