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Physician Dispensing in Massachusetts Impacts Workers’ Compensation System

Does your doctor ever try to provide you with your prescription medication right in his office, saving you the time and hassle of going to the pharmacy? Many doctors today offer their patients the convenience of buying their medications directly after their visit and patients tend to appreciate this additional service. This process is known as physician dispensing, and is not highly regulated in Massachusetts. Doctors and outside companies are benefiting from this lack of regulation, as they can charge insurance providers more than the normal rate for these prescriptions and create more debt for these insurance carriers.

Patients may be unaware of the effect that this additional service will have on their insurance providers, however. So for example, a woman who complains of heartburn may go to her doctor and her doctor may prescribe Zantac. The doctor will then provide Zantac directly to this woman, and send the bill to the company that provided him with the medication. This company will then pay the doctor about 70% and then file a claim with the insurance carrier to obtain the full amount charged, which in this instance might be about $3.25 per pill. If the woman had chosen to go to the pharmacy and get her prescription filled there instead, the insurance company would have paid a claim for about 35 cents per pill. The doctor is not the only one who will benefit from the woman buying Zantac at his office. The company that help him set up his in-office pharmacy as well as the drug provider will also profit from this one sale.

How Does This Affect Workers’ Compensation?

Workers’ compensation is not very different from insurance companies, as it provides insurance for injured workers. Since there are no laws in Massachusetts to tightly control physician dispensing, companies who provide medications to doctors can file claims for medications at any rate and these rates are much higher than what a pharmacy would charge. Not only will pharmacies lose business but funds from the workers’ compensation system will be drained by such practices. As health care bills continue to rise, it is every day people who will be hit with the higher insurance premiums and related costs. Employers will feel payment increase to drug providers as well, as they pay into the workers’ compensation system.

Studies show that physician dispensing has enabled doctors to charge up to 300 percent higher for drugs than a local pharmacy. In Massachusetts, the Workers Compensation Research Institute (WCRI) is aware of the problem and provides seminars to discuss the impact that physician dispensing has on the workers’ compensation system. The WCRI has also conducted a study to show this impact, which includes Massachusetts. Hopefully, ongoing research and published articles will catch the attention of policymakers and other stakeholders to enforce strict regulation on such practices.

Source: Insurers Pay Big Markups as Doctors Dispense Drugs, The New York Times, July 11, 2012

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