KEYSTONE RX, LLC v. AMERIHEALTH

A recent opinion from the Commonwealth Court of Pennsylvania has changed the rules for Utilization Review and thrown open the doors to a new class of litigants.

In Keystone Rx, LLC v. AmeriHealth (Fee Review Section), 1369 CD. 2018 (Commw. Ct. 2019), the defendant requested Utilization Review of a treating physician and received a favorable finding that all of that physician’s treatment, including pharmaceutical prescriptions, was unreasonable and unnecessary.

In spite of that Utilization Review (“UR”) determination, the pharmacy who had provided the prescriptions at issue in the UR determination filed an Application for Fee Review seeking payment.

Traditionally, when bills at issue in Fee Review are for treatment that has already been found unreasonable and unnecessary via UR determination, the Fee Review application is dismissed. That is what happened in this case - the Fee Review Hearing Officer concluded that the Fee Review application was essentially moot, in light of the Utilization Review determination which had found that the treatment at issue was not reasonable and necessary.

The pharmacy appealed this Fee Review Decision to the Commonwealth Court of Pennsylvania, arguing that the Utilization Review process violated the pharmacy’s constitutional right to due process.

In an opinion filed December 12, 2019, the Commonwealth Court affirmed the Hearing Officer’s dismissal of the Fee Review application, but importantly agreed with the pharmacy’s argument regarding denial of due process. The Commonwealth Court took surprising steps to outline new requirements to allow pharmacies and similarly situated providers (such as vendors of durable medical equipment) to participate in future Utilization Review litigation as a party.

DUE PROCESS IN UTILIZATION REVIEWS

Prior law allowed only the "provider under review" to participate in URs

It should be noted at the outset that the regulations to the Pennsylvania Workers’ Compensation Act already allow treating physicians to participate in Utilization Review litigation.

Although the parties to a workers’ compensation dispute are typically limited to include the injured worker and any named defendants, the Utilization Review regulations allow the “provider under review” who disputes a Utilization Review determination to appeal and participate as a party before a workers’ compensation judge. This has traditionally allowed doctors and medical providers the opportunity to participate in litigation of Petitions to Review Utilization Review Determinations.

However, this exception to the general rule, allowing treating physicians to participate as an interested party in Utilization Review litigation, was applied only to the “provider under review” and arguably excluded pharmacies and similar healthcare vendors.

According to the regulations, when Utilization Review is requested for “anesthesia, incident to surgical procedures, diagnostic tests, prescriptions or durable medical equipment” the “provider under review” is the physician making the prescription or referral. Therefore, a pharmacy or durable medical equipment vendor would not participate in Utilization Review litigation, but the physician prescribing the drugs or equipment would. The pharmacy’s argument in Keystone Rx was that a violation of due process occurs when billing is denied as a result of a Utilization Review process in which the pharmacy could not participate.

Commonwealth Court's Due Process Analysis

The pharmacy’s arguments about lack of due process certainly have some convincing aspects. Unfortunately, the Commonwealth Court in Keystone Rx does not engage in any deep analysis of the pharmacy’s arguments. Instead, after distinguishing the case from two prior cases cited by the pharmacy, the opinion simply concludes without further analysis that the current rules do not comply with due process.

The court offers no explanation as to why a pharmacy’s interests are not adequately protected by the participation of both the injured worker, ostensibly benefiting from the prescription, as well as the treating physician who has prescription authority.

This is significant because the concept of a doctor prescribing potentially dangerous drugs is premised upon the idea that the doctor is a financially disinterested medical expert, who only has the patient’s best interests at heart. The court does not explain why a pharmacy should be able to participate in disputes limited entirely to the issues of reasonableness and necessity. Obviously the pharmacy’s desire regardless of the setting is for prescriptions to be written and paid for. Every prescription should therefore be reasonable and necessary from the pharmacy’s perspective, a position that can all but be assumed. It would seem that the “reasonable and necessary” best interests of the patient is lost when the assessment becomes based in monetary gain.

Likewise, the Keystone Rx opinion does not offer a detailed analysis of the law of due process. The law concerning due process is well developed and prior workers’ compensation cases before both state and federal courts suggest that the pharmacy’s claims of due process violations may not be valid. These prior workers’ compensation cases were not discussed by the Commonwealth Court.

Expected Implementation

The court concludes its opinion by stating that in the future, when a Utilization Review request is filed, “a provider which is not a ‘health care provider’ as defined in the Act, such as a pharmacy, testing facility or provider of medical supplies, must be afforded notice and an opportunity to establish a right to intervene under the usual standards for allowing intervention.”

The court does not offer any specific guidance as to how this holding is to be carried out nor does the court cite authority for its ability to mandate which parties may participate in workers’ compensation proceedings. This is a step that could be seen by some as coming alarmingly close to administrative rule-making by the court.

Attorneys representing the Bureau of Workers’ Compensation have recently entered their appearance before the Commonwealth Court in anticipation of potential re-argument. This raises the possibility that the Bureau of Workers’ Compensation may not be in agreement with the Court’s opinion.

Potential Complications

The Commonwealth Court’s new procedural rule raises some important questions and possible issues.

Under the current rules, a Utilization Review Request could address both a prescribing physician and any pharmacies or other healthcare vendors where prescriptions are sent on an ongoing basis. Under the Commonwealth Court’s new rule, these pharmacies and other healthcare vendors will need to be provided notice and an opportunity to participate in the Utilization Review process and subsequent litigation.

But, what happens where, in the midst of the Utilization Review process, the injured worker takes the same prescription under review to a new pharmacy? Must the new pharmacy be accorded the same due process rights as the original pharmacy? If so, what happens if claimant changes pharmacies after close of the record but before a decision is rendered? Must the record be re-opened to allow the new pharmacy to independently litigate its case and preserve its due process rights?

If the Commonwealth Court’s opinion in Keystone Rx is allowed to stand, it is anticipated that these and similar procedural issues will need to be litigated in the future.

Suggested Next Steps

  1. Be on the lookout for additional updates. If the Keystone Rx opinion is not appealed, it is anticipated that the Pennsylvania Bureau of Workers’ Compensation may issue an update of its Regulations, Utilization Review Request forms, and/or associated WCAIS pages.
  2. For future Utilization Review requests, where the treatment to be reviewed includes “anesthesia, incident to surgical procedures, diagnostic tests, prescriptions or durable medical equipment” be sure to provide written notice to the relevant healthcare vendors and keep a record of same.
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