The Physician Dispensing Quandary: How to Control Costs and Ensure Medications Are Medically Appropriate in Workers’ Comp

In August, the Florida Division of Workers’ Compensation (DWC) released plans to rescind a 2020 bulletin that conveyed workers’ compensation payers had to cover the costs of physician-dispensed drugs without limitations.

Physician dispensing — when doctors prescribe and dispense a medication directly to patients from their office — is a common practice that many states have placed limitations on in the past to ensure the safety of injured workers. It bypasses the Pharmacy Benefit Management (PBM) systems put in place by many employers for the oversight of safety and affordability of the drugs prescribed.

Alan Rook, senior clinical account executive at myMatrixx, said, “Our data suggests physician dispensers are charging Florida employers nearly three times more on average for a drug dispensed by a doctor’s office compared to states that have restrictions in place.”

Alan Rook, Senior Clinical Account Executive, myMatrixx

Florida’s current policy places most of the burden on the employer or its insurance representative to challenge a drug being dispensed by the doctor’s office. The state provides no relief in the form of utilization management mandates, such as duration of use or days’ supply. “This omission has allowed costs to run out of control and un-challenged leading to employers’ budgets blowing up,” Rook said.

The Florida DWC will host a workshop on November 1 to listen to stakeholders’ concerns and recommendations to correct existing policy.

Right now, Florida is without regulations that are found in many other states that help ensure the safety of physician dispensed drugs and help carriers manage costs. Physician dispensing poses a number of clinical and financial risks to workers’ comp stakeholders. Without pharmacist oversight, an injured worker may risk taking a drug that interacts negatively with their other medications.

“There are states that limit the days’ supply and/or time frame from date of injury wherein a physician can dispense and charge for a medication dispensed from their office. The Florida workers’ compensation regulations do not have these restriction or limitations at this time,” said Kim Ehrlich, vice president of regulatory compliance at myMatrixx.

What Is Physician Dispensing? How Is It Regulated?

Kim Ehrlich, Vice President of Regulatory Compliance, myMatrixx

Historically, physician dispensing was utilized for patients who may need only a small supply of a medication or who live in rural areas and may not have access to a local pharmacy. The practice was never meant to replace pharmacies, especially when a patient may be taking a drug for longer periods.

Each state has different laws regarding physician dispensing and a few states ban it outright. Some states limit the supply of drugs that can be dispensed through a physician’s office, while others only allow physicians to administer injectable drugs in their office and bill separately or only allow the practice of physician dispensing in emergencies.

“The physician dispensing regulations differ from one state to another,” Ehrlich said.

Challenges with Physician Dispensing in Workers’ Comp

When the practice isn’t regulated, physician dispensing can pose a number of clinical risks to workers’ comp patients. The biggest risk associated with physician dispensing is the lack of pharmacist oversight. Providers who treat workers’ comp patients for a particular issue, for example pain caused after a broken arm, are likely not the patient’s primary care physician.

These doctors may be relying on a patient’s account of what they’re taking and could prescribe them a medication without knowing that it may interact negatively with a drug the patient did not report. A pharmacist, on the other hand, would have a detailed record of the prescriptions on file for a given patient.

The importance of utilization management in workers’ comp is imperative. According to the Center for Disease Control (CDC), during May 2020-April 2021, the estimated number of drug overdose deaths in the U.S. exceeded 100,000 over a 12-month period for the first time, with 64% of deaths involving synthetic opioids other than methadone.

“There’s no oversight for that patient to make sure they’re being prescribed medications that are appropriate for them based on their age, their gender and other drugs that they’re taking,” Rook said. “With physician dispensing, the whole oversight process to ensure safety is being taken away.”

Hand-in-hand with these clinical risks are the financial risks for carriers. Within workers’ comp, physicians may dispense drugs at higher prices than they would for group health patients. Physicians often dispense repackaged drugs with average wholesale prices that are higher than those from the original manufacturer, WCRI reports.

“Outside of a workers’ comp or liability claim, when a patient goes to a physician’s office, any medication received there is typically a sample. It’s generally something to take home for a short duration or just to get started before you get your medications from the pharmacy,” Rook said.

How the States Can Help Address Physician Dispensing Challenges

Since physician dispensing is currently outside of the PBM pharmacy network, the physician-dispensed medication is adjudicated retrospectively. This means the patient already has the medication, making it much harder to affect change in therapy when the patient is already taking the medication.

“We perform physician outreach to the doctors alerting them that we would like them to go through the pharmacy benefit management processes to ensure proper oversight with regards to safety,” Rook said.

Ehrlich also pointed to well-tested solutions like utilization review and state mandated drug formularies to help keep costs down and to protect injured workers.

“The goal isn’t to get rid of physician dispensing in Florida, but to focus on the safety of injured workers while also addressing inefficiencies within the system and processes,” Ehrlich said. “It’s vital for carriers, TPAs and employers to share what’s occurring with patients when it comes to the safety of injured workers.”

All tools available to PBMs are retrospective concerning physician dispensing. Therefore, in order for real change to occur, the state has to modify or change the policy, which will provide better guidance to employers and their representatives and is enforceable. This is why the November workshop is important for stakeholders to attend and share their concerns and recommendations with the state if change is desired.

To learn more, visit https://www.mymatrixx.com/pbm-solutions.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with myMatrixx. The editorial staff of Risk & Insurance had no role in its preparation.