Review, Regulate, or Reform? What Works to Control Workers’ Compensation Medical Costs


September 1, 1994 Related Topics: Medical Costs, System Overview

In March 1994 WCRI brought together twenty experts on health care issues to examine the evidence about what actually works to contain costs and preserve quality. One intent was to bring to the workers’ compensation arena lessons learned by researchers from other parts of the health care financing system. The conference speakers—all experts in their fields—included health services researchers from outside the workers’ compensation community as well as prominent researchers and policymakers in workers’ compensation; they included economists, medical doctors, professors, government and labor leaders, and insurance and business executives. Because of the extraordinary response to the conference material, WCRI commissioned the presenters to prepare papers for a book that could reach a wider audience. The papers in this book provide some of the best and most up-to-date critical thinking on the key issues of medical cost containment in workers’ compensation. All the papers deal in some way with evidence from research or experience about what works to control costs and to achieve quality goals. All the papers have a practical and empirical orientation.

Among the cost containment initiatives and issues examined in the book:

  • Managed care
  • Capitated delivery systems (HMOs, for example)
  • Provider networks
  • Practice guidelines
  • Provider profiling
  • Incentives for providers and patients
  • Utilization management
  • Quality assurance methods
  • Cost sharing
  • Fee schedules

The goals of the workers’ compensation medical care system are similar to those of the medical care system as a whole: access to needed care, reasonable costs, and high-quality care. The added dimension is that medical treatment should be provided in a way that promotes early return to work. The workers’ compensation system faces certain critical choices, amplified in these studies, which will determine what the system will look like down the road:

  • Federal or state control
  • Tight or loose controls
  • Competition or regulation
  • Administrative integration with group health or workers’ compensation indemnity benefits

Four common themes emerge: incentives matter; opportunities for cost savings are substantial and diverse; quality and cost containment need not compete—they can go hand in hand; and risks are associated with untested structural reform.

Despite their diverse points of view, sources of information, and methods described, the papers in this book are all consistent in pointing toward opportunities for substantial cost savings and improved quality in workers’ compensation medical care. They suggest the need for a cooperative effort among researchers, policymakers, providers, workers’ advocates, employers, insurers, and practitioners to find the best ways to control costs while improving the quality of and maintaining access to care.

Finding the answers and translating them into practice will take research with a greater on-line focus. Medical providers need research that will help them measure and provide timely feedback on the effectiveness and quality of the care they provide. Insurers need research that will help them measure the cost and effects of case management and other managed-care interventions for the management decisions they must make. Finally, policymakers need research that will help them measure the effects of state programs ranging from existing price regulation to programs that foster beneficial forms of competition in medical and insurance markets. In all these areas, measuring outcomes and learning from experience are key. Research with this on-line orientation almost certainly will not sit on the shelf. It will be used to shape future policy and practice.

Review, Regulate, or Reform? What Works to Control Workers’ Compensation Medical Costs. Dr. Thomas W. Grannemann, Editor. September 1994. WC–94–5.


Copyright: WCRI

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