CA DWC Hosts Public Hearing on Fee Schedules

On April 11, 2024, the California Department of Industrial Relations, Division of Workers’ Compensation (DWC) hosted a public hearing on proposed rule changes to the Physician and Non-Physician Practitioner Fee Schedule and Pharmaceutical Fee Schedule. Key proposed rule changes to the Pharmaceutical Fee Schedule are as follows:

• Drug ingredient cost is defined as the lesser of the following:

  - National Average Drug Acquisition Cost (NADAC)

  - Wholesale Acquisition Cost (WAC) if there is no NADAC

  - Federal Upper Limit

  - Maximum Allowable Ingredient Cost

• Two-Tier Dispensing Fee of $10.05 or $13.20[1]
• No Dispensing Fee for physician-dispensed drugs and compounded medications dispensed by a physician
• Implementation deadline within 90 days of adoption date of the rule changes

Representatives from pharmacy benefit managers (PBM), physician dispensing groups, clinics, third-party billers, and the American Association of Payers, Administrators and Networks (AAPAN) attended the hearing.

Written and verbal comments from these representatives were submitted prior to and during the hearing. All comments will be considered in the state’s rule-making process.

Comment themes presented during the public hearing

PBMs and AAPAN:

• Minimum of six months to implement any change
• Simplification to one (1) dispensing fee
• An increase in administrative costs will result from lower reimbursement and higher complexity
• Strengthen, enforce, and address pre-authorization requirements for compounded medications and physician dispensing

Physician Dispensing Groups, Clinics and Third-Party Billers:

• Elimination of dispensing fees for physician-dispensed drugs and lower reimbursement rates will effectively eliminate physician dispensing in CA
• Retain the current $7.25 dispense fee for physician-dispensed drugs
• Proposed pharmacy fee schedule unfairly compensates retail pharmacies by increasing dispensing fees
• Elimination of physician dispensing forces injured workers to understaffed retail pharmacies

MyMatrixx Actions

MyMatrixx will continue to monitor the rule-making process and encourage the state to adopt policy that make sense for our clients, keep costs manageable and prioritizes medication safety for injured workers.

We believe the practice of physician dispensing not only bypasses critical patient safety alerts that PBM systems identify and communicate in real-time to retail pharmacies before medications are dispensed but also introduces potential safety issues including the:

• Lack of pharmacist for medication checks and patient counseling
• Lack of regulatory oversight for medication labeling, record keeping and storage
• Lack of supervision of the dispenser.

With physician dispensing, there is also a potential financial conflict of interest when the physician prescribing the medication is also dispensing the medication.

Within the next two months, MyMatrixx anticipates the state will publish the adopted rule. We will communicate details of the required changes once they are published.

Please contact your MyMatrixx Account Management team if you have any additional questions.