The Texas Workers' Compensation Commission (the commission) adopts new §134.501, Initial Pharmaceutical Coverage with changes to the proposed text published in the August 9, 2002 issue of the Texas Register (27 TexReg 7041).

As required by the Government Code §2001.033(1), the commission's reasoned justification for this rule is set out in this order which includes the preamble, which in turn includes the rule. This preamble contains a summary of the factual basis of the rule, a summary of comments received from interested parties, names of those groups and associations who commented and whether they were for or against adoption of the rule, and the reasons why the commission disagrees with some of the comments and proposals.

Changes made to the proposed rule are in response to public comment received in writing and at a public hearing held on September 5, 2002, and are described in the summary of comments and responses section of this preamble.

The provision of pharmaceutical services to injured workers in the workers' compensation system involves a health care provider writing a prescription, the injured employee taking the prescription to a pharmacist, the pharmacist filling the prescription and billing a workers' compensation insurance carrier (carrier) that then pays the bill. Because the issue of compensability in workers' compensation may not be determined until after a prescription is filled, pharmacies sometimes are denied payment for a prescription provided to an injured worker. In this situation the pharmacist incurs a loss. As a result of this uncertainty of payment, some pharmacies refuse or are reluctant to fill workers' compensation prescriptions making it difficult for some injured employees to obtain prescribed medications needed to treat their injuries

House Bill 2600 (HB-2600), adopted during the 2001 Texas Legislative Session, amended §408.028, and added §413.0141, Initial Pharmaceutical Coverage. This new section of the Act allows the commission to adopt rules that will provide for payment of specified pharmaceutical services sufficient for the first seven days following the date of injury if the health care provider verifies insurance coverage and receives a verbal confirmation of an injury from the employer or from the carrier. In addition, if the injury is determined to be noncompensable, the carrier is eligible for reimbursement from the Subsequent Injury Fund (SIF) for such pharmaceutical services. HB-2600 gives the commission the authority to establish this process by adopting rules on or after September 1, 2002.

To address the difficulty in obtaining pharmacy services that injured workers have reported, the commission has chosen to implement the option provided by §413.0141 regarding initial pharmaceutical coverage.

Adopted new §134.501 meets the statutory intent of §413.0141 by providing the requirements the health care provider must follow to ensure payment under this statute for prescription medication for the first seven days following the date of injury. The rule also provides the requirements the carrier must follow to obtain reimbursement from the SIF if the injury is determined to be noncompensable. The Medical Advisory Committee (MAC) and the HB-2600 legislative stakeholders group reviewed a draft of §134.501 prior to proposal and provided input. The commission's Medical Advisor also provided consultation and recommendations for this rule.

Adopted new §134.501 establishes the process and requirements for requesting reimbursement for prescription medication sufficient for the first seven days following the date of injury. If the health care provider documents verification of workers' compensation insurance coverage and receipt of a verbal confirmation that an injury has been reported to the employer or the carrier, the carrier shall provide payment for the amount of pharmaceutical services reasonable and necessary to treat the reported injury for the first seven days following the date of injury. If the injury is determined to be noncompensable, the carrier is eligible for reimbursement from the SIF pursuant to commission rules 116.11 and 116.12 (relating to Request for Reimbursement or Refund from the Subsequent Injury Fund and Subsequent Injury Fund Payment/Reimbursement Schedule, respectively).

Subsection (a) of adopted new §134.501 defines the methodology for calculating the seven-day period following the date of injury and how reimbursement for the pharmaceutical services will be determined.

Based on comments received, changes were made to subsection (a) to clarify applicability of the initial coverage period. Language addressing 'reasonableness and medical necessity' was removed in order to comply with the statutory intent of §413.0141. Based upon these changes, carriers will not be required to pay for medications sufficient for the initial coverage period if the carrier determines in accordance with the Act and commission rules, that the medications are not reasonable or medically necessary or that they are unrelated to the reported workers' compensation injury. Language was also added to the end of the subsection that would further clarify that initial pharmaceutical coverage is limited to care that is reasonable, medically necessary, and related to the reported injury. Subsection (a)(3) was amended by adding language to the first sentence that clarifies the subsection only refers to initial pharmaceutical coverage. Finally, the effective date of the rule was changed from September 1, 2002 to December 1, 2002 because of a later than expected adoption and to allow adequate time for implementation.

Subsection (b) of adopted new §134.501 provides that the carrier may be eligible for reimbursement for payments made under subsection (a) from the SIF as provided in Chapter 116 of the commission rules.

Subsection (c) of adopted new §134.501 states that the health care provider can verify insurance coverage and confirm the existence of a report of an on-the-job injury by calling the employer or the carrier. This section also establishes a requirement for the employer and/or the carrier, upon request, to verify insurance coverage and to confirm any report of an injury. Insurance coverage can also be confirmed by using the commission's Internet-based coverage verification system. When the health care provider has verified insurance coverage and has confirmed an injury has been reported, the health care provider is required to document how and from whom the verification and confirmation was received. When billing for the pharmaceutical services that were provided for the first seven days following the date of injury, the health care provider shall affirm on the bill for pharmaceutical services that the health care provider obtained and documented the required verification and confirmation.

