Act 184 Closes the Physician-Dispensing Loophole

10.28.14

New Act Has the Potential to Save the Insurance and Employer Community Millions of Dollars in Prescription Fee Reimbursements

Act 184—previously H.B. 1846—has removed all incentives from the practice of physician dispensed medications.  Signed into law by Governor Corbett on October 27, 2014, Act 184 brings reimbursement for physician-dispensed medications in line with reimbursements paid to pharmacies, and limits the length of time that a physician can dispense medications directly to an injured worker.

One of the main driving forces behind Act 184 was the extremely high costs to the workers’ compensation system of physician-dispensed prescriptions, with no meaningful associated benefit.  As a result, Act 184 specifically states that the savings realized by passage of the amendment shall be used to provide a direct reduction in workers’ compensation insurance rates.  In other words, stopping the practice of physician-dispensed prescriptions will have a direct impact on an employer’s bottom line.

Prior to Act 184, physicians had the ability to dispense medication directly to injured workers, and avoid the pricing caps applicable to pharmacies.  By repackaging and dispensing prescription medications, physicians could realize a substantial profit margin.  This practice was permitted only in the workers’ compensation context, and was only applicable to physicians.  Prescriptions dispensed by a pharmacy were subject to a reimbursement cap of 110 percent of the average wholesale price of the prescription.

Physician-dispensed medication will now be subject to the reimbursement cap of 110 percent of the average wholesale price of the prescription.  The original manufacturers’ NDC number must now be included on all bills and reports seeking reimbursement.  A repackaged NDC number will no longer be acceptable.

Physician dispensed schedule II and III prescriptions will be limited to one initial seven day supply commencing upon the injured worker’s initial treatment by a health care provider.  If the injured worker undergoes a medical procedure or surgery, an additional 15 day supply may be dispensed on the date of the procedure.

Act 184 applies to all physicians treating in the aggregate, so an injured worker is prevented from having multiple physicians dispensing prescriptions.  Finally, only licensed pharmacies are entitled to seek reimbursement for dispensing over-the-counter medications.

Act 184 is prospective only, and takes effect on December 26, 2014.

For more information contact Peter M. Harrison at  267.765.4133 or pharrison@wglaw.com or Joseph Gentilcore at 215.972.7932 or jgentilcore@wglaw.com.

Media Contacts

Lexi Burchmore
267.295.3377
lburchmore@wglaw.com

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