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| | Jose Solorio Put His Passion Into Correcting The 'Scandalous State Of Affairs' In California Workers' Compensation In Authoring AB 378
By Lonce LaMon - October 21, 2011
Two weeks ago on Friday, October 7th 2011, California Governor Jerry Brown signed into law AB 378, an Assembly bill authored by Assemblyman Jose Solorio, designed to curtail the abuse of drug compounding, especially as it has imposed excessive expense into the California workers’ compensation system.
The 41-year-old Solorio was educated at UC Irvine and Harvard University, and represents the cities of Anaheim, Garden Grove, and Santa Ana. He said he wanted to address the “scandalous state of affairs” that has led to skyrocketing costs for compound medications in the California workers’ compensation system.
He is the son of farm workers, and in his youth he labored in the fields alongside his parents. Now Solorio focuses his legislative efforts on education, public safety, job creation, and improving California's water and transportation infrastructure.
Jose Solorio explained in his rhetorical writings to sell AB 378 that in 2002, the Legislature passed Assembly Bill 749, which directed an official medical fee schedule for pharmaceuticals to be created to contain workers' compensation costs and to ensure that injured workers had access to appropriate treatment. But since then, there has been a growing practice by some prescribing physicians to utilize medications that are not covered by the fee schedule, to dispense these medications directly to workers' compensation patients, and to bill employers and insurers at highly inflated rates. These practices unfairly enrich the physicians engaging in these efforts, cost employers and insurers millions of dollars, and prevent these wasted dollars from being used to enhance benefits for injured workers.
One way these physicians accomplished the goal of billing at inflated rates was by repackaging common medications from bulk supplies so that the packages did not have fee schedule codes. Then they dispensed them in common amounts at prices far above the fee schedule for the same products sold through pharmacies. This practice continued until the Administrative Director of the Division of Workers' Compensation adopted a regulation in 2007 that required any repackaged medication to be reimbursed at the same fee schedule as the same drug distributed through pharmacies and not reimbursed based on arbitrary prices associated with unscheduled packages.
“Prior to the adoption of the physician dispensing regulation, compounded medications, creams, copacks, and other medical foods constituted a small percentage of the overall cost of prescription medications. However, once the abusive repackaging practice was outlawed, the practice of physicians prescribing or dispensing compounded medications, creams, copacks, and medical foods expanded rapidly,” Solorio wrote.
He further expatiated, “The percentage of California workers' compensation medication dollars that are used toward compound drugs, copacks, and medical foods has increased from 2.3 percent in 2006 to 12 percent in 2009. This increase in compound drugs, copacks, and medical foods has increased costs for insurers and led to rising premiums for employers.
“For example, State Compensation Insurance Fund reported that what was rarely billed prior to 2007 rapidly escalated to over $58 million in billings in a 16-month period. Another insurer reported a 16-fold increase in less than a two-year period.
“Compounded drugs are not evaluated for safety or efficacy by the federal Food and Drug Administration (FDA). According to the FDA, compound drugs carry significant health risks that can lead to permanent injury or death.
“In order to alleviate California's employers and insurers from this significant increase in costs, to enhance the efficiency of the workers' compensation system, and to ensure that injured workers receive safe, appropriate health care, the Legislature hereby declares the need to remove the financial incentive for prescribing costly and questionable compounded drugs, copacks, and medical foods and to create a new process for the prescription of compound drugs, copacks, and medical foods.”
Directly amending 139.3, Solorio wrote in:
“… for pharmacy goods furnished for use outside the physician's office for which the referring physician's office or group practice charges more than the documented paid cost net of any rebates or refunds or discounts plus the lesser of 20 percent of the documented paid cost or one hundred dollars ($100), or for psychometric testing that exceeds the routine screening battery protocols, with a time limit of two to five hours, established by the administrative director, the referring physician obtains shall obtain a service preauthorization from the insurer or self-insured employer. Any oral authorization shall be memorialized in writing within five business days."
In the original 139.3, the major emphasis was to curtail medical providers from referring patients to other medical practices of which they have a vested business interest through an ownership--all or in part-- of their own or else through a spouse, family member or other blood relative. 139.3 makes it unlawful for a physician to make such referrals unless the relationship is disclosed openly to the patient.
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