THE EXAMINER. Quarterly review of legislative and regulatory updates impacting the workers compensation and auto casualty markets.

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1 NOVEMBER 2013 THE EXAMINER IN THIS ISSUE Featured State Legislative Updates Illinois WC Regulation - Workers Compensation Preferred Provider Program...1 Texas House Bill 1322 DME & Home Health Care Reimbursement...1 State Legislative Updates Adopted/Enacted Proposed About Healthcare Solutions...7 Healthcare Solutions legal and compliance team actively monitors the workers compensation and auto casualty regulatory landscapes. The purpose of this newsletter is to provide you with timely updates on proposed and enacted regulations that may impact your business. Questions or comments about The Examiner may be ed to marketing@. Featured State Legislative Updates Illinois WC Regulation - Workers Compensation Preferred Provider Program The Illinois Department of Insurance approved final regulations for its Workers Compensation Preferred Provider Program (WC PPP) Administrator certification. The regulations were adopted on March 4, 2013, establishing rules related to 820 ILCS 305/8(a) and 8.1a, which were enacted on June 28, The purpose of the law is to allow for direction of care through established provider networks. A PPP program allows employers and insurers to contain costs and impact quality of services by eliminating all non-network care, with the exception of care for claimants who utilize an opt-out option. In order to qualify as a WC PPP, an organization must meet requirements regarding proper notice to injured workers, accessibility of providers, procedures to allow injured workers to opt out of the program, and provider qualification. Procura Management, a wholly owned subsidiary of Healthcare Solutions, was approved as a WC PPP Administrator by the Illinois Department of Insurance, effective August 15, Because the company maintains networks of all types of providers physicians, specialty services (imaging, physical therapy, DME, and home health) and pharmacies it is uniquely positioned to provide the comprehensive networks required of WC PPPs under Illinois law. Texas House Bill 1322 DME & Home Health Care Reimbursement Under Texas Labor Code , which became effective on September 1, 2013, insurance carriers and selfinsured employers (collectively, Carriers ) will have a new avenue to obtain durable medical equipment (DME) and home health services at a discount below Texas fee schedule. Previously, Texas law required Carriers to pay no less than fee schedule, unless contracted with an approved Health Care Network. The new law allows a Carrier or its authorized agent to obtain discounts by contracting with an Informal Network that has met certain defined requirements. Requirements include the following: 1. The Informal Network must register with the state s Department of Insurance, and must report to the state all Carriers that obtain services via the network, including FEINs for each Carrier. 2. Contracts must be in place between each Carrier or its authorized agent and the Informal Network, and between the Informal Network and each network provider. 3. The Informal Network must send quarterly notices to its network providers in accordance with the statute s requirements Meadow Church Rd Suite 300 Duluth, GA Healthcare Solutions has established a Texas Informal Network for DME and Home Health services, and is able to deliver these services at a discount below fee schedule to contracted customers. For more information about the featured legislative updates, please contact your account executive or marketing@. Main: Fax:

2 State Legislative Updates This section provides information on changes to states legislation. The section is divided by status (Adopted/Enacted and Proposed) and provides a brief summary of the bill/rule. ADOPTED/ENACTED Arkansas Prescription Drugs SB965 Allows the physician to indicate that a generic drug may be substituted for a brand drug. The patient has the right to refuse substitution. The bill was effective August 15, Prescription Drugs SB1171 Except when dispensed directly by a practitioner other than a pharmacy to the ultimate user, no Schedule II, III, or IV substance may be dispensed without the written, oral, faxed, or electronic prescription of a practitioner. The prescription will not be filled or refilled more than six (6) months after the date of the prescription or be refilled more than five (5) times, unless renewed by the practitioner. The bill was effective August 15, California Billing Requirements SB146 Removes pharmacies from the requirement that a prescription accompany the request for payment found in California s 2012 omnibus workers compensation bill, SB 863. The bill was amended to allow re-billing of denied claims until March 31, The bill was effective August 19, PDMP Funding SB809 Changes funding mechanism for current PDMP program. The bill was amended to remove the tax on drug makers and substituted by a $6.00 licensure fee. The licensure fee requirement is effective April 1, Delaware Cost Containment WC Regulation/HB175 Establishes pharmaceutical reimbursement formulas as follows: Brand: AWP 12% + $4.00; Generic: AWP 20% + $5.00. If the actual charge is less than this amount, then it is the maximum allowed. Physicians dispensing drugs from their office do not receive the dispensing fee referenced above. Compounds: sum of the NDCs for each drug + $ Establishes a closed formulary, requiring prior approval of non-preferred drugs via a specified form. The reimbursement rate for pathology, laboratory, radiological services, and durable medical equipment was reduced by 15%. The regulations remove the reference to maximum medical improvement (MMI) from the workers compensation treatment guidelines and changes the maximum number of visits allowed under the guidelines. The regulations were effective September 11,

