The Texas Workers' Compensation Commission (the commission) proposes new §134.500, and §§134.502-134.506 concerning pharmaceutical services. Section 134.501 is reserved for expansion.

These new rules are proposed to comply with statutory mandates in the Texas Labor Code. Prior to the 77th Legislative Session, 2001, §408.028 required a health care practitioner providing care to an injured employee to prescribe any necessary prescription drugs in accordance with applicable state law. It also stated that an insurance carrier may not require an employee to use pharmaceutical services designated by the carrier.

House Bill 2600 (HB-2600), adopted during the 2001 Texas Legislative Session, amended §408.028. In addition to previous requirements, the revised statute requires that physicians and doctors order over-the-counter alternatives to prescription medications when clinically appropriate and applicable, in accordance with state law. Amended §408.028 requires the commission by rule to develop an open formulary under §413.011 that requires the use of generic pharmaceutical medications and clinically appropriate over-the-counter alternatives to prescription medications as clinically appropriate and applicable in accordance with state law. Finally, amended §408.028 requires the commission to adopt rules to allow an injured employee to obtain reimbursement for over-the-counter medications prescribed or ordered, and purchased by the employee.

A May, 2000 study by the Research and Oversight Council on Workers' Compensation (the ROC) examined state agency workers' compensation pharmaceutical data and concluded that pharmaceutical costs have risen an average of 50 percent from 1997 to 1999. During the period of 1995 through 1998, the frequency of state employee workers' compensation filings decreased 20 percent. Rising utilization coupled with the fact that injured employees in Texas have a choice between brand name and generic drugs created major cost increases to the system. HB-2600 requires the use of generic medications. This requirement, stated throughout new §134.500, and §§134.502-506, is anticipated to create a system-wide savings.

Proposed new §134.500, and §§134.502-506 provide much needed structure and clarification of pharmaceutical benefits. Section 134.501 is reserved for future use. In the absence of pharmacy data, it is difficult to quantify the problems and costs relating to pharmacy issues. However, based on the anecdotal personal experiences from employees, prescribing doctors, pharmacists, and carriers involved in pharmaceutical delivery, it is believed that the proposed rules will address many of the problems in the system. The Medical Advisory Committee (MAC) provided advice and input for proposed §134.500, and §§134.502-506 through a subcommittee. The commission's Medical Advisor also provided consultation and recommendations for these rules.

§134.500. Definitions.

Proposed new §134.500 provides definitions for terms used throughout this subchapter. Adding a section of definitions clarifies the meaning of the rules and increases the ability of the parties to understand their responsibilities. The following terms are defined: "compounding," "statement of medical necessity," "nonprescription drug or over the counter medication," "open formulary," prescribing doctor," "prescription," and "prescription drug." The rule is proposed to apply to prescriptions that are prescribed on or after March 1, 2002.

§134.502. Pharmaceutical Services.

Proposed new §134.502 relates to the prescribing, billing and dispensing of medications. This section requires doctors to prescribe generics and over-the-counter alternatives when appropriate and to comply with §134.506, the Outpatient Drug Formulary. Current rules do not put any limitations on brand-name prescriptions and do not address the prescription of over-the-counter medications. HB-2600 gives the commission the authority to require the use of generic medications and to address prescribing of over-the-counter medications as alternatives to prescription drugs, and this rule does both. The rule as proposed does not allow an employee to refuse a generic prescription and opt for a brand name drug by agreeing that the employee will pay additional cost or a copayment, as allowed in some other health care systems.

This rule also introduces the statement of medical necessity and provides a framework for the contents of the statement. This tool, already informally used, will assist multiple system participants in gaining access to and in the reimbursing of medications. A statement of medical necessity will assist pharmacists in the resolution of medical necessity disputes. The statement will also assist injured employees when seeking reimbursement for out-of-pocket expenses for medications. Proposed §134.502 formalizes the statement of medical necessity by requiring the doctor to furnish it to a requesting party and giving a framework for the content of the statement or documentation.

§134.503. Reimbursement Methodology.

Proposed new §134.503 outlines the reimbursement for pharmaceutical services. The general reimbursement methodology from the 1996 Medical Fee Guideline (MFG) was carried over with some exceptions. The 1996 MFG had a dispensing fee of $7.50 for generic medications and a dispensing fee of $4.00 for brand-name medications. The higher fee for generic medications was designed to encourage the dispensing of generic medications. Proposed §134.502 requires the use of generics in most instances; therefore, it is not necessary to provide a financial incentive to dispense generic medications. The proposed rule also eliminates the separate multiplier for generic and brand name drugs, and sets the multiplier at 1.25 for both. The 1996 Medical Fee Guideline required use of two monthly publications of Medispan, while the proposed rule authorizes use of any nationally recognized pharmaceutical reimbursement system.

