State News : Pennsylvania

The Pennsylvania Supreme Court issued a recent decision on 03/20/25 relative to the case of Schmidt v. Schmidt, Kirifides & Rassias, PC (WCAB), No. 32 MAP 2024, 2025 WL 864223 (Pa. Mar. 20, 2025) which may significantly impact payment for “medical treatment” in Pennsylvania.  This decision pertained to reimbursement to a Claimant for CBD oil which was purchased on account of the work injury.  The Court affirmed the Commonwealth Court, which required the employer pay for the claimant’s CBD oil.  Further, the Pennsylvania Supreme Court set forth a broader interpretation of what constitutes “medicine and supplies” under Section 306(f.1)(1)(i) of the Act.  More significantly, and troubling from the defense perspective, the Court found that the cost-containment provisions of the Act apply to providers, they do not apply to the Claimant.

The Claimant in this matter is a workers’ compensation claimant’s attorney who injured his low back putting files into a bag. Instead of proceeding to incase his use of opioids, the Claimant elected to use CBD oil, which he indicated proved effective in managing his pain.  This also led to less narcotics and avoiding surgery.  There are questions from reading the decision if the recommended CBD oil was to be applied topically with the Claimant, then electing to get oral CBD oil.  The Claimant purchased this “medicine” at a natural remedy store and submitted the receipts for reimbursement which were not paid for by the Employer/Carrier on the basis that CBD oil was not a pharmaceutical drug.  The Claimant filed a penalty petition due to failure to pay for the treatment and penalties were awarded by the Workers’ Compensation Judge, who determined that CBD oil qualified as a “supply” under the Act and the Medical Cost Containment Regulations (MCCR), which require submission of a bill on a HCFA form and a corresponding medical report concerning the treatment, were not binding upon the Claimant.  These regulations also address re-pricing of medical treatment and have a provision that should a Medicare payment mechanism not exist for a particular treatment, accommodation or service, the amount of payment to be made to the healthcare provider is 80% of the usual and customary charge or the actual charge, whichever is lower. 

The Appeal Board was divided and reversed by finding that CBD oil was not a “supply” under the Act given it was not proven to be safe or effective by the FDA and because submission of a receipt did not trigger the payment obligation under the MCCR.  As previously intimated, the Commonwealth Court reinstated the Judge’s decision and found CBD oil was a medicine and supply as it was “prescribed” by the doctor’s office and managed the Claimant’s pain lessening opioid use and allowing the Claimant to avoid surgery.  The Court found there was no requirement for FDA approval of treatment under the Act and the billing requirements of the Act did not apply to the Claimant, who was not a healthcare provider. 

The Pennsylvania Supreme Court noted that the terms “medicines” and “supplies” was not defined under the Act.  It considered such words to be a singular phrase of “medicines and supplies” in undertaking its analysis.  Ultimately the Court felt this meant “any item that is part of a health care provider’s treatment plan for a work-related injury.” As for the FDA concerns, the Court indicated that such challenges are better left to be addressed via Utilization Review as to whether the treatment is reasonable and necessary.

This Decision is troubling given its potential implications moving forward.  The MCCR in Pennsylvania are now over 30 years old and it is well past time for them to be reviewed and revised so as to address changes in medicine and the current reality of medical care.  It is undeniable that the Workers’ Compensation Act requires payment for reasonable and necessary medical expenses which are causally related to the work injury.  Now, with where the Court has gone in terms of indicating that the MCCR do not apply to injured workers seeking reimbursement of “medicine and supplies”, the reasonableness and necessity portion of the Act has essentially been circumvented.  While the Court said that a Utilization Review should be pursued to address the issue of the lack of efficacy and approval by the FDA, the Defendant/Employer/Carriers have lost the opportunity to review treatment to determine if it is reasonable and necessary because the Court has said that the MCCR, which contain the provisions allowing for review of the reasonableness and necessity of treatment to not apply to the Claimant.

All that needs to happen is for a physician to not necessarily “prescribe” treatment but rather to just make a recommendation.  This can be for anything that could be a “medicine and supply”, CBD, medical marijuana, sleep aids such as beds, vitamins, hot tubs, etc. and if the Claimant then purchases the recommended “treatment” there is not a specific treatment that is subject to review (like 5 mg of Vicodin 4 x/day).  It is up to the Claimant to decide what he is to get and how much.  It is an extreme example but what would occur if a receipt was submitted for caseloads of CBD products where the volume would obviously not be able to be utilized except over years so that it was excessive so as to not be reasonable or necessary in terms of the amount.  There cannot be a utilization review filed on a Claimant and the medical provider, who does not write a specific prescription or even pick out the product or amount (where there is just a recommendation for CBD oil without more as to type, dosage, potency, frequency) as that is not something that is able to be reviewed.  

In the context of medical marijuana, it is the Claimant who picks everything.  They get approved for a card and then they pick out the amount, the form (vape, leaf, etc), the strain (potency), etc. the If the Claimant cannot be subject to a Utilization Review by a peer of the same medical specialty (as would we have Claimant’s then reviewing other Claimant), then the reasonableness and necessity of treatment cannot be reviewed and the Defendant/Employer/Carrier is now in a position where they may be required to pay for treatment, contrary to the Act, which is not reasonable and necessary.  The Court makes blanket statements about treatment needing to be paid for that is reasonable and necessary and that if there is a challenge a Utilization Review can be filed; however, it apparently does not know this is how the Act works in connection with the Medical Cost Containment Regulations.  The practical reality is, in this newly created situation of reimbursements to the Claimant, this is not something that works so that now there is no mechanism to address whether “treatment” to be reimbursed is reasonable and necessary and it cannot be re-priced.  If the Claimant gets something recommended by a doctor and submits a receipt, it apparently is now to be reimbursed or the Employer/Carrier may be subject to penalties even if the treatment is not reasonable and necessary because that cannot now apparently be addressed.