(September 1, 2011) Two California Chamber of Commerce-supported bills that will help lower workers’ compensation costs await action in the Senate.
- AB 378 (Solorio; D-Anaheim) lowers pharmaceutical costs.
- AB 335 (Solorio; D-Anaheim) lowers frictional costs in the workers’ compensation system.
AB 378 lowers workers’ compensation costs by removing incentives for physicians to refer patients to pharmacies in which the physician or physician’s family has a financial interest, and establishes a temporary fee schedule to reimburse for compound drugs until the workers’ compensation administrative director can establish a formal one.
Compound medication in the workers’ compensation system has been used primarily to assist injured workers who could not manage medication in its standard formulation.
In the last several years, however, there has been a sharp increase in usage and costs of compound drugs. Payments for compound drugs, medical foods, and co-packs grew from 2.3% to 12% of total medication expenses between 2006 and 2009, according to a 2010 report issued by the California Workers’ Compensation Institute (CWCI).
The CWCI report also found that from 2006–2009 these three types of “medications” also accounted for a disproportionate amount of total medication payments. Compound drugs, co-packs and medical foods accounted for 3.9% of total prescriptions, but 10.1% of total payments for medications.
Because compound medications are specialty products designed specifically for individual patients, they are not covered by the Medi-Cal fee schedule, even though most or nearly all of the active components of the compound are on the fee schedule. This creates an opportunity for some pharmacists and physicians to prescribe and charge fees beyond what would be allowed for pharmaceutical treatments within the fee schedule. Cost pressures are added to the workers’ comp system, which in turn leads to higher costs for insurers and higher premiums for employers.
The CalChamber believes AB 378 is a good start at establishing guidelines to the dispensing of compound drugs and under what circumstances they would be covered, and how much.
Specifically, AB 378 removes the financial incentives for physicians to prescribe compound drugs by adding pharmacy goods to a list of medical goods and services for which it is unlawful for a physician to refer patients if the doctor has a financial stake in the pharmacy. This ensures that the physician solely has the patient’s well being in mind when prescribing compound drugs.
AB 335 brings an estimated savings of $42 million to the workers’ compensation system by requiring the workers’ compensation administrative director to work with the Commission on Health and Safety and Workers’ Compensation to develop regulations regarding notices to injured workers.
The bill requires the administrative director and commission to develop and make accessible a booklet written in plain language about the workers’ comp claims process.
AB 335 also streamlines and simplifies other notices to employees.
The CalChamber believes AB 335 will create better outcomes for injured workers by providing them with more digestible information at key points in the claims process. This information flow should lead to a reduction in frictional legal expenses that result from confusion and poor communication.
The CalChamber is encouraging members to contact their senators and ask them to support AB 378 and AB 335.