The Impact of Initial Treatment by Network Providers on Workers’ Compensation Medical Costs and Disability Payments

By Richard A. Victor

August 1, 2001 Related Topics: Comparing Group Health and Workers’ Compensation

An increasing percentage of workers receive treatment for their work-related injuries and illnesses within workers’ compensation medical networks. Advocates of networks contend that directing injured workers to network providers helps contain costs because of their specialized knowledge of occupational injuries, familiarity with administrative reporting requirements and objectivity with the disability aspects of the case. In addition, some maintain that early involvement with network providers can reduce medical and indemnity costs by both (1) increasing the likelihood that subsequent care will be provided within a network, and (2) exercising some continuing influence over treatment decisions and facilitating return to work based on decisions made during the initial visit. Critics, on the other hand, argue that networks may seek to contain medical costs by offering fewer services and thereby may negatively affect the quality of care for injured workers, lengthening the duration of disability and increasing income benefit payments.

The quality and accessibility of medical care are not directly measured in this study. WCRI is undertaking studies that will examine the affect of medical networks on worker satisfaction, health and functioning, and return to work – important dimensions of medical care for injured workers.

Major findings:

  • WCRI found that workers’ compensation medical networks are generally associated with much lower medical costs: 16 to 46 percent lower if the injured worker is treated exclusively by network providers and up to 11 percent lower if the worker is treated predominately, but not exclusively by network providers.
  • Lower network medical costs do not increase indemnity benefit costs.
  • The impact of the first non-emergency visit to a workers’ compensation network provider is significant: It is the single largest factor that determines continuing care by network providers. For workers who saw a network provider at their initial visit, network penetration rates (the percent of total medical payments paid to network providers) were, on average, 24 to 67 percentage points higher when compared to claims that involved a non-network provider at the initial visit. (See chart.)

The Impact of Initial Treatment by Network Providers on Workers’ Compensation Medical Costs and Disability Payments. Sharon E. Fox, Richard A. Victor, Xiaoping Zhao. August 2001. DM-01-01.

Copyright: WCRI

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Research Questions:

  1. Does care by network providers reduce medical costs without increasing income benefit payments?
  2. Is the first visit an important leverage point in determining the impact that a network might have?

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