3 Florida Physician Dispensed Drugs Senate Bill 662 Limits repackaged drug reimbursement to the average wholesale price (AWP) of the original manufacturer. Sets the physiciandispensed fee schedule at 112.5% of AWP + $8.00 dispensing fee, as opposed to the AWP + $4.18 rate applicable for pharmacies. In addition, the existing statute that allows application of contracted discounts when paying non-contracted dispensers is repealed. The bill was signed by the governor and was effective July 1, The DWC held a proposed rulemaking meeting to discuss implementation of SB 662 on August 8, Proposed regulations have not been released. Georgia Pain Management Clinics HB178 Places pain management clinics under the regulation of the Georgia Medical Board, requiring the clinics to be licensed by the medical board as well as the board of pharmacy. Only Georgia-licensed physicians will be allowed to own pain management clinics opened on or after July 1, Any pain management clinic in existence prior to July 1, 2013 is exempt from the licensed physician ownership requirement. The bill was effective July 1, Idaho Pharmacy Fee Schedule WC Regulation The Idaho Industrial Commission updated the Rx fee schedule. The updated reimbursement formulas are as follows: Brand: AWP + $5.00; Generic: AWP + $8.00; OTC: Reasonable Charge + $2.00, if prescribed by a physician. The regulation was effective July 1, Pharmacist Licensure HB17 Requires licensure of pharmacists to dispense within the state. This requires out-of-state pharmacists to obtain an Idaho pharmacy license before practicing. Requires registration of drug or device outlets doing business in or into Idaho with the pharmacy board. The bill excludes nonresident pharmacists practicing pharmacy into Idaho who are employed by an Idaho registered nonresident mail service pharmacy. Adds definitions of telepharmacy and mail service pharmacy to the code. The bill was effective June 3, Indiana Physician Dispensed Drugs/Fee Schedule HB1320 Limits physician dispensed drug reimbursement of legend drugs to the average wholesale price (AWP) set by the original manufacturer. If the national drug code (NDC) of a legend drug cannot be determined, maximum reimbursement is the lowest cost generic for that legend drug. Limits liability for workers compensation payments to a medical service facility to the contracted rate or 200% of Medicare. Allows providers to request an explanation of benefits (EOB) if the bill has been reduced as a result of the application of a Medicare coding change. The bill was effective July 1, 2013; however, many of the new sections are not effective until July 1, Physician Assistant Dispensing HB1099 Authorizes a physician to delegate to a physician assistant the authority to prescribe Schedule II controlled substances for an aggregate 30 day supply under certain circumstances. The bill was effective July 1, PDMP Program HB1465 Establishes a committee to study updating the current prescription drug monitoring program (PDMP) to require health care practitioners to consult the PDMP before prescribing, dispensing, or administering a controlled substance in an amount that exceeds a 30 day supply. The bill was effective July 1,

