“Self-interested providers” drive up WC costs with compound drugs

“Self-interested providers” drive up WC costs with compound drugs

“Self-interested providers” drive up WC costs with compound drugs Editor’s Note: This is the first in a two-part series on the use of compound drugs in workers’ compensation.

Healthcare providers more concerned with their bottom line than with patient safety are driving up workers’ compensation costs and endangering already injured employees by prescribing compound medications, alleges Joseph Paduda, president of the industry trade group CompPharma.

According to CompPharma’s latest research, “Compounding is Confounding Workers’ Compensation,” there is no clinical evidence that topical compounds commonly used in workers’ comp are more effective than commercially available, manufactured drugs.

Not only that, compound drugs may actually be unsafe for patients. A 2013 Washington Post investigation revealed that compounding pharmacies like the New England Compounding Center (NECC) have been linked to 51 deaths and more than 700 illnesses in the past decade due to unsanitary conditions and contaminated steroid injections.

Yet despite the disturbing figures, compounded prescriptions continue to be issued at an alarming rate. Paduda attributes that to self-interested healthcare providers seeking the higher price tag of compound medications.

“I would absolutely put it down to self-interested providers. I’m not going to qualify that,” Paduda said in a conversation with Insurance Business. “There’s no justification for this. In fact, there’s a lot of reasons—patient safety being the chief among them—for providers to avoid compounds.”

And while worker safety is the foremost concern when it comes to compound prescriptions, there is another painful outcome for employers—increased medical costs.  

According to a study from the California Workers’ Compensation Institute, the average workers’ comp payment per compound drug prescription increased 68.2% from the first half of 2011 to the first six months of 2012. At the same time, the average paid for a non-compound drug script actually decreased 4.6%. That’s despite a declining share of workers’ comp prescriptions.

“They tend to be at least three times more expensive than an average script,” Paduda said.

CWCI also found that workers treated with compound drugs stay out of work longer than patients treated with commercially available drugs, thus increasing both medical costs and indemnity payments.

Due to a lack of regulation of compound drug prescriptions, Paduda predicts the trend will only continue.
Producers, however, can play a key role in guarding employers and their workers from the higher costs and increased dangers of compound drugs.

“A lot of the times, employers aren’t aware of what’s happening or why their workers’ comp rates are going up, so agents have to essentially back stop the payer and make sure the insurer or TPA they’re working with is doing their utmost to manage prescriptions appropriately,” he stressed. “Agents can go through a loss run and find out of compound meds are being used and then meet with the employer, find out why it’s being allowed and discuss ways to stop it.”

That conversation may also serve as a differentiator for producers, Paduda noted.

“Most agents don’t have this conversation with their insureds, so the ones that do will have a leg up on their competitors,” he said.

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