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FAST TRACK ARTICLE
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A Preliminary Investigation of the Effects of a
Provider Network on Costs and Lost-Time in
Workers’ Compensation
Edward J. Bernacki, MD, MPH
Xuguang (Grant) Tao, MD, PhD
Larry Yuspeh
T
Objective: We sought to compare lost-time days and average and
median workers’ compensation claims costs between injured workers
managed by OMNET Gold (OG) physicians and those managed by
physicians not participating in OG. OG is a statewide health care
provider network coordinated by occupational medicine physicians and
established by the Louisiana Workers’ Compensation Corporation
(LWCC) to manage the medical care of injured workers. Methods: We
identified and contrasted 158 lost-time claims managed by OG physicians and 1,323 claims managed by physicians not participating in
OG during the first year of network operation (August 1, 2003 to July
31, 2004). Results: The average and median costs for a non-OG claim
was $12,542 and $5,793, whereas the average and median costs for an
OG claim was $6,749 and $3,015. The average and median number
of lost-time days for an OG claim was 53.4 and 34.0 and 95.0 and
58.0 for a non-OG claim. The mean differences were statistically
significant. Conclusions: A small network of physicians may have an
effect on the duration of lost-time and workers’ compensation costs. (J
Occup Environ Med. 2005;47:3–10)
Division of Occupational and Environmental Medicine, Department of Medicine, Johns Hopkins
University School of Medicine, Baltimore, Maryland (Drs Bernacki and Tao); and Louisiana Workers’
Compensation Corporation, Baton Rouge, Louisiana (Mr Yuspeh).
Address correspondence to: Edward J. Bernacki, MD, MPH, Director, Division of Occupational and
Environmental Medicine, Johns Hopkins University, School of Medicine, 600 North Wolfe Street,
Billings Administration 129, Baltimore, MD 21287-1629. E-mail address: bernacki@jhmi.edu.
Copyright © by American College of Occupational and Environmental Medicine
DOI: 10.1097/01.jom.0000152745.75983.27
he direction of claimants for assessment and treatment by employers to
networks of health care providers is
associated with reductions in workers’ compensation costs and disability duration.1–14 Health care providers who attend to large numbers of
workers’ compensation claimants have
fewer lost-time cases, a shorter average length of disability, and less attorney involvement than health care providers who attend to smaller numbers
of workers’ compensation claimants.15
Utilization review, particularly
precertification, has been associated
with medical cost savings of 5% to
10% in both the major medical and
workers’ compensation insurance
environments.16 –20 However, the
processing times involved in the performance of utilization review on
claims involving diagnostic testing
or medical treatment may increase disability duration and temporary total
costs in workers’ compensation.17,18
Despite the favorable medical cost
savings, this technique has not been
widely supported by the health care
provider community, perhaps because
it increases the administrative burdens
of a medical practice and erodes the
autonomy of health care providers in
making clinical decisions.18
In August, 2003, the Louisiana
workers’ compensation Corporation
(LWCC), a private, tax-exempt mutual insurance Company assisted by
the Johns Hopkins University School
of Medicine, initiated a small statewide health care provider network
(OG) that permitted its participants
to attend to the health care needs of
4
Costs and Lost Time Compensation in Smaller Networks
injured workers without prospective
utilization reviews. This network
was modeled after the Johns Hopkins’ workers’ compensation provider network that achieved significant reductions in lost-time and
costs.5– 8 However, the Hopkins’ network and similar networks that
achieve these outcomes were designed for one organization or for
groups of employers in a small geographical area.1,3,5– 8 LWCC felt that
it could create a statewide network
that would realize the efficiencies of
small networks by establishing and
linking together a number of area
networks. The premise that LWCC
used in constructing its network
was “quality medical management
aggressively applied by empowered,
yet, accountable physicians trained and
disciplined in common occupational
care management methods and unencumbered by pre-certification requirements, will minimize or eliminate
disability in the shortest time
possible.”21 LWCC’s goal in creating OG was to permit health care
providers within the network to use
the appropriate diagnostic and
treatment regimens at the time they
are indicated, not when they are
approved by an insurance company. LWCC also felt that medical
care costs could rise because of the
absence of any utilization review
mechanism, but any increases
would be more than offset by reductions in system inefficiencies
associated with utilization review.
