Winter 2017

State of States



Sandy Shtab, Healthesystems AVP of Advocacy and Compliance, comments on regulatory activity around the country.


A number of states have begun to take more aggressive steps to tackle the nation’s opioid epidemic. Florida, Georgia, and North Carolina are the latest to join in a multifaceted effort to address the overprescribing, misuse, and other patient safety risks through legislation and regulation change. 

In May 2017 Florida Governor Rick Scott declared an Opioid State of Emergency, opening access to funds to combat opioid abuse and diversion programs. Soon after, he signed an executive order, quietly allocating an additional $20 million in funding to prevention and treatment programs. The problem is so significant that in October, Senate budget committee members heard from first responders, law enforcement officials, and others who made appeals to allocate an additional $50 million in funding to law enforcement, treatment, and educational programs. In recent weeks, Florida legislators pre-filed a bill that, if passed, will instate a strict three-day limit on opioid prescriptions. That bill will be considered in the 2018 legislative session.  

In North Carolina, state legislators passed The Strengthen Opioid Misuse Prevention (STOP) Act; a comprehensive piece of legislation that creates greater oversight into opioid prescribing patterns through the use of a prescription database monitoring program, institutes a five-day supply limit on initial prescriptions for acute pain, and increases access to naloxone, an overdose prevention medication.  

North Carolina secured a combined $31 million in state budget allocation and federal grant funds as a result of Congress’ 21st Century CURES Act. These funds will be used for prevention, treatment and recovery services. In addition, an Opioid Prescription Drug Abuse Advisory Committee was assembled, focusing on syringe exchange laws and naloxone dispensing.  The North Carolina Department of Health and Human Services has also published a five-year plan with stated goals to: 

  • Reduce the oversupply of prescription opioids
  • Reduce the diversion of prescription drugs and the flow of illicit drugs
  • Increase community awareness and prevention
  • Expand treatment and recovery systems of care
  • In addition to statewide efforts, North Carolina regulators created a Workers’ Compensation Opioid Task Force. The group has been meeting since September to determine what changes can be made within the workers’ compensation system to prevent the misuse and overprescribing of opioids, and ultimately improve patient outcomes. Among the issues the task force is considering are: 
  • The need for prescribing guidelines that address appropriate durations of opioid therapy
  • Establishing risk thresholds for MME 
  • The need for more patient education 

No formal draft rules have been published, though they may be forthcoming.  In tandem with this effort, the DWC has been studying the impact a state-mandated formulary may have on the workers’ compensation system, though no timeline for adoption of rules or implementation has been published to date.  

Data from North Carolina’s Department of Health and Human Services (HHS) indicates a 73% spike in opioid-related deaths between 2005 and 2015. This staggering statistic emphasizes the urgent need to set these plans into motion as quickly as possible. With these combined efforts, the HHS projects a 20% reduction in opioid-related deaths. 

Georgia has also ramped up their efforts as Attorney General Chris Carr announced in September the creation of a Statewide Opioid Task Force, providing an infrastructure of communication between 52 organizations in the public, private and non-profit sectors impacted by the opioid epidemic. Georgia’s Task Force first met on October 4th to discuss the state’s current response to the opioid epidemic, and ways to leverage each group member’s unique assets to combat this issue. Future meetings and news releases will be announced online. 

Georgia’s Workers’ Compensation Board has been considering for at least two years how a drug formulary might impact the system, though that work is being done by a small, closed committee. With the formation of this new statewide task force, the Bureau of Workers’ Compensation may find more momentum and stakeholder support to drive forward initiatives such as a mandated formulary.  

The work being done in these states is diverse and broad reaching, beyond the injured worker population. As we have seen in New York, Kentucky and other states which began this work in 2014 and earlier, this kind of laser focus on education, oversight and patient safety have a measureable impact on overall opioid utilization. 

Despite the progress which has been made, there is much more work to be done. We anticipate other states will join in these efforts in 2018. 


After announcing several opioid initiatives earlier this summer (see Reality Check: New FDA Initiatives Re-Examine Opioid Policies on page 26) the FDA has opened a public commentary period in the Federal Register to understand what areas of focus are important to the public to identify and address opioid product and policy issues.

In their announcement, the FDA specifically called out the following questions:

  • What can the FDA do to ensure that the full range of available information, including possible public health effects, is considered when making opioid-related regulatory decisions?
  • What steps can the FDA take related to dispensing and packaging to facilitate consistency and promote appropriate prescribing?
  • Should the FDA require mandatory education for healthcare professionals who prescribe opioids, and how should such education be implemented?