4 Kentucky Prescription Drugs HB217 Each state licensing board will establish regulations for licensees authorized to prescribe or dispense controlled substances, including mandatory prescribing and dispensing standards related to controlled substances, the requirements of which will include the diagnostic, treatment, review, and other protocols and standards established for Schedule II and III controlled substances containing hydrocodone. The bill was effective June 25, Maine Fee Schedule SB483 Employee has the right to choose the physician or pharmacist that dispenses their prescriptions. The bill is effective October 9, Maryland Physician Dispensed Drugs SB139 Requires dentists, physicians, and podiatrists employed at a medical facility or clinic that specializes in the treatment of medical cases reimbursable through workers compensation to obtain a dispensing license from the board of pharmacy before dispensing to claimants. The bill was effective July 1, Montana Prescription Drugs SB323 Ongoing prescriptions for Schedule II and III drugs may be prescribed only by a treating physician. After consulting the prescription drug monitoring program, a treating physician may decline to prescribe or refill a Schedule II or III drug. The bill was effective July 1, New Hampshire Direction of Care SB95 Allows the injured employee the right to select his or her own pharmacy or pharmacist for dispensing and filling prescriptions for medicines. The bill is effective January 1, Generic Substitution SB147 Requires generic substitution absent medically necessary order from the prescriber. In situations where the legend drug is less expensive, it will be dispensed. Prescription refills will not require the reissuance of the medically necessary indication. The bill is effective January 1, North Carolina Prescription Requirements HB675 States no written prescription for a Schedule II substance will be dispensed more than six months after the date it was prescribed. The bill is effective October 1,

5 Oklahoma Prescription Requirements HB1783 States a written or oral prescription for any product containing hydrocodone with another active ingredient will not be refilled. The bill is effective November 1, Diagnostic Imaging SB250 Changes reimbursement rules for diagnostic imaging providers. In order to be reimbursed, MRI providers must meet Medicare requirements for the payment of MRI services or have accreditation from the American College of Radiology, the Intersocietal Accreditation Commission, or the Joint Commission on Accreditation of Healthcare Organizations. The bill is effective August 29, Omnibus Workers Compensation Bill SB1062 Allows employers to opt out of the workers compensation system. Removes jurisdiction over workers compensation claims from the courts and creates an administrative commission for dispute resolutions. Changes repackaged and physician-dispensed drug reimbursement to the lesser of the original labeler s NDC and the lowest-cost therapeutic equivalent drug product. Changes the timeframe in which a medical bill payment must be made from 60 to 45 days. Adds penalties for failure to pay medical bills in a timely fashion. Requires the workers compensation commission to adopt a closed formulary. Prior authorization is required for prescriptions and nonprescription drugs that are not preferred and exceed, or are not addressed by official disability guidelines (ODG). The preauthorization request will include the prescribing doctor s drug regimen plan of care and the anticipated dosage or range of dosages. The majority of the bill is effective February 1, 2014; however, certain provisions went into effect on August 29, Oregon Managed Care SB533 Extends from 90 to 180 days, the period during which a nurse practitioner authorized to provide medical services to a worker enrolled in an MCO may provide medical treatment to the worker if the treatment is determined to be medically appropriate. Authorizes workers to receive compensable medical treatment from a primary care physician or chiropractic physician who is not a member of the MCO but who maintains the worker s medical records and is a physician with whom the worker has a documented history of treatment under certain circumstances. The bill is effective January 1, Rhode Island Electronic Prescriptions HB5756 Allows the director of the department of health to promulgate rules and regulations for the purpose of adopting a system for electronic data transmission of Schedule II, III and IV drug prescriptions. Allows a practitioner to sign and transmit electronic prescriptions for controlled substances. Allows a pharmacy to dispense prescriptions transmitted electronically. The bill was effective June 24, Non-Cancer Pain Protocols WC Regulation Requires opioid contracts between physicians and the injured worker to provide guidance on prescribing of certain drugs, limits initial opioid prescriptions to 5 days with follow-up visits scheduled before the prescription renews, requires urine drug testing to take place before writing a prescription then randomly at least 2 times a year, up to 4 times. The medical advisory board adopted the protocols, which were effective May 21,