An increase in medical costs did
not occur when the Johns Hopkins
network was established, 8 but
LWCC did not know how the elimination of utilization review would
play out in a network covering an
entire state. The purpose of this
investigation was to compare outcomes, specifically disability duration, medical and indemnity costs,
between physicians in this network,
OG, and all other physicians who
treat workers’ compensation claimants in the State of Louisiana
whose claims were paid by LWCC.
Characteristics of OG
OG was created as an expert provider organization within OMNET.
OMNET is a network of physicians
formed by LWCC in 1996 as a
discounted fee-for-service network
to treat workers’ compensation
claimants in Louisiana. Both OG
and OMNET are registered trademarks of LWCC. The health care
providers in OMNET were selected
based on their willingness to treat
workers’ compensation patients,
accept a discount off the Louisiana
Workers’ Compensation Medical
Fee Schedule, schedule appointments for assessment within 24
hours of being contacted, and their
proximity to major LWCC clients in
the State of Louisiana. There are
approximately 1,300 health care providers in OMNET.
Managing care physicians (MCPs)
make up the core of OG. The MCP is
responsible for initial treatment of all
claimants in a defined geographical
area and also is responsible for tracking medical care provided the injured
worker if the individual loses time
from work. LWCC and Johns Hopkins felt that MCPs should preferentially be occupational medicine physicians because of their familiarity
with the workers’ compensation system and the demands of the work.
Virtually all MCP physicians are occupational medicine practitioners.
Supporting the MCP in the treatment
of an injured worker are orthopedic
surgeons, neurosurgeons, physiatrists, chiropractors, and physical
therapists, among other specialized
health care providers. The MCP and
supporting health care providers make
up an MCP network in a locality. OG
became a collection of regional MCP
networks that operates as a statewide
network coordinated by LWCC. Each
of the major population centers in Louisiana, for example, New Orleans, Baton Rouge, and Lafayette, has at least
one MCP network. On July 30, 2004,
there were 50 MCPs, 81 specialty physicians, and 45 physical therapists/
chiropractors in OG.
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Bernacki et al
The MCP assesses the injury or
illness, providing treatment appropriate to the MCPs level of training and
referring patients for specialized care
within the MCPs referral network.
MCPs and specialty physicians in
OG are free to make all medical
decisions in the care of an individual
worker
Identification and Training of
OG Healthcare Providers
LWCC assembled OG in a sequential process. First, LWCC determined the number and losses of
claims submitted by each of its policyholders for its most recent calendar yea, to identify the 200 policyholders with the largest number of
claims. It then determined the number of cases treated by each occupational medicine physician within
OMNET to identify practitioners
who treated the greatest number of
LWCC claimants in that year. It then
invited the occupational medicine
physicians who practiced in closest
proximity to the 200 largest LWCC
insureds to participate in OG. The
other health care providers in the
MCP network were identified by
asking the MCPs to submit names of
practitioners they used most often
when referring patients for more definitive care. The roster of OMNET
health care providers was then queried to determine if the providers
nominated by the MCPs were participants in OMNET. In virtually all
cases, these providers were participants of OMNET. However, those
health care providers who were not
members of OMNET had to join
prior to becoming a participant in
OG.
All MCPs, as well as their nursing
and support staffs and other health
care providers in OG, were required
to attend 2 days of professional training that provided Continuing Medical Education Units (CMEs) to the
physicians, nurses and other health
care providers attending these sessions. The training program was presented by the Johns Hopkins Univer-
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Volume 47, Number 1, January 2005
sity School of Medicine, Department
of Medicine’ s Division of Occupational Medicine, and LWCC. The
accreditation body for the CMEs was
the American College of Occupational and Environmental Medicine.