The FDA hopes to receive suggestions, recommendations, and comments from interested parties, including patients and patient representatives, healthcare professionals, academic institutions, regulated industry professionals and other interested organizations. The FDA will accept comments until December 28, 2017 at


Earlier this month, the National Academy of Social Insurance (NASI) released its annual report Workers’ Compensation: Benefits, Coverage, and Costs, which looks at the impact of states’ economic recovery and the corollary impact on jobs, work injuries and claim costs. The 20th in the series, this latest report looked at data from 2011-2015 and highlighted growth in the overall covered workforce in all but one state (West Virginia), increases in covered wages, and decreases in benefits in all but three states over the period of the study. According to the report, declining medical costs as a share of payroll were partially due to decreases in medical fee guidelines, or adoption of regulation changes such as treatment guidelines and perhaps even formularies.

The 96-page report and a summary infographic are both available for download at 


On October 2, 2017, the International Association of Industrial Accident Boards and Commissions (IAIABC) hosted its 103rd Convention in Portland, Oregon, bringing together public policy experts, insurer and TPA representatives, and other industry leaders to discuss developments and trends impacting regulatory and administrative change. Healthesystems’ government affairs, compliance, and state reporting representatives attended the event to interact with and gain insight from regulators representing 34 state workers’ compensation agencies.
Matt Bryant, Chair of the Associate Members Council, engaged jurisdictional agency leaders and addressed enforcement of compliance standards with a roundtable discussion of upcoming legislative activity. Notable items discussed include:

  • Colorado implemented an Uninsured Employer Fund, which will be funded by penalties and fines associated with employer noncompliance
  • Kansas updated their AMA guidelines to the 6th Edition
  • Massachusetts is exploring how a formulary could help injured workers and carriers to prevent opioid dependence and overutilization
  • Michigan abandoned the idea of pursuing a formulary, however they are in discussions about how to best regulate air ambulance rules and reimbursement
  • Nevada indicated progress towards determining intoxication standards for marijuana in response to recent recreational legalization. The state has not yet defined what those limits will be, but Schedule V drugs will now need to be reported to the state’s PDMP
  • New York is continuing to overhaul their business processes and technology upgrades. They expect to release the plan for their formulary and medical treatment guidelines soon, as they are on a statutory timeline to deliver their plan before December 31, 2017
  • Pennsylvania has consolidated all their systems into one database, allowing them to focus on data quality, record retention, and data maintenance. They are also dealing with the after effects of the Protz decision, a constitutional challenge involving the application of the most recent version of the AMA impairment guidelines. The impact of Protz is thought to be in the millions, and regulators have begun to question how this will impact legacy claims, while the legislature addressed the law change needed in the coming session
  • South Carolina is looking at telemedicine as it begins work on its next iteration of the Medical Fee Schedule, due to be updated in April 2018
  • Tennessee plans to roll out new certification requirements for claims adjusters and will be drafting E-billing rules, which will become effective in Summer 2018
  • Washington is planning medical state reporting rulemaking, slated for mid-2018. The state encountered a number of challenges as they implemented the state reporting requirements for self-insured entities. As a result, they are still working on adjustments to the reporting process while they actively seek voluntary participation
  • Wisconsin regulators reported the agreed-upon bill process has been completed by the medical advisory committee. A legislative proposal will be considered in 2018, which would cap medical fees at group health rates plus 2.5%. Critics of the proposal indicate the 2.5% markup over group health rates is insufficient to compensate physicians for the administrative burdens associated with workers’ compensation claims 

A recurring theme to the conference was the increasing need to embrace technology solutions to simplify how government agencies, businesses and individuals interact. Many states are focusing on system integration, such as requiring the electronic filing of claim disputes and legal dockets. While many states have adapted with cutting-edge technology, others are looking for creative, low-cost ways to engage stakeholders. One jurisdiction described their efforts to use Facebook Live to broadcast public meetings. Others are changing their recruitment efforts to attract a new generation of workers. How, when, and where people are working has changed in the last decade, and state and private industries are faced with challenges to adapt not only from a workers’ compensation perspective, but from a hiring and retention perspective. Working from home, using mobile devices, and offering flexible working hours were all mentioned as coverage complexities and employment challenges.

Lastly, the Medical Issues Committee, chaired by regulators from Minnesota and Idaho, provided an update on its Opioids Solution Project. This project involves the development of an opioid regulation database that is being researched by committee members in an effort to corral all similar regulations into an easy-to-read database schema. To date, the group has completed research on 24 states, but they are faced with a number of challenges, including upkeep and maintenance, which will be needed to keep regulations current. Healthesystems has been participating in this project, and once completed, the database will be accessible to all IAIABC members at no cost. The project is expected to be completed by April 2018. 

