Recent Decision in FL Court of Appeal: Dispensing Practitioners Do Not Meet Definition of Pharmacist

by M. Heberling

Today we are highlighting an interesting case law development in the State of Florida First District Court of Appeal, which could potentially affect workers’ compensation claims and settlements.

Background
Florida Statute Section 440.13(3)(j) entitles injured workers to “absolute choice” in the election of the pharmacy or pharmacist dispensing and filling prescriptions. Based on this law, the Florida Department of Financial Services crafted proposed rules (69L-7.730 and 69L-7.740) that indicated workers’ compensation insurers must pay for medications dispensed by physicians, physician assistants, and other similar practitioners (as defined by Florida Statute Section 465.0276).

Physician-dispensed Medications vs. Pharmacy
These rules were ultimately challenged in the First District Court of Appeal by several entities, including Publix Super Markets, Zenith Insurance Company, et al. In their decision, the Court noted, “the heart of [their] inquiry is whether the phrase ‘pharmacy or pharmacist’…can be read to encompass a dispensing practitioner”. They considered not only the plain language of the word pharmacist but also other portions of Florida statutes that define and regulate pharmacists, such as Chapter 465. The Court ultimately determined that the term “pharmacist” in Section 440.13(3)(j) does not include a dispensing practitioner. They specifically indicated that a different provision, 440.13(12)(c), references reimbursement rates for dispensing practitioners and does nothing to broaden or transform the meaning of pharmacist with respect to the “absolute choice” provision. They concluded that, “dispensing practitioners do not fit within the plain meaning of ‘pharmacist’, nor do they engage in the ‘practice of the profession of pharmacy”.  The Court held that the proposed rules are an invalid exercise of delegated legislative authority.

Potential Impact on Medicare Set Asides
This decision has created a buzz in the Florida insurance industry. Physician-dispensed medications can be very expensive, often significantly higher in cost than if the injured worker obtained the same medications through a pharmacy, such as CVS or Walmart. This new case law makes the payment to the dispensing provider discretionary unless a licensed pharmacist is employed with the practice. The is clearly beneficial during the active management of workers’ compensation claims as insurers are no longer forced to pay exorbitant physician-dispensed rates. Likely, many in the industry are also hoping that this decision will help constrain and reduce future medications costs in Medicare Set-Asides (MSAs).

While there may be downstream benefits that may come from this decision with respect to the potential mitigation of MSAs, it is unlikely to directly impact those costs. Per the WCMSA Reference Guide, version 4.5, CMS requires medications to be priced utilizing the lowest available Average Wholesale Price (AWP). The lowest available AWP is not aligned with, and has no relation to, the physician-dispensed rate. If a Claimant were to change where they obtained medications, it may change the amount being billed/paid under the workers’ compensation claim, but it would not affect the costs being applied by CMS. The only pertinent information would be the type of medication and the dosing instructions (e.g., diclofenac 3% solution, applied twice per day). If the plan is to opt out of the voluntary CMS submission process, then theoretically there could be other methods of pricing medications, such as using retail rates from GoodRx or Pharmacy Benefit Manager (PBM) rates, but again these are not aligned with physician-dispensed pricing.

Though this decision may not directly reduce future medication costs in MSAs, it may create a smoother path toward mitigating those costs. As noted above, the pertinent information impacting prescription costs is the type of medication, strength, and dose. Therefore, it is possible that with less financial stake in the outcome, a prescribing physician will be more amenable to adjusting the medication regimen in ways that reduce costs. For instance, switching from diclofenac 3% solution to diclofenac 1% gel. These conversations are routinely worth exploring as parties work toward settlement, and that is even more true after this decision from the Florida First District Court of Appeal.

If you have any questions about this case or want to learn more about optimizing Medicare Set-Aside allocations, please contact us at [email protected].