Gino DiCaro

Court decision provides potential solution for drug repackaging

By Gino DiCaro, VP, Communications

Capitol Update, Nov. 4, 2005 Share this on FacebookTweet thisEmail this to a friend

Despite recent reforms in the workers' compensation arena, there are still loopholes used by various parties to exploit the payers in the system. One loophole allows doctors to provide prescription drugs to injured workers directly out of their offices. They do this by contracting with companies that provide a drug cabinet, the drugs, and then regularly refill the cabinet. The contractors also take care of all of the billing and inventory. These companies are able to bill employers at highly inflated rates because this practice is not covered by the Official Medical Fee Schedule.  

Senator Jackie Speier (D-Hillsborough) attempted to resolve this situation by introducing SB 292. However, the measure was stymied by the doctors' lobby despite strong support from both the employer and labor communities. The labor and employer communities have since looked to the regulatory process for potential relief from this obvious exploitation.

There is one promising decision that could provide relief to employers.  In the case of Scott Kuntz v. Patterson Floor Coverings and Golden Eagle Insurance Company the Workers' Compensation Appeals Board ruled that an outpatient surgery center must bill a reasonable amount despite the fact that the Official Medical Fee Schedule did not apply to the services they provided.  In determining whether or not the surgery center was entitled to the full amount billed, the court looked at a number of factors - the surgery center's usual fee, the fees charged by other providers in the area, and the fee generally accepted by other providers.  

There is some hope in the community that this same logic could be applied in the case of the drug repackaging contractors mentioned earlier. While the court system may provide some relief, CMTA continues to seek resolution of this and other loopholes through legislative and regulatory channels.  

Read more Workers' compensation articles

Capitol updates archive 989898989