The introductory modules of this
training program consisted of cost
drivers in workers’ compensation;
overview of workers’ compensation in
Louisiana; a description of OG and
methods used to measure performance
of network providers; and the role of
the MCP and other network health
care providers in OG. The second day
of training consisted of physical demands of common occupations in
Louisiana; fundamentals of case management; psychosocial aspects of work
and disability; physical demands of the
workplace and accommodation; optimizing physician/patient interactions;
and return to work programming.
Workshops were conducted for health
care providers and support staff in case
management techniques, accommodating the injured worker to restricted
work and optimizing patient/health
care provider interaction.
Each health care provider or practice paid the cost of training, which
was consistent with the cost of similar training programs for professionals in the Southeastern United States.
All OG providers agreed to bill with
the same discounts as provided in
OMNET. As indicated, LWCC removed all precertification requirements but required that MCPs practices track the activity of a claimant
with a lost-time claim to resolution.
LWCC paid $250 per claimant to the
MCP to help offset the administrative cost of patient tracking.
Claims Submission
and Processing
All injured workers who are employed by an organization insured by
LWCC are required to notify their
employer of the incident. The employer submits a report of the injury to
LWCC. Upon notification of the injury, LWCC creates a claim file in its
claims payment system. Employers
participating in OG direct injured employees to an OG MCP for initial care.
Significant injuries requiring immediate care are referred to the closest
emergency facility. The employee is
free to accept this referral or select a
physician of his or her choice for the
initial and subsequent visits. MCP’s
may receive referrals from OG participating companies or identify claimants from nonparticipating companies
as eligible for OG involvement.
The MCPs notify LWCC that they
are managing an OG claimant. Once
notified of MCP involvement in a
claim, LWCC flags the claim in its
Claims Payment Database and follows it as an OG claim. At the
MCP’s office, a staff member (MCP
case manager) is assigned to follow
the case to assure that patient care
proceeds without undue delay. This
individual also acts as a bridge between all parties involved in patient
care. Each case manager/patient advocate at LWCC is assigned an OG
claimant to follow. The LWCC case
manager/patient advocate is the
MCPs point of contact within
LWCC. This individual communicates with the MCP case manager on
an as needed basis and facilitates
claims processing and return to work
within LWCC. The case manager/
patient advocate coordinates treatment with the MCP. The LWCC
Claims Representatives investigates
and determines compensability, becomes the secondary LWCC OG
contact for the MCP case manager,
coordinates return to work with the
employer and vocational consultant,
and is responsible for payment of
indemnity and medical expenses.
The LWCC Professional Health care
Services office tracks all treatment,
assists the MCP office in facilitating
scheduling, participates in LWCC
discussions regarding OG claimants,
and identifies impediments to care
and designs procedures to overcome
these impediments. The LWCC vocational consultants perform transitional duty and job analysis, work
with the injured employee, the employer and MCP or non-MCP treat-
5
ing physicians to facilitate return to
work and assist alternative job placement if return to work is ruled out.
The claims representatives, Professional Health care Services and vocational consultants perform similar
functions for OG and non-OG claimants. At LWCC, Professional Health
care Services performs precertification and peer review of non-OG
claimants. Jointly, the MCP, case
manager/patient advocate, Professional Health care Services representative, and vocational consultant coordinate modified duty or full duty
for OG claimants. Weekly one and
one-half hour meetings are conducted by the case manager/patient
advocates, claim representative and
Professional Health care Services to
discuss the progress of each OG
claimant. Figure 1 summarizes the
flow of claimants through OG and
activities performed by LWCC and
MCPs in processing OG claims.
Data Collection and Analysis
All claims information at LWCC
resides in the Claims Payment Database. Information acquired on each
claim includes name, social security
number, ICD-9 code of the injury/
illness, health care providers and employer, as well as all claim payments.
