Provider Networks in Workers’ Compensation

At the 2018 NCCI Annual Issues Symposium, Barry Lipton from NCCI and Alex Swedlow from CWCI discussed studies on the impact provider networks have on workers’ compensation.

California Data

• Data reviewed from 1990-2017
• 332% increase in medical costs per claim during that time period.
• In 2003, California passed legislation to encourage medical network use. Another law change in 2013 made it easier to manage these networks and limit liability for payments outside of the network.
• In 2004, 50% of workers’ compensation medical care was delivered by networks. In 2016 that was 84%. So the law changes did as intended in increasing the use of medical networks.
• This came at a cost. The administrative burden on California workers’ compensation is 53%. This is double the average workers’ compensation system and ten times the administrative costs of group health or Medicare. Much of this is litigation costs. However, utilization review costs also increased significantly.
• Studies show physicians with more experience treating workers’ compensation claims had better claim outcomes across all possible measurements. This highlights the need for having occupational medicine specialists as the primary provider in your networks.
• Network utilization is a challenge outside of major metropolitan areas where physicians are limited.

Key elements of network evaluation

• Adequate data.
• “But my patients are sicker”.
• Transparency of evaluation.
• Medical bill data is not enough. You need to understand the type of services, information about the claim, the injured worker and the type of injury.
• Getting the injury description correct. The change to ICD-10 greatly enhanced this with a huge increase in diagnosis codes.
• Percentage of claims with changes in primary medical provider. About 25% of claims have a change in medical provider and this is associated with higher medical costs and longer periods of disability.

Recent CWCI Study

Surprisingly, claims managed by a MPN were only 3% lower costs per claim than non network and claims under a PPO model were only 4% lower. So having a network alone does not guarantee lower costs. An updated study in 2018 showed only a 2% difference between a network managed claim and a non-network claim. This study also showed that network managed claims performance across several different measurements were not better than non-network claims. This included lost time days and opioid use. There was tremendous variation between the network performance with some coming in at half the costs of others.

NCCI Data

• Share of medical provider payments network is around 78% now for NCCI states. This varies greatly by state. The less populated states tend to be the ones with the worst network utilization.
• In network pricing departures have been stable at around 14% below fee schedule. It was found that the higher cost fee schedule (compared to Medicare pricing) states had higher discounts for network use.
• 34% of out of network reimbursements are below fee schedule compared to 87% for in network.
• In network physicians are using more services per claim than out of network. Is this because they are delivering better care, handling more complex injuries, or are they using more utilization to make up for the discounts the network takes.

MEGA CLAIMS

They are defining mega claims at those with total incurred of $10 million or greater. Recent accident years are showing an uptick on those claims. While they are still rare, there is definitely more of them. Their data on these claims is very limited as it does not include self-insurance or large deductible claims which is over half the total workers’ compensation market. 70% of mega claims are from either motor vehicle accidents or falls from elevation.