In February, California’s Division of Workers’ Compensation (DWC) proposed changes to the Official Medical Fee Schedule (OMFS) for workers’ comp.

While there are a slew of proposed revisions to pharmaceutical reimbursements, one potential change is of particular concern to physicians. The revised regulations would eliminate the pharmaceutical dispensing fee for physicians.

A letter from occupational health provider group Concentra to the DWC explains why eliminating the physician dispensing fee is wildly unfair to physicians who treat injured workers. Every physician in California should read this letter thoroughly and share their concerns before or at the scheduled public hearing.

DWC Proposal: Drop Physician Dispensing Fees

The proposed regulations, available to review in full here, amend and adopt several sections of the California Code of Regulations (CCR), including the Physician/Non-Physician Practitioner and Pharmacy portions of the Official Medical Fee Schedule (OMFS).

In a February Newsline, the DWC states:

“The proposed regulations make revisions to the Physician Fee Schedule and Pharmaceutical Fee Schedule to adopt relevant Medi-Cal revisions and related provisions of the Labor Code.”

The DWC Newsline does NOT mention that the DWC is adding a new CCR, 9789.40.5: “Pharmaceuticals Dispensed By a Physician on or after [date to be determined].” §9789.40.5(f) would mandate:

“A dispensing fee is not payable for a drug dispensed by a physician.”

Physicians may reasonably wonder why the DWC wants to suddenly deprive them of revenue for a vital service to injured workers. In its Initial Statement of Reasons for the proposal, the DWC claims (emphasis ours):

“Physicians will dispense drugs to their patients as part of an office visit, and will be reimbursed for an evaluation and management code, which includes time spent counseling the patient (such as advising on medication usage), and documenting the patient record.  Many of the tasks involved in dispensing a drug to a patient are already included in the physician’s reimbursement.”

According to the DWC's “logic,” physicians are already paid for dispensing medications when reimbursed for Evaluation and Management (E/M), which is – to use technical workers’ comp regulatory jargon – horse poop.

Concentra Defends Dispensing Fees

In a letter to the DWC submitted as part of the public comment period, Concentra Executive Vice President Greg Gilbert outlines several compelling reasons to retain physician dispensing fees — and why physician dispensing is a vital component of the workflow for injured worker care.

1. Dispensing tasks are not compensated for under E/M codes.
   
   As Concentra points out, E/M billing codes 99202-99215 include only “the work value associated with the management of the medication regarding the decision to prescribe,” not the actual cost and value of dispensing.
   

2. Medical Decision Making (MDM) does not include dispensing pharmaceuticals.
   
   Concentra cites both the American Medical Association and the Medical Group Management Association in stating that the MDM component of E/M billing codes reflects the time and work required to evaluate medications, not dispense them.
   

3. Dispensing tasks are clearly defined (and not included in E/M).
   
   Concentra refers to the California Welfare and Institutions code, which reflects federal regulations that define dispensing fees as covering “the overhead associated with dispensing (procurement and inventory management), preferred drug formulary (MTUS) review, patient drug utilization review, patient counseling on how to take the medication and any side effects” — none of which are covered by E/M reimbursement.
   

4. Physicians and pharmacists incur similar costs and provide similar value when dispensing medications.
   
   Concentra poses the question: how is it less valuable or costly for a physician to dispense medications from a clinic than for a pharmacist to dispense them from a pharmacy? California Labor Code makes no distinction between physician dispensing and pharmacy dispensing.
   

Concentra contends that if the DWC considers dispensing medications a free service (but only when physicians do it), clinics will be forced to stop dispensing altogether. This would create numerous hurdles for injured workers subject to the already labyrinthian workers’ comp system, including:

• Making it more challenging for physicians to ensure adherence to prescriptions by filling prescriptions at the practice
• Overburdening already-overburdened retail pharmacies facing staff shortages
• Forcing injured workers to pay for medications upfront; clinics like Concentra dispense without payment and assume the risk of the injury claim being denied
• Overburdening emergency rooms, where injured workers who cannot afford medications may go to receive medications without providing immediate payment
• Subjecting injured workers to language barriers, which is a more common problem for pharmacies than clinics and other practices staffed with interpreters
• Imposing extra transportation needs on injured workers who must visit a pharmacy in addition to the physician’s practice

Concentra is to be applauded for drawing attention to this proposal, and for taking such a strong stance in support of injured workers and the physicians who treat them.

Read the full letter here, and add your voice to the chorus of physicians telling the DWC to take a beat before depriving providers of even more revenue and making the treatment of injured workers even less financially sustainable for practices statewide.

DWC hearing details are as follows:

April 11, Thursday at 11 AM PT
Elihu Harris State Building
1515 Clay Street, Second Floor, Room One
Oakland, California 94612.

Written comments may be submitted via mail, fax, or email by 11:59 PM PT on April 11 to:

Maureen Gray
Department of Industrial Relations
Division of Workers’ Compensation
1515 Clay Street, 18th floor

Oakland, CA 94612

Fax: (510) 286-0687
Email: dwcrules@dir.ca.gov

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