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Should Workers’ Compensation Cover Medical Marijuana?

  • MGA Systems
  • |
  • August 2021
  • |
  • Insurance
Medical Marijuana spilled from prescription bottle on to paper prescription pad.

The legalization of medical marijuana offers people another option for pain management, but how does its availability affect the workers’ compensation industry, both in the treatment of the injured workers and in workplace safety?

As you know, workers’ compensation insurance protects an employee injured while engaging in activities that have to do with work of the employer and are performed by the employee while engaged in the business of the employer. The coverage pays for the medical treatment of the injured worker and temporary wage replacement while an injured employee is unable to return to work.

Each state has different rules and algorithms for calculating rates, based primarily on the company’s number of employees, the classification of its employees (for example, clerical workers, airplane pilots and so forth) and its claims history. Another important factor in workers’ compensation premiums is the cost of claims. These costs include the rising costs of healthcare, especially the exploding prices of prescription drugs necessary to treat the injured worker.

Nearly every claim has a pain component and unfortunately, addictive painkillers are usually the only available option when treating chronic pain. These drugs continue to be expensive but, more importantly, are causing addiction and death at frighteningly high numbers. According to the Centers for Disease Control and Prevention (CDC), the U.S. prescribing rate for opioids was 46.7 prescriptions per 100 persons in 2019. NCCI data in 2016 shows that injured workers were prescribed opioids at an even higher rate.

Instead of prescription opioids, new options for pain management are becoming available. As of this writing, only 14 states remain that do not have legalized recreational cannabis nor medical marijuana. This creates avenues of change for the workers’ compensation industry, and is something we are watching at MGA Systems, so that we can provide the most up-to-date information.

At issue: Could carriers cover the cost of medical marijuana instead of an addictive pain medication to help the injured worker manage pain? Would this reduce claims costs and thus reduce workers’ compensation premiums? Or, would carriers have grounds to deny a medical marijuana prescription because it remains a Schedule 1 (illegal) drug according to the federal government? Currently, there are only a few states that have laws explicitly stating that medical marijuana is not reimbursable for injured workers.

New Mexico has a landmark case that could pave the way for other states. In 2014, the New Mexico Court of Appeals ruled that a worker’s employer and its insurer must pay for medical marijuana for treating an employee’s chronic pain from a job-related back injury. The court ruled that medical marijuana was reasonable and necessary medical care. For news on this case, read here.

If the workers’ compensation industry approved the use of medical marijuana for injured workers, the result would be a reduction in opioid addictions plus reduced pharmaceutical costs and cost-containment for workers’ comp claims. But, is there a price to pay for covering medical marijuana prescriptions for injured workers?

What about worker impairment on the job? For the employees that have returned to work after an injury, but are still managing pain, does the use of medical marijuana lead to impaired performance and judgment? Should it be treated like alcohol usage while on the job – not allowed? Many employers do random drug tests or require drug tests as grounds for employment, but it is currently impossible to test for the influence of marijuana. An IRMI article cited that one workers’ compensation issue to watch was an increase in job injuries due to workers using marijuana to manage pain.

Unfortunately, there is no reliable way for an employer to determine if an employee is high on marijuana while at work. A drug test may come back positive because the tetrahydrocannabinol may be detectable in bodily fluids for seven days, and even as long as 30 days after the last use. While medical marijuana may offer a solution to workers’ compensation rising costs, overprescribed opioids and effective pain management, employers need to find a way to test for worker impairment to ensure the continued safety of the workplace.

This topic continues to be one to watch in this industry. NetRate, MGA Systems’ commercial lines rating application, ensures that workers’ compensation insurance providers can accurately quote policies with up-to-date rating data. To start a conversation about using an automated rating solution to help control some of your costs associated with writing workers’ compensation nsurance, please give us a call at (877) 790‑1114 or contact us here to find out how MGA Systems can provide you with the solutions — and customization — you need.

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