The recent Lafayette Bone & Joint Clinic v. LUBA case decided by the Louisiana Supreme Court sought to settle questions regarding employer choice of pharmacy (about which courts have differed). The resulting decision, in which LUBA was only obligated to pay up to the statutory $750 limit for physician-dispensed medications which the claimant could have filled at almost any retail pharmacy, has been greeted as a victory for the employer/carrier community.
In the guest post below, Jeffrey Napolitano, attorney with Juge, Napolitano, Guilbeau, Ruli & Frieman representing LUBA in this case, explains the matter and implications for carriers moving forward.
In the case of Lafayette Bone & Joint Clinic v. LUBA, the Louisiana Supreme Court allowed the insurance company to refuse authorization for the doctor to dispense prescription medication on the basis of cost when the payor made the identical medication available to the claimant through other pharmacies at a much lower cost.
Basis of the case: the “loophole”
There currently exists in the Fee Schedule a loophole which allows pharmaceutical distributors to reprice prescription medication obtained from the manufacturer once they repackage the medication for dispensing to individual patients. The repackagers are allowed to purchase the medications from the manufacturer at one price, repackage the medication for 30, 60 or 90 day use, then relabel this with a new NDC serial code and attach to this any price they choose. The employer/carrier is then required under the Fee Schedule to pay the inflated price, plus a 1.4 multiplier. This resulted in charges that were 200-800 percent higher than when the medication was obtained at a retail pharmacy.
LUBA decided to challenge this practice by refusing to authorize the repackager or the physician to dispense repackaged medication. Instead, they advised the physician to direct their claimants to a retail pharmacy to fill their prescriptions. The physician ignored the directives of LUBA and continued to dispense the prepackaged medication to the claimants.
The Supreme Court refused to consider the choice of pharmacy issue
There is no explicit workers’ compensation law directing that one party has the exclusive right to choose a prescription medication provider. Paragraph (A) of LSA-R.S. 23:1203 directs only that the “employer shall furnish all necessary drugs” for the treatment of an injured employee work-related injury.
The facts of this case did not raise a tenable employee choice of pharmacy issue, as there was no testimony from the employee, the treating physician, or the nursing staff as to whom the employee selected as his choice of dispenser. This case hinged on Section 1142(B) [of Title 23] – that a health care provider may not incur more than $750 in treatment without the consent of payor and employee.
Further, no authority has been cited that would require a payor to authorize any and all medical treatment a doctor could possibly provide at an office visit simply because the office visit had itself been authorized.
Trial court findings
Our workers’ comp law leaves open the possibility that medical fees – even if they fall within the amounts set forth in the reimbursement schedule – may be deemed unreasonable.
The trial court eventually found that:
- There was no advantage to in-house dispensing,
- the cost was significantly more, and
- the physician was not providing an equivalent pharmacy service as found at retail pharmacies.
Further, the court established that, given the circumstances, pre-packaged medications in a doctor’s office was not “necessary” or “usual and customary.”
However, it also found that LUBA should have tendered $750 for the unauthorized treatment and therefore an assessment of penalties and attorney fees was proper.
Take Away Points
When considering what is reasonable and necessary, the employer may factor in the cost of the treatment. Just because a charge falls within the Fee Schedule alone does not automatically make this a reasonable charge.
For prescription medication, this becomes a two-prong process. The first question to ask is: “Did the payor adequately and timely provide for the furnishing of drugs to the employee?” If the answer is yes, then you can refuse pre-authorization to a provider whose drugs are too expensive. That is a reasonable position to take that will not result in an assessment of penalties. The second prong is once you take that position, and if the provider dispenses the drugs anyway without authorization, then you are required to respond to this action by paying up to $750 under in order to avoid penalties and attorney fees.
Can this case be applied to scenarios other than prescription medication? The answer is a qualified yes.
The application of this principle to prescription medication is easy because a pill is a pill is a pill. A Mobic from one pharmacy is no different than a Mobic from another pharmacy.
To the extent that the choice of, say, durable medical equipment is identical, the payor should be able to choose the cheaper vendor as long as they get it to the claimant in time. But there may be a wide range of wheelchairs available that differ in ease of function or comfort. The payor may not be able to force the worker to use the cheapest model if it is of lesser quality or comfort. If the Cadillac of wheelchairs operates better and is more comfortable, then the injured worker may be able to get the better model.
The same is true for MRI scans. Some machines are of higher quality. If so, the claimant may be able to force choice in these instances.
The choice of the physician, himself, is a protected choice for the claimant. However, with regard to durable medical equipment, if the payor can show that the quality of the equipment is identical, or that the added bells and whistles are not medically necessary, then they should be able to require using the cheaper vendor.
The bottom line is that cost is a valid factor to consider, but never in a vacuum. When all other factors are equal, cost may be the deciding factor. However, when all other factors are not equal, cost becomes just one factor in the equation to consider, and may not always be the determinative factor.
Editor’s note: Jeffrey C. Napolitano is a director in the law firm of Juge, Napolitano, Guilbeau, Ruli & Frieman in Metairie, Louisiana. He obtained his Bachelor of Science degree, cum laude from Louisiana State University in 1982. He was a member of the Loyola Law Review, and received his juris doctor degree from Loyola University School of Law in 1985. His practice area is state and federal workers’ compensation and employer’s liability. He is a member of the CLM, is a fellow of the College of Workers’ Compensation Lawyers and carries Martindale-Hubbell’s highest rating
(AV). Napolitano has also served as Chair for the Workers’ Compensation Committee of the Defense Research Institute (DRI) and has been a featured speaker of numerous seminars on workers’ compensation issues throughout the state and nation. You can reach him at: firstname.lastname@example.org