Physician dispensing claims: outcomes impossible to ignore

July 20, 2023

A hand holding a prescription bottle of pills.
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A little over a year ago, we published a blog on the topic of physician dispensing and how this practice has drastically increased pharmacy spend in workers’ compensation claims across a number of jurisdictions. The states most heavily impacted are feeling the pressure from both sides – one of which advocates for regulatory changes to better control this practice, while the other argues that physician dispensing provides easier access to care. The latter argument typically calls out the “bureaucracy” of the workers’ compensation system and claims that physician dispensing provides a necessary detour to ensure quick access to essential medications and therefore improved drug adherence.

Data analysis

At Sedgwick, we believe the answers can be found in the data. We recently measured claim outcomes for five specific jurisdictions where physician dispensing is most prominent: Florida, Georgia, Illinois, Louisiana and South Carolina. The data included those claims with pharmacy spend where the dates of loss occurred between 2020 and 2022. In total, we reviewed just over 100,000 claims where over 48,000 did not receive medications dispensed by a physician and over 54,000 claims did.

Results

For physician dispensing (PD) claims, the average days of lost time per claim was 73% higher than for non-PD claims. Average indemnity incurred, medical incurred and total incurred per claim were all higher for PD claims with a 75%, 23%, and 46% increase respectively compared to non-PD claims. For total incurred costs, this increase represents over $9,000 per claim in additional spend. We broke the analysis down even further and reviewed indemnity only claims, removed high spends claims (>$100K), and also reviewed major surgery claims. Regardless of how the analysis was dissected, in nearly every scenario pulled from our book of business, claims that receive physician dispensed medications incurred higher costs and less favorable outcomes. Not only can physician dispensed medications be more expensive, but there is a claim cost that needs to be brought to the forefront of this discussion.

Reducing costs and improving outcomes for injured workers

As mentioned in our previous blog, Sedgwick takes a comprehensive approach when addressing physician dispensing. Until certain jurisdictions improve the regulatory framework of this practice, it is important to remain collaborative, regardless of if those efforts involve new initiatives with a pharmacy benefit manager (PBM), clinical enhancements or improved provider netw­ork solutions.

As part of our holistic approach, we recently identified and implemented a provider network solution for a client that saw 90% of their pharmacy spend in Florida accounted for by physician dispensing. Our network solution ensured that more care would be provided by those physicians who do not dispense out of office yet still provide quality care. This process has been in place for over a year and the client has witnessed a $460K annual decrease in physician dispensing spend in Florida alone. In addition, overall claim outcomes have improved for their patient population due to this change. Like everything else we do at Sedgwick, collaboration and innovation are keys to improving outcomes for injured workers. To see more change as it relates to physician dispensing, we all need to collaborate to experience a lasting and positive impact.