Sticks and Stones and Broken Bones: The Legislative Debates over Workers Compensation Reform

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It is no secret that the workers compensation industry must continually adapt to legislative and regulatory changes. So far in 2012, significant action has occurred in the areas of physician dispensing, prescription medication abuse and policy reform. Further activity is underway in a number of legislative chambers, and a handful of states have advanced reforms that impact workers compensation payors and injured workers.

These changes are altering operations, premiums, compliance, access to quality care, patient recovery, claim duration and the ability to manage outcomes. In fact, no single area of the system has been immune from scrutiny, with state legislators taking a hard look at everything from disability benefits to the cost and delivery of pharmacy and ancillary services. Some issues have resulted in harsh divisions with even harsher words, and in some higher-profile state issues, the debates have became fierce enough to make national news.

The Road Paved in 2012

One of the year's biggest developments was the escalation of physician dispensing and its cost on the system. Physician dispensing significantly raised costs; repackaged medications that were processed out-of-network at non-contracted rates and without utilization review were three times more expensive than retail pharmacy costs. The result was an extra $700 million spent, which begs the question: Is the convenience worth the cost?

States reacted differently, with some restricting the practice, while others either limited reimbursement costs or engaged ill rigorous policy debates. In Florida, drug repackaging held the spotlight, as HB 668, sponsored by Sen. Alan Hays (R-Umatilla) and proposed to regulate pricing for repackaged drugs, generated one of the more acrimonious debates of this past legislative season. Whereas the House version, HB 511, sponsored by Rep. Matt Hudson (R-Naples), sailed through the House committees, the Senate version faced multiple unfriendly amendments and was on life support for most of the session.

Both sides claimed influence was "purchased," with presented data immediately being refuted by the opposition. As a result of this passionate political volley, other important bills became political casualties as retribution for a particular stand on the bill. In the end, the senators, besieged by wildly conflicting data, were caught in the middle of a firestorm of words. So they did the only safe thing and stuck with the status quo.

Maryland had its own mini-drama surrounding its efforts to limit reimbursement on physician-dispensed drugs. Its Workers Compensation Commission held a public hearing, accepted public comments and drafted a rule that would have put reimbursement for physician-dispensed medications on par with that received by pharmacies. Prior to official adoption, however, the commission was summoned to a legislative committee that sent a message discouraging the changes. In response to mounting objections (some of the same players that offered objections to the Florida repackaged drug legislation resurfaced as debate over the proposed Maryland rule played out), the rule was pulled. Status quo was once again the end result.

Perhaps the largest challenge faced by workers compensation payors is the management of prescription drug misuse and abuse. Narcotics account for 25%-40% of retail medication costs and total about $1.4 billion annually. With misuse and costs on the rise, creative solutions were in high demand. States explored prescription drug monitoring programs, limits on prescribing and utilization control requirements. In fact, with the exception of Missouri, all states have prescription drug monitoring programs.

In 2012, New York took big steps towards combating opioid abuse with a new program that was the first of its kind. The New York legislature passed the Internet System for Tracking Over-Prescribing Act (I-STOP), which directs the New York Department of Health to create a real-time prescription drug monitoring system. …