The Impact of Workers Compensation Drug Fee Schedules

Posted Date: September 28, 2015
    

Fee schedules are a widely used cost containment tool to regulate workers compensation medical costs. An important question asked by many stakeholders is: How effective are fee schedules at controlling medical costs?

NCCI has published a series of studies on the price impact of physician fee schedules. Those studies have shown that properly designed physician fee schedules can help contain workers compensation medical costs. However, fee schedules set too high can undermine their effectiveness.

This is a continuation of NCCI’s research on the impact of fee schedules on workers compensation prices paid. The focus of this study is on average wholesale price-based (AWP-based) prescription drug fee schedules. This study looks at differences in prescription drug (Rx) prices across states to assess the effect of Rx fee schedules on Rx prices paid in workers compensation.

This report compares the effect of Rx fee schedules for:

  • States with low-, medium-, and high-fee-schedule maximums
  • Brand name Rxs vs. generic Rxs
  • Physician-dispensed Rxs vs. pharmacy-dispensed Rxs
  • In-network vs. out-of-network transactions

Key Findings

  • AWP-based Rx fee schedules do have an effect on Rx prices paid in workers compensation
  • States with similar workers compensation Rx fee schedules do not necessarily have similar Rx prices paid
  • Lower workers compensation state Rx fee schedules seem to correspond with lower workers compensation Rx prices paid
  • While average Rx prices paid are higher in high-fee-schedule states vs. low-fee-schedule states, the differences are smaller than the nominal differences in the AWP multipliers
  • In low-fee-schedule states, workers compensation Rx prices paid are concentrated closer to the fee schedule maximums compared to states with higher fee schedules
  • Average Rx prices paid in high-fee-schedule states are greater than in states without fee schedules
  • Brand name Rxs tend to be paid closer to the fee schedule maximums than generic Rxs
  • Physician-dispensed Rxs are generally paid closer to the fee schedule maximums than pharmacy-dispensed Rxs
  • Out-of-network Rxs tend to be paid closer to the fee schedule maximums than in-network Rxs