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Workers' comp regulatory and legislative outlook for 2017

Optum Workers' Comp
| Jan 06, 2017

A new year is upon us, signaling the opening gavel of legislative sessions around the country. There is a new administration in Washington D.C. and time to once again to look ahead to see what policy changes might be in store for the workers’ compensation system. View the PDF outlining these changes here, or continue reading below. 

Opioid Analgesics

In December of 2016, the Centers for Disease Control and Prevention (CDC) reported 33,091 opioid overdose deaths in 2015. This is a new record high and represents a 12% increase over 2014. The CDC indicates that illicit opioids drove most of the increase, with synthetic opioid deaths increasing 73%. Prescription opioid deaths increased by 4%. Simultaneously, the United States Congress passed and sent to the President the 21st Century Cures Act that provides much needed funding for substance abuse education and treatment program grants. In a December 17, 2016, editorial published on, CDC Director Frieden stated, “This crisis was caused, in large part, by decades of prescribing too many opioids for too many conditions where they provide minimal benefit and is now made worse by wide availability of cheap, potent, and easily available illegal opioids: heroin, illicitly made fentanyl, and other, newer illicit synthetic opioids. These deadly drugs have found a ready market in people primed for addiction by misuse of prescription opioids.” Frieden went on to say that while it is important that we provide help and treatment for individuals addicted to opioids, it is critical to look upstream and “reduce the number of Americans exposed to opioids for the first time.” These increasing numbers are frustrating and challenging stakeholders throughout the system and we anticipate the battle against opioids will again be the number one issue for workers’ compensation in 2017. Furthermore, we expect policymakers will take a multi-faceted approach.

  • Opioid control legislation gained some real footholds in the Northeast in 2016. Massachusetts passed HB 4056, a comprehensive act covering substance use, treatment education and prevention. The bill institutes a seven-day limit for an initial prescription of opioids with exceptions based on medical necessity and contains a number of education provisions for providers, patients and the general public. Other New England states, including Maine, Connecticut, New Hampshire, Rhode Island and New York followed suit, passing similar bills, as did Pennsylvania. Vermont passed legislation empowering various state agencies to collaborate and develop an analogous program through a rulemaking process.

    We expect to see other states advance opioid control bills. Utah has signaled it is looking at the Massachusetts law for ideas for their 2017 session. Alaska and California had bills addressing opioid prescribing limit bills stall in 2016. We anticipate these bills will be back in 2017. Kentucky, Mississippi and Oregon also have pre-filed bills for 2017 imposing some type of prescribing limitations on opioids.

  • Prescription Drug Monitoring Programs (PDMPs) are seeing some renewed attention as a component of opioid control legislation. Historically, PDMPs have been voluntary, but more states are moving to make their use mandatory. When New York implemented its iSTOP program in 2013, it was one of the first states to make using the PDMP mandatory, and at that time, had the shortest window of time for reporting data. In 2016, Utah, Maine and New Hampshire added provisions requiring mandatory utilization of their PDMP as part of their opioid control bills.

    Looking ahead, as other states craft opioid control legislation we expect that, if they are one of the 20 states that still don’t mandate using the PDMP, it will be added as a provision. Additionally, look for states to shorten the window of time for required reporting. Less than five years ago, many states had a 30-day window to report. Over the last few years, we have seen a number of states move to a 24-hour window.
  • Drug Formularies continue to be evaluated as a requisite tool for containing the use of opioid analgesics in workers’ compensation. Tennessee became the latest state to adopt a drug formulary when they launched their program in August of 2016 for new claims. It will take effect for all claims on February 28, 2017. California released an informal draft formulary for comment in mid-2016. Since that time, the Division of Workers’ Compensation (DWC) has been reviewing comments and making modifications to their formulary rule. A formal draft rule is expected in January of 2017 and the DWC is still pushing to meet the July 1, 2017 target implementation date. Additionally, several other states are exploring drug formularies:
  • New York released a formulary concept paper in early fall 2016 and solicited comments from the broad stakeholder group. Our government affairs team met with the New York Workers’ Compensation Board (WCB) in December and at that time, the WCB was still reading through a large volume of comments. Based on the feedback from the stakeholder community, the WCB feels there is support to pursue a drug formulary rule sometime in 2017 and they are being very thoughtful in their approach as they narrow their focus to the must-have provisions of any drug formulary proposal.
  • North Carolina has been exploring a drug formulary for the last couple years. A proposal stalled last year over concern that a formulary might override the use of a pharmacy benefit manager (PBM) by employers. Several conversations occurred with business leaders in Raleigh on how to structure the implementation and administration of a formulary. Subsequently, those fears were generally allayed so don’t be surprised to see a drug formulary bill in North Carolina this year, despite reports to the contrary.

  • Louisiana continues to wrestle with the concept of a drug formulary. Two years ago the Medical Advisory reviewed a draft program and refused to endorse it. Last year the legislature introduced a bill that later stalled. Representative Chris Broadwater has been a strong proponent of a drug formulary to help reduce utilization of opioid analgesics and better control pharmacy costs. If a bill gets done in Louisiana this year, Representative Broadwater will likely be the person to shepherd it through the process.

  • Arkansas crafted a formulary rule a few years ago that was ultimately sidelined with a change in the Governor’s office. Those efforts have been revived and the current administration is taking a fresh look at the drug formulary concept. A new draft is anticipated in 2017.

  • Montana’s Medical Advisory Committee (MAC), over the last year, has been exploring how a drug formulary might impact injured workers and their care. The MAC will continue to discuss this issue in 2017.
  • Georgia is another state that has bounced around a formulary idea for a couple of years. While the idea does seem to be on the table, there doesn’t seem to be a strong sense of urgency to move a proposal forward at this time. Thus, we do not anticipate action on a formulary in 2017.

