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Insurance legislators reintroduce physician dispensing model law

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The National Council of Insurance Legislators’ latest model law on pharmaceutical reimbursement in workers compensation is a reintroduction of a 2013 model law that represents a new push to help educate more state lawmakers on the importance of reining in drug costs for injured workers, according to the organization’s leader.

The model law aims to re-establish clear guidelines for doctors when it comes to reimbursement and distribution of drugs to help reduce workers compensation insurance costs, according to a draft of the Workers Compensation Pharmaceutical Reimbursement Rates Model Act included in NCOIL’s spring meeting agenda, set for March 2-4 in Atlanta.

It zeros in on physician dispensing and drug compounding in workers compensation — issues states are grappling with, NCOIL CEO Tom Considine told Business Insurance from his office in Manasquan, New Jersey.

“We believe this is a hidden accelerator in health costs,” he said, echoing the sentiments of many in comp circles who believe physicians dispensing drugs can raise costs significantly. 

A former banking and insurance commissioner for New Jersey, Mr. Considine said the latest push is the result of Pennsylvania’s passage of a law in 2014 that limited what physicians can charge when dispensing drugs and what kinds of drugs they can dispense, among other changes. The chairwoman of NCOIL’s workers compensation committee, Republican Pennsylvania state Rep. Marguerite Quinn, sponsored H.B. 1846, which introduced physician prescribing rules, during the 2013-14 session of the Pennsylvania House of Representatives. She could not be reached for comment.

NCOIL’s model law aims to get more states on board with change, Mr. Considine said, adding that NCOIL is now in the process of tallying which states enacted laws based on the organization’s 2013 adopted model law on the practice of physician dispensing.

Twenty-two states have limits on physician dispensing practices, according to data gathered in early 2017 by Matrix Healthcare Services Inc., then doing business as MyMatrixx and recently acquired by Express Scripts Holding Co.

Some states limit the distribution of drugs by physicians by allowing samples only, while others limit types of drugs and how long they can be distributed by their doctor.

A spokeswoman for the Washington-based National Association of Insurance Commissioners told Business Insurance that model laws can be effective in inspiring change.

“Model laws and regulations are an important part of the national system of state-based insurance regulation,” the spokeswoman said. “Model laws help address areas where uniformity and consistency across state borders are beneficial to consumers, regulators and insurers.”

Mr. Considine said more states have indicated interest in physician dispensing thanks to more involvement by lawmakers.

“We believe there are more active legislators involved now, (and) they will be more inclined to pass legislation in their states,” he said.

One component of NCOIL’s model law would permit an employer, its workers comp insurer or its designated third-party administrator, under certain conditions, to restrict reimbursement for pharmaceutical products to a directed network of preferred pharmaceutical providers.

The act also limits physician-distributed drugs to no more than a first fill within seven days from the date of injury, according to the draft. The act will also limit compound medications, requiring a “critical evaluation, physician documented medical necessity or utilization review of compounded pharmaceutical products prescribed for patients,” according to the draft.