California’s $100 Million Drug Testing Problem

The rapid escalation in the use of opioids in California’s workers’ comp industry is not only raising concerns about drug diversion and addiction among injured workers, but is also spawning one of the industry’s fastest growing sectors – drug testing. New research indicates that over the past eight years drug testing has grown by over 4,500% and is now costing California employers nearly $100 million a year and this is on top of the cost of the original prescriptions.

“This study confirms a viral-like growth rate in the volume of drug testing and in the amounts billed and paid for these services,” the California Workers’ Compensation Institute (CWCI) notes in a new report. “At the same time, the results show a 315% increase in the average amount paid per testing encounter, suggesting that both the number and the relative complexity of tests per office visit may be on the rise.”

The study is based on claims data from national and regional workers’ comp carriers representing 42% of the market and spanning an eight-year period beginning in 2004. The researchers identified 27 different procedure codes that were tied to over 450,000 drug tests during the study period. These resulted in total charges of $78 million and actual payments of $50 million.

Extrapolating these results out to the industry as a whole – both insured and self-insured – the researchers estimated that payments reached $98 million in 2011. Billed amounts industry-wide were estimated at $137 million last year.

The growth rate in the overall spend and the number tests is alarming. The study identified just over 186,000 dates of service for drug testing last year in the data set. Three year’s prior the total was 28,642 and in 2004 there were only 4,012 dates of service in the data set (see chart).

Drug Testing Through The Years

 


Year

Number of Dates of Service

Total Billed

Total Paid

Avg. Paid

2004

4,012

$324,031

$142,481

$35.51

2005

5,302

$449,884

$175,658

$33.13

2006

6,833

$610,418

$260,595

$38.14

2007

12,914

$1,233,573

$595,521

$46.11

2008

28,642

$4,102,671

$1,832,366

$63.97

2009

71,614

$9,363,596

$4,798,049

$67.00

2010

135,533

$23,037,263

$14,409,630

$106.32

2011

186,023

$38,485,639

$27,447,536

$147.55

Total

450,873

$77,607,075

$49,661,835

$110.15

Percent Change

4.537%

11,777%

19,164%

315%

“With an estimated $98 million spent on drug testing in California workers’ compensation in 2011, research is needed to determine whether, in the long run, these tests actually lead to better outcomes for the injured worker. Are injured workers who are tested more or less likely to become addicted or overdose?” the report notes. “Conversely, are they more or less likely to transition off opioid medications, receive alternative pain management therapies, return to work, or if necessary, enter rehabilitation programs?”

CWCI also notes that there could be other costs linked to the increase in drug testing that are not yet known, such as more office visits for the testing, links to other diagnostic testing, as well as a likely increase in medical management fees. Additional research is planned.

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