Yesterday the California Workers’ Compensation Institute (CWCI) released a report estimating that carriers and self-insured employers paid $98 million for drug testing in 2011, 192 times the $509,000 paid in 2004.
CWCI estimated total system costs for drug testing was $177.3 million over the past eight years, but $98.7 million of that was paid in 2011 and $51.4 million was paid in 2010. Spending on drug testing in 2011 accounted for about 2.5% of all system medical expenses that year.
Whats more, CWCI said that the average amount paid per date of service increased 315% to $147.55 in 2011 from $35.51 in 2004.
These results seem to point towards two trends that can be described using insurance vernacular: an increase in frequency (the amount of testing being done) and an increase in severity (the cost of each test).
Of course these are conclusions and what is driving both frequency and severity is an unknown, but there are calls for more regulation to provide guidance on when drug testing should take place and how much drug testing should cost.
Some will lay blame on testing labs because of evidence of impropriety, with allegations that drug testing labs have caught on to the opioid trend and are capitalizing on the situation.
In April, WorkCompCentral ran a story about drug testing labs accusing other labs of gaming the situation by inflating testing bills by up to 1500%, and by recoding or bundling services.
In addition labs and drug testing companies are alleged to provide doctors with marketing and promotional materials showing them how they can bill not just for a $20 point of care, but also for multiple office visits, patient consultations and preparing reports.
One possible contribution to the rise in drug testing frequency and severity in workers' compensation cases may be due to an increase in enforcement efforts against labs that are intentionally overbilling by the Centers for Medicare and Medicaid Services.
Prosecutors in Massachusetts announced in April that Calloway Laboratories agreed to pay $20 million to settle state charges that it defrauded Medicaid with a kickback scheme and excessive urine tests.
In February, the U.S. Attorney’s Office in Michigan announced that three labs in Troy, Mich., agreed to pay $6 million for improperly billing about $900 worth of urine drug tests for patients regardless of what the physician ordered.
In May 2011, Quest Diagnostics paid $241 million to settle a whistleblower lawsuit accusing it of overcharging Medi-Cal and paying kickbacks to doctors, hospitals and clinics that referred patients to its labs.
And in November 2010, Ameritox Ltd. agreed to pay $16.3 million to settle allegations that it made cash payments to physicians in exchange for referrals for drug-testing services.
So perhaps the increase in workers' compensation drug testing is the result of a shift by the labs from the Medicare system to the more fractured, less onerous, state workers' compensation systems with the myriad of 50 different sets of rules and regulations making it easier to hide.
Perhaps part of this meteoric rise in testing costs is due to pure profiteering. There certainly is evidence of this.
In March Dr. Gerald Pearlman accused his former employer, Accatur Diagnostics, of performing unnecessary tests to inflate bills and submitting invoices to payers using codes in the Official Medical Fee Schedule that are supposed to be used only by the laboratories that perform the tests, resulting in bills for tests that were between $1,000 and $3,000 when the cost of the testing was only $70.
I guess that this trend should be expected. The substantial increase in opioid cases around the country, in and out of workers' compensation systems, would result in increased testing. Capitalism being what it is, there is a natural tendency to take advantage of the situation while it still exists.
One thing is for certain, this too shall pass and the next cost driving trend will take its place - we just don't know what that will be ... yet.
In the meantime, prepare for increased regulation and rules adding yet more complexity and costs.