(510) 286-2932        jyoung@boxerlaw.com

Our Blog

Drug testing is an increasing cost driver in California workers’ comp.

That’s one of the take-aways from a just released study of drug testing in the California workers’ comp system. The study, written by Stacy Jones of the California Workers’ Compensation Institute, analyzed 2.8 million clinical lab service records.

The numbers are interesting and a critical backdrop to understanding the issues surrounding testing. Here are some key findings from the report:

-“Between 2007 and 2014, Urine Drug Testing services as a percentage of all California workers’ compensation laboratory services increased nearly six-fold from 10.2 percent to 59.1 percent and reimbursements for those services as a percentage of total lab payments more than tripled from 23.1 percent to 77.0 percent”

there was a shift from tests focusing on identifying the presence of drugs to tests aimed at measuring the amount of specific drugs

-“quantification of opiates remains the leading test by volume, followed by quantification of substances (PCP/Cocaine/Ethanol) that would be illicit or problematic if used in conjunction with prescribed medications.”

-recently there has been a big spike in testing for antidepressants

-looking at the period from 2007 to 2014 on a per employee basis, the number of tests per date of service increased 228%, while the cost of tests per date of service increased by 220%.

more providers are doing drug testing, leading to less concentration of testing facilities

The DWC is developing new chronic pain and opioid guidelines. The current status on  those regs can be found here:


However, the 2009 version of the MTUS Chronic Pain Guidelines included this language on drug testing:

“Recommended as an option, using a urine drug screen to assess for the use or the presence of illegal drugs. For more information, see Opioids, criteria for use: (2) Steps to Take Before a Therapeutic Trial of Opioids & (4) On-Going Management; Opioids, differentiation: dependence & addiction; Opioids, screening for risk of addiction (tests); & Opioids, steps to avoid misuse/addiction.”

Before putting a patient on opioids the MTUS required  doctors to  “Consider the use of a urine drug screen to assess for the use or the presence of illegal drug”.

For ongoing management the MTUS specifies that doctors consider “Use of drug screening or inpatient treatment with issues of abuse, addiction, or poor pain control”.

So we have a current system that seems to encourage and perhaps even require doctors to do drug testing. Among the rationales of course is to ferret out other substances that the patient may be taking and to screen for the presence  of meds in the patient to deter drug diversion.

It should surprise no one then that the costs for testing have increased along with the increase in use of opioids.

Does this create  a profit center for some providers? Absolutely. Is it a good thing to require testing, though?

It turns out that there are arguments for and against testing, so one person’s cost driver may be another’s cost saver.

Here in italics is what the CWCI report concludes:

There is an ongoing debate over the cost and the benefits of urine drug testing, not only in workers’ compensation, but in all health systems. In their 2011 analysis of the role of UDT in the treatment of chronic pain, Christo et al opined: “UDT has been used, misused, and abused due to financial incentives, and the influence of medical licensure boards, the Drug Enforcement Agency (DEA), and other governmental agencies.”

On the other hand, in its joint research with Laffer Associates, the Millennium Research Institute (MRI), the research and advocacy arm of Millennium Laboratories, argued that there is a direct relationship between the number and frequency of UDTs for clinical pain management and the benefits to the patient and society as a whole, estimating that billions of dollars in potential savings could be derived from the use of these tests:“…we estimate that the chronic pain population that currently uses opioids is approximately 6.8 million people. If the entire pain population that use opioids received 2 UDT’s, the total aggregate benefits would be between $7.4 billion and $9.5 billion. If the entire pain population received 6 UDT’s, the total aggregate benefits would be between $19.5 billion and $25.7 billion. If the entire pain population received 12 UDT’s, the total aggregate benefits would be between $31.1 billion and $43.5 billion (Laffer, et al., 2011, p. 16).”

The correct public policy perspective toward the use of UDTs undoubtedly lies between these two diverse opinions (emphasis added). It is clear that any objective assessment of the value of drug testing must focus on outcomes and demonstrate direct, positive correlations between the performance of UDTs, clinical outcomes and drug abuse deterrence, which can only occur if relevant tests are effectively used in patient-specific clinical decision-making. Performance of a test, or in the case of UDT’s multiple tests, does not automatically translate into direct savings, and it is less likely to produce savings if testing is prompted by a desire to increase revenue based on the frequency of use.”

