Straight-From-the-Source-Blog-Header.png

Workers’ compensation alert: Employers need miracle cure for rising drug costs

By Higginbotham on June 25 , 2015

Prescription.

America has a serious drug problem: The skyrocketing cost of prescription medication. It’s a growing crisis for patients and employers alike. Just look at these sobering statistics:

  • In 2014, 77 percent of employers spent 16 percent or more of their total health care budgets on pharmacy benefits, up from 71 percent of employers in 2013. Almost 5 percent of employers spent more than 30 percent of their total health care budgets on pharmacy, according to a recent prescription drug benefit survey from Buck Consultants at Xerox.
  • Recent data from Healthentic, a Seattle-based health data analysis company, reveals that opioid abuse is costing U.S. businesses nearly $26 billion every year, with lost work and productivity accounting for $10 billion. The 13 percent of the population responsible for opioid prescription abuse accounts for 92 percent of employer’s costs.
  • Super Spending: U.S. Trends in High-Cost Medication Use, a recent report by Express Scripts Holding Co., reveals that more than half a million patients in the U.S. had prescription drug costs of over $50,000 in 2014, an increase of 63 percent from 2013. An estimated 576,000 Americans spent more than their median household income on prescription drugs in 2014. The total financial impact to payers is a shocking $52 billion a year.

For employers, escalating drug costs represent a growing share of their overall workers’ compensation costs.

Employers have struggled to contain medical costs associated with workers’ comp (WC) claims for a long time, and medical expenses now exceed indemnity expenses for the typical WC claim according to NCCI’s Workers Compensation Prescription Drug Study, 2013 UPDATE. Rising pharmaceutical costs are only adding to the financial pain. In fact, for the first time in more than a decade, the average prescription cost per claim increased in 2014.

What can employers do to control these costs?

It’s clear you need aggressive strategies to manage the pharmaceutical aspect of your workers’ compensation claims. Some of the most effective include:

  • Use of pharmacy benefit managers (PBMs)
  • Drug guidelines
  • Evidence-based prior authorization
  • Encouraging or mandating use of generics and step therapy
  • Urine drug monitoring
  • Drug utilization review with targeted interventions
  • Offering addiction treatment

If not managed properly, prescription drug use can push your workers’ compensation claim costs up and be a constant drain on your bottom line. And although there’s no miracle cure, an integrated approach is the best course of action to improve clinical outcomes and keep costs down.

For more information about controlling your workers’ compensation insurance costs, contact the business insurance experts at Higginbotham Insurance.

Tags: Business Insurance

  
SUBSCRIBE TO NEWSLETTERS