A story making the rounds recently is the announcement that State Compensation Insurance Fund (State Fund) has implemented a new contract within its medical provider network.  Labor Code § 4616 allows self-insured employers and insurance companies to create Medical Provider Networks (MPN) which limit the list of treaters an applicant can choose.  State Fund already had an MPN in place, but in mid-June sent out additional requirements for membership to the physicians in its MPN.

Essentially, the new terms restrict the provision of more than 60 days of supplies for opioid medications unless the prescribing doctor shows cause.   Another limit is placed on prescription of compound drugs.  The compound drugs are a money-maker for some doctors.  Because doctors make their own varieties, these drugs are not any medical schedule and have no set price – that bill goes to the self-insured employer or insurance company, of course.  The Insurance Journal has an article on it here.

Here is the take of the California Society of Industrial Medicine and Surgery on this matter.  I imagine that, even without clicking the link, you can guess how an interest group advocating for a major source of income for its members feels about the breaks being put on the proverbial gravy train.

Taking the position that these compound drugs are necessary to treat patients, the SCIMS is trying desperately to make State Fund appear the greedy villain, denying patients the medication they need.  This contention is easily addressed – if doctors would lower the prices of these compound drugs to reflect a reasonable profit over the cost of production, this cost-cutting restriction would probably not be necessary.  An accusation of greed serves as a sharp sword, but one that cuts both ways.

Not only will a limit on opioids serve to protect patients from over-prescription, but it will also limit the amount of drugs entering the black market.  At the California Self-Insured Association Fall Educational Program in 2010, I heard a gentleman speak about the services his company provided – drug testing of applicants to make sure they are actually taking, and not just re-selling, the drugs they are prescribed!

As an aside, your humble author can’t recommend this conference enough – the lectures are informative, and the case materials and law updates prove to be a useful resource and desk-reference for the rest of the year.  If you have the time, contact Phil Millhollon about attending, I’m sure you won’t regret it.

Basically, some of the physicians are upset that the compound and opioid prescription faucet is tightened to a trickle.  Naturally, the California Applicants’ Attorneys Association is unhappy with this as well.  Inflated future medical treatment estimates translate easily into larger Compromise and Release figures, and increased need for expensive compound drugs and opioids plays to this as well.

So far, State Fund is standing its ground, and I salute its courage and determination.

Just a word on MPNs – if properly established, they are a fantastic tool to cut costs.  The MPN can be used to filter out doctors who over-prescribe, over diagnose and/or engage in fraud.  The notice requirements of MPNs have even withstood elastic interpretation regarding notice requirements.

State Fund is setting a great example, and hopefully more insurers and self-insurers will follow suit.  With enough properly established and properly limited MPNs, we can form a phalanx against fraud and workers’ compensation abuse.