LOUISVILLE, Ky. (April 4, 2016) — Injured workers can choose where they fill their prescriptions since pharmacies are considered “medical providers” under the state's workers compensation law, a Kentucky appellate court has ruled.
On behalf of its employer-members, the Kentucky Employers Safety Association (KESA), a nonprofit workers compensation self-insurance group, pays for medical care and prescription drugs related to occupational injuries and diseases, court records show.
When a newly injured worker goes straight to a pharmacy without notifying Louisville-based M. Joseph Medical, the pharmacy benefit management solutions firm that works with KESA, the association usually pays the pharmacy directly, according to records. M. Joseph Medical later re-prices the drug and requests that the pharmacy accept the adjustment.
Methuen, Mass.-based Injured Workers Pharmacy, however, refused to accept the price adjustment, saying its prescription drugs are based on commercially published average wholesale prices that are within Kentucky's fee schedule, records show.
As a result, KESA informed its employers' injured employees that it would no longer pay for prescriptions filled at Injured Workers Pharmacies and initiated medical fee disputes, according to records.
The five KESA employers involved — Steel Creations, Preston Highway Metered Concrete Inc., Murray Electronics Inc., Family Allergy and Asthma, and Samaritan Alliance L.L.C. — argued that the group should be able to choose where workers fill their prescriptions since pharmacies are not considered medical providers pursuant to Kentucky's employee choice of provider rule, according to records.
The chief administrative law judge of Kentucky's Workers' Compensation Board heard each of the disputes at the same time in May 2013, finding that a pharmacy is a medical provider and injured workers have the right to choose where they fill prescriptions, and that the sanctions against KESA were justified since it prosecuted the claims without reasonable grounds, records show.
KESA was then ordered to pay Injured Workers Pharmacy the average wholesale price-based prices it charged for the injured employees' drugs, according to records. On appeal, the Workers' Compensation Board affirmed most of the judge's decisions, reversing only the assessment of sanctions against KESA.
KESA filed a petition for review arguing that average wholesale price figures are not the average of actual prices paid to wholesalers for drugs, and that the board erred in its determination that pharmacies are medical providers.
A three judge panel of Kentucky's Court of Appeals affirmed the Workers' Compensation Board's decision, ruling that pharmacies are medical providers, and declining to hold that commercially published average wholesale prices should not be used in calculating average wholesale prices.
“The fact that KESA is able to obtain a cheaper price by working with (M. Joseph Medical) and its PBMs does not necessitate the conclusion that (Injured Workers Pharmacy) prices, gathered from (average wholesale prices), are not representative of the average wholesale price,” according to the appellate court's ruling.
__________________________________
This report appeared on the website of Business Insurance magazine, a Chicago-based sister publication of Tire Business.