The information is entered into the
system on each claim as information is
received by LWCC. To perform this
study, ICD-9 codes, lost-time days,
medical, indemnity and other expenses
for each claim was abstracted from this
database for all claims on injuries or
illnesses that occurred between August
1, 2003, and July 31, 2004.
Statistical Methods
The analysis of variance method
was used to compare differences between OG and non-OG claimants who
lost time (claimants who were paid 1
day temporary/total).22 The indicators
included lost-time days to ascertain
disability duration, medical, indemnity
and other losses (ie, MCP management
fee [$250]; attorney, bill review and
surveillance costs etc.). To assess the
comparability of the types and severity
6
Costs and Lost Time Compensation in Smaller Networks
Fig. 1. Omnet Gold claims processing.
of injuries and illnesses in the OG and
non-OG claimants, ICD-9 codes,
which were common to both groups,
were identified. The twenty-five
ICD-9 codes that had the highest mean
costs were then compared between OG
and non-OG claims (Table 3). The
differences in mean costs of the top 25
ICD-9 codes between the non-OG
claims and OG claims were subjected
to significance testing.22
Results
There were 6343 non-OG claimants
and 586 OG claimants identified who
submitted a claim for an injury that
occurred between August 1, 2003, and
July 31, 2004. The proportion of OG
claims to all claims during this period
amounted to 8.5%. Total losses for
non-OG claims, amounted to
$22,551,838 and OG claims,
$1445,082 during this time period.
Correspondingly, the proportion of
losses to all claims for OG claims was
6.2% during this time period (Table 1).
There were 158 OG lost-time claims
amounting to $1066,342 in losses versus 1323 non-OG lost-time claims
amounting to $16,593,066 in losses,
between August 1, 2004, and July 31,
2004. The proportion of losses for
injuries that occurred during this period for OG claimants were 6.0%,
whereas, the proportion of OG claims
to all claims submitted during this
period was 10.7% (Table 1).
As seen in Table 2, for the 158 lost
time claims managed by OG physicians, the number of lost-time days
averaged 53.4 days and for the
non-OG physicians the average number of lost time days was 95.0. This
difference was statistically significant (P ⬍ 0.01). The median number
of lost time days was 58 for non-OG
physicians and 34 for OG physicians.
The average medical care cost for
each lost time claim managed by OG
physicians was approximately $4007
less than that of the claims managed
by non-OG physicians. The difference was statistically significant
(P ⬍ 0.05). The difference between
median medical losses for OG and
non-OG physicians was $1360. The
indemnity cost for claims managed
by OG physicians was on average
$1848 lower than claims managed by
non-OG physicians. The difference
was highly significant (P ⬍ 0.01).
Differences in median indemnity
losses between OG physicians and
non-OG physicians amounted to
$1081. In the other expense category
(ie, management fee, legal expenses
etc.), OG claims were on the average
of $62 more costly than non-OG
•
Bernacki et al
claims. This difference was not significant (P ⬎ 0.05). The median
difference between the two physician
groups for this category amount to
$174, again with OG physician
claims being more costly than
non-OG physician claims. Total average losses for claims managed by
non-OG physicians equaled $12,542,
whereas total losses for claims managed by OG physicians was $6749, a
difference of $5793. The total median loss costs for claims managed
by non-OG physicians amounted to
$6940, whereas total median loss
costs for claims managed by OG
physicians amounted to $3925, a difference of $3015. The median claim
duration during the study period was
approximately 6 months.
Table 3 lists the top 35 average
total cost per claim by ICD-9 codes
for the two comparison groups. It
indicates that in each of the top 25
categories, non-OG claims are more
costly than claims in the OG group.
The average cost in the non-OG
group for these 25 categories is
$14,498 per claim (95% confidence
interval: $13,007 to $15,990), which
is significantly (P ⬍ 0.01) higher
than the average claim cost of $6183
(95% confidence interval: $4699 to
$7666) in the OG group.
