Tying Work Comp to Other Systems Can Cause Chaos

Tying workers' compensation systems to other systems, which often seems logical, can cause chaos occasionally.

This is becoming evident in California where a change in how prescription drug reimbursement rates are calculated for the Medi-Cal database may cause billing problems in workers' compensation and might also require regulatory changes for consistency in how medications are reimbursed.


California Labor Code Section 9789.40 requires reimbursement rates for prescription drugs in the workers' compensation system to be 100% of the rate paid by Medi-Cal. 


The Department of Health Care Services (DHCS) maintains the Medi-Cal database, which until Sept. 28 was based on average wholesale price information provided by First DataBank. First DataBank stopped publishing average wholesale price information at the end of September because of several lawsuits in which it was accused of inflating the prices.

DHCS is changing from average wholesale price to average acquisition cost. Average acquisition cost will be based on survey data showing what pharmacies actually pay for drugs, according to the Division of Workers' Compensation (DWC).


There seems to be consensus that average acquisition cost is a better costing methodology, at least by those interviewed by WorkCompCentral in this morning's story.


But DHCS is also changing its fiscal intermediary from Hewlett-Packard to Affiliated Computer Services, and as a result, Medi-Cal pricing information has not been updated since Sept. 28, and new data will not be available until the end of October, according to the DWC.


Consequently those affected will need to review every pharmacy bill from Sept. 30 until the updated file is available, creating considerable duplicate work loads and, of course, unintended system costs.


Another interesting twist that may not have been contemplated was pointed out by Steve Cattolica, vice president of government affairs for the California Society of Industrial Medicine and Surgery (CSIMS).


Cattolica questioned in the WorkCompCentral story whether average acquisition cost accounts for the differences paid by bulk purchasers, compared to those who buy in smaller amounts which may result in reimbursement rates that are inadequate for some smaller operators. 


The Medi-Cal transition will be completed in March or February, according to DWC. In the meantime, the Medi-Cal database will continue to be based on average wholesale prices.
workers compensation