STUDY: Cost, Time and Volume Impact of Physician Dispensing

Jun 24, 2014
New study highlights how physician dispensing negatively impacts overall outcomes for injured workers and workers' compensation payers.
  • Workers' Compensation Insurance
  • Pain

When physicians dispense medication instead of pharmacies, injured workers experience poorer outcomes, longer absences from work and payers see higher costs.

Significant increases in cost and quantity of medications directly dispensed from physicians’ offices in Illinois prompted Johns Hopkins University and Accident Fund Holdings, Inc. to investigate the impact on claims outcomes. An analysis of the claims outcomes confirms the risks and less beneficial effects of physician dispensing in workers’ compensation.

Investigating the Impact of Physician Dispensing

My colleagues and I recently completed a study published in the Journal of Occupational and Environmental Medicine which examines the impact of physician-dispensed medications on workers’ compensation claims outcomes in Illinois.

Consistent with a 2013 study in California by the California Workers’ Compensation Institute, we found higher overall costs from physician dispensing in Illinois. Claims costs for injured workers who received opioids from a physician’s office were twice as expensive, and their absences from work were twice as long. These outcomes persisted even after controlling for differences in age, gender, attorney involvement and injury complexity.

Increased Costs

Physician-dispensed medication not only impacts pharmacy cost, but also medical claim costs and disability outcomes. In Illinois, the average medical benefit per workers’ compensation claim was 39% higher and indemnity expenses were 27% higher when physician-dispensed medications were present. Our findings were directionally consistent with the previous study in California where the average medical benefit per workers’ compensation claim was 16.4% higher and indemnity expenses were 6.9% higher with physician-dispensed medications.

More Lost Time From Work

Injured workers who received medication through a physician’s office missed, on average, 85 days of work, compared with only 64 days for those receiving medication through a pharmacy. Injured workers who received opioid medication through a physician’s office missed, on average, 122 days of work, compared with only 66 days for those receiving opioid medication through a pharmacy.

Higher Prescription Volume

If an injured worker received a physician-dispensed medication within 90 days of his injury, the total number of prescriptions during the life of the claim was on average 2.99 times higher than those from a pharmacy. For opioids specifically, the number of prescriptions was 3.2 times higher when medications were dispensed from a physician’s office.

The Influence of Opioids

An even more striking difference was seen in physician-dispensed opioids versus pharmacy-dispensed opioids.

Medical Cost Increases from Physician Dispensing

Indemnity Cost Increases from Physician Dispensing 


The study evaluated the differences between physician-dispensed and nonphysician-dispensed medication in relation to:

  • Pharmaceutical, medical and indemnity costs
  • Lost time from work
  • Prescription volume

The sample included 6,824 workers’ compensation indemnity claims over the last six years.

Impact on States

In five states – California, Maryland, Georgia, Florida and Illinois – physician-dispensed medications now account for approximately half of the entire workers’ compensation medication expenditures. This has prompted some states such as California and Florida to enact legislation that limits reimbursement of physician-dispensed medication.

Accident Fund has applied the findings of this study and other insights to develop and implement innovative tools and techniques to limit the impact of physician dispensing. Such solutions, including Express Scripts’ Physician Dispensing Enhancement, are key in addressing this issue, reducing costs and protecting the well-being of injured workers.

comments powered by Disqus