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Nancy Grover

Nancy Grover is co-Chair of the National Workers’ Compensation and Disability Conference and Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at

Prescription Costs

Physician Dispensing Increases as Lawmakers Consider Action

A new report says the prices have increased for medications dispensed by physicians but not for those dispensed by pharmacies.
By: | October 15, 2014 • 3 min read
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Nearly 30 percent of medications given to Pennsylvania’s injured workers in 2012-13 were dispensed by physicians. At the same time, the same providers were paid almost half the total amount spent for all prescriptions in the workers’ comp system.

A new report from the Massachusetts-based Workers Compensation Research Institute updates a previous study that looked at the prevalence and costs of physician-dispensed prescriptions in the state. It says in many cases the prices paid for physician-dispensed medications increased while the prices paid to pharmacies for the same drugs did not change or decreased.


“With an additional year of data, we continued to find higher and growing prices paid to dispensing physicians for drugs commonly dispensed to injured workers in Pennsylvania,” the report said. “In 2012/2013, physicians dispensed 29 percent of workers’ compensation prescriptions and were paid 48 percent of what was spent for all prescriptions for injured workers. This was an increase from 17 percent of all prescriptions and 17 percent of total prescriptions costs four years earlier.”

While supporters of physician dispensing say it is more convenient for patients and improves access and patient compliance to the prescribed drugs, opponents argue the costs are too high and according to some research does not lead to optimal outcomes. The WCRI report looks specifically at the prices paid for physician-

dispensed vs. pharmacy-dispensed medications.

Ibuprofen was the drug most commonly dispensed by physicians in Pennsylvania at an average cost of $0.74. The same pill dispensed by a pharmacy costs an average of $0.26, a difference of 186 percent. The report also noted that the price paid for physician-dispensed ibuprofen increased 20 percent in four years while the price for the same drug dispensed at a pharmacy decreased by 11 percent.

The report says the markup of Carisoprodol, a muscle relaxant, averaged 841 percent — $0.51 per pill dispensed by a pharmacy vs. $4.84 dispensed by a physician.

Among opioid prescriptions, oxycodone-acetaminophen (sold as Percocet) cost $0.64 per pill from the average pharmacy compared to $3.55 when dispensed by a physician. The most common opioid dispensed by physicians, hydrocodone-acetaminophen (sold as Vicodin), costs an average $0.40 per pill at a pharmacy vs. $1.38 from a physician.

Some medications commonly dispensed by physicians were “much less likely to be dispensed at pharmacies,” the report said, “which may mean that physicians who do not dispense them are less likely to write prescriptions for these medications.” Examples included naproxen sodium (Aleve), and omeprazole (Prilosec).

The report comes as the issue of physician dispensing is being considered by Pennsylvania legislators. Current law sets the maximum reimbursement amount at 110 percent of the average wholesale price for pharmacies as well as physician dispensers.

“The intention is to set reimbursement rates at the same levels for the same drugs regardless of the dispensing point,” the report said. “However, physicians in Pennsylvania often dispensed and billed for repackaged drugs, which were paid at higher prices than what pharmacies were paid for the original products of the same drugs.”


Amended legislation before the state Senate would limit reimbursements for physician-dispensed prescription drugs to 110 percent of the AWP of the original manufacturer National Drug Code, or the AWP of the least expensive clinically equivalent drug if the original manufacturer NDC is not included in the bills from physicians seeking reimbursement, the report explained. The bill also would limit physician dispensing of the more restrictive Schedule II and Schedule III opioids.

Nancy Grover is co-Chair of the National Workers’ Compensation and Disability Conference and Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at
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NWCDC Preview

Program Management Track Highlights High-Level Sessions

Two key sessions in the new Program Management track focus on behavior-based safety and the influx of private equity firms in the workers’ comp market.
By: | October 10, 2014 • 5 min read

The 23rd annual National Workers’ Compensation and Disability Conference® & Expo takes place Nov. 19-21 at the Mandalay Bay Resort and Casino in Las Vegas. The confer­ence is produced by LRP Publications, which also publishes Risk & Insurance®.

ConferenceBehavior-based safety and the influx of private equity firms in the workers’ comp market are two of the sessions rounding out the NWCDC’s new Program Management track.

Behavior-Based Safety Program: How You Can Prevent Injuries and Improve Product Quality

Friday, Nov. 21, 10-11:15 a.m.

