Myths and Misinformation About Drug Payments in PA Comp

Myths & Misinformation About Drug Payments?

In Pennsylvania Workers’ Compensation Cases

Determining how much to pay for a prescription medication under Pennsylvania workers’ compensation is not easy.? Unlike most states, PA has no formulary, no list of specific prices, and no obvious pricing schedule upon which to rely.? Although the law recently changed, most payers are simply paying for drugs the same way that they did years ago.? Worse still, If an employer tries to find out how much to pay based on the new law and asks its PBM, TPA, insurer, re-pricer, or defense attorney, it may get inaccurate or outdated information. ??Answers and advice are often based on myths ?or outdated practices, resulting in the loss of hundreds of millions of dollars each year. ?This article attempts to correct some common misunderstandings about drug bills and payments in PA comp.

Myths & Misunderstandings:

1.??????? You have to pay for drugs at 110% of Red Book AWP (average wholesale price).? This is no longer true.? In the Federated case, the Bureau’s reliance on Red Book AWP was found to be unlawful.? Although an appeal is pending, a request for a stay of the Federated decision was denied by the PA Supreme Court.? As of now, Red Book AWP is no longer usable as the Bureau designated pricing schedule.?

2.??????? Compounded pain creams are the root of the problem.? This is no longer true.? Years ago, the compounded pain cream racket involved doctors prescribing unapproved concoctions that carried prices of up to $10,000 a month.? Due to public pressure, media attention, industry push-back and prosecutions, compounded pain creams have virtually evaporated from the comp scene.??

3.??????? Drug prices are not a big problem in PA comp.? This is not true.? PA is now No. 1 in the nation in the average price paid in comp for prescription medications.? Up to 50% of all open comp cases involve drug payments, and drug bills significantly increase total case exposure, ?lump sum settlements, and Medicare set-aside amounts.

4.??????? Drug overpricing doesn’t amount to much money per claim.? This is not true.? Some companies are paying over $10,000 per month for common generic drugs which, if paid for by Medicare or private health insurance, would cost less than $500 per month.? ?On average, drug bills in PA are inflated by 300% versus normal charges.??

5.??????? If a doctor writes a prescription for a drug and it is filled by a pharmacy, it has to be paid as a prescription drug.? This is not true and the cause of enormous drug overpayments.? About 20% of all bills from out-of-network pharmacies are for over-the-counter drugs camouflaged to look like specialty prescription products.? For many such products, the over-the-counter price is under $20, but comp payers are charged over $1000 for the exact same drug or formulation.?

6.??????? If the employer has a PBM, and the worker uses an out-of-network pharmacy, you can deny payment. ??This is not true.? In most cases, PA employers are powerless to compel a worker to use an in-network pharmacy. ?Doctors or lawyers can steer claimants to out-of-state “workers’ comp” pharmacies that often charge up to 10 times more for drugs than do chain retail pharmacies.

7.??????? If you use a PBM, you have no problem because you are already getting deep discounts on drugs.? Not true.? Most PBMs still use a pricing model based on discounting the Red Book AWP.? The Red Book AWP is so inflated and unrealistic that even an 80% discount against Red Book AWP can result in payments 5 times ?higher than normal retail prices.? ?Discounts taken against fake and engorged Red Book AWPs are illusory.?

8.??????? Your PBM will protect you from overcharges by out-of-network pharmacies.? This is usually not true.? PBMs can negotiate prices and discounts with pharmacies with whom they have contracts, but most have no real power to negotiate or reduce prices for drugs from out-of-network pharmacies.? The PBM might get token or courtesy discounts, but still pass on a bill to the ultimate payer for up to 15 times more than actual average wholesale price.?

9.??????? There is nothing you can do to reduce payments for high-priced drugs without costly litigation.? This is not true.? PA gives the payer the right to reduce payments unilaterally without litigation and without a lawyer by simply paying the amount that the payer believes is due and issuing an Explanation of Benefits.? If the pharmacy disagrees, it can file for Fee Review.? ?There are at least 7 bases for issuing an EOB challenging drug prices ranging from reliance on the banned Red Book prices to suspected financial arrangements between the prescribing doctor and the pharmacy or its biller.

10.? You can’t reprice drug bills based on a pricing schedule other than Red Book.? This is not true.? The Bureau’s designation of Red Book was banned by the courts, but the Bureau has not yet designated a replacement resource.? Until and unless the legislature, the Bureau, or the Supreme Court acts, employers and insurers can consider paying based on another pricing schedule that meets the parameters outlined by Federated (nationally published and accurate averages of amounts actually paid by pharmacies at wholesale), and such schedules are already in use in federal programs and are available for free online.?

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Cliff Goldstein, Esq., formerly the CEO and a Senior Litigator at Chartwell Law, has 35 years of experience in litigating complex workers' compensation cases.? He now concentrates solely on addressing excessive pricing, fraudulent practices, abuse, and waste regarding drugs used in workers' compensation cases.? He can be reached at 215 588 4901 and [email protected]

This article does not provide legal advice.? All cases are unique and if appropriate, should be discussed with an attorney of the client’s choosing.? This article is intended only to stimulate discussion, and its contents are not a substitute for independent research and legal consultation before taking or refraining from any action.? This article is merely an expression of opinions of the author.? This article does not create or imply an attorney client relationship.? Do not take or refrain from taking any action based on this article and be sure to consult with an attorney of your choice about the risks of taking or refraining from any actions.? The prices and other numbers in this article are examples taken from websites at the time the article was written. Actual prices and other data will be different and change frequently, and the figures presented are only examples.? Not all PBMs work under the same standards, formulae, and terms, and PBM? contracts vary.? Prices for drugs should be examined based on the type of drug, NDC number, provider, billing entity, prescriber, NADAC or other schedules, and other factors, and payments should be made in accordance with the then-current law.? The law in this area is in a state of flux with cases pending appeal.?? Some drugs do not have NADACs.? Some drug bills to comp payors are for non-prescription medications, raising a series of additional issues to address.? No particular pharmacy, PBM, billing company, or doctor? is accused herein of any wrongdoing.? Not all out of network or workers’ compensation pharmacies use the same pricing standards or models and there is great variation in prices and terms between companies and among types of drugs.? Some workers’ compensation and some out of network pharmacies charge significantly less than the example cited in this article, and some do participate in price negotiations via PBMs.? This article is based on a small sample of limited data that may not be representative of the industry as a whole.? This article does not represent the opinions of any company or law firm and is the copyrighted property of the author.? It may not be reproduced in whole or in part without the permission of the author.? Cliff Goldstein is licensed to practice law in Pennsylvania and maintains an office in Merion Station, PA.? For more information, please contact Cliff Goldstein at [email protected] .?

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