BILL ANALYSIS
AB 2593
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Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2593 (Bradford) - As Introduced: February 19, 2010
SUBJECT : Workers' compensation: pharmacy fee schedule
SUMMARY : De-links the pharmacy reimbursement rates in the
workers' compensation system from the MediCal fee schedule.
Specifically, this bill :
1)Specifies that the reimbursement for pharmacy services in the
workers' compensation system shall be the lowest of the
average wholesale price (AWP) minus 17%, the federal upper
limit, or the maximum allowable ingredient costs (MAIC).
2)Provides that, in addition to the reimbursement rate specified
above, there shall be a professional fee for dispensing the
medications (dispensing fee) of at least $7.25 per
prescription.
3)Provides that the "federal upper limit" and the MAIC shall
have the same meaning as in specified provisions of the
MediCal law.
EXISTING LAW :
1)Provides for a comprehensive system of workers' compensation
benefits for workers injured on the job. These benefits
include temporary and permanent disability payments, death
benefits for dependents, and medical care services, including
pharmacy services.
2)Provides that medical services provided to injured workers are
subject to an official medical fee schedule (OMFS) adopted by
the Administrative Director (AD) of the Division of Workers'
Compensation.
3)Specifies, with respect to pharmacy services, that absent
adoption of a different reimbursement schedule by the AD, that
reimbursement for pharmacy services shall be based on the
MediCal payment system.
FISCAL EFFECT : Undetermined.
AB 2593
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COMMENTS :
1)Purpose . According to the author, the bill has two purposes.
Initially, the bill aims to "de-link" the workers'
compensation pharmacy reimbursement rates from the MediCal
system because the state's budgetary problems have in the
past, and may again, force cuts to MediCal rates that have
nothing to do with a reasonable reimbursement rate for
workers' compensation pharmacy services. In addition, the
author notes that, due to litigation, the primary source for
determining AWP is being eliminated, so the time is right to
address the link between MediCal and workers' compensation
pharmacy reimbursement rates.
2)Support . The sponsor of the bill, CompPharma, an association
of pharmaceutical benefit managers (PBMs) that provide
services to workers' compensation pharmacy providers,
insurers, and employers, argues that the bill would stabilize
the reimbursement rates paid for pharmacy services in the
workers' compensation system. Stability would enable its
members to better invest in cost saving technologies.
CompPharma cites 3 problems with existing law: 1) linking the
reimbursement rate to the MediCal rate inappropriately ties
the workers' compensation pricing to the state budget process;
2) workers' compensation and MediCal are very different
systems and patient populations, and; 3) reducing the "per
pill" cost does not address the real cost driver in workers'
compensation pharmacy services, which is the in appropriate
utilization of medications. CompPharma members provide cost
saving utilization controls. Other PBMs make similar
cost-control arguments.
3)Opposition . Opponents, a diverse group including employers,
insurers, labor and self-insured entities, argue that there is
no access problem for pharmaceuticals in the workers'
compensation system, and therefore there is no basis to be
concerned about a link to the MediCal fee schedule. In the
event something changes with respect to the MediCal rate that
adversely affects the workers compensation market, measures
can be taken to address specific problems. The bill
anticipates that there may be an issue, and the opponents
object to addressing this potential before it actually
materializes. In particular, the California Labor Federation
AB 2593
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notes that when the fee schedule was adopted, pharmaceutical
companies asserted that it would be so disruptive in the
market that availability problems would arise. That fear, it
has turned out, was not well-founded.
The Association of California Insurance Companies (ACIC) is
opposed unless the bill is amended. The two issues ACIC cites
are: 1) adoption of a prohibition against using compounding of
medications as a way around the fee schedule, and 2) a
requirement that third-party billers use pre-negotiated
billing rates where a "below schedule" contract is in place.
REGISTERED SUPPORT / OPPOSITION :
Support
CompPharma
Express Scripts, Inc.
Opposition
California Labor Federation, AFL-CIO
California Manufacturers and Technology Association
Insurance Brokers and Agents of the West
Liberty Mutual Insurance Company
CSAC Excess Insurance Authority
California Coalition on Workers' Compensation
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086