A Healthesystems publication

Fall 2011

State of the States


The Florida Division of Workers’ Compensation has issued the “final draft” of its update to the Provider Reimbursement Manual. The latest draft incorporates changes based on comments received at a July hearing. Healthesystems provided information about electronic authorization for DME, home health and home medical supplies. No changes were made to previously proposed language regarding physician dispensing. The manual will be submitted to the legislature for review prior to it becoming effective, and will not become effective before the spring of 2012.


In response to the decision by First Data Bank to stop publishing its AWP “Blue Book,” the U.S. Department of Labor, Office of Workers’ Compensation Programs — which administers workers’ compensation programs for the Division of Longshore and Harbor Workers’ and the Division of Coal Mine Workers’ Compensation — announced that it would begin using Medi-Span for its pharmacy pricing resource. The agency had previously utilized Blue Book.


The Oklahoma Workers’ Compensation Court announced that it would begin using Medi-Span as its AWP resource. The change became effective September 6, 2011.


The Tennessee Division of Workers’ Compensation conducted a hearing on September 28, 2011 on amendments to its medial fee schedule. New provisions included in the amendments could require the pharmaceutical fee schedule to use “lesser of” language incorporating an Average Wholesale Price (AWP) and General Equivalent Average Price (GEAP) . Written and oral testimony during the hearing opposed the addition of the GEAP language. The Division will continue to receive testimony through October 12, 2011 and expects to make a decision on any changes before adopting shortly thereafter. The Division intends to adopt amendments to the medical fee schedule to be effective by the end of January 2011 , due to the scheduled expiration of an emergency rule related to issues in the physician fee schedule.


The Illinois General Assembly passed House Bill 1698 to reform workers’ compensation legislation and was signed into law by Governor Pat Quinn on June 28, 2011. The bill includes numerous updates to the Medical Fee Schedule such as changes to out-of-state provider reimbursement, days to pay or deny a bill, a 30% reduction in medical fee reimbursement rates, new reimbursement rules for medical implants and prescriptions dispensed outside of a licensed pharmacy, the use of AMA criteria, as well as changes to fee schedule regions. Several of the fee schedule changes became effective when the Governor signed the bill and others will become effective at later dates.


AB378 was signed into law by Governor Jerry Brown on October 7, 2011 incorporating disclosure standards for physician owned pharmacies, along with a new fee schedule methodology for reimbursement of compound drugs. These measures are intended to better control pharmacy costs. The legislature made a unilateral 10% cut in all Medi-Cal spending earlier this year due to budget constraints.

Separately, Medi-Cal will implement a new reimbursement methodology based on Actual Acquisition Cost (AAC) for drug product reimbursement in February or March of 2012. AAC rates are determined based on surveys of pharmacy purchasing invoices. In the interim, Medi-Cal and the California Division of Workers’ Compensation will both continue using AWP data supplied by First Data Bank under a special arrangement to determine reimbursement rates. First Data Bank had suspended its publication of the AWP “Blue Book,” for determining reimbursement rates, but the company has agreed to continue producing the data for Medi-Cal until work is completed on the new ACC benchmark.

It is important to note that The CA Division of Workers’ Compensation posted the interim pharmaceutical fee schedule data file on September 28, 2011 and stated it will not be updated for “approximately one month” due to logistical issues delaying Medi-Cal’s continued use of the AWP data.


The Workers’ Compensation Commission has withdrawn its pharmacy fee schedule rule that was heard in April, 2011. The rule would have incorporated the use of Generic Equivalent Average Price (GEAP) into the fee schedule. A new rule is expected to be proposed in November.


The Commissioner of the Division of Workers’ Claims is planning to amend current regulations governing pharmacy reimbursement by the end of 2011. The Commissioner indicated he will hold a public stakeholder meeting prior to the regulations being formally proposed. He is considering providing an option in addition to AWP for determining reimbursement, though he acknowledged that difficulty in obtaining necessary data may make it difficult to act on the issue in the short term. Planned amendments will also address physician dispensed medications.


The Workers’ Compensation Division has proposed changes that will set reimbursement rates for durable medical equipment, prosthetics, and orthotics at 110% of the CMS rate. Items that do not appear in the fee schedule would be based on a contracted rate with the payer or 80% of usual and customary charges.

South Carolina

A South Carolina pharmacy task group is addressing reimbursement for repackaged drugs. The consensus of the group to date has been to come up with a definition of AWP and to reimburse repacks based on original NDC. There was also discussion of using Medi-Span. No formal proposal has been made yet, and we expect more activity around this in the coming weeks.


A draft of e-billing regulations has been issued by the Office of Workers’ Compensation Administration (OWCA). Proposed regulations are not expected to be implemented prior to January 2013. E-billing will not be mandatory for all billing providers, but it will be mandatory for all payers to be able to accept bills electronically.



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