Massachusetts: Workers' comp prescription drug costs per claim lower than most states

The cost for prescription drugs used in the Massachusetts workers' compensation system is significantly lower than in many states, according to a study.

The 16-state study by the Workers Compensation Research Institute found that the average payment per claim for prescription drugs in the Massachusetts workers' comp system was $289 -- 30 percent lower than the median of the study states. Researchers said the main reasons for the lower prescription costs were lower prices paid to pharmacies due to a lower pharmacy fee schedule, more frequent use of less expensive generic drugs, and a ban on physicians dispensing medications directly to their patients.

The report, Prescription Benchmarks for Massachusetts, found that the average prices paid to pharmacies for common drugs were lower than the median study state, largely due to Massachusetts' lower pharmacy fee schedule. Researchers said the schedule is based on the Wholesale Acquisition Cost, which is much lower than the Average Wholesale Price that is used in many states as a reference price for pharmacy fee schedules. For example, the price paid for the painkiller Percocet®, a drug prescribed in 41 percent of claims with prescriptions in Massachusetts, was 22 percent lower than the median of the 16 states.

Use of Schedule II narcotics decreases among California injured workers (08/13/12)
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Study shows increasing frequency, costs of physician-dispensed meds (09/06/12)
Opioids, physician dispensing continue to concern practitioners (02/25/13)
Opioids, physician dispensing are major concerns among WC payers (02/11/13)

The study also found that less frequent prescriptions for brand name drugs to treat injured workers in the state contributed to the lower average prices. Physicians in Massachusetts used brand name medications for only 12 percent of all prescriptions, compared with 15 percent in the median state, according to the study.

Researchers noted that the utilization of prescription drugs in Massachusetts was lower because physicians wrote and workers filled fewer prescriptions. The average number of prescriptions per claim was 17 percent lower than the median state while the average number of pills per claim was 14 percent lower.

Massachusetts is one of three states -- including New York and Texas -- where physician dispensing is not allowed. In several states where physician dispensing was common, researchers said physician-dispensers were often paid higher than pharmacies for the same prescription.

Medical costs moderate. In a separate study by WCRI, researchers found that workers' comp costs per claim with more than seven days of lost time for medical care had a moderate increase in 2007 after years of rapid growth. The report also found that medical costs per claim with more than seven days lost time at an average 36 months of experience in Massachusetts were the lowest of the 15 states examined.

Researchers noted that indemnity costs per claim with more than seven days of lost time were stable in 2007 due to the offsetting effects of stable duration of temporary disability and moderate growth in the average weekly wage. In addition, medical cost containment expenses per claim grew rapidly in 2007 after stabilization in 2006.

The study also found that benefit delivery expenses per claim with more than seven days of lost time and expenses in Massachusetts were 24 percent lower than the 15-state median. Most expenses components in Massachusetts were lower than typical, researchers said. Medical cost containment expenses per claim were 34 percent below the median state. Furthermore, both the average defense attorney payment per claim and medical-legal expenses per claim were 25 percent lower than the median state.

Read more at the WorkersComp Forum homepage.

August 2, 2010

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