HOUSE OF REPRESENTATIVES	H.B. NO.	1243
TWENTY-SIXTH LEGISLATURE, 2011		H.D. 2
STATE OF HAWAII		S.D. 1

A BILL FOR AN ACT

RELATING TO REPACKAGED DRUGS AND COMPOUND MEDICATIONS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  The legislature finds that regulating markups on repackaged prescription drugs and compound medications will help to contain unreasonable increases of prescription drug costs in Hawaii's workers' compensation insurance system as repackagers expand into states, including Hawaii, where repackaged drug and compound medication costs are not currently regulated.

     The legislature further finds that Hawaii's current reimbursement rate for pharmaceuticals is among the highest in the nation for brand and generic products.

     The legislature notes that this measure is not intended to deter physicians from dispensing drugs to their patients.  The legislature acknowledges that physician dispensing serves an important purpose and assists patients in receiving comprehensive health care from a single provider.  The legislature finds that this measure promotes the practice of physician dispensing of prescription medication in an ethical and transparent manner by authorizing reimbursement of a dispensing fee for each prescription dispensed by a physician.

     The purpose of this Act is to close a loophole in Hawaii's workers' compensation insurance law to restrict markups of repackaged prescription drugs and compound medications to an amount that will help deter inflation of health care costs by preventing prescription medications from becoming an unreasonable cost driver.

     SECTION 2.  Section 386-21, Hawaii Revised Statutes, is amended to read as follows:

     "§386‑21  Medical care, services, drugs, and supplies.  (a)  Immediately after a work injury is sustained by an employee and so long as reasonably needed, the employer shall furnish to the employee all medical care, services, drugs, and supplies [as] that the nature of the injury requires.  [The liability] Liability pursuant to this subsection for [the] medical care, services, drugs, and supplies shall be subject to [the] a deductible [under] pursuant to section 386-100.

     (b)  Whenever medical care is needed, the injured employee may select any physician or surgeon who [is practicing] practices on the island where the injury was incurred to render medical care.  If the services of a specialist are indicated, the employee may select any physician or surgeon practicing the relevant specialty in the State.  The director may authorize the selection of a specialist practicing outside of the State [where] when no comparable medical attendance within the State is available.  Upon procuring the services of a physician or surgeon, the injured employee shall give proper notice of the employee's selection to the employer within a reasonable time after [the] beginning [of the] treatment.  If for any reason during the period when medical care is needed, the employee wishes to change to another physician or surgeon, the employee may do so in accordance with rules prescribed by the director.  If the employee is unable to select a physician or surgeon and the emergency nature of the injury requires immediate medical attendance, or if the employee does not desire to select a physician or surgeon and so advises the employer, the employer shall select the physician or surgeon[.  The selection, however,]; provided that selection of a physician or surgeon by an employer shall not deprive the employee of the employee's right [of] to subsequently [selecting] select a physician or surgeon for continuance of needed medical care.

     (c)  The liability of the employer for medical care, services, drugs, and supplies shall be limited to the charges computed [as set forth] pursuant to in this section.  The director shall make determinations of [the] allowable charges and shall adopt fee schedules based upon those determinations.  Effective January 1, 1997, and for each succeeding calendar year thereafter, [the] allowable charges shall not exceed one hundred ten per cent of fees prescribed in the Medicare Resource Based Relative Value Scale applicable to Hawaii as prepared by the United States Department of Health and Human Services, except as provided in this subsection.  The rates or fees provided for in this section shall be adequate to ensure at all times the standard of services and care intended by this chapter [to] for injured employees.

     If the director determines that an allowance under the medicare program is not reasonable or if a medical treatment, accommodation, product, or service existing as of June 29, 1995, is not covered under the medicare program, the director, at any time, may establish an additional fee schedule or schedules not exceeding the prevalent charge for fees for services actually received by providers of health care services, to cover allowable charges for that treatment, accommodation, product, or service.  If no prevalent charge for a fee for service has been established for a given service or procedure, the director shall adopt a reasonable rate which shall be the same for all providers of health care services to be paid for that service or procedure.

     The director shall update the schedules required by this section every three years or annually, as required[.  The updates shall be], based upon:

     (1)  Future charges or additions prescribed in the Medicare Resource Based Relative Value Scale applicable to Hawaii as prepared by the United States Department of Health and Human Services; or

     (2)  A statistically valid survey by the director of prevalent charges for fees for services actually received by providers of health care services or based upon the information provided to the director by the appropriate state agency [having] with access to prevalent charges for medical fee information.

     When a dispute exists between an insurer or self-insured employer and a medical services provider regarding the amount of a fee for medical services, the director may resolve the dispute in a summary manner as the director may prescribe; provided that a provider shall not charge more than the provider's private patient charge for the service rendered.