Subsection (d) of adopted new §134.501 states that the health care provider may dispense the amount of medication ordered by the prescribing doctor in accordance with applicable laws. This will allow the dispensing health care provider to make the decision whether to dispense greater than the amount of pharmaceutical services sufficient for the first seven days following the injury when the prescription is for a greater amount. The key here is that the health care provider is not limited to providing only seven days worth of medication just because the rule focuses on this initial period following the date of injury. Reimbursement to the carrier from the SIF is however limited to the first seven days following the injury.

Subsection (e) of adopted new §134.501 allows voluntary certification of pharmaceutical services in accordance with Texas Labor Code §413.014(e) and §134.600 of this subtitle (relating to Preauthorization, Concurrent Review, and Voluntary Certification of Health Care.)

Subsection (f) describes the importance of communication in the prompt delivery of pharmaceutical services and encourages employees to promptly report injuries to their employer. This subsection encourages employers to provide the employee with a written statement that confirms that an injury has been reported, that identifies the date of injury as reported by the employee and the name of the carrier. This subsection affirms that providing the information that verifies coverage and confirms that an injury was reported does not waive the employer's right to contest the compensability of the claim should the carrier accept liability for the claim. It also does not waive the carrier's right to further review the claim under the Act and commission rules.

The following group submitted comments generally supporting §134.501: Village Family Practice.

The following groups submitted comments recommending delaying adoption at this time: Alliance of American Insurers and Texas Association of Business.

The following groups submitted comments making recommendations, and/or supporting portions and opposing portions of §134.501: PMSI, Texas Mutual Insurance Company, and Third Party Solutions.

Summaries of the comments and commission responses are as follows:

COMMENT: Most commenters expressed general support of the rule.

RESPONSE: The commission agrees.

COMMENT: Some commenters requested that the rule be delayed until further progress has been made in reducing overall costs to the system, stating reasons that it is counter productive and will add to the costs of the system before off-setting measures have been implemented. Commenters additionally stated that the commission is not required to implement §413.0141.

RESPONSE: The commission disagrees. Section 408.028 of the Act was amended by HB-2600 and contained a required implementation date of February 1, 2002. Among other things, this section contained cost-saving provisions, specifically a requirement for the use of generic and over-the-counter medications in lieu of brand name medications. Rules implementing this section were adopted in December of 2001 and became effective on March 1, 2002. Since the implementation of these rules, carriers should have realized savings and the commission has confirmed with some carriers that this in fact has occurred. The commission has therefore chosen to implement §413.0141.

COMMENT: Commenter recommended that the preamble acknowledge that carriers would incur administrative expense in seeking reimbursement from the SIF. Another commenter felt that carriers would be negatively impacted by the rule because carriers will be required to pay multiple filling fees to pharmacists in compensable cases, there was no certainty of reimbursement to carriers, and the reimbursement mechanism may be impractical to utilize.

RESPONSE: The commission agrees that administrative expenses may be incurred in seeking reimbursement from the SIF. However, the commission believes that these administrative expenses are necessary to ensure that only eligible amounts are paid from the SIF in accordance with commission rules. The rule allows a pharmacist to provide pharmaceutical services for more than the first seven days following the date of injury as long as it is in accordance with the prescription. In addition, the health care provider and the carrier can agree to voluntary certification of medication for greater than the first seven days following the injury. In these cases only one dispensing fee would be required. The possibility of multiple filling fees is a function of the statutory limits on liability for medical services and on reimbursement from the SIF.

COMMENT: Commenter requested clarification of the term "health care provider" to explain the commission's intent in subsection (a) in order to reduce confusion and further delays of care. Commenter stated that the term as proposed could be interpreted several ways: as a third party administrator or billing entity; pharmacy benefits managers; and the actual end provider or end pharmacy that actually provides the services. Another commenter recommended the incorporation of language to subsection (a) to read, " ... health care provider (HCP) or an agent or assignee of the health care provider."

RESPONSE: The commission disagrees that additional language is necessary. System participants can have agents perform actions on their behalf. A common example of this includes carriers designating third party administrators to manage aspects of their claims such as the payment of benefits. The employer of the agent is responsible for the acts and omissions of the agent. This concept applies to health care providers as well. Therefore, if a pharmacy employs an agent and that agent fails to comply with the rule on behalf of the pharmacy, the pharmacy is considered to have committed the violation. However, the commission has observed situations where agents of carriers refuse to communicate or acknowledge agents of pharmacies and vice versa. To the extent that such non-communication causes a breakdown in benefit delivery, it may violate the statute and rules. When a system participant designates an agent to serve a function, that relationship cannot be ignored.