Discussion
OG lost-time claims represent
10.7% of all claims that were processed by LWCC from August 1,
2003, to July 31, 2004, but accounted
for only 6.0% of LWCC’s paid
losses during that time period. Medical and indemnity claim costs at 6
months of development amounted to
$12,542 for non-OG claims and
$6749 for OG claims. The non-OG
claims costs is slightly less than the
Louisiana average claim costs of
$14,053 observed by the Workers’
Compensation Research Institute for
claims arising from October 2000
through September 2001, evaluated
as of March, 2002.23 Furthermore,
claims managed by MCPs assisted
by other health care providers in OG,
experienced 44% fewer lost-time
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TABLE 1
Number of Claims and Paid Losses OG versus Non-OG (August 1, 2003–July 31, 2004)
Non-OG
OG
Total
% NonOMNET
Gold
6,343
1,323
$22,551,838
$16,593,066
586
158
$1,445,082
$1,066,342
6,929
1,481
$23,996,920
$17,659,408
91.5
89.3
93.8
94.0
Indicator
# of Claims
# of lost-time claims
Total losses
Losses for lost-time claims
% OMNET
Gold
8.5
10.7
6.2
6.0
TABLE 2
Number of Claims, Median and Mean Lost Time Days, Medical, Indemnity and Other Losses for Claimants OG versus NonOG
Non-OG (1323)
OG (158)
Diff.
Indicator
Median
Mean
95% C.I.*
Median
Mean
95% C.I.*
LT Days
Medical Losses
Indemnity Los
Other Losses**
Total Losses
58
$3,446
$2,501
$86
$6,940
95.0
$7,875
$4,421
$246
$12,542
89.93–100.03
$6,802– 8,948
$4,132– 4,710
$214 –279
$11,342–13,741
34
$1,816
$1,420
$260
$3,925
53.4
$3,868
$2,573
$308
$6,749
44.49 – 62.26
$3,125– 4,611
$2,044 –3,101
$233–383
$5,590 –7,907
P
Value
Mean
% Diff.
Median
Mean
Median
0.0000
41.6
24
43.8
41.4
0.0123
$4,007 $1,630 50.9
47.3
0.0000
$1,848 $1,081 41.8
43.2
0.2171 ⫺$61.80 ⫺$174 ⫺25.2 ⫺200.0
0.0013
$5,793 $3,015 46.2
43.4
* 95% confidence interval.
** (Adm., Mgt. Fee, Legal, etc.).
days and were 46% less costly than
claims that were managed by other
physicians that were paid by LWCC
during the 12-month period. These
outcomes were achieved by OG physicians managing claimants with injuries that were at least consistent
with injuries incurred by claimants
managed by non-OG physicians.
The estimated working days saved
for the 158 OG claims managed during the 12-month period was 6574
days (158 ⫻ 41.6). Medical care
costs avoided during this time period
amounted to $633,074 ($4007 ⫻
158), indemnity savings were
$291,992 ($1848 ⫻ 158). The total
savings in claims costs of claims
managed by OG physicians was
$915,294 ($5793 ⫻ 158). These savings were offset by the $62 per case,
increase in administrative costs
(other losses), which are associated
with the $250 management fee, bill
review and attorney costs.
What were the factors that accounted for the observed differences
and estimated savings? The approach
to patient care and claims processing
in OG differs markedly from the way
injured workers are handled outside
of OG. The most meaningful OG
characteristics are: (1) experienced
physicians and other health care providers in an MCP network familiar
with working with each other and
who were trained in common case
management methods; (2) occupational medicine physicians coordinating medical care;(3) LWCC case
managers and other claims personnel
initiating their activities when the
claim is created, not when problems
emerge and following these cases
closely to resolution; and (4) diagnostic and treatment initiated when
indicated, not when approved by a
third party. We felt that all the characteristics of OG had to be present
and interact simultaneously to
achieve the outcomes we observed.
However, we felt that the activities
of well chosen OG MCPs and their
MCP case managers were of paramount importance and were primarily responsible for this difference in
lost-time days and costs.
