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At a Glance:
Title:
11019
Date:
August 23, 2010
Status:
Medical Fees

11019

August 23, 2010

DECISION AND ORDER

This case is decided pursuant to Chapter 410 of the Texas Workers’ Compensation Act and Rules of the Division of Workers’ Compensation adopted thereunder.

ISSUES

A contested case hearing was held on August 13, 2010 to decide the following disputed issue:

Is the preponderance of the evidence contrary to the Medical Fee Dispute Resolution Findings and Decision that (Healthcare Provider), Petitioner, is not entitled to additional reimbursement in the amount of $76.72 for Clonazepam 0.5 MG TABLET-0.5 MG, Hydrocodone-APAP 7.5-500 TAB – 7.5-500, and Naprelan 375 TABLET SA-375 MG dispensed on October 22, 2008?

PARTIES PRESENT

Petitioner/Sub-Claimant appeared and was represented by PR, attorney. Respondent/Carrier appeared and was represented by BJ, attorney. Claimant did not appear.

BACKGROUND INFORMATION

(Healthcare Provider) (HCP) is a mail order pharmacy whose primary business involves filling prescriptions for patients who have suffered a work related injury. HCP does business in all 50 states.

On October 22, 2008 HCP dispensed a 20 day supply of Clonazepam 0.5 MG TABLET-0.5 MG, a 15 day supply of Hydrocodone-APAP 7.5-500 TAB – 7.5-500, and a 30 day supply of Naprelan 375 TABLET SA-375 MG to Claimant. HCP billed Carrier $320.82. Carrier reimbursed HCP $244.10. HCP then invoked the Division’s Medical Dispute Resolution system in an attempt to secure full payment for the medication dispensed to Claimant.

On May 25, 2010, the Division’s Medical Fee Dispute Resolution Officer issued a Findings and Decision that HCP failed to provide sufficient evidence to determine HCP’s usual and customary (U&C) charge for the prescriptions in question, that the lesser of the U&C charge or MAR (Maximum Allowable Reimbursement) formula amount for those prescriptions could not be determined, and that HCP was not entitled to any additional reimbursement. HCP appealed that decision to a contested case hearing.

An employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed. Texas Labor Code Section 408.021. The term "health care" includesa prescription drug, medicine, or other remedy. Section 401.011(19) (E). The Commissioner of the Division of Workers’ Compensation is directed by statute to adopt a fee schedule for pharmacy and pharmaceutical services that will provide reimbursement rates that are fair and reasonable; assure adequate access to medications and services for injured workers; and minimize costs to employees and insurance carriers. Section 408.028(f)). Insurance carriers must reimburse for pharmacy benefits and services using the fee schedule or at rates negotiated by contract. Section 408.028(g). The Commissioner has adopted reimbursement methodology to establish the maximum allowable reimbursement (MAR) for prescription drugs in Division Rule 134.503.

Rule 134.503(a) provides:

  1. (a)The maximum allowable reimbursement (MAR) for prescription drugs shall be the lesser of:
  2. The provider's usual and customary charge for the same or similar service;

    (2) The fees established by the following formulas based on the average wholesale price (AWP) determined by utilizing a nationally recognized pharmaceutical reimbursement system (e.g. Redbook, First Data Bank Services) in effect on the day the prescription drug is dispensed.

  3. (A) Generic drugs: ((AWP per unit) x (number of units) x 1.25) + $4.00 dispensing fee = MAR;

(B) Brand name drugs: ((AWP per unit) x (number of units) x 1.09) + $4.00 dispensing fee = MAR;

(C) A compounding fee of $15 per compound shall be added for compound drugs; or

  1. A negotiated or contract amount.
  2. There is no contract between HCP and Carrier applicable to the issue in dispute at this hearing.

On December 11, 2003, (Executive Director), the Executive Director of the Texas Workers’ Compensation Commission, issued Advisory 2003-21 to address the determination of a pharmacy’s U&C charge for prescription drugs. In part, the Advisory states:

The Commission’s pharmacy prescription pricing rule is based, in part, on several important provisions concerning health care provider charges. First, fee guidelines are based, in part, on a provision that payment may not be in excess of the fee charged for similar treatment of an injured individual of an equivalent standard of living and paid by that individual or by someone acting on that individual’s behalf (Texas Labor Code Section 413.011(d)). Also, “[a] health care provider commits an offense if the person knowingly charges an insurance carrier an amount greater than that normally charged for similar treatment to a payor outside the workers’ compensation system, except for mandated or negotiated charges” (Texas Labor Code §413.043(a)).

Parties requesting medical dispute resolution should ensure that they abide by the statute and rule references outlined above. The Commission’s Medical Dispute Resolution Section has indicated that parties filing a dispute have the burden of proof to support their position for advocating additional reimbursement. The burden of proof includes production of sufficient evidence to support that the reimbursement requested is in accordance with the factors listed in §413.011(b) of the Texas Workers’ Compensation Act.

MDR will consider information and documentation on “same or similar services” as specified in (Division) Rule 134.503(a)(1) to include workers’ compensation and non workers’ compensation prescriptions for same or similar number of units dispenses for the same or similar prescription (with recommended adjustments to reflect the U&C charges for the number of units dispensed for the prescription involved in the dispute).