“The benefits of using UDT to monitor patient adherence to medication regimens and identify potential substance abuse are well documented and as such have been included in the proposed Medical Treatment Utilization Schedule opioid treatment guidelines currently in development. The purpose of testing is to assist in medical management, and as such, testing should be done based on medical necessity related to a claimant’s medical presentation, dispensed drugs and evidence-based medicine protocols. Financial incentive should not be the driving force. Nevertheless, this study documents a steady increase in the number of tests being performed, which reflects not only an increase in the number of injured employees being tested, but in the number of service dates and the number of tests per service date. In addition, the study confirms a significant shift in billing patterns since 2007, exemplified most strikingly by the use of CPT code 82486, suggesting that non-clinical economic interests may be influencing both the volume of tests being performed as well as the paid amounts.”

The shifts in volume and paid costs have resulted in part from the need to monitor injured employees who are prescribed multiple medications, including opioids, on a long-term basis. It is apparent from the data, however, that billing and provider changes also reflect a shift from laboratory-based services to clinic- and physician office- based services, which is indicative of the practice that was the subject of a Wall Street Journal exposé on the rising use of UDT for Medicare patients.25 That investigation found that as mass-spectrometry equipment has become smaller and less expensive, clinical practices have installed the machines on-site or contracted with management companies to do so in order to realize financial benefits that they were unable to achieve in the past when these types of tests were performed by large laboratories.”

“In an effort to address the changes in the technology that is used to perform the analysis of drug levels, the AMA has recently made some significant changes to the CPT codes that are used to identify various UDT services. These changes became effective in 2015; however Medicare has delayed adoption of this set of codes pending further valuation analysis. Further complicating an already complicated billing picture, Medicare has defined a table of codes to be used in lieu of the new AMA CPT codes and maintained the 2014 valuation.”

“In addition to changes in codes and their definitions, Medicare is also contemplating changes to coverage rules in an effort to address questionable billing practices. There are currently two draft changes for Medicare local coverage determination that are intended to address the continued misuse and abuse of urine drug testing (see Appendix 2). Once Medicare adopts those rules, the California Division of Workers’ Compensation may adopt them within the rules in the Clinical Lab Fee Schedule, which would provide clinicians, labs and payers needed clarification. Absent that, it appears likely that the volume of UDTs that do not correlate with changes in clinical demographics will continue to increase, even after factoring in the growing recognition of the opioid epidemic.”

“Drug testing is a new and escalating complement to the broader issue of growing pharmaceutical utilization and cost in the California workers’ compensation system. Recent data on AY 2012 claims show prescription drug and durable medical equipment reimbursements accounted for 13.6 percent of total medical payments within the first two years of injury treatment, double the percentage noted for AY 2006 claims. Historically, it has been shown that pharmacy payments as a proportion of total workers’ compensation treatment costs can increase as much as 20 percent as claims age, so that proportion will likely continue to increase. With prescription drugs consuming an increasing share of the workers’ compensation medical dollar in recent years, the selection of drugs has remained highly controversial, as evidenced by recent data showing that 45 percent of all medical disputes resolved by independent medical review last year involved prescription drug requests. Meanwhile, the profusion of in-office drug testing now runs in tandem with physician dispensed drugs, fueling additional concerns and controversy. The confluence of these issues will remain a focus of future studies and public policy debate.”

Exactly how this CWCI study will influence policymakers at the DWC as they finalize chronic pain and opioid guidelines is not clear.

Obviously to the extent that guidelines reduce use of opioids prescribed in the system there may be less need for testing.

Unfortunately the cost of testing has become one of those extra cottage industries that crop up in the comp system, ultimately further diluting the percentage of the comp dollar that is actually delivered in benefits to the worker.

Necessary in some cases, perhaps, but overall another example of how the system skews away from really delivering value.

Here is the summary of the CWCI study:


Stay tuned for some posts assessing the end of the 2015 legislative session.

Julius Young





Julius Young

Comments are closed.