A Healthesystems publication

Winter 2016

State of the States


Treatment Guideline Resources

The Industrial Commission recently posted guidance materials and flowcharts on the use of medical treatment guidelines and provider authorization processes. These resources can be found on their updated Medical Resource Office page at www.azica.gov.

Public Stakeholder Meeting

The Commission also held a public meeting for industry stakeholders for the purpose of gathering input on the introduction of legislation that would impact aspects of the Industrial Commission’s operations. Many individuals provided input on recommended system changes, addressing medical treatment, reimbursement rules, utilization review, and dispute resolution.


Proposed Formulary Draft Released

The California Division of Workers’ Compensation (DWC) released its initial draft of their drug formulary rule on August 26. The draft rule updated multiple sections of the Medical Treatment Utilization Schedule (MTUS), and included a Preferred Drug List. The Preferred Drug List and MTUS updates were modeled around guidelines published by the American College of Occupational and Environmental Medicine (ACOEM). Formulary highlights include:

  • Preauthorization requirements and medical necessity for compound drugs and non-preferred drugs
  • Prohibiting payers from requiring preauthorization for preferred drugs, while allowing payers to uniformly approve non-preferred drugs within their utilization review (UR) plans
  • New prescriber documentation requirements for brand drugs when a generic is available
  • Preauthorization requirements for the physician-dispensing of most medications
  • Rules for transitioning patients from non-preferred medications to preferred-medications when appropriate

Stakeholders provided extensive feedback to the DWC via their online forum, and the DWC is considering this feedback before adopting a final rule which is expected to become effective by July 1, 2017. Additional medications may be added to the preferred drug list and more specific timeframes may be delivered regarding the transition process. A formal hearing will occur prior to the final disposition of the rule.


State Ramps Up Efforts to Combat Opioid Abuse

Governor Andrew Cuomo’s administration has pushed a statewide effort to increase access to drug treatment resources. The effort began with the 2012 I-STOP bill, intended to decrease doctor shopping and diversion. The bill hoped to accomplish this goal by increasing prescriber utilization of the state’s prescription drug monitoring program and by mandating the electronic prescribing of controlled substances. This summer, Cuomo signed a comprehensive package of bills expanding patient and first responder access to emergency drug treatment medications like naloxone, and requiring health insurers to use state-approved uniform criteria for coverage determinations when considering approval for substance abuse disorder treatment. Most relevant to workers’ compensation patients is a new provision which prohibits physicians from prescribing more than a seven-day supply of opioids for acute pain treatment, while also requiring ongoing education in pain management for all prescribers. Similar legislation became law throughout various states in 2016, such as Connecticut, Rhode Island, Maine, Massachusetts, and New Hampshire.

In conjunction with these efforts, the New York State Workers’ Compensation Board (WCB) updated its information packet to include state agency contact information for injured workers concerned about opioid dependency and substance abuse treatment services. The WCB also released a discussion document for public comment that proposes the implementation of a drug formulary, additional price controls on physician dispensers and compounds, and oversight of PBM programs.


Compound Audit Investigates Formulary Adherence

At a recent quarterly carrier meeting, Texas Division of Workers’ Compensation (DWC) regulators advised attendees about the status of a system-wide Compound Medications Audit. Matt Zurek, DWC Executive Deputy Commissioner, indicated that of the top ten prescribers of compounds, selected based on volume and billed amounts, seven have been escalated to a second review process by the Medical Quality Review Panel (MQRP) for suspected non-adherence to the Official Disability Guidelines (ODG). The other three cases are still under first review. DWC will publish the audit results once they become available. The Texas formulary requires all medications defined as investigational, experimental, or non-FDA-approved be subject to preauthorization. However, the Texas formulary rules only require preauthorization for compounds with an “N” drug as an ingredient. This has created a loophole in that compounds by nature are not FDA-approved since they are custom made for the patient, yet they are often made with FDA-approved ingredients. The DWC has been approached by stakeholders about this issue since the formulary was initially adopted in 2011, but there is no indication at this time that the rule is subject to amendment in the near future. It remains to be seen if the findings from this audit will drive legislative or regulatory change in 2017.


State Begins Collecting Self-Insurer Payment Data

The Washington Department of Labor and Industries (L&I) released trading partner agreement forms along with technical reporting requirements for medical bill payment data paid by self-insured entities or their third party administrators. L&I confirmed it will implement Medical Bill Electronic Data Interchange (EDI) using IAIABC Release 2.0 reporting standards. Testing for Medical Bill Reporting EDI will begin late 2016 with voluntary reporting beginning early 2017. Mandatory reporting will begin on July 1, 2017. Currently, there are no statutory requirements authorizing L&I to collect medical bill data, however, proposed rules will be drafted in the coming months and are expected to be adopted by July 1, 2017.

NCCI Updates Reporting Requirements

The National Council on Compensation Insurance (NCCI), along with several independent rating bureaus, announced two changes to their medical data call requirements. As of July, NCCI now offers a new indicator to determine if a payment was processed by a pharmacy benefit manager through a network pharmacy. NCCI also added new codes to capture payments made by carriers to injured workers for the reimbursement of medical marijuana. NCCI also announced that their Data Educational Program will be held from January 31 through February 3.


Report Indicates State Programs Account for Cost Shifting

In early October, the US Department of Labor (DOL) released a report Does the Workers’ Compensation System Fulfill its Obligations to Injured Workers? The DOL and the National Academy of Social Insurance hosted a public webcast to review the findings. According to the report “there is growing evidence that costs of workplace-related disability are being transferred to other benefit programs” like Medicare, Social Security Disability, and the medical coverages under the Affordable Care Act. The report is timely considering recent court decisions in Florida which have sparked a national debate about the adequacy of benefits. Legislation in a number of states now limits the duration of medical benefits, and other states have created statutory coverage exclusions on some injury types and exposures, leaving injured workers without recourse. The report delves into the details of those issues and how, despite the cost shifting, employer costs continue to rise nationally. The full report can be accessed at www.dol.gov.


  • More bills will be raised on mandatory prescriber education
  • Seven-day limits on acute pain opioid prescribing will continue to pop up
  • Many states will consider drug formularies (LA, MI, MT, NY, NE, NC, SC, NM, PA, VA)
  • Federal inquiries on manufacturer price gouging may drive changes in pharmaceutical regulation
  • Treatment guidelines will continue to be discussed as states grapple with evidence-based medicine and consensus medicine
  • Growing discussion will address issues related to compound drugs, physician dispensing and novel dose medications
  • The national conversation of workers’ compensation benefit adequacy will continue



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