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 September 22, 2010 to decide the following disputed issue:
In Docket No. (Sequence 09):
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 $49.90 for Alprazolam 1 MG tablet – 1 MG dispensed to Claimant on August 8, 2008, $46.04 for Hydrocodone-APAP 10/500 dispensed to Claimant on August 19, 2008 and $72.60 for Fentanyl 25 MCG/HR patch – 25/1h dispensed to Claimant on August 27, 2008?
In Docket No. (Sequence 10):
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 $49.90 for Alprazolam 1 MG tablet – 1 MG dispensed to Claimant on September 2, 2008?
PARTIES PRESENT
Petitioner appeared, by telephone, and was represented by JB, attorney.
Respondent appeared and was represented by BJ, attorney.
Claimant did not appear and his attendance was excused.
BACKGROUND INFORMATION
The Claimant sustained a compensable injury on _______________ and the medications for which additional reimbursement is sought were dispensed as part of the medical care for the compensable injury. Petitioner, (Healthcare Provider) (HCP), dispensed a 30-day supply of Alprazolam 1 MG tablet to the Claimant on August 8, 2008, a 30-day supply of Hydrocodone APAP 10/500 to the Claimant on August 19, 2008 and a 30-day supply of Fentanyl 25 MCG/HR patch to the Claimant on August 27, 2008. HCP billed Respondent (Carrier) $429.61 for these medications. HCP dispensed a 30-day supply of Alprazolam 1 MG tablet to the Claimant on September 2, 2008. HCP billed Carrier $10 for this service. Carrier rejected the prices charged by HCP, estimated that $261.07 was a reasonable cost for the medications dispensed in August 2008 and that $77.60 was a reasonable cost for the prescription dispensed to Claimant on September 2, 2008. Carrier tendered that payment to HCP. HCP then invoked the Division’s Medical Dispute Resolution system in an attempt to secure what it considered to be full payment for the prescription drugs dispensed to Claimant.
In decisions dated May 25, 2010 and May 26, 2010, the Division’s Medical Fee Dispute Resolution (MFDR) Officer determined that HCP had failed to provide sufficient evidence to determine HCP’s U&C (usual and customary) charge for the Alprazolam, Hydrocodone and Fentanyl patch dispensed to Claimant, that the lesser of the U&C charge or MAR (Maximum Allowable Reimbursement) as calculated using the formula set forth in Division Rule 134.503 could not be determined, and that HCP was not entitled to any additional reimbursement. HCP appealed that decision to a contested case hearing.
DT, HCP’s reimbursement manager, testified that HCP is a mail-order pharmacy, licensed to dispense prescription medications in all 50 states, that specializes in providing prescription medication to workers’ compensation claimants. HCP also has customers whose cases arise outside the workers’ compensation arena, including a small percentage of customers who “pre-pay” their prescriptions at a discounted rate. The pre-pay customers pay up front for their medications as opposed to having an invoice submitted to an insurance carrier. DT testified that non-prepay customers outside the workers’ compensation system are charged the same rates that are charged in workers’ compensation cases, but pre-pay customers pay the discounted rate (AWP-10%).
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 §408.021). The term “health care” includesa prescription drug, medicine, or other remedy. (Texas Labor Code §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. (Texas Labor Code §408.028(f)). Insurance carriers must reimburse for pharmacy benefits and services using the fee schedule or at rates negotiated by contract. (Texas Labor Code §408.028(g)). There is no contract between HCP and Carrier applicable to the issue in dispute at this hearing.
Pursuant to Rule 134.503, MAR for prescription drugs is the lesser of the provider’s U&C charge for the same or similar service or a price established by formulas based on the average wholesale price (AWP) determined by utilizing a nationally recognized pharmaceutical reimbursement system such as Redbook or First Data Bank Services in effect on the day the prescription drug was dispensed. For generic drugs, the formula is ((AWP per unit) × (number of units) × 1.25) + $4.00 dispensing fee) and for brand name drugs the formula was ((AWP per unit) × (number of units) × 1.09) + $4.00 dispensing fee). (Division Rule 134.503(a)(2)).
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.
HCP has the burden to demonstrate its entitlement to the additional reimbursement it seeks. DT testified that, although reimbursement varies per state, HCP calculates the U&C charge for brand name drugs at AWP x 1.78 x number of units + $4.50 dispensing fee and for generic drugs AWP x 1.25 x number of units + $4.50 dispensing fee. The medications at issue in this case are generic drugs. DT’ affidavit in evidence indicates that the formula that HCP used to calculate the charge for the generic name medication is the AWP x 1.25 + $4.00 dispensing fee. In evidence are print outs dated August 26, 2010 of price histories for Alprazolam 1 MG tablet, Hydrocodone-APAP 10/500 tablet and Fentanyl 25 MCG/HR patch indicating the AWP for each of these medications as of the current date. The print out is copyrighted by First DataBank, Inc. The document indicates that the effective dates for the AWP prices are the current prices as of the date they are accessed, in this case August 26, 2010, and the price history indicates the effective dates that the prices are updated. Although it does not specifically note the AWP on the specific date the drugs were dispensed to the Claimant, it appears from the document that the AWP listed is the current amount as of the effective date to the present since there are prior and post effective dates that are updated to represent the current effective date. The heading over the effective date is “Current” and the document is dated August 26, 2010. Based on this data obtained from First DataBank, Inc., the AWP in effect on the date the Alprazolam was dispensed to the Claimant on August 8, 2008 and September 2, 2008 was 1.09782, the Hydrocodone –APAP dispensed on August 19, 2008 was 0.50606 and the Fentanyl Patch dispensed on August 27, 2008 was 14.4200.
