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Tips for Controlling Workers' Compensation Prescription Costs:

By Cassandra Rudy, Work Comp Claims Consultant, MMA 

April 12, 2018

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Workers’ compensation prescription drug costs have been a challenge for many employers in recent years. As of 2016, prescription drug costs accounted for 38 percent of workers’ comp medical costs. And the average medical cost of a lost-time claim continues to rise. So, what can employers do to try and keep those costs in line?

After all, once the patient is on the medication, there appears to be little, if anything, you as an employer can do to curb costs. But here’s what you can do to help get more control over workers’ comp prescription drug costs.

The key to controlling workers’ comp prescription drug costs is to work with providers before an employee is injured and drugs are prescribed.


You can help control costs by talking with preferred clinics near your workplace and working with them to make sure they are onboard with your program and goals. You may not have the ability to dictate where an employee receives care, but you can offer your preferred providers as an option.

Get them to agree to protocols that will benefit employees and help them return to work as quickly as medically possible—as well as help keep prescription drug costs under control.

Encourage doctors to offer injured workers alternatives for pain management, including counseling and physical therapy.


Do what you can to limit dispensing from the start. Often prescription costs, among others, are exacerbated by the injured workers’ first visit to the Emergency Room, local clinic or personal physician. If these are out of your insurers’ network, it can add to the cost. (You should also require prior authorization for compounded specialty drugs.)

Providers should pursue alternative treatments, including coaching, counseling and drug-weaning programs when appropriate. This should ultimately help to accelerate recovery of injured workers, result in a faster return to work and reduce overall workers’ compensation costs.


Once you have talked with your preferred providers, schedule ongoing reviews of the processes to help keep tabs on possible addiction problems and potential overuse issues.

One protocol you should definitely consider employing is the “Patient/Provider Contract,” literally an agreement between the employee and the physician or clinic that covers opioid use. It is not at all unusual for physicians to use narcotics contracts for better control of patients’ use. This contract ensures that the patient and provider have thoroughly discussed the risks, side effects and benefits of opioid medications; agreed on the goals of treatment; promised to keep all scheduled appointments; and prescribed the drugs only on an as-needed basis.


You should also make sure that pharmacies are actually dispensing prescribed drugs rather than physicians. Drugs dispensed by physicians typically cost 60 percent to 300 percent more than retail pharmacies (depending on the drug), according to a Workers’ Compensation Research Institute study.


Talk with your clinic of choice about having the injured employee/patient agree to check ins such as random urine analysis to identify any ongoing problems. There is ample evidence that too little drug testing of a majority of opioid-prescribed patients occurs with any regularity, if at all.


In line with the patient/provider contract and random testing, you should strongly consider reviewing ongoing progress to help prevent over-prescribing, get ahead of potential addiction problems, and, ultimately, keep costs under control.


When you ensure that risks in the workplace are minimized and everyone knows how to perform tasks safely, you can help prevent accidents and injuries, and the need for prescriptions in the first place. Find the hazards and fix them: it’s the best way to prevent injuries or illness.


It’s obviously in everyone’s best interests to help the injured employee get back to work as quickly as possible. The longer injured employees are away from work, the less likely that they’ll ever return. Make sure you have the right programs in place to lower the length of employee absences, which will reduce your costs.


Integrate wellness programs with other programs that focus on stress reduction, mental and emotional health, financial health and work/life balance. That integration can help keep employees healthier, safer and freer from the stress that can result in illness and cause accidents.


Whatever steps you take to curb costs, make sure you clearly explain them to employees. If you don’t, your motives could easily be misunderstood and that can result in non-compliance. Make sure your company’s prescription drug program is accessible, understandable and affordable.

The last thing you want to do is make it more difficult for workers and their families to get the treatments they need.


As states continue to adopt guidelines that address the prescribing of opioids, more payers will have to demonstrate that their programs are consistent with those guidelines. So, the sooner you have a workable program in place, the better.


Talk with your Marsh & McLennan Agency representative to learn more about how we can help you design, implement and manage a more effective program.

This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.