New WCRI Study Examines Impact of Provider Choice Policies on Workers’ Comp Costs

New WCRI Study Examines Impact of Provider Choice Policies on Workers’ Comp Costs

The Workers Compensation Research Institute (WCRI), a non-profit organization, examined the relationship between provider choices and Workers’ Compensation medical and indemnity costs. It looked at the cost for injuries occurring primarily between 2007 and 2010 across 25 states in which either employers or workers control the choice of provider. It excludes states where workers can choose a provider within their employers’ established network.

Although the study, “The Effects of Provider Choice Policies on Workers’ Compensation Costs,” found little evidence of differences in the average medical costs per claim between states where policies give employers control over the choice of provider and states where policies give workers the most control of the choice of provider, it did note important differences when it came to the type of injuries. Policies, according to the WCRI study, that provide employees with the most control over provider choice are associated with higher medical and indemnity costs among the small share of the most expensive back-related injuries and, more generally, higher indemnity costs for the costliest cases overall.

“Policy changes designed to restrict worker choice across the board may do little to reduce costs on average,” said John Ruser, WCRI President and CEO. “Rather, policymakers in states where policies give workers control of the choice of provider might focus on factors affecting costs for the most costly cases.”

This recent WCRI study differed from a previous one the organization conducted in 2005 where those findings indicated that there were higher costs when the employee chose the primary provider than when the employer did. The effect seemed to come largely from when workers selected a provider they had not seen previously, notes WCRI. In contrast, the current study looks at the relationship between Workers’ Compensation costs and provider choice laws. While provider choice policy influences who chooses the provider, it does not fully determine who chooses. The WCRI observed “that it is 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. Therefore, the evidence about the impact of actual provider choice can be uninformative about the impact of provider choice policies, potentially understating or overstating the role of policy. For example, it may be that workers with more complicated or expensive cases end up choosing their providers because of contested issues or medical complications. In that case, evidence of higher costs when workers choose their own providers would overstate the effect of policies allowing them to choose their own providers.”

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Source: WCRI