Costs Lower When Employers Choose, Says Study that Included Mass., Pa. Systems

Costs Lower When Employers Choose, Says Study that Included Mass., Pa. Systems

The choice of medical care providers to treat injured workers by either workers or their employer not only impacts medical costs but also a variety of outcomes for injured workers, according to a study by the Workers Compensation Research Institute and the Public Policy Institute of California.

These outcomes include the duration of time out of work, return to work, the workers’ perception of the degree of recovery from the work injury, and their overall satisfaction with the health care received.

The study, The Impact of Provider Choice on Workers’ Compensation Costs and Outcomes, also found that costs and outcomes differ when workers chose providers who previously treated them and when workers choose new providers. The findings come from the employee interviews conducted in 2002 and 2003 in four states–California, Texas, Massachusetts and Pennsylvania.

The study found that when workers chose their provider, costs were generally higher, perceived recovery of health outcomes were not better, and return-to-work outcomes were often poorer than when employers chose. But workers reported much higher satisfaction with care.

According to the study, this finding suggests that employers, on average, may be well-positioned to select good quality, lower-cost providers–or at least better positioned than many workers. It also suggests that employers, in practice, were not generally selecting inferior-quality providers; although there may be exceptions, they were not frequent enough to affect overall results.

A pre-existing relationship with a provider may be very important. When workers selected providers who had treated them previously, costs and worker outcomes were not dramatically different from when employers selected the providers. However, when workers selected new providers, costs were higher and return-to-work outcomes poorer.

This evidence suggests that state laws that grant employers greater influence over the choice of provider may lead to lower costs and better return-to-work outcomes than laws that allow workers to select providers where they do not have a pre-existing relationship with a primary care provider.

When workers selected the providers–either prior or new–they expressed higher levels of satisfaction with overall medical care.

The study noted that the higher level of satisfaction for workers who selected new providers was surprising, given that costs and return-to-work outcomes appeared to be worse. After examining the data on satisfaction further, the authors speculate that the greater satisfaction may be related to empowerment, trust in the employee-selected provider, or the process of care that leaves workers more satisfied with the new-provider choices–but not likely to be related to better physical or economic outcomes.

The study observed that workers and their advocates believe that the choice of treating doctor or provider should be left to the worker to ensure they are treated by someone they trust and whose interests align with the workers’ interests. In contrast, employer advocates say the choice of provider should be made by the employer to ensure that incentives exist for keeping costs or care reasonable and appropriate.

Improve provider choice laws
While the study found evidence to support both sides of the argument, it concluded that it appears possible to improve the design of provider choice laws to lower costs and improve return-to-work outcomes without adversely affecting physical recovery from workplace injuries.

From the late 1980s to the early 1990s–a period of rising workers’ compensation costs–a number of states modified “employee choice” laws to require that workers select providers from within approved networks of providers created by employers.

Recently enacted measures in California (Senate Bill 899) and Texas (House Bill 7) changed the rules regarding provider choice that, in part, allows employers to establish networks of physicians and gives them the sole right to decide which providers are in the network. And both statutes permit an exception when the worker has pre-designated his or her primary care provider.

The conclusions are particularly salient for California because they suggest that the recent legislative changes in California may have struck an appropriate balance by significantly expanding the limits on worker choice of provider but retaining an exception where there is a pre-existing provider relationship.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation. The Public Policy Institute of California is a private, nonprofit organization dedicated to improving public policy in California.

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