When LWCC constructed the Network, it was not sure whether medical costs would be higher among OG
physicians because they were not
subject to utilization review and
non-OG physicians were. As mentioned, this was not the case with the
Johns Hopkins network,5– 8 but it
was difficult to envision a statewide
network where observations of physician behavior could not be made as
easily as observations of physician
behavior in an extremely small network servicing one employer. Furthermore, it was expected that OG
physicians would be aggressive, that
is, expedite the diagnostic and treatment process and this aggressiveness
could also result in an increase in
medical costs. In fact, medical care
costs were not higher, but 51% lower
overall and 14.5% lower on a per
lost-time day basis. This would suggest that utilization review seems to
have little impact on the behavior of
experienced physicians preselected for
their ability to appropriately treat and
manage workers’ compensation cases.
In fact, utilization review may be
counterproductive because it slows
down the medical care process, which
increases indemnity payments if the
injured worker is losing time from
8
Costs and Lost Time Compensation in Smaller Networks
•
Bernacki et al
TABLE 3
Frequency and Mean Cost of Claims By Top Twenty-Five ICD-9 Codes OG versus non-OG
Non-OG
Disease/Injury/Procedure
Cervical disc displacement
Laboratory examination
Brachial neuritis NOS
Torn meniscus
Lumbar disc displacement
Lumbar disc dis W/mylopathy
Sprain of foot NOS
Contusion of upper arm
Unknown/undiagnosed
Contusion of hip
Joint pain-shoulder
Electric shock
Fracture calcaneus-close
Joint pain-L/Leg
Sprain supraspinatus
Tenosynovitis hand/wrist nec
Cervicalgia
FX metacarpal NOS-closed
Open wound finger W/tendon
Backache NOS
Lumbago
Contusion of knee
Bite with skin intact
Sprain lumbar region
Lumbosac disc degen
Total
work. Utilization review undoubtedly
does affect the behavior of inexperienced or marginal providers.16,17
However, subjecting experienced physicians and other health care providers
to utilization review may create unnecessary increases in administrative
costs. Also, that aggressiveness in
promptly diagnosing and treating a
condition does not necessarily mean
over utilization of medical resources.
In fact, we observed that OG physicians prescribed lesser amounts of diagnostic and treatment resources over
a shorter period of patient disability
time without utilization review than
non OG physicians prescribed with
utilization review over longer periods
of disability time.
It is possible that the differences in
medical care costs between claims
managed by OG physicians versus
non-OG physicians were the result of
lower medical payments to OG physicians than non-OG physicians due
to discounts. The payments made to
OG
ICD-9
Mean
N
Mean
N
Difference
722.0
V72.6
723.4
836.2
722.10
722.73
845.10
923.03
799.9
924.01
719.41
994.8
825.0
719.46
840.6
727.05
723.1
815.00
883.2
724.5
724.2
924.11
924.9
847.2
722.52
$31,200
$29,756
$25,220
$22,969
$20,911
$20,439
$19,959
$19,646
$18,530
$18,133
$17,618
$16,889
$16,620
$16,301
$15,153
$14,381
$14,368
$14,340
$13,416
$12,815
$12,317
$11,846
$11,207
$11,097
$11,054
8
1
3
3
20
5
7
2
4
4
19
1
13
14
12
1
21
6
8
11
53
13
1
99
13
$19,030
$9,913
$6,424
$7,053
$5,808
$5,828
$1,945
$3,562
$5,874
$1,057
$10,821
$9,559
$6,796
$12,176
$5,782
$3,184
$4,808
$11,506
$1,244
$7,645
$5,225
$8,126
$2,760
$4,625
$2,438
2
1
1
1
1
1
1
2
1
1
1
1
2
3
7
1
2
1
1
1
2
2
1
17
2
$12,170
$19,843
$18,796
$15,917
$15,104
$14,611
$18,014
$16,084
$12,655
$17,074
$6,796
$7,331
$9,824
$4,124
$9,371
$11,197
$9,560
$2,833
$12,172
$5,170
$7,092
$3,719
$8,447
$6,471
$8,616
$14,498
342
$6,183
56
$8,316
non-OMNET, non-OG health care
providers (those providers not subject to the discount) amounted to
30% of all payments made by
LWCC during the study period. The
average discounted proportion of
medical fees in OMNET amounted
to 10%. The worst-case scenario assumes that all medical expenses of
non-OMNET claimants (health care
provider, medication and hospital expenditures) would not be subject to a
discount. In this case, the impact of
unrealized discounts would be approximately 3% (0.1 ⫻ 0.3) or $120
in medical expense. This would reduce the observed difference in medical savings from $4007 to $3887.