In reviewing the types of agent relationships that exist, the commission has noted that many pharmacies contract with various agents for billing and reimbursement services. The agent serves as the pharmacy's proxy in dealing with the carrier. Generally, the pharmacy bills the agent and the agent reimburses the pharmacy and then bills the carrier.

The commission has found in some cases that when a carrier receives a bill from the pharmacy's agent, the carrier reimburses the pharmacy directly rather than the agent. This results in the pharmacy being double paid due to the "advanced payment" from the agent, and creates confusion, as the agent believes that the carrier has failed to pay the bill. Consequently, some agents have filed violation referrals with Compliance and Practices for the carriers' apparent failure to timely pay or dispute the pharmacy bills. The commission is developing a new pharmacy billing form (TWCC-66a) that allows designation of where and to whom the payment is to be remitted. This should alleviate this problem and help clarify the role of the agent in the process.

COMMENT: Commenter requested clarification in subsection (a). Commenter stated the subsection is vague enough to force carriers to pay for medications unrelated to the compensable injury, and requests clarification on how a carrier can challenge unrelated medications based on this proposed language. Another commenter echoed this concern and suggested that at a minimum, the preamble needed to indicate that carriers would not be reimbursed from the SIF for prescriptions that are not appropriate or not medically necessary but which were paid under subsection (a).

However, this second commenter's preference was to clarify the definition of "specified pharmaceutical services" by amending the last sentence of subsection (a) to read "For purposes of this rule, specified pharmaceutical services are prescription drugs and over-the-counter medications prescribed by a doctor that cure or relieve the effects naturally resulting from the compensable injury, promote recovery, or enhance the ability of the employee to return to or retain employment" (suggested additional language is in italics). The commenter's reasoning for this was that it mirrors statutory language and would help clarify that the initial pharmaceutical coverage is limited to care which is reasonable and necessary and related to the reported injury.

RESPONSE: The commission agrees that the initial pharmaceutical coverage is limited to care which is reasonable and necessary and related to the reported injury. The fact that the Legislature limited SIF reimbursement for the initial coverage period to circumstances in which the claim is found to be noncompensable indicates that the guarantee of payment was intended to address claims where the carrier questions compensability and not reasonableness or medical necessity or relatedness to a workers' compensation injury. Carriers are expected to review claims for relatedness as well as reasonableness and medical necessity and providers continue to have access to medical dispute resolution should such a question arise.

Therefore, the commission has amended subsection (a) as suggested by the commenter and has further removed language in the previous sentence that addressed reasonableness and medical necessity. Based upon these changes, a carrier will not be required to pay for medications during the initial coverage period if, in accordance with the Act and commission rules, the carrier finds them not to be reasonable or necessary or finds them unrelated to the alleged workers' compensation injury.

COMMENT: Commenter recommended adding the following language to proposed subsection (a)(3), "Payment for the specified pharmaceutical services for the first seven days following the date of injury shall be in accordance with §134.503 of this title (relating to Reimbursement Methodology)" (suggested additional language is in italics). Commenter stated that it clarifies that the subsection refers only to initial pharmaceutical coverage.

RESPONSE: The commission agrees and has added language to subsection (a)(3) as recommended.

COMMENT: Commenter recommends a language substitution in subsection (b) from "may" to "shall" in stating the carriers' eligibility from the SIF under subsection (a).

RESPONSE: The commission disagrees. The statute states that the carrier is eligible for reimbursement from the SIF, however that eligibility is conditional. A carrier must meet the conditions set out in §413.0141 and reimbursement is subject to the conditions in commission rules 116.011 (relating to Request for Reimbursement or Refund from the Subsequent Injury Fund) and 116.012 (relating to Subsequent Injury Fund Payment/Reimbursement Schedule). Reimbursement is also subject to the priority of reimbursement established in the statute and commission rules.

COMMENT: Commenter supported proposed subsection (c)(1) believing it will lead to smooth implementation and future compliance.

RESPONSE: The commission agrees.

COMMENT: Commenters recommended language clarification in (c)(2) regarding "prescribed manner and methodologies" on how health care providers are to affirm the verified information on the bill. Commenter additionally inquired as to whether the commission will be developing a form for this item of the proposed rule.

RESPONSE: The commission disagrees. The phrase "form and manner" is used to allow flexibility, particularly with filing requirements. This also allows the commission to offer additional filing options without amending a rule should technology change. The commission is developing a new pharmacy billing form (TWCC-66a) on which the pharmacy will make its affirmation.

COMMENT: Commenter recommended language addition to the end of subsection (c)(2) to read: "The insurance carrier shall not be liable for reimbursement of pharmaceutical services when the health care provider fails to affirm this required information." Commenter states this language is needed because without affirmation of the required verification, the carrier should not be liable until such proof is provided.