On September 29, 2017, the Arkansas Workers’ Compensation Commission posted new materials on its website to advise stakeholders of changes to their proposed workers’ compensation formulary. Arkansas regulators originally planned to make the new formulary effective on September 1, 2017. However, based on feedback from Healthesystems and others, Commission leaders have decided to push the proposed effective date to July 1, 2018. Healthesystems sent comments to regulators to recommend a number of changes to the proposal, including substantiation of medical necessity and preauthorization for any compounded medication, and recommended a lower morphine equivalent dose (MED) of 50 mg/day unless special exceptions are met. The Commission implemented a number of our recommendations into the latest draft, specifically reducing the MED preauthorization threshold to 50 MED, and will also require opioid prescribers to reference the state prescription drug monitoring program (PDMP) as part of the opioid protocol. Healthesystems and other stakeholders have voiced concerns about the short time to implement the formulary and the absence of guidance on how legacy claims should be handled, including the weaning of patients from non-formulary drugs prior to July 1, 2018. The formulary rules will likely require future review and modifications as physicians, insurers, and injured workers provide input to regulators on post-implementation observations. Arkansas joins a number of states who are currently in the process of implementing or investigating how a drug formulary might improve patient care. View the proposed changes at

The California Division of Workers’ Compensation (DWC) recently updated the Medical Treatment Utilization Schedule (MTUS) and implemented various guidelines from the American College of Occupational and Environmental Medicine (ACOEM) effective as of December 1, 2017. Among the changes is a rule that would restrict payment for spinal cord stimulators, which are surgically implanted devices intended to modify or block nerve activity to minimize pain via electrical stimulation.

Various physicians have objected to restrictions on spinal cord stimulators, including the leaders of many professional physicians’ associations. Supporters of the technology feel spinal cord stimulators can significantly help patients reduce office visits and their reliance on pharmacotherapy, and some have argued that while spinal cord stimulators can cost as much as $30,000 to install, restrictions to their use could force doctors into using other, ineffective therapies, such as opioids.

However, ACOEM’s Cervical and Thoracic Spine Disorders and Low Back Disorders guidelines do not recommend spinal cord stimulators due to insufficient evidence that they can significantly reduce pain to benefit the patient. The key point of contention for this debate is the question of what qualifies as evidence-based medicine, as previous MTUS guidelines allowed for the use of spinal cord stimulators, citing a different set of evidence-based medical guidelines.

The MTUS updates can be viewed at

Drug Pricing Legislation Will Bring Transparency to Some, Not All Payers

California Governor Jerry Brown recently signed Senate Bill No. 17, which requires a manufacturer to notify the public prior to raising the price of certain prescription drugs. The bill was introduced to hold manufacturers accountable for notifying certain payers of significant price hikes and for explaining the reasons behind price increases. Workers’ compensation insurers are not amongst the types of payers who must be notified.

Supporters of the bill said this new regulation was needed to bring more transparency to a pricing system which is today shrouded in secrecy. In October 2018, health plans will be required to send data to the California Department of Managed Health Care on the 25 most frequently prescribed medications for brand, generic and specialty drugs, along with information on the highest cost medications and those with biggest year-over-year increases. And starting in January 2019, drug manufacturers will be required to notify state agencies, healthcare service plans and health insurers when a drug price exceeds a specified threshold, as well as driving factors for the price change. The agency will then aggregate and post the information for public review on their website starting in 2019.

The topic of drug price transparency has been in the national spotlight for several years. More recently, drug price increases from makers of the EpiPen®, insulin and other life-saving medications were the subject of recent Congressional hearings. To date, no significant progress has been made to legislate a national solution, however individual states are not waiting on Congress to act. The National Academy for State Health Policy reports at least 50 bills have been filed in 2017 in a number of states to address the practice. Earlier this year, 20 state attorney generals filed joint lawsuits against drug manufacturers for unexplained drug price increases.

Workers’ Compensation Pharmacy Fee Schedule May Soon Be Changing

This summer, California legislators passed a budget bill that, among other things, could dramatically reduce reimbursement to pharmacies serving Medicaid and potentially workers’ compensation patients. The budget calls for the use of a new pharmacy benchmark called Actual Acquisition Cost (AAC). AAC is described by some Medicaid programs as the equivalent of AWP minus 75% for some generic medications. This new benchmark has pharmacy providers concerned about their ability to continue serving patients in the state at or below their cost to acquire the drugs.

Though these changes were primarily intended to impact the state’s Medicaid program (Medi-Cal), they could also impact workers’ compensation patients in the near future, because workers’ compensation pharmacy reimbursement rates are tied to Medi-Cal. Some experts are concerned that California’s injured workers may have trouble finding pharmacies willing to serve them, as was the case in New York when they attempted a similar effort to slash Medicaid spending on drugs. Fortunately, the New York Workers’ Compensation Board acted quickly to delink the two systems to ensure injured workers would have broad access to pharmacy services.