In our study MCP physicians
achieved a 44% reduction in the
number of temporary total days paid
and a 42% reduction in temporary
total costs. This outcome was expected and is consistent with other
studies of provider networks who
have achieved this magnitude of cost
reductions.8,9 –12 What is interesting,
however, is that OG achieved the
same level of costs savings and reduction in time lost from work as
much smaller networks created for a
single employer or multiple employers in a small geographic area.1,4,5– 8
Some of OG’s MCP networks were
probably better than others in achieving positive outcomes. When these
data are reanalyzed at 18 months, 30
months, and 42 months, individual
MCP networks will be contrasted to
determine which process variables
(ie, case management activity modified daily etc.) are associated with
better outcomes.
OG was offered to the 200 LWCC
policyholders with the most claims.
These insureds, for the most part, are
companies with large numbers of employees, but in some instances, companies with the greatest risk profiles.
Injured employees working for large
employers are more likely to return to
work (and thereby incur shorter time
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Volume 47, Number 1, January 2005
periods off work) than injured employees working for smaller employers.24
It is thought that this is the consequence of fewer opportunities for providing modified jobs and the higher
cost to small companies of holding
injured workers jobs open for longer
periods of time.14,25 We do feel that
the higher proportion of claimants
from larger employers in OG probably
has impacted our findings, but it is
difficult to determine the magnitude of
this affect. Unfortunately, the database
does not contain information on employer size. We plan to introduce
another field to the database that quantifies the size of the claimant’s employer. When these data are reanalyzed in two years, we will compare
outcomes controlling for employer size.
We contrasted the disability duration and costs of “flagged” MCP
claimants versus all other claimants for
the entire study period, August 1,
2003, and July 31, 2004. It is possible
that some or most of the medical care
provided to a few claimants managed
by MCP physicians was provided by
non-MCP health care providers. Alternately, some medical care may have
been provided by MCP network physicians who were managed by nonMCP physicians. This was not common; however, both of these scenarios
would tend to reduce the magnitude of
the differences observed rather than increase the magnitude of the differences.
The age of the population also was
not taken into account in the analysis.
Some evidence exists that older workers have greater claims severity and
lost-time because of injuries than
younger workers.26,27 Age of the
claimant included at the time of injury
was not in the LWCC Claims Database at the time of the study. However,
there is evidence that the magnitude of
the affect of age on claim severity is
small.14,25 Because of this, it is unlikely that any age disparities between
the compared groups could have affected the outcome of this study to any
great degree.
As mentioned, each MCP’s practice added a new dimension and time
commitment to facilitate care within
the MCP’s network. The MCP case
managers, on average, expend differing shares of an FTE per week on
this activity. The time devoted to this
activity, of course, is offset by a
reduction in the time to prepare for
precertifications, which is estimated
to be 2 hours for each precertification. The MCP office is compensated
$250 to offset some of the cost of
case management. This expense is
included in the other expense category and is part of the cost analysis
presented in Table II.
An increased amount of time and
resources was expended by the
LWCC staff on OG claims. The
LWCC estimates that case managers/
patient advocates, Professional
Health Services, claims representatives, vocational consultants perform
approximately the same amount of
activities for OG and non-OG
claims, exclusive of the 2 hours per
week involved in OG claim meetings. LWCC did not hire more personnel to administer OG.