HCP’s request for additional reimbursement was denied by MDFR because it did not provide sufficient information to support the claimed U&C charge. At this hearing, HCP introduced into evidence the AWP determined by utilizing a nationally recognized pharmaceutical reimbursement system (First DataBank Inc.) in effect on the day the prescription drugs were dispensed as required by Rule 134.503 in calculating the MAR and the testimony of DT regarding HCP’s U&C charges. DT testified that, since HCP’s U&C charges exceed the price established by the formula pursuant to Rule 134.503, HCP bills at the formula rate. HCP calculated the charges for the prescriptions at issue in this case as follows: Alprazolam 1MG tablet, on the dates the medications were dispensed, was AWP (1.09782) x 1.25 x number of units (90) + $4.00 dispensing fee = $127.50 for each date of service; for the Hydrocodone – APAP 10/500 dispensed on August 19, 2008 was AWP (.05060) x 1.25 x number of units (180) + $4.00 dispensing fee = $117.85 and for the Fentanyl 25 MCG.HR dispensed on August 27, 2008 was AWP (14.420) x 1.25 x number of units (10) + $4.00 dispensing fee = $184.25.
Although DT testified that 95% of HCP’s business is workers’ compensation claimants, he also testified that 4-5% of its customers are no-fault auto claims and less than 1% are cash/direct pay customers. DT testified that the direct pay program, which allows customers to pre-pay at a discounted preset rate, is available in all states, including Texas. HCP presented a significant amount of documents into evidence; however these materials fail to establish its U&C charge for the prescription drugs in question. HCP presented evidence of its charges outside the workers’ compensation system, but the payment sought from Carrier exceeds the fee charged for similar prescriptions dispensed to pre-pay customers. In a number of jurisdictions, HCP receives less than it does in Texas, even using the guideline amount. HCP contended that those lower fees are alleged to be due to mandated fee schedules; however, there was no substantive evidence offered of the statutory provisions for the alleged mandated fees. Carrier argued that, pursuant to Texas Labor Code Ann. §413.043, 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. HCP must show that the payment sought does not exceed 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. In the case of customers who pre-pay by cash or credit card, the evidence presented by HCP establishes that the prescription prices at issue are substantially more than the same prices that would be charged to a pre-pay customer in Texas. Based on the evidence presented, HCP failed to provide probative evidence of the U&C charge of the prescription drugs in question; therefore, HCP did not meet its burden of proof and is not entitled to additional reimbursement in the amount of $168.54 in docket number (Sequence 09) and $49.90 in (Sequence 10).
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
- 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).
C.The medications for which additional reimbursement is sought were dispensed as part of the medical care for the compensable injury of _______________.
CONCLUSIONS OF LAW
- The Texas Department of Insurance, Division of Workers’ Compensation, has jurisdiction to hear this case.
- Venue is proper in the (City) Field Office.
- The preponderance of the evidence is not contrary to the Medical Fee Dispute Resolution Findings and Decision that (Healthcare Provider), Petitioner, is not entitled to additional reimbursement in the amount of $49.90 for Alprazolam 1 MG tablet – 1 MG dispensed to Claimant on August 8, 2008, $46.04 for Hydrocodone-APAP 10/500 dispensed to Claimant on August 19, 2008, and $72.60 for Fentanyl 25 MCG/HR patch – 25/1h dispensed to Claimant on August 27, 2008.
- The preponderance of the evidence is not contrary to the Medical Fee Dispute Resolution Findings and Decision that (Healthcare Provider), Petitioner, is not entitled to additional reimbursement in the amount of $49.90 for Alprazolam 1 MG tablet – 1 MG dispensed to Claimant on September 2, 2008.
DECISION
(Healthcare Provider), Petitioner, is not entitled to additional reimbursement of $49.90 for the Alprazolam 1 MG tablet – 1 MG dispensed to Claimant on August 8, 2008, $46.04 for Hydrocodone-APAP 10/500 dispensed to Claimant on August 19, 2008, and $72.60 for Fentanyl 25 MCG/HR patch – 25/1h dispensed to Claimant on August 27, 2008.
(Healthcare Provider), Petitioner, is not entitled to additional reimbursement in the amount of $49.90 for Alprazolam 1 MG tablet – 1 MG dispensed to Claimant on September 2, 2008.
ORDER
Carrier is not liable for the benefits at issue in this hearing. Claimant remains entitled to medical benefits for the compensable injury in accordance with §408.021.
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 8th day of October, 2010.
CAROL A. FOUGERAT
Hearing Officer