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Insurer must pay pharmacy wholesale price for compound cream


An insurer is required to pay a pharmacy for a compound cream dispensed to a workers compensation claimant based on a nationally recognized fee schedule, the Pennsylvania Commonwealth Court held Tuesday.

In Indemnity Insurance Co. of North America v. Bureau of Workers Compensation Fee Review Hearing Office, the court held that the insurer failed to show that the price of the cream was calculated using a “fictitious” number.

In 2013, a worker sustained an injury to her back and was prescribed a compound medical cream consisting of gabapentin, flurbiprofen, ketamine, cyclobenzaprine, Lidoderm and bupivacaine to treat her injury. The pharmacy billed Indemnity Insurance Co. of North America $7,255 for the cream, and the insurer’s third-party administer reduced the invoice by 95%, arguing that the charges exceeded the guidelines set forth under Pennsylvania workers compensation law. Indemnity paid $305 on the pharmacy’s invoice.

The pharmacy filed an application for fee review and the Bureau of Workers Compensation Fee Review Hearing Office ordered the insurer to pay an additional $6,336 plus interest, on the basis that reimbursement for all unlisted or unclassified drugs under state workers comp law will be based on 110% of the average wholesale price.

Indemnity appealed, arguing that the hearing office erred when it based its price based on a nationally recognized schedule of average wholesale pharmaceutical prices — calling it a fictitious number — but the hearing office affirmed the decision.

Indemnity appealed, but the Commonwealth Court affirmed the hearing office’s decision. The court held that Indemnity’s experts presented no evidence to support their proposed “correct” unit prices of the various drugs in the cream, nor any evidence that the average wholesale price was “fictitious.”

The court also dismissed Indemnity’s assertion that the bureau’s regulation “improperly connects the amount of medical compensation owed to an (average wholesale price) set by private companies,” noting that the law allows the bureau to use information from any nationally recognized schedule of prices compiled from the marketplace.





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