Physician dispensing remains a hot topic in workers’ comp. While many cite the convenience and timeliness of receiving medication quickly from a physician, others note that medications dispensed directly by physicians do not receive the same in-depth level of review compared to retail pharmacies, and that physician dispensed drugs often come with higher costs.
Over the years, this debate has led to many attempts to regulate physician dispensing. According to a recent WCRI study, there has been little change in physician dispensing rules over the last three years. However, in the last few months, several states have attempted to address physician dispensing.
The Florida Division of Workers’ Compensation (DWC) proposed rule changes to remove reimbursement and billing provisions for physician-dispensed medications. This proposal follows a February 2026 court ruling, which found that injured workers’ statutory right to choose a “pharmacy or pharmacist” does not extend to physician dispensers. As a result, the DWC is proposing to remove related billing requirements, including language addressing insurer disallowance of payment for medications dispensed without prior authorization.
A public hearing was held on July 15th, and stakeholder comments are being reviewed.
Additionally, the Michigan Workers’ Disability Compensation Agency proposed updates to its Health Care Services rules and fee schedule. Among many proposed changes, this would limit physician-dispensed medication reimbursement to the first 42 days of care. A public hearing for these changes was held on July 24th, and comments received are currently being reviewed.
Earlier in 2026, Hawaii and Georgia both attempted to address physician dispensing with new bills, but neither measure made significant progress.
On the other side of the spectrum, the Pennsylvania Supreme Court ruled recently that the Workers’ Compensation Act’s anti-referral provision does not prohibit physicians from referring injured workers to pharmacies in which they have a financial interest.
The case came about when injured workers received medications from a prescriber-affiliated pharmacy, and the payer refused to reimburse the medications, arguing that the self-referrals were unlawful. An earlier Commonwealth Court ruling sided with the payer, which held that the statute’s reference to “goods and services” included prescription drugs and pharmacy services within the anti-referral prohibition. The Supreme Court disagreed and concluded that the law does not extend to pharmacy referrals.
Based on the Court’s interpretation, any expansion of the restriction to include pharmacy referrals would require changes to the statutory language.
Payers must review existing reimbursement policies and denial practices related to physician-owned pharmacies. Following this decision, payers may no longer rely on the anti-referral provision as the sole basis for denying reimbursement for prescriptions dispensed by physician-owned pharmacies.
It appears that ongoing attempts to address physician dispensing will continue for the foreseeable future. As for the concerns surrounding physician dispensing, many have stated that physician dispensing bypasses drug utilization software, which is used to evaluate a patient’s drug regimen for safety concerns, such as:
- Drug-drug interactions
- Drug-allergy interactions
- Duplication of therapy
- Inappropriate dosing range
Additionally, physician dispensing can bypass contracted rates for drug costs, which can result in higher drug costs. This is particularly noteworthy in certain drug classes.
For instance, according to the WCRI, physician dispensing and delivery pharmacies accounted for more than 70% of prescription payments for dermatological agents in 20 states. Furthermore, the NCCI reported that physician-dispensed topicals accounted for more than 50% of topical payments on average, compared to 17% for other pain management drugs.
