Blog

Policy Matters Alert

Important legislative and regulatory updates

Update on New York Pharmacy Direction of Care Processes

July 8, 2025 · Public Policy & Regulatory Affairs Team

The New York Workers’ Compensation Board (WCB) recently revised its rules to allow claimants to obtain medically necessary medication(s) outside a direction of care network pharmacy under certain circumstances once the claims administrator (payer) provides notice to the claimant, network pharmacy, direction of care network and/or PBM. The amendments will take effect July 11, 2025.

In New York, a payer may designate a pharmacy network and require claimants to obtain all prescribed medicines from that designated pharmacy network. Changes to Sections 440.3, 440.4, and 441.3 require the payer to provide notice to the claimant that the payer may choose not to pay for prescription medication(s) for body parts or conditions being challenged, as well as for any additional body part or condition that has not been established or for which the payer has not accepted liability until the body part of condition is established or the legal challenge completed.

Notice requirement from payer

Although the WCB has yet to issue a required (paper format) form, the notice(s) to be sent from the payer to the pharmacy, PBM, network of pharmacies, and injured worker must include the following information:

The designated network pharmacy may elect not to dispense and payer may elect not to reimburse for a prescription medication if a legal challenge, additional body part or condition has not been established and for which the payer has not accepted liability, until liability for the additional body part or condition is established or legal challenge completed.
If, after the claimant attempts to obtain a prescription medication and the pharmacy direction of care network refuses to dispense the medication, the claimant may go outside the designated pharmacy network to obtain that medication.
Thereafter, during the pendency of any legal challenge or dispute, the claimant may continue to go outside the network pharmacy to obtain the medication if the pharmacy network refused to dispense.
Following the conclusion of a legal challenge or amendment of a claim to include an additional body part or condition, the payer must re-serve the claimant with the notice required in Section 440.4(b) before requiring the claimant to obtain their prescribed medication through the pharmacy direction of care network.
A contact phone number must be provided for the claimant to call with questions. Additional contact information, such as an email address, is optional.

Penalties and surcharges

If a payer fails to provide notice to the claimant as required by 12 NYCRR 440.3(d) and their designated network pharmacy does not dispense prescribed medication, consistent with the formulary, the payer will be subject “to penalties under section 114-a (3) of the Workers’ Compensation Law of at least two-thousand dollars, with increased penalties thereafter for any subsequent failures to dispense.”

When a payer elects not to dispense or pay for prescription medication after providing the notice required by 12 NYCRR 440.3(d) and the claim or the additional body part or condition is later found to be compensable, the payer will be liable for the cost of any prescription medication dispensed by a non-network pharmacy during the controversy at the pharmacy fee schedule rate plus a surcharge of 25%. Additional information on the rule changes can be found here: https://www.wcb.ny.gov/content/main/SubjectNos/sn046_1766.jsp

Optum and client actions

It is important to note that this will ONLY impact claims administrators/payers who currently utilize a pharmacy direction of care program/network in New York. This program or network can be applied together with the Tmesys network and the Optum WC pharmacy bill review or through any other vendors processing pharmacy transactions for our clients. We strongly urge clients to reach out to any external vendors to ensure compliance.

Our Tmesys Network, Pharmacy Bill Review, and Public Policy and Regulatory Affairs teams continue to develop processes and procedures to ensure compliance for clients who utilize an Optum pharmacy direction of care program. Moving forward, we will communicate with clients through their Optum account manager about this issue until the legal challenge and body part/condition process is completed.

Should you have any questions regarding the recently adopted New York regulations, please contact our Public Policy and Regulatory Affairs (PPRA) team at optumwc.policymatters@optum.com

Additional Optum resources:

For more information on these policy developments and others we have been tracking this year, be sure to visit our Legislative and Regulatory Tracker. Bills or regulations can be filtered by insurance line, topic, status and jurisdiction.

Subscribe now