CWCI Estimates California Workers’ Comp Drug Testing Costs Hit $98 Million in 2011

CWCI Estimates California Workers’ Comp Drug Testing Costs Hit $98 Million in 2011

A new California Workers’ Compensation Institute (CWCI) study finds that widespread use of narcotic painkillers to treat work-related injuries – including relatively minor injuries where their use is not supported by medical evidence -- has fueled exponential growth in the use of drug testing in California workers’ compensation over the past 8 years, resulting in an estimated $98 million in additional medical expense to the system in 2011.

Using workers’ compensation claims data from its Industry Claims Information System (ICIS) database, the authors of the study tracked 27 procedure codes used to reimburse drug testing visits that took place during an 8-year span (2004 through 2011). A total of 450,873 drug testing encounters were identified in the study sample, with the top 10 codes accounting for 86 percent of the drug testing service visits, 95 percent of the charges, and 96 percent of the payments. Single drug screens were the most common drug test performed on injured workers, accounting for one out of three drug testing visits, and nearly half of all charges and payments.

To track the growth in the use and the cost of drug testing in California workers’ compensation, the authors stratified the sample data by the year of service, which revealed a huge spike in the use of drug testing and in the resulting amounts billed and paid, as well as steady increases in the average amounts billed and paid for tests from 2004 through 2011. The volume of drug testing in the sample data skyrocketed from 4,012 visits in 2004 to 186,023 visits in 2011, a relative growth rate of 4,537 percent. This huge increase in drug testing coincided with the dramatic growth in the volume of Schedule II opioid prescriptions (major narcotics such as oxycontin, fentanyl, morphine and methadone) dispensed to injured workers, as documented in prior CWCI research. At the same time, the average amount paid per drug testing visit quadrupled from $36 in 2004 to $148 in 2011. Extrapolating the results of the study to the entire California workers’ compensation market, the authors estimated that system wide, payments for drug tests on injured workers in California totaled $98 million last year, which is a conservative estimate due to the lack of mandated controls for drug testing billing and the high incidence of medical liens.

The Institute has released a full report on the study, including background information, tables, and commentary as a CWCI Research Note, “Drug Testing Utilization and Cost Trends in California Workers’ Compensation.” The report is available in the Research section of the CWCI website, www.cwci.org. CWCI members and subscribers may also log in to the website to view a summary Bulletin.

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