After several previous attempts to establish a workers’ compensation pharmaceutical fee schedule in Maryland, the latest effort, Senate Bill 306, is seeing forward legislative momentum after being voted favorably out of the state’s Senate with amendments.
From fee disputes to reasonable costs
Under current Maryland regulations, the workers’ comp. insurer determines the pharmaceutical reimbursement value based on "nationally recognized and published relative value studies, or on the values assigned for services involving similar work and resources." This reimbursement value is subject to review by the Commission and has led to many disputes between parties.
In contrast, most other states’ workers’ compensation systems establish fee schedules for dispensed pharmaceuticals, thereby reducing disputes and adding certainty to providers and payers.
Contracting with a pharmacy network through a pharmacy benefit manager, like MyMatrixx by Evernorth, is one of the most effective and most common ways of controlling medication costs. However, not all providers accept contracted rates, and this is when a state fee schedule can assist by placing a reasonable ceiling on pharmaceutical costs for the non-contracted “out of network” transactions.
SB 306 and its amendments
As first introduced, SB 306 would direct the Workers’ Compensation Commission to adopt a fee schedule limiting reimbursement to "an index or indexes based on acquisition cost" and may include "reasonable" dispensing fees. The Senate Finance Committee subsequently approved the following amendments:
- The fee schedule should be in place by September 1, 2026.
- The fee schedule would be limited to medications provided by licensed pharmacies (would exclude dispensing physicians).
- The Commission may include in the fee schedule any percentage increase or decrease to the index(es) it determines.
- The bill would not prohibit insurers/employers from agreeing with PBMs or providers to rates other than fee schedule or from agreeing to use other pricing indexes.
- The state’s Prescription Drug Affordability Board would be required to conduct a study of workers’ compensation prescription drug affordability challenges and make recommendations, if applicable, for policies to address identified affordability challenges, with findings and recommendations due March 1, 2026 (six months prior to the deadline for the fee schedule to be in place).
MyMatrixx perspective
In support of the bill, MyMatrixx submitted written testimony to the Senate Finance Committee while also encouraging legislators and the Commission to ensure all dispensed medications are covered under the fee schedule. By this, we meant all national drug codes (NDCs) for both prescription and over-the-counter medications and all providers that may dispense.
Though subject to future determination, based on acquisition cost, there are two “indexes” that are likely available to adopt by the Commission:
- National Average Drug Acquisition Cost (NADAC): NADAC is the result of a survey process the federal Centers for Medicare and Medicaid Services (CMS) uses to estimate pharmacy pricing for drugs acquired by retail pharmacies that state Medicaid programs can utilize to set reimbursement rates to pharmacies. Given the voluntary nature of this index and its connection with Medicaid, it does not cover all medications dispensed within the workers’ compensation system. The medications that fall into this gap in coverage represent an even higher percentage of total medication costs (some more expensive drugs dispensed in the workers’ compensation system may not have a NADAC).
- Wholesale Acquisition Cost (WAC): WAC is generally a more comprehensive published index that could be used to account for many of the NADAC gaps. However, though rarer, there are some medications which also lack a WAC.
Given these gaps, we support the ability of the Commission to adopt ‘backup’ published reimbursement indexes to avoid potential loopholes. Practically, that may require the inclusion of other published and regularly updated industry indexes that are not necessarily tied to “acquisition cost.” Granting the Commission authority to do adopt such backup sources will ensure all medications have a fee schedule rate and avoid the current subjective system of disputes and uncertainty. In lieu of that, the Commission should still be granted authority to cap reimbursement for these gap medications, even if not tied to an acquisition cost index.
Additionally, we support applying this fee schedule to all providers, including dispensing physicians. Physician dispensing has been a concern in many states for workers’ compensation for several years. A 2024 Workers’ Compensation Research Institute report showed that physician-dispensed medications accounted for over half of total medication payments in the Maryland worker’s compensation system. MyMatrixx believes the practice of physician dispensing bypasses the benefits of a PBM and ignores critical patient safety alerts that are typically identified and communicated to retail pharmacies before medications are dispensed. We believe it important to hold dispensing physicians to the same standards as dispensing pharmacists, including reimbursement. Prior to the amendments, SB 306 would have included dispensing physicians, and we believe that any finally enacted legislation should include dispensing physicians and not create a loophole for those providers to inflate medication costs for the state’s employers.
Looking Forward
SB 306 now needs to be considered by the House. MyMatrixx is closely following activity with this bill, and we remain committed to collaborating with legislators, the Commission, and our Maryland clients to ensure any changes enable the processing of required medications at the appropriate costs without negative impacts to workers’ compensation payers and the injured workers we serve. We encourage clients to follow the progress of this legislation and reach out to legislators to share any comments or concerns.
The MyMatrixx Regulatory Affairs team tracks and monitors newly introduced and pending legislation across the country. You can visit the Legislative and Regulatory Policy Tracker on our Statehouse Watch webpage to sort current bills by topic and state for a broader snapshot−or the details−of the legislation. Questions for our Regulatory Affairs team can be sent to MMXRegulatoryAffairs@MyMatrixx.com.