Payors Share Responsibility for the Opioid Epidemic

9 Min Read By: Joy Stephenson-Laws

The prescription opioid epidemic ravaging the country claims almost 100 lives daily with an accompanying annual cost upward of $500 billion dollars. Current estimates suggest nearly two million Americans are dependent on or abuse prescription opioids. 

As would be expected with what has been described as a “national health emergency,” there is no lack of finger-pointing (but substantially less discussion of who should take responsibility for adequately addressing it). The usual suspects are the pharmaceutical companies who promote highly addictive opioid painkillers through aggressive marketing programs, the healthcare providers who prescribe them–at times just to placate patients–and the distribution channel of pharmacies that make them available 24/7. 

There is, however, a fourth player in the opioid epidemic drama that, until recently, hadn’t been the subject of very much attention. It now finds itself under much closer scrutiny for its role in allegedly getting and keeping patients addicted to opioid painkillers while not doing enough to help fix a problem it is accused of helping create and perpetuate. 

Who is this player?  It is the payors–the private and public insurance companies and programs that cover the vast majority of Americans. These include the well-known commercial companies as well as government programs such as Medicare, Medicaid and the collection of State and local health insurance programs.

Fueling the Epidemic

Various studies, most recently one by the Johns Hopkins University Bloomberg School of Public Health, strongly suggest that payors have not done enough to combat the opioid epidemic. The Johns Hopkins study, for example, concluded that major insurer coverage policies for drugs to treat lower back pain–one of the more common types of chronic, non-cancer pain for which prescription opioids have been overused–“missed important opportunities” to steer patients toward safer and more effective treatments than prescription opioids. (These studies collectively go on to also say that providers continue  to play a role, albeit at times unwittingly, in expanding the epidemic rather than working to reduce it).   

While there are a variety of payor policies and actions blamed for the ongoing increase in prescription opioid use (and abuse), they fall into three basic areas.

Prescription Opioids are Too Price Accessible

In an open market, there is usually a direct relationship between price and demand. This is perhaps nowhere more evident than with prescription opioid painkillers. The logic is simple:  if opioid-based medicines cost less than safer alternatives, including non-narcotic medicines, then prescribers and consumers will opt for the addictive opioids rather than less addictive medicines.

This economic reality has been consistently borne out by researchers. The Johns Hopkins study showed that both public and commercial insurance plans tend to make covered opioids available relatively cheaply to patients. How cheaply?  The median commercial plan, for example, places 74 percent of opioid painkillers in Tier 1, the lowest cost category, and the median commercial co-pay for Tier 1 opioids was just $10 for a month's supply.

In stark contrast, studies show that only one-third of the more than 40 million people covered by Medicare have access to an available painkiller skin patch that contains much less potent opioids as its key active ingredient. Other plans simply do not cover non-addictive alternatives to opioids or have co-pays that are higher than those for opioids. Many plans also require pre-authorization for the safer, alternative painkillers.

As Rep. Elijah Cummings, the ranking member of the House Committee on Oversight and Government Reform, has said, the insurance industry has, in effect, created incentives that may steer patients to the very drugs that are fueling the opioid crisis.

The government has had to intervene to curb the increased consumption of opioids that has accompanied these lower prices. In 2016, Massachusetts set a seven-day limit on initial opioid prescriptions.[1] North Carolina imposed a five-day limitation on opioid prescriptions which went into effect on January 1, 2018.[2] The Florida Agency for Health Care Administration limits narcotics prescriptions in the Medicaid program to a maximum seven-day supply.[3]

Other states have even imposed a limitation on the prescribed dosage amount. Maryland has limited opioid prescriptions to the lowest effective dose in a quantity no greater than what is needed for the expected level of pain.[4] Arizona is proposing legislation that would cap maximum prescription dosages and set a five- or fourteen-day limitation on prescriptions.[5]

Prescribers are Rewarded  for  Putting or Keeping Patients on Opioids

A previous article discussed how the U.S. Government, through its Medicare program, may also be contributing to the opioid epidemic by including pain questions on patient satisfaction surveys. The Centers for Medicare and Medicaid Services (CMS) have used the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey, a set of 32 questions administered to a random sample of hospital patients about their experience of care, since 2008.[6] The results of these surveys are posted on CMS’s “Hospital Compare” website.[7] Now, as part of the Affordable Care Act’s Hospital Value-Based Purchasing Program, CMS is withholding 1 percent of Medicare payments—30 percent of which is tied to HCAHPS scores—to fund the incentives of the program.[8] The belief is that these surveys pressure doctors to prescribe unnecessary opioids in hopes of getting a better score on patient surveys. As various studies have shown, opioid use has been associated with higher patient satisfaction scores.[9]

It is easy to spot the conflict here. Tying money to great reviews can easily lead to undue pressure on doctors to prescribe opioids to make a patient happy in order to get a good score. Perhaps the biggest area affected by patient satisfaction surveys has been the emergency room. Several studies suggest that ER doctors have drastically changed their practice in order to avoid negative patient satisfaction reports.[10] Prescribing painkillers, even when not entirely necessary, is often necessary to get paid by Uncle Sam.

Two surveys of more than 800 emergency physicians by Emergency Physicians Monthly and the South Carolina Medical Association reported that more than 50 percent of the ER docs routinely ordered tests and procedures, prescribed medications, and even admitted patients to the hospital unnecessarily. Why? Because patient satisfaction affects their bottom line.