In short, the new reimbursement model will reimburse pharmacies for their actual purchase price for medications, with an increased variable dispensing fee. This new reimbursement model is said to be a more transparent way of paying for medications, but there are many critics who say access to broad networks will shrink as pricing pressures squeeze out independent community pharmacies. According to the National Community Pharmacist Association, smaller pharmacies’ acquisition cost for drugs can be 25-50% more than a retail or big box chain store. This kind of reimbursement strategy may make it impossible for community pharmacies to keep serving injured workers.

Several years ago with these risks in mind, a number of pharmacy stakeholders proposed a legislative bill that would have delinked the workers’ compensation pharmacy fee schedule methodology from the Medi-Cal program. The legislature declined to act upon that proposal. So what happens next?

The Department of Health Care Services has oversight of the Medi-Cal program. They have a plan in place to implement changes to their pricing in July or August 2018. Once Medi-Cal has implemented their new benchmark, which includes a variable dispensing fee, DWC will then issue guidance to affected stakeholders on how this applies to injured worker claims. The DWC may have some authority to make necessary changes rather than adopting the identical payment mechanisms, such as defining a single uniform dispensing fee for all pharmacists. Stakeholders are urged to engage with the DWC to share questions about ensuring good access to care, supporting a single dispensing fee for all pharmacists, and any other concerns before the implementation of these new pricing strategies in July 2018.

The Colorado Division of Workers’ Compensation (DWC) implemented regulations in their 2017 fee schedule update that removed preauthorization requirements for telemedicine services. The DWC hopes to see telemedicine implemented more in workers’ comp, particularly for rural areas with limited access to healthcare providers. Colorado previously passed House Bill 1029 in 2015, recognizing telehealth as a legitimate means to receive healthcare services, mandating that no healthcare benefit plan could require in-person contact between a provider and patient for services appropriately provided through telehealth. While the bill took effect at the beginning of the year, it did not apply to workers’ comp claims, and many had hoped to see the benefits telemedicine has provided in group health applied to workers’ compensation. The DWC’s new regulations will go into effect January 1, 2018, and the DWC is offering a series of training events to help familiarize providers with telemedicine.

The Texas Department of Insurance recently issued a memo on an informal working draft that would expand the accessibility of telemedicine services in the Texas workers’ compensation system by allowing healthcare providers to bill and be reimbursed for telemedicine services, regardless of where the injured employee is located at the time the services are delivered. The proposed rules would remove restrictions that have kept telemedicine from benefiting patients in underserved areas with limited access to healthcare providers. The proposed rules state that healthcare providers must follow applicable Medicare payment policies and billing provisions found throughout Chapter 133 and 134 of TDI-DWC rules when billing for telemedicine services.

New Mexico’s Workers’ Compensation Administration (WCA), in conjunction with the National Council on Compensation Insurance (NCCI), recently released a medical data report and a supplemental report on opioid utilization. The medical data report features a multitude of charts breaking down spending on treatment, average medical costs per case, and a distribution of payments by service category, including deeper dives into services such as physician, hospital outpatient, hospital inpatient, ambulatory surgical centers, drugs, DME, and other services.

The opioid utilization supplement examined prescription drug statistics, opioid claim stats, the concurrent use of opioids and benzodiazepines, changes in opioid prescribing patterns, and average morphine milligram equivalents (MME).

The medical data report can be viewed online at

As one of many workers’ comp updates required in the 2017-2018 New York State budget, the Workers’ Compensation Board (WCB) has recently published a set of proposed Permanency Impairment Guidelines. These revised guidelines will supersede the WCB’s 2012 Impairment Guidelines and establish the methodology for evaluation of medical impairment and determination of permanency with respect to injuries which are amenable to a schedule loss of use award. The finding of permanency is to be made by the WCB, based on the evidence of the permanent medical impairment’s measured impact on the earning power of the disabled claimant.

A 45-day public commentary period ended on October 23rd. The WCB will review the comments received prior to revising the guidelines and moving forward with implementation by the January 1, 2018 deadline.

The proposed guidelines can be viewed online at

If you would like to hear more about any of these stories, please reach out to us at


Since 2010, the semi-annual RxInformer clinical journal has been a trusted source of timely information and guidance for workers’ comp payers on how best to manage the care of injured worker claimants and plan for the challenges that lay ahead. The publication is an important part of Healthesystems’ proactive approach to advocating for quality care of injured workers while managing the costs associated with treatment.