UR Nation End of Month Regulatory News Summary

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As January draws to a close, here’s a summary of some of the more interesting news stories.

CA Court of Appeal Opened the Door to Civil Liability for UR Physicians?

In King v. CompPartners, Kirk King had sustained a back injury in 2008. In 2011 King suffered from depression and was prescribed the psychotropic Klonopin. In 2013 CompPartners conducted utilization review (UR) to determine if the Klonopin was still medically necessary. Dr. Sharma, an anesthesiologist, reviewed King’s records and determined Klonopin was not medically necessary. After King stopped taking the Klonopin he suffered four seizures and sustained additional injuries.

King sued Dr. Sharma in Superior Court for negligence, malpractice and other similar causes of action. The court sustained a demurrer without leave to amend. This terminated the case at the trial level. The Superior Court stated that King’s claims were preempted by the Workers’ Compensation Act. In other words, King could not sue Dr. Sharma for other things, such as negligence, malpractice, etc., because a UR is part of the workers’ comp process governed by LC Sec. 4610. King filed an appeal.

The Court of Appeal agreed with the Superior Court that the demurrer should have been sustained. However, the Court of Appeal ruled that King should have been given an opportunity to amend the complaint. The Court of Appeal stated that while Dr. Sharma’s determination was clearly within the scope of the Workers’ Compensation Act (thus preempted) King could possibly state a cause of action over Dr. Sharma’s failure to warn about the abrupt stop of Klonopin rather than a gradual withdrawal.

This case is causing many UR agents to look closely at the language in their letters to providers and injured workers. It is generally advised that all letters that modify or deny drug treatment requests have language that warns that immediate cessation of the drug not occur unless medically safe to do so.

CMS to Launch Bundled Payments Pilot Program for Hip and Knee Replacements

Starting April 1, Centers for Medicare and Medicaid Services (CMS) will require more than 800 hospitals to accept bundled payments for hip and knee replacements as part of a pilot program.

Under the CMS plan, hospitals will coordinate an “episode of care” that starts with the patient’s admission to the hospital and ends 90 days after discharge. The idea is to streamline care. CMS wants to eliminate treatment from multiple providers that often have conflicting instructions that result in medical complications and unnecessary expenses.

The initiative is known as Comprehensive Care for Joint Replacement. Some industry stakeholders believe bundling payments deserves a closer look for workers’ compensation.

Payers See Steep Drug Price Increases in 2016

The price of Lyrica, a commonly used pain medication in workers’ compensation, shot up 9.4 percent on New Year’s Day. This drug, and more than 100 other Pfizer drugs, got hefty price increases.

“What it comes down to is they’ve raised prices because they can,” said Joe Paduda of Managed Care Matters

Workers’ comp payers are feeling the squeeze as the price of branded and generic medications continues to climb. The average wholesale price for branded medications increased 12.5 percent in 2014 and 13.3 percent in 2013. Generics, which stayed relatively flat from 2010 to 2013, suddenly shot up by 10 percent in 2014.

Express Scripts Sued by 6 Compounding Pharmacies

Six compounding pharmacies have sued Express Scripts in federal court. The pharmacies allege that Express Scripts created obstacles to reimbursement, conducted bad faith pharmacy audits, and restricted or eliminated mail-order delivery of compounds. The lawsuit also accuses Express Scripts of conspiring with other pharmacy benefit managers (PBMs) to limit competition in violation of anti-trust laws.

Express Scripts has yet to file their answer, motion to strike, demurrer or other responsive pleading. However, a spokesman for the company stated, “We continue to work on behalf of our clients to reduce any wasteful spending on compounding drugs and ensure patient access to cost-effective and clinically effective medications.” Express Scripts has also said “We will vigorously defend ourselves.”

According to the allegations in the lawsuit, Express Scripts is the largest PBM in the country. It fills more than 1.4 billion prescriptions per year for 86 million patients. It also provides PBM services to government health and workers’ comp insurers. It reported $2.05 billion in revenue in the first nine months of 2015.

Nebraska to Try Again in 2016 to Create a Drug Formulary

Last year, Nebraska Legislative Bill 429 failed. It was a drug formulary bill based on Official Disability Guidelines (ODG). But 429 was vigorously opposed by providers, applicant attorneys and labor unions. Their argument at the time was that Nebraska had relatively stable workers’ comp costs, so the bill was not needed.

The new bill, again spearheaded by Bob Hallstrom, will have a much more narrow scope. Hallstrom said it will consist of Schedule II through Schedule IV drugs in order to address opioid issues.

Hallstrom, a lobbyist for Nebraskans for Workers’Compensation Equity & Fairness, said that despite relatively stable workers’ comp costs, Nebraska can reap substantial cost savings with a drug formulary.

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.