Compounding the problem are savvy patients aware of how the system now works. One physician wrote that drug seekers “are well aware of the patient satisfaction scores and how they can use these threats and complaints to obtain narcotics.”

Lax Application of Utility Management Protocols

Another factor identified by the Johns Hopkins study is that many insurers failed to apply evidence-based "utilization management" rules to discourage opioid overuse and encourage safer and more effective alternatives. What's more, many of the utilization management rules in place were applied as often to non-opioids as opioids.

While utilization management takes various forms depending on the clinical setting and payor policies, the most common are quantity limits, step therapy and prior authorization. Here are some of the ways that not correctly applying these rules exacerbates the opioid crisis:

  • Quantity Limits. While the S. Centers for Disease Control and Prevention Guideline for Prescribing Opioids for Chronic Pain is for a short-term supply, many insurance policies allow for 30-day supplies. The danger here is that duration of early prescriptions is associated with a patient converting to chronic use.
  • Step Therapy. This is a strategy that makes riskier opioids the “last resort” for pain management after other, non-narcotic medications have failed to provide pain relief. By permitting opioids to be a “first step,” the risk of addiction and/or chronic use increases. Unfortunately, fewer than 10 percent of government and commercial plans require step therapy for opioids.
  • Prior Authorization. The idea is that requiring a provider to get in touch with the insurer before prescribing an opioid will help reduce the number of prescriptions or encourage quantity control or step therapy. The reality is that only a minority of plans require this.

Only recently has the Centers for Medicare & Medicaid Services (CMS) urged state Medicaid agencies to require quantity limits, step therapy or prior authorization to limit access to particular opioids. [11] On February 1, 2018, CMS issued a Draft Call Letter announcing that it is considering new strategies to reduce opioid overutilization under Medicare Part D, including limiting initial prescription fills for treatment of acute pain with or without a daily maximum dose.[12]

The Way Forward

Providers have a stake in working with payors–commercial and public–as well as with distribution channels to continue to develop integrated solutions to the opioid crisis. Aside from the human toll on their communities, they also are not immune to the economic costs. Studies have clearly shown that the epidemic is increasing hospitalizations and that is hits emergency rooms especially hard.

Some estimates put the average cost of treating an overdose patient in the intensive care unit at almost $100,000. If a majority–or even a minority–of these patients are underinsured or uninsured, the resulting uncompensated care costs can easily cripple a provider that is already operating on a razor-thin margin.

Nonetheless, there are opportunities for healthcare providers to contribute to fighting the opioid crisis. They can support initiatives being undertaken by such groups as America’s Health Insurance Plans that seek to combat opioid abuse. They also can develop, implement and maximize the value of programs designed to identify potential opioid abusers and limit the prescribing of opioid painkillers. Finally, they can negotiate contracts with payors that require prompt authorization and fair reimbursement for non-opioid alternatives where indicated. 


[1] H.4056, 2016 Leg., 189th Sess. (Ma. 2016).

[2] H.B. 243, 2017 Gen. Assemb., 175th Sess. (N.C. 2017).

[3] Christin Sexton, Florida Medicaid program limits opioid prescriptions, Palmbeachpost.com (February 20, 2018), available at https://www.palmbeachpost.com/news/state--regional-govt--politics/florida-medicaid-program-limits-opioid-prescriptions/xaRsMNmfOBpGs7574oRpdN/

[4] Maryland Prescriber Limits Act of 2017

[5] Arizona plan to combat opioids would limit dosages, amount, U.S. News (Jan. 19, 2018), available at https://www.usnews.com/news/best-states/arizona/articles/2018-01-19/arizona-plan-to-combat-opioids-would-limit-dosages-amounts

[6] Centers for Medicare and Medicaid Services. Survey of patients’ experiences (HCAHPS). http://www.medicare.gov/hospitalcompare/Data/Overview.html. Accessed September 3, 2018.

[7] Centers for Medicare and Medicaid Services. Official hospital compare data archive. https://data.medicare.gov/data/archives/hospital-compare. Accessed September 3, 2018.

[8] Hospital Consumer Assessment of Healthcare Providers and Systems. HCAHPS fact sheet. November 2017. https://www.hcahpsonline.org/globalassets/hcahps/facts/hcahps_fact_sheet_november_2017.pdf. Accessed September 4, 2018.

[9] Sara Heath, Opioid Use Associated with Higher Patient Satisfaction Scores, Patient Engagement Hit, available at https://patientengagementhit.com/news/opioid-use-associated-with-higher-patient-satisfaction-scores. Accessed September 3, 2018.

[10] See for example, Kelly, S., Johnson, G.T., and Harbison, R.D. “Pressured to prescribe”: the impact of economic and regulatory factors on South-Eastern ED physicians when managing the drug seeking patient. J Emerg. Trauma Shock. 2016; 9: 58–63

[11] U.S. Dep’t of Health and Human Servs., CMCS Informational Bulletin, Best Practices for Addressing Prescription Opioid Overdoses, Misuse, and Addiction (Jan. 28, 2016), available at https://www.medicaid.gov/federal-policy-guidance/downloads/CIB-02-02-16.pdf. Accessed September 3, 2018.

[12] CMS, Fact Sheet, 2019 Medicare Advantage and Part D Advance Notice Part II and Draft Call Letter, Feb. 1, 2018, available at https://www.cms.gov/newsroom/mediareleasedatabase/fact-sheets/2018-fact-sheets-items/2018-02-01.html. Accessed September 3, 2018.


Joy Stephenson-Laws

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