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Physician dispensing in work comp – worse than you think

The good folks at NCCI just released research which focuses attention on what looks to be the fastest growing part of the work comp medical dollar – drugs dispensed by physicians.
The lead sentence in their annual update[opens pdf] on prescription drug costs puts it bluntly: “The volume of prescription drugs dispensed by physicians to workers compensation (WC) claimants has risen sharply in recent years–putting upward pressure on WC costs.” [emphasis added]
While that’s bad enough, the current situation is likely worse. Why? NCCI based their report on 2008 data. If the 2007 – 2008 trend (excluding California) continued for 2009/10, physician dispensed drugs accounted for 64% of total spend last year.
Between 07 and 08, physician dispensed drugs went from about 8% of drug spend to about 16%. Now, I don’t believe the trend continued for two more years; I also don’t believe it went down. Therefore, I’m betting physician dispensed drugs accounted for somewhere between a fifth and a quarter of drug spend in 2010.
While you’re digesting that, here are a few more factoids to ruin your lunch.
The study, authored by Barry Lipton, Chris Laws, and Linda Li and based on 2008 data, goes on to report:
physician dispensing has increased in most states, with particularly large increases seen in southeastern and central midwestern states
Georgia saw physician dispensed drugs hit about 30% of all drug costs, Florida hit about 45%, with Hawaii, Michigan, and Maryland all in the mid-to-upper twenties
– dispensing is increasing for new and old claims; my bet is the growth in dispensing the initial script means there will be a downstream growth in dispensed drugs.
I don’t believe all docs are just dispensing drugs to make more money. I do know the profits for docs and the dispensing companies can be enormous.
More on when, where, why, and how physician dispensing may be appropriate later this week.

One thought on “Physician dispensing in work comp – worse than you think”

  1. Does this happen on the group health side, or is this strictly something that happens in workers comp?
    If it is a work comp only issue, then the motive is clearly profit. There is an easy fix, which is states prohibiting this practice. It is a clear conflict of interest for the physician to make direct profit from writing prescriptions.

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Joe Paduda is the principal of Health Strategy Associates



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