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WCRI Report on Provider Choice Policies: Who Gets to Pick the Doctor?

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By Dara Barney

Should the choice of provider in workers’ compensation cases be left to workers or employers? Is it more expensive when policies give control over doctor choice to one or the other? Are there other underlying reasons behind cost differences? What factors do policymakers need to consider when implementing provider choice policy changes?

The Workers’ Compensation Research Institute (WCRI) set out to answer those questions recently, and released “The Effects of Provider Choice Policies on Workers’ Compensation Costs” this morning.

The comprehensive, more than 100-page report is authored by WCRI Public Policy Researcher Bogdan Savych and UC Irvine’s David Neumark. WorkersCompensation.com was sure to get the details in an exclusive in-depth interview with WCRI CEO John Ruser and Savych.

The report includes 25 states, which were chosen based on availability of data. “The 25 states chosen capture nearly 90 percent of benefits paid in all states where policies give control over provider choice predominantly to workers or employers. We had to assure that we could get as many states as possible, while at the same time making sure there were substantial records on workers’ compensation claims that we could use in the study.” 

As for motivations behind the study, Bogdan said WCRI wanted to better understand provider choice policies in the two main camps: one where policies give the employer control over the choice of provider, the other where policies give the employee the choice of provider. Most studies looking at this question were published in the 1990s, using data from 1980s.

In main findings for medical costs included the study, “…we conclude that there is by no means an overwhelming case for concluding that overall medical costs per claim are higher when policies give workers more control over the choice of provider. However, there is fairly strong evidence that medical costs are higher for certain injury groups, including back and neck sprains, strains, and non-specific pain, or neurologic spine pain.” 

For indemnity costs, “For average costs the evidence is in the direction of higher costs in the states where regulations allow workers to have the most control over provider choice.”

“I think when we talk about back injuries, sprains, etc., those types of injuries, there is more of a scope for differences in provider decisions, either because of the greater complexity in the nature of treatment or greater subjectivity about a workers’ readiness to return to work,” Bogdan said.

Two main policy change themes are noted in the study: 

  • There is no evidence that giving employers control of provider choice reduces workers’ comp costs.
  • Some empirical data suggests, possibly, that policies with worker control of provider choice could drive up indemnity costs and in some cases medical costs for the most expensive types of injuries.

“There are two main approaches towards provider choice policies: employers control the provider choice or workers control the choice of provider. In the study, you do not see substantial cost differences between the two approaches on average. But that is not the end of the story,” Bogdan said. “When you look at the most expensive claims, you see evidence of higher costs when policies give workers control of the provider. This is especially pronounced for back injuries, where we observed higher indemnity and medical costs in the states where policies give workers control over provider choice.”

When it comes to provider policy change and awareness, the study could be considered an essential fixture in today’s workers’ comp industry for timely and reliable data.

“These dual findings are very important,” Bogdan said. “If policymakers are looking at these two provider choice policies in terms of cost, we do not see substantial cost differences between them overall. However, there is a narrow group of injuries where provider choice policies make a difference.”

Ruser discussed the report’s significance. “I think the study speaks for itself. It is important to look not only at the impact of provider choice policies on the average claim, but also on subsets of claims. The authors do a good job of drilling down into the data to identify the impact on costs for specific types of injury.”

WCRI conducted related research in 2005 that focused on the impact of who made the actual choice of provider, finding higher costs when a worker chose a doctor they had not previously seen. The present study differs from this previous one in focusing on provider choice policies, according to Ruser. 

“Now people can look at this most recent study, to infer how choice policies affect costs, as compared to the actual choice of the employer or employee,” he said.


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