Satisfaction with OG was not assessed in a systematic fashion on
either the health care provider or
claimants in OG. This is a deficiency
in the study that will be addressed
when these data are reanalyzed.
We tried to assess comparability of
illness and injury severity in both the
OG and non-OG claims by only assessing lost workday cases and comparing costs in the top 25 ICD-9 codes
common to both groups. Some of the
highest cost claims may not be equally
represented in both groups and could
bias the results if one group had a high
number of costly cases. In OG, 35.4%
of the cases were in the top 25 ICD-9
code and in non-OG, 25.8% of the
cases were in the top 25 ICD-9 codes.
In addition, there were 62 ICD-9 codes
which were common to both OG and
non-OG claimants. The mean and median costs for non-OG claimants in
these 62 ICD-9 codes were $11,346
and $7,175, whereas, the mean and
median costs for OG claimants were
$6,219 and $3,739. This would suggest that the effect of this bias was not
great and probably effected OG claims
9
to a greater extent than non-OG
claims. ICD-9 codes are frequently
applied incorrectly and there are substantial variations across providers in
its application. In workers compensation, the first ICD-9 code that is assigned may remain fixed in a claim
system even though the diagnosis has
changed. Of course, these problems
would apply equally to both groups.
However, the finding that within identical ICD-9 codes, OG physician
claims costs are much lower than
non-OG physician claims costs supports the notion that the OG physicians
manage the same type of injury in a
manner that leads to lower costs.
Participation in OG by claimants
was voluntary. It is possible that a
higher proportion of individuals who
may be litigious and, therefore, represented by an attorney, would not
choose to participate in OG. Workers’ compensation claims in which
an attorney is involved are associated
with medical and indemnity costs
that are approximately three times
higher than claims where an attorney
is not involved.28 If OG claims had
more attorney involvement, this of
course, would bias the outcome of
the study. Unfortunately, we did not
obtain attorney representation or litigation rates for OG and non-OG
claims and, therefore, could not ascertain the magnitude of this variable’s affect on the study outcomes.
However, it is unlikely that a difference in attorney representation or
litigation rates could significantly affect the outcome of the study at six
months of valuation. When these
data are reanalyzed at eighteen
months, litigation rates, as well as
attorney representation rates, will be
compared between OG and non-OG
claimants to assess the affect of these
variables on the outcome.
This work assess OG’s first year
of operation. As the program and
claims mature, and these claims and
subsequent claims are reanalyzed, a
more focused accounting of its ability to control lost-time days and costs
should emerge. Specifically, we
would like to determine which pro-
10
Costs and Lost Time Compensation in Smaller Networks
cess variables within the MCP network or LWCC are responsible for
the largest differences in cost and
lost-time. Does more time spent on
case management by the MCP case
managers, early on in the life of a
claim lead to greater reductions in
medical, temporary/total or permanent/partial losses? Is the frequency
of interactions between MCP case
managers and LWCC case manager/
patient advocates associated with decreases in medical care costs? Will
the magnitude of the differences observed over an average maturity of 6
months increase or decrease at eighteen months and thirty months?
We have evaluated claims with a
median duration of 6 months. It is
entirely possible that as claims mature
and are re-evaluated at 18 and 30
months, the differences demonstrated
will change. However, as of this valuation period, our assessment indicates
that OG has achieved the same control
of lost-time and costs in a statewide
program as smaller networks or clinics
have achieved with smaller numbers
of workers in limited geographical areas. If further analysis of these data
and outcomes from other similar networks support these findings, it is feasible that such networks can be used to
control medical care and other costs in
non-workers’ compensation settings.
6.
7.
8.
9.
10.
11.
12.
Acknowledgment
We gratefully acknowledge the assistance
of Catherine Vaeth in the preparation of this
manuscript.
13.
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