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Every year there is great interest in what potential legislative changes are facing the Workers' Compensation system. Both the Workers' Compensation Research Institute (WCRI) and the California Workers' Compensation Institute (CWCI) have independently identified the biggest areas of what I call “leakage”.

What drives the increases in medical costs is the failure of the system to mandate (and to follow) what is known as “evidence based medicine” and the failure to have and implement pharmacy cost containment programs (usually manifested as opioid abuse).

The two aspects of pharmacy cost drivers are a lack of a comprehensive pharmacy formulary being in place and the perverse financial incentives for physicians to over prescribe pharmacy treatment if they are also dispensing out of their offices. As a result, in many States the legislative battles will be focused on these three issues.

Below is a State by State analysis of currently proposed legislation. This list is not what will be ultimately passed because in some states the final bill is sent to the floor at the last minute. It will be interesting to see what forces and factors prevail.

Texas’ success with a closed formulary, studies from the California Workers’ Compensation Institute, and the potential savings other states may achieve by a adopting a formulary as indicated by the Workers’ Compensation Research Institute has led to the introduction of formulary legislation in several states.

California Assembly Bill 1124: introduced the day of bill filing deadline, would require the administrative director of the Division of Workers’ Compensation to establish a formulary for the purposes of prescribing prescription medications.

Louisiana: Senate Bill 256 pre-filed on April 3, 2015, requires the director of the Office of Workers’ Compensation Administration, with the assistance of the Closed Pharmacy Formulary Oversight Panel, to adopt rules and regulations to establish and maintain a closed formulary no later than January 1, 2016.

Montana Senate Bill 292: a bill requiring the Department of Labor and Industry to establish rules implementing an outpatient drug formulary by July 1, 2016—stalled when reaching the House. The Senate passed the bill by a vote of 29 to 21 but the bill was “tabled” in the House Committee on Business and Labor on March 20, 2015.

Two states with strict physician dispensing controls are considering legislation similar to what was adopted in Utah last year (SB 255). New York Assembly Bill 5929 amends the Education Law to make limited exceptions for physician dispensing of certain topical pharmaceuticals used for dermatological (mostly aesthetic) purposes.

In Texas, House Bill 1483 was introduced by Representative John Zerwas—a physician from Simonton, Texas. The Senate version of the bill, Senate Bill 588, is sponsored by Senator Joan Huffman. The Texas bills allow for limited physician/therapeutic optometrist dispensing of aesthetic pharmaceuticals.

North Carolina Senate Bill 656 was introduced in late March. This bill adds prescribed over-the-counter drugs to the statute governing reimbursement for prescription drugs and professional pharmaceutical services. NC SB 656 also amends the physician dispensing provisions adopted last year, changing the phrase “drugs dispensed by a physician” to “health care provider dispensed prescription drugs, prescribed over-the-counter drugs and pharmaceutical services.” The bill also specifies that a repacked NDC number may only appear in conjunction with the manufacturers’ NDC number. NC SB 656 further limits reimbursement to outpatient providers. If adopted, only the initial health care provider providing the employee’s initial treatment following injury may seek reimbursement for Schedule II, Schedule IIInd IV drugs for an initial five-day supply.

Nevada Senate Bill 231 amends the Nevada Industrial Insurance Act restricting physician dispensing. In particular, NV SB 231 caps reimbursement at 110 percent of Average Wholesale Price (AWP). This bill requires that the original NDC be documented on all bills and reports. If the original NDC is not submitted, the reimbursement will be based on the AWP of the least expensive, clinically equivalent prescription drug. NV SB 231 limits the initial supply to the quantity necessary to treat an injured employee for 15 days measured from date of treatment.

On April 2, 2015, a comprehensive workers’ compensation reform bill was introduced in Alabama.Provisions in Senate Bill 330 include requiring a formal written agreement as a condition of receiving pain management that requires Schedule II, III or IV controlled substances. If the employee is prescribed medication or durable medical equipment, the bill provides that the employer has the right to designate a pharmacy, facility, or other method to enable the employee to have the prescriptions filled in a timely manner.

The bill also establishes maximum fees for medical services, but allows an employer to enter into agreements with providers as to the rates, fees, or levels of reimbursement. Pharmacy Maximum Reimbursement Rates would be set at the Average Wholesale Price (AWP) for brand and at 30 percent less than the AWP for generic. The dispensing fee for brand and generic would be five dollars. Physicians authorized to issue or prescribe prescription drugs would be prohibited from having the prescription filled in any location, facility, pharmacy, or business establishment in which such physician has a financial interest of any kind. The bill also outlines conditions for establishing that medical treatment is not causally related to an employee’s job injury or occupational disease.

Legislation amending prescription drug monitoring programs is prevalent across the country. There are still 20 bills associated with this issue that are still viable for adoption.

For the purpose of reviewing and offering an opinion on an individual’s request for workers’ compensation benefits, this bill allows a physician who is a medical director for a licensed workers’ compensation insurer or an approved self-insured employer to have access to the controlled substance database effective May 11, 2015.

In Missouri, there were four bills introduced this year to create a PDMP. Missouri House Bill 130 passed the House on February 26, 2015 with 107 members voting for the bill and 48 voting against (seven members were absent). In mid-March, the bill moved to the Senate and was assigned to the Senate Committee on Transportation and Infrastructure.

e-Billing has been mandated in Minnesota since 2009. Last November, the Minnesota Department of Labor and Commerce and Health hosted a symposium to discuss the barriers to implementing workers’ compensation electronic transactions. Bills introduced in the Minnesota House and the Senate, House Bill 1976 and Senate Bill 1822, would require workers’ compensation payers to provide health care providers with the information needed to submit medical bills and reports electronically. This bill mandates electronic submission of medical reports, records, and requires payers to send payments by electronic funds transfer. The bill also allows the commissioner of labor and industry to assess financial penalties to payers, providers, and clearinghouses.

Virginia Governor Terry McAuliffe signed House Bill 2384 on March 26, 2015. This legislation requires the Virginia Workers’ Compensation Commission to establish a schedule for requiring electronic medical billing and payment to be consistent with the IAIABC’s standards and methods. The schedule must be established by January 1, 2016, with an effective date no earlier than July 1, 2016, and no later than December 31, 2018.

There are other bills which are directly related to workers compensation. These include bills for changes in fee schedules, utilization review requirements, and some changes to treatment guidelines and proposals related to expanding presumption of coverage for certain types of employees (i.e. firefighters, police officers).

Examples of legislation indirectly related to workers’ compensation include changes in medical practice act “pain management” guidelines, such as Georgia House Bill 28 – which proposes that when a Schedule II or III controlled substance is prescribed for a patient for 90 consecutive days or greater for the treatment of chronic pain from non-terminal conditions, a physician shall require the patient to complete Opioid Education and Pro-Active Addiction Counseling at least once every three months during the course of such treatment.