Prescription for Change: 
New prescribing rules, liability insurance plus other interim issues

by Tom Banning, TAFP Director of Legislative Affairs

The ways in which prescriptions are written and dispensed in Texas are about to change dramatically as of June 1, 2002.  Late in the legislative session the large retail pharmacy chains, led by H.E.B. added an amendment to Senate Bill 768 that repeals the two-line prescription form and gives a pharmacist the ability to substitute a generic drug unless the prescriber clearly indicates, in his or her own hand writing that the brand is “medically necessary.” The bill was originally filed as a “clean up” bill to address emergency kits.

The amendment was offered without benefit of a hearing in either chamber of the Legislature or any consideration to physicians or other health care professionals.  It was never filed as legislation or vetted among affected professionals. A House/Senate conference committee was appointed and amendments were made to clarify that a pharmacist has the legal responsibility to dispense as directed by the practitioner and required the Texas State Board of Pharmacy to garner input on rulemaking from regulatory boards for prescribing stakeholders.

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Steve Morse, director of professional services for the Texas State Board of Pharmacy, says the new rule was put in place to resolve a reimbursement issue pharmacists experienced when filling Medicaid prescriptions. In cases where a generic equivalent is available, Medicaid will only pay for the generic drug unless the pharmacist can show proof that the physician wrote “brand necessary” or “brand medically necessary” on the prescription in his or her own hand.

“Pharmacists were following those substitution instructions [on the two-line prescription form] and then getting dinged when they were audited by Medicaid, so the move was to make this uniform,” Morse says.

The rule will require physicians to write by hand the phrase “brand medically necessary” or “brand necessary” on every prescription for which the physician wishes the brand-name medication dispensed if a generic is available, whether or not the script is for a Medicaid patient. Signing under the “dispense as written” line will no longer legally require the pharmacist to dispense that drug.

 “When they phone it in, all that a physician or the physician’s designated agent will have to do is say, ‘we need to dispense this brand, brand necessary,’” Morse says, “and if it is indeed a Medicaid patient, the physician will have to follow up with a written prescription, either sent or faxed to the pharmacy, with ‘brand necessary’ across the face of it.”

For electronic prescriptions, physicians will be required to include the phrase “brand medically necessary” or “brand necessary” to have the brand medication dispensed. Physicians will have to follow with faxed or mailed prescriptions bearing the required phrase if they wish to bar generic substitution for Medicaid scripts sent electronically.

 Contact the TAFP Legislative Department:

 Tom Banning, Director of Legislative Affairs

Greg Herzog, 
Legislative Aide

Visit the Member Advocacy section of the Web Site

Medical Liability

If you haven’t renewed your medical liability this year, get ready for some sticker shock. Physicians across Texas are reporting premium increases from 30 to 300 percent.

After several years of relative stability, medical liability insurers in most—though not all—major markets across the country are reporting sharp increases in loss adjustment expense and loss ratios. Industry analysts warned well in advance of the current economic downturn and long before the terrorist attacks on Sept. 11 that premiums were inadequate to cover losses and that the market was transitioning from a “soft” market with too many competitors to a “hard” market where marginal carriers consolidate or leave a market.

Insurers have countered the hemorrhaging of their bottom lines with double and triple digit premium increases, reducing policy limits, increasing deductibles, refusing to renew some classes of risk and abandoning the market altogether. They are pricing insurance beyond affordability for some practices, and calling for tort reform.

The consequences of this instability are devastating to both doctors and patients. Physicians are confronted with a choice of unaffordable or unavailable coverage, while being squeezed by mounting pressure from hospitals and managed care organizations to maintain or increase their policy limits. Economically fragile practices or more litigious venues are reporting the exodus of specialists, inability to recruit physicians, early retirement, and difficulty maintaining ER or code coverage.  Physicians almost uniformly report increasing defensive practices and dropping high-risk classes of patients and/or high-risk procedures.

TAFP has begun discussions with state and local officials regarding solutions.  The next iteration of this debate, which will be initiated by Texas House and Senate interim committee studies and public hearings, will focus on three related problems:

1. adequacy of tort law, legal professional discipline and judicial enforcement of current statutes;

2. adequacy of state oversight of underwriting and reserve practices of liability carriers; and

3. adequacy of patient safety measures and medical professional discipline.

Part of our charge is to accurately document the extent of the lawsuit abuse problem and the degree to which the problem has compromised access to care and increased the cost of medical care.  We need your help.  Please provide TAFP staff with any stories or problems you’ve had with abusive or frivolous lawsuits, any services you’ve stopped performing, the amount of increase in your liability coverage premiums, or any practice changes you’ve had to make or will make unless something is done to address this problem.  Please send any information to:

Texas Academy of Family Physicians,
attn: Tom Banning,
6034 West Courtyard Drive, Suite 140, Austin, Texas 78730
or tbanning@tafp.org