Proposed §134.503 instructs the pharmacist to dispense the generic when prescribed or when a prescription does not require the use of a brand name drug. The rule as proposed does not allow an employee to refuse a generic prescription and opt for a brand name drug by agreeing that the employee will pay additional cost or a copayment, as allowed in some other health care systems.

The proposed rule sets reimbursement for over the counter drugs at reasonable retail value, excepts inpatient and parenteral drugs, and requires insurance carriers to update pricing data at least every 30 days.

§134.504. Pharmaceutical Expenses Incurred by the Injured Employee.

Proposed new §134.504 provides a process for the injured employee to obtain reimbursement for medications that have been purchased out-of-pocket. Current rules do not address injured employee reimbursement for pharmaceutical expenses, nor do they require a carrier to consider an injured employee's request for reimbursement. Under current rules, injured employees submit a variety of forms of requests to carriers seeking reimbursement. Proposed rule 134.504 establishes a standardized method for employees to seek and receive reimbursement for monies paid out-of-pocket for prescriptions.

§134.505. Chronic Pain Prescriptions. Proposed new §134.505 addresses opioids prescribed for employees with chronic, non-cancer pain. The rule requires the treating doctor to submit a written report to the carrier for treatment with opioids beyond thirty days. The proposed rule outlines what the report must contain and requires the report be submitted at least every sixty days when treating with opioids. The proposed rule also addresses payment and denial of payment for opioids.

§134.506. Outpatient Drug Formulary New §134.506 as proposed, would adopt the outpatient open drug formulary as defined in Section 134.500(a)(4). Proposed §134.506 also addresses detoxification and chemical dependency treatments, and additional information for certain prescriptions. It also gives direction to the carrier as to what to do when they have concerns about medications prescribed, and requires 15-day notice prior to discontinuing payment for one or more drugs in a routine, regularly observed regimen of prescription drugs.

Tom Hardy, Director of Medical Review, has determined that for the first five-year period the proposed rules are in effect there may be fiscal implications for state or local governments as a result of enforcing or administering the rule. The added clarification provided by these rules could result in a reduction of disputes, thereby decreasing the cost of enforcement or administration by the commission. Any reduction in costs to the commission cannot be quantified.

Local government and state government as a covered regulated entity will be impacted in the same manner as described later in this preamble for persons required to comply with the rules as proposed.

Mr. Hardy has also determined that for each year of the first five years the rules as proposed are in effect the public benefits anticipated as a result of enforcing the rules will be an improved system for pharmaceutical delivery that will provide positive benefits to all participants in the system. The participants in the system are: injured employees, employers, insurance carriers and health care providers, including pharmacists. Use of a statement of medical necessity should reduce disputes, benefiting all system participants.

The benefits of the proposed new rules to employees are the improved access to pharmaceutical services, including an open formulary and use for off label indications. Clear guidelines will assist pharmacists in participating in the system and should reduce disputes that delay receipt of medications. Employees will also benefit from the requirement for 15-day notice in advance of discontinuing payment for drugs in a routine, regularly observed regimen of prescription drugs. In addition, the proposed new rules provide procedures for employees seeking reimbursement for out-of-pocket monies spent on medications.

The benefits of the proposed new rules to employers is the assurance that their injured employees are receiving appropriate and medically necessary medications in a timely manner for their compensable injury in anticipation of an early release-to-work as appropriate.

Insurance carriers will benefit from the proposed new rules. Clarity in the rules should give carriers the ability to process claims more quickly and pay claims more accurately. Reduction in the number of disputes because of added clarity will also benefit insurance carriers. Increased use of generic and over-the-counter medications will also reduce carrier costs.

Prescribing doctors will benefit from the proposed new rules in that they will have clear guidelines to follow when prescribing medications. Clear guidelines outlining prescribing and reimbursement will assist the prescribing doctor and pharmacist in making decisions and should result in a reduction in disputes. The proposed rules will also encourage pharmacists to provide services for injured employees.

There will be minimal anticipated economic costs to persons who are required to comply with the rules as proposed.

The fiscal impact of the reimbursement methodology and the requirements relating to use of generic drugs and over the counter medications, is difficult to quantify because the commission does not receive data on pharmacy billing and payments. The impact on a pharmacy will vary depending on that pharmacy's current practice of dispensing generics versus name brand drugs, and the pharmacy's profit margin for generics versus name brand drugs. It is anticipated that use of generics and over the counter medications will reduce insurance carrier and system medical costs. Health care providers will have some increased costs in providing statements of medical necessity and required chronic pain treatment plans, but those costs should be off-set by a reduction in the number of disputes. Insurance carriers will experience some increase in payment of medical benefits because of the requirement for 15-day notice prior to discontinuing payment for drugs in a routine, regularly observed regimen of prescription drugs, but this cost should be more than off-set by a reduction in disputes and savings from use of generic drugs and over the counter medications.

