Florida: Doctors dispute physician dispensing as WC cost driver

State regulators' annual report on the workers' comp system is not sitting well with some Florida physicians. The Florida Medical Association is taking issue with statements about the effect of physician drug dispensing on system costs.

The 2012 Annual Workers' Compensation Report from the Florida Office of Insurance Regulation points to the "developing physician drug dispensation issue," saying workers' comp rates could decline 1.1 percent if the state were to limit the amount physicians can charge for repackaged drugs. The FMA has repeatedly called that a "bogus claim" saying the report itself shows "virtually no difference" in the cost of drugs dispensed by physicians and pharmacies.

Jeffery M. Scott, general counsel of the FMA is quoted as saying that insurance carriers have engaged in what appears to be an anti-competitive scheme of intimidation against dispensing physicians who are simply trying to treat their patients effectively and efficiently. He's also quoted as saying that, in order to "increase patients' access to health care in Florida, there is a need for policies that help physicians provide that care in a free-market system, rather than making it harder with price-fixing schemes that hurt physicians and their patients."

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The OIR's annual report is mandated by state statute and evaluates competition in the state's workers' comp system. It notes than more than 95 percent of the reimbursement dollars spent on repackaged drugs in Florida since 2008 has been the result of physician dispensing and nearly 98 percent in 2011. "A by-product of repackaging/relabeling has been that the average unit price of a repackaged drug can be many times that of the drug in its non-repackaged form."

In addition, the annual report says medical costs in Florida's workers' comp system are driven by inpatient and outpatient care, and ambulatory surgical centers. It says savings between 8.6 percent and 9.4 percent could be realized by addressing the issue.

"NCCI estimates that substantial savings could be achieved with legislative reforms for the reimbursement of hospital inpatient care, hospital outpatient care, ambulatory surgical center care and drug repackaging," the report says.

The report also found:

The Florida workers' comp market is competitive based on a comparative analysis. It is served by a large number of independent insurers with none exercising meaningful control over price. Also, there are no significant barriers to entry and exit of insurers in the market.
Of the six most populous states, Florida is one of two where private market insurers rather than a state-sponsored residual market dominate the market.
Reforms enacted several years ago have and continue to impact the state's workers' comp rates, especially with regard to the attorney's fees provisions. However, the improvement from the legislative changes may have run its course "as there have been three rate increases after seven years of decreases."
Legislation enacted in 2003 and 2004 has addressed affordability in the voluntary and residual markets and "both markets remain stable."

Read more at the WorkersComp Forum homepage.

February 11, 2013

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