Exclusively from Foa & Son
The problem of opioid abuse, much in the news recently, has reached epidemic proportions. The human and social cost of opioid abuse is severe and highly visible and affects all levels of society, but there is a dollar cost to employers, too, which is sometimes visible, often not.
You may have already seen some costs related to drug abuse reflected in your health insurance program costs. Another, much less visible cost is in your workers compensation claims, which directly affect your premiums. In general, workers compensation claims adjusters at larger and more sophisticated insurance companies are pretty sensitive to the potential for higher costs and less successful outcomes from treatments for work injuries that involve excessive opioid use, and combat that wherever they can within the context of the applicable state WC statutes. If you ever sit in on a review of your open WC claims with your insurance company’s claim adjuster (which you should do periodically), that’s something to watch for. Good adjusters are alert to potential overuse of painkillers; the problem is that not all adjusters are good, and not all insurance companies are as diligent in managing this aspect of claims, and where that’s true, you can end up writing bigger premium checks.
A recent report from the Workers Compensation Research Institute (WCRI) highlighted another area where opioids can surreptitiously hit your pocketbook. When a workers compensation claim approaches resolution, adjusters are required to notify CMS (Centers for Medicare and Medicaid Services) for any claimant near retirement age or potentially eligible for social security disability. The operating principal here is that if future medical expenses can be expected from a work injury, they should be the responsibility of the workers compensation system, not Medicare. Claim adjusters are required to submit such claims to CMS, who determines how much money needs to be included in any claim settlement for future medical expenses. This is known as the Medicare Set Aside, and these dollars are added directly to the final settlement value of a claim.
There are a lot of problems with how this works in practice, but one common one is how anticipated future prescription drug costs are calculated. A recent WCRI (Workers Compensation Research Institute) report highlighted this. Here’s the problem: the WCRI did a study of almost 8,000 recent closed claims for which workers compensation Medicare set asides were established. They found that the average amount set aside for prescription drugs was $48,986 and the average allocation for other future anticipated medical expenses was $54,407, for a combined total of $103,393 for these claims, all of which was added to the final claim settlement. Of those drug costs, opioids were the most commonly prescribed drug for set asides; the study noted they represent “significantly higher proportions than in the general workers compensation population.”
It gets worse. The researchers also looked at the doses approved, and found that for set-aside settlements that included opioids, injured workers were on average approved not only for high daily doses, but some 70% of settlements required funding for decades of opioid use, with an average duration of use of 20.9 years. Moreover, 10% of set-aside plans included opioids at levels that actually represented a medical indicator of elevated risk to the patient. Many of the set asides that included opioids also had concurrent prescription reserves for other sedative-hypnotics and muscle relaxant prescriptions, further imperiling claimants if they actually used the amount of medication included in the set aside.
Claimants attorneys like big settlements for obvious reasons, but including dangerous levels of highly addictive drugs does not help the claimant, and increases the employer’s costs. Fortunately, there are mechanisms to contest these set-asides and appeals based on medical facts have good chances of success. But, as mentioned earlier, don’t assume your insurance company or claims adjuster is actually looking at these amounts or pushing back. When claims approach closure and a Medicare set-aside becomes a possibility, you need to be keeping an eye on your claims and your claims adjuster. Remember, all these excess claims costs may not necessarily benefit the injured worker, but they all ultimately find their way into your workers compensation premiums.