Wednesday, August 29, 2012

Michigan Moves on Repackaged Drugs

State regulators in Michigan are working on draft rules to address drug repackaging in work comp.  Several weeks ago, I wrote a post on the 6 core tenets of any strong statutory/regulatory action in this area.  Let's see how Michigan's newly proposed rules stack up.

1) The rule doesn't ban physician dispensing. There are legitimate reasons a doctor may need to dispense medications to a patient and the rule allows for those limited circumstances.

Michigan = check. 

2) The rule focuses on the financial remuneration tied to physician dispensing and fixes such fees at the Average Wholesale Price (AWP) of the medication plus a reasonable dispensing fee.

Michigan = check. (AWP - 10% + $3.50 for brands and AWP - 10% + $5.50 for generics)

3) The rule clearly specifies the source for the AWP (Medi-Span, Redbook, etc.). Many states are silent to the AWP source and this creates a lot of noise in the system.

Michigan = check.  (Redbook)

4) The rule specifies that fees are determined by "a) the NDC for the underlying drug product from the original manufacturer, or b) the therapeutic equivalent drug product from the original manufacturer/labeler NDC." This leaves no room for physicians or other agents to create new NDC codes as a result of repackaging.

Michigan = check. 

5) If the underlying NDC isn't known or isn't shared, discretion rests with the payer to determine the most appropriate NDC code. There is a dispute resolution process outlined if the provider disagrees.

Michigan = unclear.  The Michigan rules stipulate that if a pharmaceutical bill is submitted for more than $35 using an unlisted or "not otherwise specified" code, then the bill must be accompanied by an invoice.  Not sure I follow, but at least they're thinking about it. 

6) Perhaps most importantly, this is a regulatory change, not a statutory change.  This won't be possible in all states, but where it is, it's the way to go. 

Michigan = check.

A great start for Michigan.  Well done.

On Twitter @PRIUM1

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