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Does Medical Control Affect Overall Costs?

May 04, 2017 (6 min read)

The Surprising Results of a Recent WCRI Study

Often, the subject of attempts to reform workers’ compensation focuses on matters of choice. Injured workers and their advocates allege that by providing them more choice, better treatment can be obtained. The employer, on the other hand, wishes to retain medical control, believing that by so doing, there will be better containment on medical costs and the ability to return to work. Underlying both parties’ arguments is clearly some self-interest. One must also realize that choice as to provider has additional ramifications beyond the purely medical. Decisions as to the level of impairment and disability may in theory be radically different depending on who chose the expert. In many states across the nation, attempts to curb costs are often focused on lessening the control that employees have on the medical options.

The Workers’ Compensation Research Institute (WCRI) has released a new and interesting study which provides some further insights into this long-standing policy discussion. The authors attempted to determine whether there is a relationship between provider choice policies and Workers’ Compensation medical and indemnity costs. In their introduction, they acknowledged that evidence of the effects of provider choice policies and workers’ compensation costs has been far from definitive. Results, in fact, have been quite contradictory. One of the reasons for this is that the studies have often focused on different criteria to arrive at conclusions on this issue.

In this latest study, they have studied costs for injuries occurring between 2007 and 2010 evaluated at an average maturity of 36 months. They then compared this to medical and indemnity costs, both incurred and developed to ultimate case resolution. The analysis included information on 25 states in which either employers or workers control the choice of provider. It excluded states were workers can choose a provider within the employee’s established network. (These would be sort of a hybrid between employer selected doctors, but still giving the employee some degree of choice.)

The results were surprising. Overall, there was, in fact, no difference in average costs between states where policies give employers control over the choice of providers and states where policies give workers the most control over the choice of provider. The average cost difference was nearly zero. The authors point out, however, that the key is the overall average. Within various individual categories there was a substantial difference. In cases involving greater expense overall, including injuries of the back, neck, nonspecific pain, or neurologic spine pain, there were higher medical costs when applicants had more control.

WCRI summarizes two important conclusions. First, that there is no evidence overall that policies giving employers more control of the choice of provider reduce medical compensation costs. Secondly, giving workers more control over the choice of provider on certain expensive cases or specific types of injuries does drive up costs. They conclude that, “policymakers might focus on how to reduce the incidence of high-cost cases when policies give worker workers control over the choice of the choice of provider.”


The final conclusion seems to be predicated on the idea that lower costs are always a good thing. On the other side of the equation, one must of course also admit that high-quality treatment is also a good thing. On “expensive cases”, it does not sound unreasonable that treatment may be more complicated. There may be unknown societal benefits and costs savings overall when higher quality treatment is provided.

Another factor to consider is how strong the various utilization review programs are state by state. You could in theory have a state that gives a lot of choice to injured workers but nonetheless has strict standards for medical review of diagnostic tests or treatment ordered. As a result, there could easily be confounding variables that may be difficult to control—the point that the authors themselves seem to acknowledge in highlighting the need for caution in interpreting the results.

One final point that I would make as a practitioner, who has substantial experience on both sides of the aisle, representing the worker and the employer, is that the system is very counterintuitive. The majority of “big claims” get started—if you asked the injured worker at deposition—because they felt dissatisfied with the level of care in an industrial clinic controlled by the carrier. They often complain that they were not taken seriously, appropriate tests were not ordered, or they were rushed back to work too quickly. This, in turn, leads them to the attorney’s office for what otherwise would have been “medical only”, at which point the case may mushroom with zealous advocacy. Although anecdotal, having practiced on the defense side for almost two decades, I can state that I have heard this story many times, as have many other practitioners.

I remember once speaking to a group of physicians at an industrial clinic. I explained to them that the best way of reducing overall costs for the carrier would in fact be to provide better quality treatment. This would be inclusive of keeping people off of work longer, ordering appropriate tests earlier on, and providing very compassionate care. The reaction I got was one of disbelief. The doctors raised their hand and stated that this would be against the general policy of the particular place I was speaking. They have instructions to return injured workers back to employment as early as possible. They argue that if they were to do otherwise, they would get into “trouble”, both with the industrial clinic and the carriers themselves.

All of the above may be true at the same time. It may be that providing a higher degree of care would save money, but it may also be that neither the carrier nor clinic may always comprehend this. We live in a society that is more shortsighted rather than long-sighted. Companies are worried more about the bottom line from year-to-year rather than long-term survival. So, too, it seems in the medical field that provides for injured workers. They’re interested in saving money now, without realizing that they are losing a lot of money in the long run. You can talk until you’re blue in the face trying to make the carriers understand this, and it is a difficult sell.

Nonetheless, if this theory is correct, this may well explain why it is only the high-cost claims where we see the greater differential in spending. When an applicant feels he or she has a significant injury, and if the carrier does not provide treatment to his or her liking, these may be the cases where more aggressive decision-making occurs on the part of the injured worker.

A discussion for another day is not just who makes the decision but the nature of the decisions made. There are modalities of treatment that if offered (such as functional restoration with cognitive training) that could add costs but ultimately save significant costs if appropriately provided. The future of orthopedic medicine and orthopedic injury seems to be headed on the road towards recognition of the crucial connection between the mind and body. I believe that in the coming decades, by focusing more on this aspect of the claim, significant benefit can occur both in terms of costs and overall results for the injured workers as well. But, again, that is a discussion for another day.

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