The California Division of Workers’ Compensation (DWC) has finally adopted updates to its pharmaceutical fee schedule. This concludes a formal rulemaking process that began in February of 2024 and included a public hearing, two rounds of modifications to the original proposal and three public comment periods. These changes are intended to align the fee schedule with the state’s current Medicaid program (“Medi-Cal”) reimbursement structure as required by law.
Fee Schedule Effective Date
The newly adopted fee schedule provisions have not substantively changed from the version proposed in October 2024. The final version of the fee schedule files and tables will take effect for products dispensed and services rendered on or after July 1, 2025. This gives stakeholders a little over six months to update their processes and systems accordingly. Products dispensed and services that took place before July 1, 2025, will continue to use the pre-existing reimbursement structure and related files.
Reimbursement Methodology
Within the fee schedule updates, the DWC has adopted Medi-Cal’s “lowest of” reimbursement methodology for drug ingredient costs, which includes use of National Average Drug Acquisition Cost (NADAC), Wholesale Acquisition Cost (WAC), Federal Upper Limit (FUL) and the Medi-Cal Maximum Allowable Ingredient Cost (MAIC), as well as Medi-Cal’s dispensing fee structure for pharmacies based on their attested volume of transactions with Medi-Cal.
Provider type | Eligible Dispensing Fee |
| Attested lower volume pharmacies | $13.20 |
| All other pharmacies | $10.05 |
| Dispensing physicians | $10.05 |
Both pharmacies and dispensing physicians may be eligible for additional fees when dispensing compounded medications.
The ingredient cost calculation and the pharmacies eligible for the higher dispensing fee are accounted for in files to be provided by the DWC. (Sample files are posted online.) The DWC expects stakeholders to only use these DWC files when determining reimbursement.
Special Provisions
The updated fees schedule rules also include special provisions for repackaged drugs, physician dispensed drugs, and compounded drugs. For example, reimbursement for certain physician-dispensed medications is additionally capped based on markups above the physician’s documented paid cost. These additional requirements are primarily copied from pre-existing statute provisions the DWC cannot change.
Updated Fee Schedule Files
After the effective date, the DWC plans to post updated fee schedule files on its website weekly. Once posted, payers must use the updated files for reimbursement within two calendar days of the posting. Payers are instructed to re-adjudicate previously paid claims/transactions for correction if a provider submits a request for second bill review (SBR).
MyMatrixx Advocacy
MyMatrixx participated in each round of rulemaking as the rules were being proposed by attending the initial public hearing and submitting three sets of written comments. We appreciate the DWC incorporating our feedback in conjunction with others in the industry to successfully:
- Extend the implementation time from the originally proposed 90 days to 180 days
- Remove an earlier proposed, more complicated reimbursement structure for “unfinished” drug products
- Add clarifying language to the rules to facilitate smoother implementation
However, despite comments from MyMatrixx and others, the DWC chose to keep the provisions that afford dispensing physicians an additional $10.05 for dispensing medications from their office, as well as additional compounding fees. DWC added those fees in response to comments submitted by multiple stakeholders representing physician dispensers. While the DWC acknowledged that Medi-Cal does not pay for physician dispensed medications, it stated injured worker access to care as the basis for the decision to allow dispensing fees for physicians in workers’ compensation.
Although the DWC believes there are “some downsides” to physician dispensing, it has determined that “on balance” the considerations favor allowing a dispensing fee. In contrast, MyMatrixx commented on and believes that the practice of physician dispensing bypasses the benefits of a pharmacy benefit manager and ignores critical patient safety alerts that are typically identified and communicated to retail pharmacies before medications are dispensed.
Moving Forward
Since early this year, MyMatrixx has been planning to implement the eventual adopted California fee schedule changes. With this now in place, we are proceeding with efforts to fully implement by the July 1, 2025, effective date.
The updated fee schedule is one of the most complicated workers’ compensation pharmaceutical fee schedules in the country and one of the lowest. Its provisions are expected to lower overall pharmacy costs in California with some of the lowered drug ingredient cost mitigated by higher dispensing fees. However, each payer’s experience and volume and mix of claims is different. The financial impact will differ by payer, particularly where contracted rates may be in place. The DWC noted in its response to comments that the California workers’ compensation law allows parties to contract for “reimbursement rates different from those” in the fee schedule.
Official documentation from the DWC on the adopted rules, including text and responses to submitted comments, can be viewed online here. Questions on this topic for our Regulatory Affairs team can be sent to MMXRegulatoryAffairs@MyMatrixx.com. For more information on policy developments like this in workers’ compensation impacting pharmacy in states across the country, please visit and bookmark Statehouse Watch at MyMatrixx.com.