our agentsebooksGET LEADS844.688.1586


The Orange

Resources for the modern insurance agent

Rising Opioid Treatment Spending Could Cost Insurers

by Precise Leads

May 3, 2018

Insurers administering health plans for large employers have seen the cost to treat opioid abuse rise sharply in recent years.

A recent study found that insurance companies that offer employer-sponsored health plans have seen the cost of treating painkiller abuse rise sharply — despite paying for fewer opioid prescriptions. The Kaiser Family Foundation-sponsored report estimated that insurers for large employers spent a collective $2.6 billion in 2016 to treat opioid addiction, up from $273 million in 2004.

This spike in the cost of treatment is further reflected by the soaring prices of treating opioid addiction in both inpatient and outpatient settings. Inpatient treatment skyrocketed from an average of $5,809 in 2004 to $16,104 in 2016. Although the average cost for outpatient treatment was lower, it still came in at a sizable $4,695.

The rise in opioid treatment spending comes as prescriptions for that class of drugs decreases. In 2004, 15.7% of enrollees in large employer health insurance plans had received an opioid prescription. By 2016, that percentage dropped to 13.6%, which also represented a steep decline from a peak of 17.3% in 2009.

More Than a Third Covered by Private Insurance

Done in partnership with the Peterson Center on Healthcare, the Kaiser study tracked prescription benefit claims paid by insurers as well as enrollees’ out-of-pocket outlays between 2004 and 2016. The sample size ranged between 1.2 million and 19.8 million enrollees per year registered in the Truven MarketScan Commercial Claims and Encounters Database. The study defined large employers as any company with more than 1,000 employees.

The study calculated that more than a third — 37% — of non-elderly people receiving treatment for opioid addiction were covered by private insurance. Individuals between the ages of 55 and 64 made up the largest percentage of those obtaining at least one opioid prescription while insured with a large employer in 2016.

A 2016 study by FAIR Health, Inc. further reinforced the high cost of treating opioid addiction. In 2015, private payers paid more than $19,000 per enrollee for opioid addiction-related care compared to $3,345 for patients requiring treatment for other medical conditions.

In addition, Optum noted in a article about the opioid crisis that about a third of all workers’ compensation medication prescriptions are written for strong painkillers. The healthcare company estimates that opioids cost employers $25.5 billion a year in lost productivity related to missed workdays and lost earnings from premature death.

Added Costs

Besides the human toll of opioid addiction, treatment for painkiller abuse drove healthcare coverage costs higher by $26 per person in 2016, according to the Kaiser study. In 2004, the increase was estimated at much smaller $3 per person.

Given the ongoing opioid crisis, health insurers and agents who work with employers should prepare for rising insurance charges as the medical community confronts how to treat this disease. Recently, the American Medical Association (AMA) and the American Society of Addiction Medicine (ASAM) proposed a comprehensive plan to treat opioid abuse that recommends an upfront one-time payment to medical professionals to evaluate the patient’s status and lay out a treatment plan. That would be followed by a month of outpatient care supplemented by medication. After that, payments would be made monthly as the patient continues to receive medication, as well as social and psychological support.

Dr. Patricia Harris, Chair of the AMA's Opioid Task Force, told Modern Healthcare that the two organizations will seek feedback on the plan and then institute a pilot program. John Feore, Director at Consultancy Avalere Health, endorsed the AMA/ASAM proposal, telling Modern Healthcare that a traditional fee-for-service model hasn’t proven successful in healing opioid addiction.

“Basically [the plan] tries to bundle all of the various components that are recognized as essential for treating this patient population,” Feore said. He added that the “payer-neutral” nature of the AMA/ASAM proposal would at least interest public and private insurance plans enough to test it out.

A comprehensive treatment model like the one recommended by the two medical organizations could potentially reduce long-term healthcare costs since substance abuse contributes to other serious illness such as arthritis, asthma, chronic kidney disease, and congestive heart failure. “This might very well turn into a cost-saver for the third-party payer because they would then not have to cover the cost of all of these other” conditions, Dr. Henry Dorkin, President of the Massachusetts Medical Society, told Modern Healthcare.

Never Miss a Story