UR Nation End of Month Regulatory News Summary

| | Evidence Based Medicine, Technology & Integration, Utilization Review

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As the month draws to a close, here are some of the more significant regulatory stories from August.

DEA Announces New Marijuana Policy

For some time, many people thought the Drug Enforcement Administration (DEA) would reschedule marijuana from Schedule I to Schedule II or III. This would make it more readily available for scientific testing. For example, opium is a Schedule II controlled substance, which means it’s illegal to possess or use but can be studied in a registered lab environment.

Instead of rescheduling marijuana, the Controlled Substances Act (CSA) will allow more entities to grow it. The idea is to bring more supply online for legitimate research in the United States.

For the past 50 years the US has relied on a single grower to produce marijuana used in research. And the bulk of that research was federally funded research. However, in recent years, there has been greater public interest in expanding marijuana-related research, particularly with regard to certain chemical constituents in plant known as cannabinoids. There are over 100 different cannabinoids that have been discovered in marijuana plants. For example, a cannabinoid called CBD has received heightened attention in recent years because of its use in treating seizures and other neurological disorders.

The new DEA policy will allow potential marijuana growers to apply for DEA registration. The DEA expects increases in the availability of marijuana for both federally and privately funded scientific research. Private researchers will become “DEA-registered researchers,” allowing them to study marijuana as if it were a Schedule II drug, without the DEA having to reschedule marijuana to Schedule II. Should the state of scientific knowledge advance such that marijuana-derived drugs are shown to be safe and effective for medical use, pharmaceutical firms will have a legal means of producing such drugs in the United States.

CA DWC Issues New Draft Formulary Regulations for Public Comment

On Friday August 26th the CA DWC released new formulary draft regulations for public comment. The formulary will take effect for new prescriptions dispensed on or after July 1, 2017, regardless of the date of injury. For legacy claims in which an injured worker is already receiving drug treatment, the formulary will be phased in, and the physician shall prepare a treatment plan to transition the worker to a preferred drug or submit an RFA for utilization review. Where an employer or insurer contracts with a pharmacy benefits manager (PBM), the drugs available must be consistent with MTUS guidelines and the MTUS Drug Formulary.

The forumlary draft regulations include several other interesting provisions. For example, any off label use must be in accordance with MTUS Guidelines and MTUS Drug Formulary. Access to drugs not on the preferred drug list will be allowed if FDA approved and shown by a preponderance of scientific evidence that a variance from guidelines is required. If a physician prescribes a brand name instead of a generic drug, the physician must document the medical necessity for the brand name. Except for “first fills,” drugs dispensed by a physician (physician dispensing) must be authorized through prospective review, or payment may be denied.

Many system participants have complained about the increasing costs of compounded drugs. The new regulations tackle that issue as well. Compound drugs must be authorized through prospective review prior to being dispensed and must include patient specific factors. Looking at the MTUS Preferred Drug List we can see that it is set forth by active ingredient. Drugs prescribed post accident as “first fill” will not require prior authorization but shall be covered for limited circumstances and short dosages. MPNs may allow longer “first fill” time frames. The administrative director will also create an independent Pharmacy & Therapeutics Committee to review and consult on safety and efficacy for purposes of updating the MTUS Drug List.

CA DWC Plans To Adopt New MTUS Guidelines

In an effort to harmonize the new Draft Formulary Regulations with the CA MTUS, CA DWC is updating MTUS as well. The idea is to concurrently adopt updated MTUS clinical topical guidelines created by ACOEM including the latest treatment guidelines for Ankle and Foot, Cervical and Thoracic Spine, Elbow Disorders, Eye, Hand Wrist, and Forearm, Hip and Groin, Knee Disorders, Low Back Disorders, and Shoulder Disorders. It appears from the draft regulations that both the new draft formulary regulations as well as the new MTUS guidelines take effect on July 1, 2017. You may recall that this is a result of AB 1124, which passed in 2015 and gave California its first workers’ comp drug formulary.

Report by FAIR Health Shows Opioid Dependence Soars Among Privately Insured

A national nonprofit organization, FAIR Health, has produced a report that analyzes opioid use among the privately insured. It opioid dependence increased 32 percent from 2007 to 2014. In its research, FAIR Health analyzed its database of more than 20 billion privately billed health care claims to see if there was a diagnosis of opioid dependence. The study found that opioid dependence was more common in men aged 19 to 35 years old, but the difference narrowed in patients 46 to 55. The less severe the opioid abuse, where users experience unsuccessful attempts to quit, was more common in women.

The report is interesting because it shows that opioid dependence and abuse is not just a workers’ comp problem. Further, among new users of heroin, approximately 75 percent report that they started using the drug after first abusing prescription opioids. And unlike earlier heroin epidemics, the demographic group most affected is not inner-city minorities, but white, middle class people in non-urban settings.

WCIRB Annual Report Shows CA CT Claims Frequency a Real Cost Driver

A new report by WCIRB shows that even though California has seen lower workers’ comp premiums, certain costs continue to exacerbate the highest-in-the-nation work comp rates. These include cumulative trauma (CT) claims in the Los Angeles Basin area.

Specifically, the Los Angeles Basin continued to show higher frequency of claims. For example, for 2014, the report shows a 3.4 percent increase. This is in contrast to areas outside of California, which saw a 3.7 percent decline in the number of claims in 2014. Also, in the Los Angeles Basin (defined as Los Angeles, Orange, Riverside, San Bernardino and Ventura counties), a surprising 14.9 percent of all claims filed in 2014 were CT claims. This compares with just 7.7 percent elsewhere in the state.

TX Claimants’ Attorneys to get Fee Hike to $200 Per hour

The Texas Department of Insurance, Division of Workers’ Comp, has announced its proposed rules so claimants’ attorneys will get their first pay raise in 25 years. The proposed rules would boost maximum hourly fees to $200 per hour, with a maximum amount that can be billed per case at $4,200. This represents an increase of $1,350 as the current maximum an attorney can make on a work comp case is $2,850. A study by the TX DWC said the proposed change will add $20 million in annual costs. Another factor is the fact that a claimant attorney may not exceed 25% of what the claimant recovers. This often makes the hourly rate irrelevant.

WCIRB Files for 2.6% Reduction in Pure Premium Rate

The WCIRB has settled on an advisory pure premium rate of $2.26 per $100 of payroll. This advisory rate, which may or may not be adopted by the California Department of Insurance, is for Jan. 1, 2017. This amount is 2.6 percent less than the rate approved by the California Department of Insurance of $2.32 back in July. California employers should find this as welcome news.

If approved by the CA Department of Insurance, this would be the fourth consecutive reduction in the pure premium rate since January 2015. In approved, the pure premium rate will have fallen 18.6 percent over that time. The WCIRB is scheduled to file the advisory rate with the CA Department of Insurance on Aug. 19. After that, a public hearing will be held to take comments from system participants. Then, the new rate may be approved.

Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.