Near misses offer a unique opportunity for employers, says Julia Sfurm. The veteran corporate senior risk manager cites them as one of the many benefits of behavior-based safety programs.

Described as the application of the science of behavior change to real-world problems, an effective BBS is a process that creates a culture of safety at an organization. It is a way to get full participation from employees at all levels.


“There are so many times where there are [safety] programs and processes in place but employees and supervisors don’t buy into it,” Sfurm said. “This process helps to get everyone engaged in the process.”

Key to an effective BBS program is eliminating the “us vs. them” atmosphere within the company. All employees must feel empowered.

“It’s where you have not just a top-down or bottom-up safety culture where somebody is telling someone to do something, but a continuous counterbalance so everyone is part of the process. They all believe that safety is important,” she explained.

The process involves having a BBS leader — preferably not a manager — who watches employees work and sees how they might perform their tasks more safely. Organizations looking to develop a successful BBS need to create an interactive social dynamic where there is interaction between the BBS leader and the team of managers who end up working together with employees.

“There has to be some trust between management and people on the floor, a social dynamic,” she said. “No one is looked at as being outside the process.”

When done successfully, a BBS program can result in reduced claim activity as well as improved productivity.

“The fact that we have employees that, as you’re going through the process, are not only seeing how an employee is doing things but asking, ‘why are you doing this?’” Sfurm said. “Some lean engineering goes into this.”

Behavioral psychology enters the picture because employees come to proactively monitor their own behaviors with an eye toward safety. They become trained to be aware of their actions to note when safety is at risk.

As employees become more focused on their own and others’ actions, there are more opportunities to prevent future claims. “If you’re observing someone, you should have the ability to catch or observe things that may be problematic, and because of that, you should be able to modify or mitigate that risk so it doesn’t happen and turn into a claim,” Sfurm said. “Near misses are free. Those are your incidents that have not occurred to cost you money — in frequency or severity — to an employee. If you can find those and eliminate them, then you’ve helped everybody — the process and more importantly the employee.”

Private Equity’s Major Deals and Their Impact on Workers’ Compensation

Thursday, Nov. 20, 10:45 a.m. to noon

Decision-makers, claims executives, risk managers, brokers, and anyone interested in understanding the move of private equity firms in the workers’ comp system may find this session of value.


  • Camilo E. Horvilleur, principal, H.I.G. Capital LLC
  • Jeffrey S. McKibben, managing principal, Odyssey Investment Partners
  • P. Hunter Philbrick, managing director, Hellman & Friedman

The panelists represent companies that have acquired and are now selling industry-related businesses. Each has a clear understanding of workers’ comp, said Joseph Paduda, principal of Health Strategy Associates, author of the ManagedCareMatters blog, and moderator for the session. But the same cannot be said of all companies trying to gain ground in the workers’ comp market.

“While some investors seem to understand the workers’ comp world quite well, others don’t have the same depth of knowledge,” Paduda said. “Those are the ones who are going to have a tough wake-up call.”


Paduda believes companies in the workers’ comp industry are ripe for private equity takeovers. “Because the workers’ comp market is inefficient,” Paduda said. “It would benefit greatly from more automation; it has relatively low regulatory risk in that the federal government is not involved to a great extent in the workers’ comp business. And the other investment opportunities in the health care space have much higher regulatory risk due to Affordable Care Act implementation.”

With those considerations, the move by private equity firms into the workers’ comp arena is generally a good thing. Employers, workers, and taxpayers can benefit from it.

“That doesn’t mean there are not going to be some wrenching, painful changes, and we’re already seeing that in significant layoffs — some of which have not been handled appropriately,” Paduda said. “But increasing the efficiency of the business and reducing employers’ costs and approving claimants’ care, that’s what this business is all about; that’s what workers’ comp is all about. Private equity over time will make that happen.”

The effects of such takeovers on a day-to-day basis for employees in the affected companies will be addressed by the panelists. They will also discuss what they seek when considering an acquisition although Paduda thinks that action may subside soon.

“I expect there will be several more transactions over the next 18 months, but the pace will certainly slow down,” he said. “If nothing else, there are fewer companies to buy now. “

Nancy Grover is co-Chair of the National Workers’ Compensation and Disability Conference and Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at
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Pharmacy Management

PDMP Value Could Be Ramped Up, Expert Contends

Prescription drug monitoring programs are proving invaluable. But legislative measures must be taken to ensure their effectiveness.
By: | October 10, 2014 • 4 min read

Prescription drug monitoring programs could be one of the most effective tools to address the abuse and misuse of opioids among injured workers. But jurisdictional variances, unavailable resources, and the lack of access to the information by some parties are hindering the potentially smooth flow of information.

