Research Finds No Improvement in Worker Outcomes When Medical Prices Increase

When the price of physician services increases relative to group health rates, injured workers report fewer problems getting the care they want but no significant improvement in physical function or speedier return to work, according to a study released Thursday by the Workers’ Compensation Research Institute.

WCRI used data taken from interviews with injured workers in 14 states and claims data from 30 states to measure the impact of medical price changes, relative to prices paid by group health.

In areas where workers’ comp paid less than group health, WCRI found increasing the price to approximately the group health rate led to a small increase in the duration of temporary disability, but little changes in measures of access to care, recovery of physical functioning and speed of return to work.

In areas where workers’ comp already paid more than group health, price increases led to fewer concerns about access to care, faster time to non-emergency visits with physicians, and more care provided to injured workers, but little change in measures of recovery of physical functioning, speed of return to work and duration of temporary disability.

The report, written by researchers Bogdan Savych and Olesya Fomenko, said the findings guide policymakers on what happens when medical prices increase. The impact of price increases varied according to whether prices to begin with were lower than group health or about the same.

But the researchers found one thing remained the same in both scenarios:

“While prices are related to measures of access to medical care and the nature of medical care provided, changes in these measures when prices increase are not material enough to result in improved recovery and faster return to work,” the report says.

The researchers measured worker outcomes by answers made by 400 injured workers during interviews conducted in 14 states from 2010 to 2013. Worker outcomes were scored by measurements including whether the worker noted an improvement to his physical condition and whether the worker returned to work within six weeks. Prices were obtained from claims data collected in 30 states.

Medical care consumes about half of every dollar spent on workers’ compensation and its share has been growing relative to indemnity benefits. States are constantly adjusting medical fee schedules to balance the interests of employers and providers. Still, prices vary widely from state to state. For example, overall prices for medical services in Wisconsin, the highest-price state, were three times higher than in Florida.

Steve Cattolica, a lobbyist for the California Workers’ Compensation Services Association, which represents medical providers, said he isn’t surprised that research shows no correlation between increased medical prices and better outcomes for injured workers. He said there are numerous variables in any workers’ compensation system: Factors such as the method of utilization review, how well physicians communicate with payers and the administrative hurdles that each system presents to providers can have substantially more impact than prices on worker outcomes.

Cattolica said in the California workers’ compensation system about half the money paid out goes toward running the administrative system; everything from attorneys, to bill reviewers to claims adjusters.

“The elephant in the room is how that care is actually provided,” Cattolica said. “There’s ample proof that the industrial medical complex — you know like, Eisenhower’s industrial-military complex — has overwhelmed the cost of administering and providing benefits.”

Employers were also not surprised to see that price increases had little impact on worker outcomes.

Kris Tefft, executive director of the Washington Self-Insurers Association, said other factors play an important role.

“To the extent that outcomes for workers are improving in Washington, and recent State Fund data would suggest they are in certain respects such as faster return to work and reduced time loss duration, the improvements are attributed more to claims management intervention like faster involvement of vocational rehabilitation and better-coordinated communication between providers, employer, and the State Fund, than pricing for medical services,” he said in an email.

Phil Millhollon, executive director of the California Self-Insurers Association, said in an interview that higher prices don’t necessarily drive quality. He said in California, most employers are accepting medical provider networks that are bundled by third-parties with little attention paid to the quality of the services provided.

Millhollon said a seasoned claims adjuster can have more of an impact on the injured worker’s outcome than the treating physician. The right adjuster will steer the worker to the quality providers who will treat the injury and return the worker to his job.

“You need to put all the pieces to the puzzle together,” Millhollon said. “Get to know the good physicians. Pay them a fair rate.”

The study is available for purchase from the WCRI website.