The American Insurance Association (AIA) submitted a statement to the Pennsylvania House Labor Committee, in support of legislation aimed at controlling costs associated with physician dispensing of medications under Pennsylvania’s Workers’ Compensation Act. H.B. 1846 would permit physician dispensing only for a five-day supply and caps reimbursement at 110 percent of Average Wholesale Price (“AWP”), the same rate generally applicable to pharmacy-dispensed drugs.
The statement notes AIA’s strong support of H.B. 1846, legislation to curb the demonstrable cost-abuse of physician dispensing of repackaged drugs. The practice of physician dispensing has mushroomed in recent years enriching physicians and drug re-packagers while adding millions of dollars to the workers’ compensation bills of Pennsylvania’s employers.
Despite decades of declining injury rates, costs are rising rapidly. Physician-dispensed medications currently account for more than one quarter of all workers’ compensation drug-related expenses, or about $1.7 billion a year. Recent research proves physician dispensing leads to higher medical costs and extended disability. According to the Workers’ Compensation Research Institute (WCRI), physician dispensing in Pennsylvania has increased markedly over the past few years. For the 2011-2012 period, WCRI found that 23 percent of all prescriptions for workers’ compensation claims in Pennsylvania were physician-dispensed, constituting 38 percent of total prescription payments.
AIA has a strong and abiding interest in the health and financial stability of the Pennsylvania workers’ compensation system. This legislation will better ensure that injured workers receive high-quality medical treatment and fair recompense for lost wages, at a price affordable to their employers. H.B. 1846 slams the brakes on this cost abuse and puts Pennsylvania’s system on an acceptable glide path.
Over the past few years, 15 states have taken steps to cap the price of physician-dispensed repackaged drugs – Alabama, Arizona, California, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Michigan, Mississippi, Oklahoma, South Carolina, and Tennessee. Furthermore, six states prohibit physician dispensing generally – Massachusetts, Montana, New York, Texas, Utah, and Wyoming.
In 2012, AIA members wrote $584,730,908 in workers’ compensation premiums in Pennsylvania, which represents 23 percent of total market share in the state.
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