What HCP contended is its U&C price is 178% of the drug’s AWP plus a $4.00 dispensing fee. HCP actually gets paid this price in 15 states. In the other 35 states HCP bills according to a fee guideline or formula and receives less money than its U&C charge. A small portion of HCP’s business does not involve billing carriers in workers’ compensation cases. HCP has some “pre-pay” customers who pay up front out of pocket. HCP charges them 90% of AWP for generics and AWP for name brand drugs.

HCP provided figures for the prices it charged workers’ compensation carriers for Clonazepam 0.5 MG TABLET-0.5 MG, 60 units, Hydrocodone-APAP 7.5-500 TAB – 7.5-500, 60 units, and Naprelan 375 TABLET SA-375 MG, 60 units, on October 22, 2008 in each of the 50 states and for pre-pay customers. For the Clonazepam the workers’ compensation price varied from $37.15 to $84.49, and the pre-pay price was $47.94, for the Hydrocodone the workers’ compensation price varied from $26.48 to $59.49, and the pre-pay price was $33.89, and for the Naprelan the workers’ compensation price varied from $13 to $354.00, and the pre-pay price was $199.35. There was no explanation showing why 178% was used for the alleged U&C price rather than some different percentage. It appeared HCP simply charged the most it could get in the different states for workers’ compensation and chose to call the highest price its U&C price.

HCP lost its case at the Medical Fee Dispute Resolution level because it did not provide sufficient information to support the claimed usual and customary charge. At this hearing more information was provided. Based on the evidence presented HCP’s U&C charge for the Clonazepam prescription in question on the date dispensed was $47.94, its U&C charge for the Hydrocodone prescription in question on the date dispensed was $33.89, and its U&C charge for the Naprelan prescription in question on the date dispensed was $199.35. $47.94 + $33.89 + $199.35 = $281.18. $281.18 - $244.10 = $37.08.

HCP is entitled to additional reimbursement in the amount of $37.08.

Even though all the evidence presented was not discussed, it was considered. The Findings of Fact and Conclusions of Law are based on all of the evidence presented.

FINDINGS OF FACT

  1. The parties stipulated as follows:

A.Venue is proper in the (City) Field Office of the Texas Department of Insurance, Division of Workers’ Compensation.

B.Claimant sustained a compensable injury on _____________, while employed by (Employer).

  • Carrier delivered to Sub-Claimant a single document stating the true corporate name of Carrier, and the name and street address of Carrier’s registered agent, which document was admitted into evidence as Hearing Officer’s Exhibit Number 2.
  • On October 22, 2008 HCP dispensed a 20 day supply of Clonazepam 0.5 MG TABLET-0.5 MG, a 15 day supply of Hydrocodone-APAP 7.5-500 TAB – 7.5-500, and a 30 day supply of Naprelan 375 TABLET SA-375 MG to Claimant; HCP billed Carrier $60.18 for the Clonazepam, $42.62 for the Hydrocodone, and $218.02 for the Naprelan, the formula amounts computed in accordance with Rule 134.503(a)(2)(A), total $320.82, and Carrier reimbursed HCP $244.10.
  • HCP’s U&C charge for the Clonazepam prescription in question on the date it was dispensed was $47.94, its U&C charge for the Hydrocodone prescription in question on the date it was dispensed was $33.89, and its U&C charge for the Naprelan prescription in question on the date it was dispensed was $199.35.
  • There is no contract between HCP and Carrier applicable to the issue in dispute at this hearing.
  • CONCLUSIONS OF LAW

    1. The Texas Department of Insurance, Division of Workers’ Compensation, has jurisdiction to hear this case.
    2. Venue is proper in the (City) Field Office.
    3. The preponderance of the evidence is contrary to the Medical Fee Dispute Resolution Findings and Decision that (Healthcare Provider), Petitioner, is not entitled to additional reimbursement in the amount of $76.72 for Clonazepam 0.5 MG TABLET-0.5 MG, Hydrocodone-APAP 7.5-500 TAB – 7.5-500, and Naprelan 375 TABLET SA-375 MG dispensed on October 22, 2008; Petitioner is entitled to additional reimbursement in the amount of $37.08.

    DECISION

    (Healthcare Provider) is entitled to additional reimbursement in the amount of $37.08 for Clonazepam 0.5 MG TABLET-0.5 MG, Hydrocodone-APAP 7.5-500 TAB – 7.5-500, and Naprelan 375 TABLET SA-375 MG dispensed to Claimant on October 22, 2008.

    ORDER

    Carrier is ordered to pay benefits in accordance with this decision, the Texas Workers’ Compensation Act, and the Commissioner’s Rules.

    The true corporate name of the insurance carrier is TEXAS MUTUAL INSURANCE COMPANY and the name and address of its registered agent for service of process is

    RON WRIGHT, PRESIDENT

    TEXAS MUTUAL INSURANCE COMPANY

    6210 EAST HIGHWAY 290

    AUSTIN, TEXAS 78723

    Signed this 23rd day of August, 2010.

    Thomas Hight
    Hearing Officer

    End of Document
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