Board Bulletins and Subject Numbers

December 11, 2012

On November 28, 2012, a final regulation covering pharmacy networks and the pharmacy and durable medical equipment (DME) fee schedules took effect. The regulation replaces a series of emergency regulations enacted following the 2007 reforms that authorized employers to require injured workers to use pharmacy networks and the Chair to set pharmacy and DME fee schedules. The permanent regulation is designed to protect injured workers' convenient access to pharmacies for important medication while ensuring that employers benefit from significant cost savings through fee schedules and network discounts.

Pharmacy Fee Schedule

New York's pharmacy fee schedule has been attributed with decreasing per-unit medication costs by 15-20%. The final regulation retains the basic fee schedule but modifies some of the rules covering pharmacy networks.

The maximum fee is based on the Average Wholesale Price (AWP) of the drug, as follows. Carriers and pharmacy networks may use either Red Book or Medi-Span to determine AWP.

The regulation clarifies the method of pricing compounded and physician-dispensed drugs to ensure that these methods of providing individualized medication do not circumvent the savings of the fee schedule. The price of compounded or repackaged drugs is determined using the national drug code (NDC) of the underlying products/ingredients.

Pharmacy Networks

The final regulation is very similar to the last emergency regulation, but makes certain clarifications and adjustments based on stakeholder experience from the last five years. The notification requirements for pharmacy networks have been simplified to allow more employers and carriers to participate. Employers may choose one of three methods to notify all employees:

• posting a notice in public areas,
• distributing a notice to all employees, or
• maintaining information on an intranet site.

The insurance carrier or self-insured employer must also provide a drug benefit card or other document identifying the pharmacy network to each injured worker when notified of an injury. Pharmacy networks are required to provide information about participating pharmacies, but pharmacies no longer have to post the name of every participating insurance carrier and self-insured employer. A carrier or self-insured employer must notify the Board of any mandatory pharmacy networks, including a list of all participating pharmacies, and must provide quarterly updates of participating pharmacies.

An injured worker may go outside the pharmacy network if the carrier or employer fails to comply with the notification requirements. Injured workers are also eligible to go outside the network in the case of a medical emergency or if there is no network pharmacy located within 5 miles (15 miles in a rural area) and the network does not provide mail order prescriptions.

When a carrier joins a pharmacy network, injured workers are given 60 days (non-controlled substance) or 90 days (controlled substance) to transition any ongoing prescriptions from their existing pharmacy to a network pharmacy. During this transition period, the carrier must continue to pay the non-network pharmacy at fee schedule.

DME Fee Schedule

The regulation adopts the New York State Medicaid DME fee schedule. The Chair may adjust the fee schedule if he finds that the reimbursement level is grossly inadequate relative to supplier costs. If the New York Medicaid DME fee schedule has not established a fee payable for a specific item, the payment amount shall be the lesser of 150% of the acquisition cost or the usual and customary price offered to the general public.