6 Pharmaceutical Protocol WC Regulation Allows the injured worker to use the pharmacy of their choice. If the insurer s plan requires the use of mail-order pharmacies, the insurer must have a system in place allowing the injured worker to be provided with enough medication to cover them until the full prescription arrives via mail. In addition, a brand medication would require a physician-physician review, use of non-opiate medications after three months would require a letter of necessity to the insurer, 90-day prescriptions would be used except for opiate/narcotic medications, which would be prescribed for a maximum of 30 days, prescriptions must be initially filled as written, if the insurer contests the necessity, a 14-day supply must be dispensed to cover the appeals process. The medical advisory board adopted the protocols, which were effective May 21, Texas Workers Compensation Certified Networks HB3152 Changes certified network contracting requirements between management contractors and third parties with health care providers. It allows intermediaries to contract with providers for rates lesser than those with the certified network. In order to do so, the contract must include the network s contract rate for services and the amount of reimbursement the health care provider will be paid after the health care provider agent s fee for providing administrative services is applied. If a management contractor or third party to whom the network delegates a function is serving as an agent for health care providers in the certified network, the management contractor or third party must disclose that relationship in its contract with the certified network. If a contract complies with the requirements, the health care provider will be reimbursed in accordance with the terms of the contract. If a contract does not comply with the requirements, the health care provider will be reimbursed in accordance with the certified network s contracted rate. The bill was effective September 1, PROPOSED California Home Health Fee Schedule WC Regulation The effective date for the new home health fee schedule required under California s 2012 omnibus workers compensation bill, SB 863, was pushed back from the original date of July 1, The DWC released a statement to interested parties indicating draft regulations will be posted sometime in Fall Medical Provider Networks WC Regulation The DWC posted draft MPN regulations. Carriers are required to update quarterly the list of network providers with a fine for each inaccurate listing of $1,000, up to a total of $25,000. In addition, defines pharmaceutical services as an ancillary benefit, expands the types of entities that may qualify to have an MPN, establishes an MPN approval period of four years, provides a petition process to either revoke or suspend an MPN, authorizes the DWC to conduct reviews of MPNs and assess administrative penalties for violations of statutory and regulatory requirements, modifies regulatory definitions, which include a definition of an entity that provides physician network services. Over 200 pages of comments were submitted to the DWC on the proposed regulations. Independent Medical Review SB626 Would remove the 24 visit cap for chiropractors, physical therapists, and occupational therapists and permits them to serve as primary treating physicians. Allows the WCAB and courts to overrule IMR determinations. Requires UR and IMR physicians reviewing treatment requests to hold the same type of license as the requesting physician (e.g., only chiropractors may review chiropractors.) Eliminates the confidentiality of IMR reviewers. Home Care Organizations AB322 Would require licensure of home care organizations that arrange delivery of home care services. 6

7 Massachusetts PBM Requirements SB483 Would require pharmacy benefit managers (PBMs) to register with the department of insurance. Prescription Drugs HB2077 Would change prescription requirements for Schedule II and III drugs. Schedule II and III prescriptions would be valid for 90 days from the date of prescription. Ohio Outpatient Medication Reimbursement WC Regulation The Bureau of Workers Compensation (BWC) proposed changes for payment of outpatient medication by self-insured employers. For non-sterile compounded prescriptions, the product cost component should be limited to the lesser of the usual and customary price or the AWP of the commonly stocked package size minus 9% for each ingredient. The maximum product cost component reimbursement for any one compounded prescription is $ A hearing was held September 30, About Healthcare Solutions Healthcare Solutions, Inc. is the parent company of Cypress Care, Procura Management, ScripNet and Modern Medical. Through its subsidiary companies, Healthcare Solutions delivers integrated medical cost management solutions to over 800 customers in workers compensation and auto/pip markets. The company s clinical- and technology based services include pharmacy benefit management, specialty healthcare services, PPO networks, medical bill review, case management and Medicare Set-Aside services. Healthcare Solutions has twice been recognized as one of the Fastest Growing companies in Georgia by Georgia Trends magazine and has received recognition by the Technology Association of Georgia for technology innovation. Utilizing market-leading technology, Healthcare Solutions delivers demonstrated benefits and savings complemented by deep industry expertise. For more information, please visit. The information contained in this newsletter was obtained from reliable sources. However, Healthcare Solutions cannot guarantee the accuracy or completeness of the information provided. 7