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NY's workers comp fee schedule - further developments

The recent imposition of a work comp pharmacy fee schedule in New York has shaken the industry - and that's not hyperbole. The latest news out of Albany is likely to intensify the aftershocks.

The preliminary guidance from the State is PBMs cannot charge more than the fee schedule, and cannot pay pharmacies more than the fee schedule.

This rather critical news arose during discussions with staff at the Work Comp Board. It's important to understand that this, and lots of other things, could change during the next 60 days (we're in an emergency regulation period (that's not the official term, but you get the idea). But for now, PBMs should carefully assess the implications of paying their pharmacy partners more than the fee schedule.

Industry sources have informed me that some of the larger pharmacy chains' PBM contracts may well be above the FS for brand (FS is AWP-14%+$4), and the inclusion of FUL language likely means the majority of generics are also reimbursable below current contract rates.

This is somewhat preliminary, but the regs are pretty clear.

What does this mean for you?

PBMs and retail pharmacies may want to look over their contracts today. State law and regulation supercedes commercial contracts, so even if the PBM-pharmacy contract calls for reimbursement at a higher level, this is inconsistent with what I'm hearing from the state.

PBMs and payers should do the same.

For now, keep your powder dry and stay tuned in to Albany - things may shift yet again.

And it may well make sense to talk with your attorneys.

Posted by on August 10, 2007 6:24 AM |

Comments

Joe,

You have stated on your blog that some chains such as Walgreens have gone on record to say that they will not accept anything below 10% below AWP. With this new WC fee schedule, they wouldn't be recieving their 10%. Infact, they would be receiving less than the Medicaid fee schedule (because the PBM has to make money too.) If what you are saying here is true, will the chains start dropping any WC related PBM? Or will the state impose administative fees on top of the fee schedule like they have done in California. This would mean that reimbursement really isn't at the Medicaid fee schedule as proposed, but higher.

Posted by: George | August 13, 2007 10:50 AM

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