January 6, 2025 – The Division of Workers’ Compensation (DWC) has revised the Official Medical Fee Schedule provisions to govern the maximum reasonable fee for pharmaceuticals dispensed to injured workers starting July 1, 2025. These updated regulations align the fee schedule with changes in the Medi-Cal methodology and additional Labor Code provisions that regulate physician-dispensed drugs. Updated Pharmaceutical Fee
Key Revisions in the Pharmaceutical Fee Schedule
The revised regulations introduce several significant updates to the Pharmaceutical Fee Schedule. Consequently, these updates ensure consistency with the Medi-Cal pharmacy payment system and relevant Labor Code provisions.
Continuation of Previous Methodology
The previous methodology for pharmaceuticals dispensed before July 1, 2025, will be preserved. This step ensures a smooth transition and maintains consistency for drugs dispensed prior to the effective date.
New Maximum Fees for Pharmaceuticals
For pharmaceuticals dispensed on or after July 1, 2025, the DWC has adopted new maximum fees based on the Medi-Cal methodology. Therefore, this change reflects the latest adjustments in the Medi-Cal pharmacy payment system.
Updated Pharmaceutical Fee Data File Format
The updated regulations introduce a new Pharmaceutical Fee Data File format. Notably, this file, which will be posted weekly, sets forth the “lowest cost” and “no substitution cost” for drugs based on the Medi-Cal methodology.
- Lowest Cost: Determined by the lowest of the National Average Drug Acquisition Cost (NADAC), Wholesale Acquisition Cost (if no NADAC exists), Federal Upper Limit, and Maximum Allowable Ingredient Cost.
- No Substitution Cost: For medically necessary brand-name drugs, this cost is based on NADAC or Wholesale Acquisition Cost if NADAC does not exist.
Elimination of Average Wholesale Price
The revised schedule eliminates the use of Average Wholesale Price (AWP) as a price benchmark. As a result, this ensures a more accurate reflection of current drug costs.
Increased Dispensing Fees
Physicians’ Dispensing Fee
The dispensing fee for physicians will increase from the current $7.25 (or $8.00 for nursing home patients) to $10.05. This adjustment reflects the need to align with updated cost structures.
Two-Tier Dispensing Fee for Pharmacies
The updated schedule adopts a two-tier dispensing fee system for pharmacies:
- $13.20 for pharmacies listed on the Medi-Cal National Provider Identifier (NPI) file as eligible for the higher tier dispensing fee on the date of dispensing.
- $10.05 for all other pharmacies or dispensing providers not listed on the NPI file as eligible for the higher tier dispensing fee.
DWC will update the Medi-Cal NPI files weekly, and the new rules will guide their use.
Compounded Drugs
The updated regulations also clarify the application of the Medi-Cal methodology for compounding fees. Consequently, this ensures compliance with Labor Code provisions relating to compounded drugs.
Implementation Timeline
DWC will implement the new regulations on July 1, 2025. This timeline provides the public with over six months to adjust their systems to accommodate the new rules. Additionally, DWC plans to post sample Pharmaceutical Fee Data Files and NPI files along with rulemaking materials for stakeholders to use in updating their internal systems. Furthermore, an updated pharmaceutical fee calculator will be made available by the effective date for public convenience.
For the full text of the regulations and the final statement of reasons, including comment charts, please visit the DWC approved regulations page. Moreover, more information and sample data files can be accessed on the new Pharmaceutical Fee Schedule webpage for products dispensed from July 1, 2025.
For additional details on this and related topics, visit MedLegalNews.
Source: CA DWC