Despite the shortcomings, experts say PDMPs are already proving to be invaluable. They say workers’ comp practitioners can urge state lawmakers to take steps to make them more effective.


“New York saw a radical change in the numbers of individuals receiving prescriptions from multiple prescribers and pharmacies” after a PDMP was implemented, said John Eadie, director of the PDMP Center of Excellence at Brandeis University. “Overall, the impact of a PDMP seems to have a very significant and immediate kind of responsiveness. So much so that the Centers for Disease Control and Prevention is recommended all states do this — mandatorily require researching [a PDMP] before a first prescription and ever after.”

Speaking at a webinar on PDMPs produced by the International Association of Industrial Accident Boards and Commissions, Eadie said the number of individuals in New York engaging in doctor shopping plummeted after that state’s prescription monitoring program was implemented last year. He said that’s just one example of the value of the programs.

PDMP Basics

Nearly every state has a program to track information from pharmacies on patients who are dispensed medications. The data includes a patient’s name, address, date of birth, and gender, as well as information about the prescriber and the medication. The name, type, strength, manufacturer of the drug, and the quantity and date it was dispensed are also recorded.

The types of drugs included vary among jurisdictions. Some states collect information on drugs classified as Schedule II through V of the Controlled Substances Act while others confine the information to more addictive medications, and still others include noncontrolled substances. Six gather information when the drug tramadol is dispensed.

States gather the information from pharmacies and make it available to various parties within the state while some also allow sharing of PDMP information with other states.

The frequency of reporting the information also varies among states from one to 30 days. In the 17 states that collect the information each day, Eadie said the data is very current and available.

“The laws in these states require all controlled substances to be recorded in the PDMPs,” Eadie said.” That’s why it is so critical to workers’ comp programs.”

Accessing the Info

Reviewing the data in the PDMP can wield some surprising results. “Physicians are generally unaware of the extent of doctor shopping,” Eadie said. “Physicians need to go to the PDMPs.”

However, many states do not require providers to look at the PDMP before they prescribe medications to injured workers. But that is changing.

“PDMP legislation was very important in 2014,” said Jaelene Fayhee, director of compliance and government affairs at pharmacy benefit management company myMatrixx. “Some related to more frequent reporting. The District of Columbia created a PDMP, and a couple laws are specific to workers’ comp.”

Workers’ comp payers are generally restricted from accessing information in PDMPs. According to Eadie, only nine jurisdictions allow access to PDMPs by workers’ comp payers.

“Third-party payers want access to the data; they want to find out if they have individuals enrolled in their programs who may be avoiding their detection programs by going to prescribers and paying cash,” Eadie said. “The only way they can find out is by going to the PDMP. There is a wide opportunity there.”

Earlier this year, the COE at Brandeis issued a report and recommended medical insurers be given access to PDMP data beyond that on prescriptions for which they have paid. The report followed a meeting of high-level experts (see box).

Unsolicited Reporting

One of the essential elements of a successful PDMP is getting parties to use it, especially medical providers. But many physicians do not access PDMPs because they are not required to do so and don’t realize the value in it.

Prescribers who use the data “discover all sorts of issues they had no clue about,” Eadie said. Information from Massachusetts showed that “when physicians were told about patients going to multiple prescribers and pharmacies, more than 90 percent of prescribers had no idea before they received that report from the PDMP. Therefore, where use of the data was voluntary, they didn’t ask because they had no clue. But when the data was sent to them, they finally saw what was going on.”


States that generate so-called unsolicited reports proactively send alerts of data suggestive of questionable activity involving controlled substances such as doctor shopping or illicit prescribing. They notify prescribers and pharmacists that patients may be abusing or diverting controlled substances. But while nearly half the states are authorized to do so, many do not generate unsolicited reports.

“PDMPs may lack money or personnel to do transmission of the data. That’s something you and the industry may want to take a hard look at,” Eadie advised practitioners. “It shows how much yet remains to be done in the country to use one of the most effective tools available to deal with the epidemic.”

Nancy Grover is co-Chair of the National Workers’ Compensation and Disability Conference and Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at
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