There will be no adverse economic impact on small businesses or on micro-businesses as a result of the proposed new rules. There will be no difference in the cost of compliance for small businesses and micro-businesses as compared to large businesses because the same basic processes and procedures apply to all entities regardless of size.

Comments on the proposal must be received by 5:00 p.m., October 1, 2001. You may comment via the Internet by accessing the commission's website at www.twcc.state.tx.us and then clicking on "Proposed Rules." This medium for commenting will help you organize your comments by rule chapter. You may also comment by emailing your comments to RuleComments@twcc.state.tx.us or by mailing or delivering your comments to Nell Cheslock at the Office of the General Counsel, Mailstop #4-D, Texas Workers' Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 78704-7491.

Commenters are requested to clearly identify by number the specific rule and paragraph commented upon. The commission may not be able to respond to comments that cannot be linked to a particular proposed rule. Along with your comment, it is suggested that you include the reasoning for the comment in order for commission staff to fully evaluate your recommendations.

Based upon various considerations, including comments received and the staff's or commissioners' review of those comments, or based upon the commissioners' action at the public meeting, the rule as adopted may be revised from the rule as proposed in whole or in part. Persons in support of the rule as proposed, in whole or in part, may wish to comment to that effect. Commenters may wish to express their opinion regarding an employee's ability to refuse a generic prescription, and include references to statutory authority supporting that opinion.

A public hearing on this proposal will be held on October 2, 2001, at the Austin central office of the commission (Southfield Building, 4000 South IH-35, Austin, Texas). Those persons interested in attending the public hearing should contact the commission's Office of Executive Communication at (512) 440-5690 to confirm the date, time, and location of the public hearing for this proposal. The public hearing schedule will also be available on the commission's website at www.twcc.state.tx.us.

The proposed new rules are proposed under the following statutes: the Texas Labor Code §402.042, that authorizes the Executive Director to enter orders as authorized by the statute as well as to prescribe the form and manner and procedure for transmission of information to the commission; the Texas Labor Code §402.061, which authorizes the commission to adopt rules necessary to administer the Act; the Texas Labor Code §406.010, that authorizes the commission to adopt rules necessary to specify the requirements for carriers to provide claims service and establishes that a person commits a violation if the person violates a rule adopted under this section; the Texas Labor Code §408.021(a), that states an employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury as and when needed; the Texas Labor Code §408.025, that requires the commission to specify by rule what reports a health care provider is required to file; the Texas Labor Code §408.028, as passed by the 77th Texas Legislature, that requires health care practitioners providing care to an employee to prescribe any necessary prescription drugs in accordance with applicable state law; the Texas Labor Code §413.002, that requires the commission to monitor health care providers and insurance carriers to ensure compliance with commission rules relating to health care including medical policies and fee guidelines; the Texas Labor Code §413.011, as passed by the 77th Texas Legislature, that requires the commission by rule to establish medical policies and guidelines relating to necessary treatments for injuries, and fees, designed to ensure the quality of medical care and to achieve effective medical cost control; the Texas Labor Code §413.012, that requires the commission to review and revise medical policies and fee guidelines at least every two years to reflect current medical treatment and fees that are reasonable and necessary; the Texas Labor Code §413.013 (1) (2) and (3), that require the commission by rule to establish a program for prospective, concurrent, and retrospective review and resolution of a dispute regarding health care treatments and services; a program for the systematic monitoring of the necessity of the treatments administered and fees charged and paid for medical treatments or services including the authorization of prospective, concurrent or retrospective review under the medical policies of the commission to ensure the medical policies and guidelines are not exceeded; and a program to detect practices and patterns by insurance carriers in unreasonably denying authorization of payment for medical services requested or performed if authorization is required by the medical policies of the commission; the Texas Labor Code §413.0141, as passed by the 77th Texas Legislature, regarding initial pharmaceutical coverage; the Texas Labor Code §413.017, that establishes presumption of reasonableness of medical services; the Texas Labor Code §413.031, as passed by the 77th Texas Legislature, that entitles a party, including a health care provider, to a review of a medical service for which authorization for payment has been denied or reduced; the Texas Labor Code §415.002, that establishes an administrative violation for an insurance carrier to: unreasonably dispute the reasonableness and necessity of health care, to violate a commission rule or to fail to comply with the Act; the Texas Labor Code §415.003, as passed by the 77th Texas Legislature, that establishes an administrative violation for a health care provider to: administer improper, unreasonable, or medically unnecessary treatment or services, to violate a commission rule, or to fail to comply with the act; and the Texas Labor Code §415.0035, that establishes an administrative violation for an insurance carrier to deny preauthorization in a manner that is not in accordance with commission rules.