Does it matter who picks the doctor? The Workers' Compensation Research Institute concluded in a report released last week that for the most part an insurer or employer will incur roughly the same claims costs for work injuries regardless if they occur in “employer choice” or “employee choice” states. It also opened the door to fruitful discussion of what does make a difference in claims outcomes.
To get to its conclusions, the research team had to neutralize a lot of factors that might bias its findings. This made large sections of the text as complex as you’ll ever see in our field. I trust the researchers made the right decisions to answer fairly the question they put before them.
The report brilliantly succeeds in dashing surmises that these laws make much of a difference, on the whole. Contrary to what one might expect, when given the power to pick their doctors, workers do not cause medical and indemnity costs to soar. The idea of masses of knowing, self-maximizing injured workers who pull the levers to stay out and run up costs is a figment of the imagination.
Injured workers want the freedom to choose their doctors. Given what we now know, how would we justify keeping that freedom from them?
The actual conduct of choice is hazier than commonly supposed. The authors cite an earlier survey which revealed that more than half of injured workers in employee choice states think their employer or another medical doctor controls which doctors they see.
The average medical costs of employee choice states appear in tables to be more than 10% higher than that of employer choice states. But the researchers, mindful of their assumptions and small sample sizes caution, “We conclude that there is by no means an overwhelming case for concluding that medical costs are higher once policies give workers more control over the choice of provider…”
The average indemnity costs are “20% to 24%” higher in employee choice states. In these states, there is a slight tendency for a larger share of work injuries to become lost time compensable. The reader gets the impression that injured workers in these states both know to and do use their rights to take more paid time off work. Still, the authors repeatedly discourage the reader from concluding that the law makes much of difference.
But they highlight a key exception, which applies to both medical and indemnity expenses. Probing down into the nature of the injury, the authors found that “back and neck sprains, strains and nonspecific pain or neurological pain” are closely associated with higher costs among employee choice states.
With this finding, repeated often, the authors opened a door, although they do not step through it. As I read the report, in particular, the well-written conclusion, I thought of a robust body of research on medical care of injured workers. These kinds of conditions are associated with an extremely wide range of medical costs and recovery outcomes.
According to the Reed Group, the 75th percentile of meniscus repair costs nationally is 215% higher than the 25th percentile. The range is even higher when you consider alternative treatment. The 75th percentile of carpal tunnel release is 633% higher than the 25th percentile of non-surgical treatment.
Follow closely how care progresses, from initial triage, through initial clinic care and then, for the higher cost claims, into specialist care. Consider the process by which, in any state, medical costs soar while recovery fails.
A number of studies done, as it happens, in employee choice states such as Michigan, Louisiana and Washington, create a composite picture of how claims get into medical trouble. Initial care is not consistently managed. A small share of injured workers, with the conditions noted by this WCRI study, are treated by a relative handful of specialists who treat well outside the norm. These outlier cases are responsible for a large share of claims costs.
It appears that outlier cases are more frequent in employee choice states. This should not be surprising. But a debate on behalf of provider choice needs to consider the impressive array of other measures claims payers have to control.
Claims payers use hard and soft measures to prevent these outliers from happening. Hard measures, written in law, include employer choice law, and mandated treatment guidelines, drug formularies, and utilization review. They are available only when approved by the legislature. Soft measures include use of immediate triage, alliances with top medical providers, case management, medical expertise, and predictive analytics. They can be applied in every state. Most of these measures are relatively new. Are they used?
It would be interesting to hear from a claims payer that vigorously apply these measures across states. How much of a difference do employee choice laws make?
ABOUT THE AUTHOR
Peter Rousmaniere is widely known throughout the workers’ compensation industry, both for his writing and consulting experience. Based in the picture perfect New England town of Woodstock, VT, he is a regular on the conference circuit, and is deeply in tune with trends and developments within the industry. His passion is writing and presenting on issues largely related to immigration, and he maintains a blog on the subject at www.workingimmigrants.com.
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