     When a dispute exists between an employee and [the] an employer or the employer's insurer regarding the proposed treatment plan or whether medical services should be continued, the employee shall continue to receive essential medical services prescribed by the treating physician necessary to prevent deterioration of the employee's condition or further injury until the director issues a decision on whether the employee's medical treatment should be continued.  The director shall make a decision within thirty days of the filing of a dispute.  If the director determines that medical services pursuant to the treatment plan should be or should have been discontinued, the director shall designate the date after which medical services for that treatment plan are denied.  The employer or the employer's insurer may recover from the employee's personal health care provider qualified pursuant to section 386-27, or from any other appropriate occupational or non-occupational insurer, all the sums paid for medical services rendered after the date designated by the director.  Under no circumstances shall the employee be charged for the disallowed services, unless the services were obtained in violation of section 386-98.  The attending physician, employee, employer, or insurance carrier may request in writing that the director review the denial of the treatment plan or the continuation of medical services.

(d)  The reimbursement amounts for drugs, supplies, and materials shall be priced in accordance with the medical fee schedules adopted by the director pursuant to subsection (c) or a lower amount for which the carrier contracts.  Payment for prescription drugs shall be made at the average wholesale price as listed in the Red Book: Pharmacy's Fundamental Reference, plus no more than forty per cent of the average wholesale price for drugs sold by a physician, hospital, pharmacy, or provider of service other than a physician; provided that:

(1) A physician who directly dispenses prescription medication to a patient on an island with a population of five hundred thousand or more shall be reimbursed a dispensing fee of $4 per prescription dispensed; and

(2) A physician who directly dispenses prescription medication to a patient on an island with a population of less than five hundred thousand shall be reimbursed a dispensing fee of $7 per prescription dispensed.

Repackaged or relabeled drug prices shall not exceed the amount payable had the drug not been repackaged or relabeled.

(e)  A repackaged or relabeled drug price shall be calculated by multiplying the number of units dispensed by the average wholesale price set by the original manufacturer of the underlying drug, plus no more than forty per cent, and adding an additional ten per cent repackaging premium.

(f)  Compounded medications shall be reimbursed based on the sum of the fee due for each medication ingredient having an assigned national drug code that is used in the compounded medication.  If the national drug code for any ingredient is a code for a repackaged drug, then reimbursement for that ingredient shall be as provided in subsection (e).

(g)  If information pertaining to the original labeler or manufacturer of the underlying drug product used in repackaged or compounded medications is not provided or is unknown, then reimbursement shall be based on the most reasonable and closely related average wholesale price for the underlying drug product.

    [(d)] (h)  The director, with input from stakeholders in the workers' compensation system, including but not limited to insurers, health care providers, employers, and employees, shall establish standardized forms for health care providers to use when reporting on and billing for injuries compensable under this chapter.  The forms may be in triplicate, or in any other configuration so as to minimize, to the extent practicable, the need for a health care provider to fill out multiple forms describing the same workers' compensation case to the department, the injured employee's employer, and the employer's insurer.

    [(e)] (i)  If it appears to the director that the injured employee has wilfully refused to accept the services of a competent physician or surgeon selected as provided in this section, or has wilfully obstructed the physician or surgeon, or medical, surgical, or hospital services or supplies, the director may consider [such] the refusal or obstruction on the part of the injured employee to be a waiver in whole or in part of the right to medical care, services, drugs, and supplies, and may suspend the weekly benefit payments, if any, to which the employee is entitled so long as the refusal or obstruction continues.

    [(f)] (j)  Any funds as are periodically necessary to the department to implement the [foregoing] provisions of this section may be charged to and paid from the special compensation fund provided by section 386-151.

    [(g)] (k)  In cases where the compensability of [the] a claim is not contested by the employer, the medical services provider shall notify or bill the employer, insurer, or the special compensation fund for services rendered relating to the compensable injury within two years of the date services were rendered.  Failure to bill the employer, insurer, or the special compensation fund within the two-year period shall result in the forfeiture of the medical services provider's right to payment.  The medical [[]services[]] provider shall not directly charge the injured employee for treatments relating to the compensable injury.

(l)  Upon receipt from a medical services provider of a bill for services that is properly completed, including all required documentation and certification by the medical services provider that all charges are eligible for reimbursement according to chapter 386 and the rules of the director, an employer, insurer, or the special compensation fund shall reimburse the medical services provider for all allowable charges within sixty days of receipt of the bill."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect on July 1, 2112.

Report Title:

Workers' Compensation; Repackaged Drugs and Compound Medications

Description:

Establishes price caps for the Hawaii workers' compensation insurance system for drugs, including repackaged drugs and compound medications; authorizes reimbursement of a dispensing fee to physicians who dispense prescription medications directly to patients; requires an employer, insurer, or the special compensation fund to provide for reimbursement of medical services within 60 days of receiving a bill for those services.  Effective July 1, 2112.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.