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WCRI Study Shows Negligible Effect of Provider Choice on Comp Costs

May 3, 2017 by Catherine Montgomery

A new study by the Workers’ Compensation Research Institute (WCRI) tackles an age-old industry debate: Should the choice of a medical provider in a workers’ compensation case be made by the injured employee or by their employer? On one side, employees argue that the matter of choice is important in establishing provider trust. On the other, employers maintain that employer choice curbs cost. But the WCRI study takes the wind out of this debate’s sails. The findings suggest no significant difference in average medical costs between states that allow injured employees to choose their doctors and states that allow employers to control that choice.[1]

Though the near-zero difference in medical costs is eye-popping, there’s some important context that must be considered before the study’s full impact can be appreciated.

For one thing, establishing conclusive results from a study such as this one is difficult. The WCRI notes that provider choice policies are often confusing, and sometimes ignored – it’s both “common for employees to choose the medical provider when policies give employers control over provider choice, and for employers to choose the provider when workers have the right to direct this choice.”[2]

Additionally, the type of injury significantly impacts medical and indemnity costs – the WCRI noted that back injuries, in particular, resulted in higher costs, and that this is especially true when provider choice policies gave the injured employee a high degree of control over provider choice.

Intriguingly, these types of high-cost injuries may partially explain the common misconception that employee-choice policies lead to higher medical costs. The WCRI findings suggest that medical complications or disputes over the proposed course of treatment for a high-cost injury may lead an injured employee to choose their own provider, regardless of their employer’s provider-choice policy. That level of nuanced critical thinking was missing from previous studies, which simply picked up on the employee’s choice without taking into account whether or not that employee’s choice conformed with their employer’s policy. As a result, the data from older could have been inadvertently skewed to suggest a false correlation between high costs and employee-choice programs.

The results of the new WCRI study should help put the misconception that medical choice and medical costs are linked to bed. It bears repeating: no difference in costs was found between states that allow injured employees to choose their doctors and those that allow employers to control this choice.

Perhaps these findings can help policymakers and industry analysts abandon this old industry debate altogether. Instead of focusing so much on who chooses an injured employee’s medical provider, the industry would be better served by a stronger focus on preventing and managing high-cost injuries in the first place.

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[1] The WCRI study drew on data from 25 states, focusing on injuries between 2007 and 2010 that were evaluated at an average of 36 months. States like California, where injured employees are allowed to choose a provider from an employer’s MPN were excluded from the study. Still, the findings offer valuable insight into the workers’ comp industry. Read more here.

[2] Link

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