  • Pennsylvania’s legislature introduced legislation at the tail end of the 2016 session designed to create a workers’ compensation drug formulary. Look for conversations to continue in 2017.

  • Treatment Guidelines are another tool that can be useful in controlling the use of opioid analgesics. Toward the end of 2016, California released a detailed companion set of treatment guidelines; one dealing with chronic pain and the other dealing with opioids. Given the scope of the challenge, the idea of a separate set of guidelines for opioids is gaining traction and, while there are no specific proposals at this time, we foresee other states moving in this direction in 2017. Treatment guidelines not only focus additional attention on the use of opioid analgesics, but can also provide guidance on therapy alternatives for reducing pain without using opioid analgesics.

Compounded Medications
Historically, compounded medications have had an important but limited role in pharmacy care for injured workers. Typically a compounded medication was provided when an injured worker could not take or tolerate a medication in its commonly prescribed form. However, there was a sort of tectonic shift several years ago when some entrepreneurial compounding pharmacies discovered a loophole in fee schedule rules allowing for some significant financial gain. And while mid-year 2016 trends point to steep declines in the use of compounded medications, payers continue to be challenged by the prescribing of expensive compounded medications without medical documentation or evidence of medical necessity. As a result, numerous states are taking action and we expect others, particularly those states considering drug formularies (California, New York, Arkansas and Pennsylvania) will move on this issue in 2017.  

  • As part of their formulary rule, Tennessee requires that all compounded medications receive authorization prior to being dispensed.
  • The Texas DWC conducted an audit of compounding practices and the Texas legislature held a hearing on the use of compounded medications in their workers’ compensation system. The State Office of Administrative Hearings heard a dispute over non-payment of compounded medications and ruled that unique combination of medications created a new compound that is not FDA approved and is experimental in nature and therefore required pre-authorization under the Texas formulary rule. We anticipate more cases in Texas will be heard on this issue and future decisions could guide rulemaking action.
  • During their 2016 session, the Illinois legislature introduced a bill to limit the use of compounded medications. The bill did not pass but will likely re-surface in the 2017 session.
  • California’s draft formulary rule contains a provision requiring pre-authorization of all compounded medications.

Physician Dispensing/Repackaged Medications
There was very little regulatory or legislative activity on this issue in 2016. While it is still a challenge, it has pushed to a back burner by opioid analgesics and compounded medications. So while there will be some effort on this issue in 2017, it will likely be part of a bigger initiative. For example, California is looking to implement some containment of physician dispensing as part of its drug formulary and New York has said that it wants to tighten up its rules before physician dispensing becomes an issue in their state.  

Medical Marijuana
Each new election and each new legislative session seems to further muddy this already difficult issue. Marijuana remains a Schedule I drug at the federal level yet states continue to pass legislation or ballot initiatives creating state law legalizing both medical and recreational marijuana. Voters in California, Massachusetts, Maine and Nevada approved recreational marijuana during the 2016 election. Meanwhile, voters in Arkansas, Florida, Montana and North Dakota gave the thumbs up to medical marijuana. The legislatures in Ohio and Pennsylvania passed laws allowing for the use of medical marijuana. Additionally, workers’ compensation regulators in New Mexico approved a fee schedule for medical marijuana and the Minnesota Department of Health approved medical marijuana for treating chronic pain. In Maine, a court ruled that an injured worker is entitled to medical marijuana if it is deemed medically necessary by the treating physician. States are already lining up proposals for medical and recreational marijuana for action in 2017.

  • Tennessee State Representative Jeremy Faison and Senator Steve Dickerson recently indicated that they will be sponsoring legislation to legalize medical marijuana.
  • The Utah legislature attempted to pass a bill in 2016 to legalize medical marijuana but the bill failed by one vote in the Senate. Proponents have a bill ready to go for 2017. If that bill fails, a group of advocates has a ballot initiative ready to launch in 2018.
  • The Senate minority leader in New Hampshire has made public his intentions to run a marijuana legalization bill now that Massachusetts has made it legal.
  • A handful of legislators in Kentucky are proposing to make the Bluegrass state the first in the Midwest to legalize recreational marijuana.
  • Texas Senator Menendez has pre-filed SB 269, a bill that would legalize medical marijuana for specified conditions, including PTSD and chronic pain.
  • The Senate Majority Leader in Virginia has asked the Crime Commission to conduct a comprehensive review of the state’s marijuana laws. Once the study is completed, the legislature will evaluate the outcomes and recommendations. The study will likely take nearly a year to complete, but something to keep an eye on as it moves forward.
  • At the Federal level, the DEA has relaxed the rules allowing more marijuana to be available for research and clinical studies. This is welcome news for the workers’ compensation industry as studies could help identify and quantify the long-term benefits and risks of using marijuana to treat various medical conditions, notably chronic pain.

There remains some uncertainty among marijuana proponents regarding the impact the Trump administration might have on the current disconnect between federal and state laws. Some observers believe there is a possibility the new administration might step up efforts to enforce marijuana laws and move to overturn the various state laws that have legalized marijuana for medical and recreational use. Though, at the time of this writing, no official position has been telegraphed by President-elect Trump or any of his cabinet picks. With so many states already choosing to legalize medical marijuana, the ongoing opioid epidemic, and a growing number of claims wherein marijuana is being deemed compensable under the claim, it seems likely it is here to stay.

Same challenges, new venues
For those immersed in workers’ compensation policy, it is clear 2017 will be a continuation of 2016, with many of the same issues being discussed, only in different venues. The good news is, we have learned from previous efforts and our collective wisdom is helping refine the various policy proposals.

For additional information or questions regarding this or other legislative and regulatory matters, please contact Brian Allen, Vice President of Government Affairs, at 801-417-6374 or via email at .