A new California Workers’ Compensation Institute (CWCI) study shows the percentage of medical services to injured workers delivered by network physicians jumped sharply immediately after Medical Provider Networks (MPNs) were introduced into the workers’ compensation system in 2005, and that both the network utilization rate and the percentage of workers’ compensation medical dollars paid to network providers have continued to climb over the past five years.

Using first-year medical service data from 891,918 California workers’ compensation claims with 2004-2009 injury dates, CWCI measured the percentage of injured worker outpatient medical services rendered by network providers before and after MPNs began operations in January 2005. The results show that the network utilization rate rose from less than half of first-year physician-based services for 2004 job injuries to nearly 2/3 of the services for 2005 injuries – the first claims in which treatment in the initial 12 months could have shifted to MPNs. Furthermore, the data show that the trend toward the use of networks has continued, with network providers accounting for nearly ¾ of physician-based services for 2008 injury claims.

To see how much of the increase in network utilization may be related to the MPNs’ extension of medical control from 30 days to the life of the claim, the study tracked changes in the network utilization rates for services provided within and beyond 30 days of injury. In 2004, just prior to the adoption of MPNs, network physicians provided 2/3 of physician-based services in the first 30 days post injury; by AY 2005, after MPNs became available, that rate rose to 74.2 percent. In contrast, the network utilization rate for services beyond 30 days jumped more than 20 percentage points — from 35.3 percent for 2004 injury claims to 55.7 percent for AY 2005 claims – indicating that at least initially, the expansion of medical control under MPNs was the key to increased network utilization in California worker’s compensation. Since 2005, network utilization rates both within and beyond the first 30 days have continued to rise steadily, albeit at more modest rates. The latest data show network providers accounted for 83.1 percent of services in the first 30 days on claims for injuries from the first quarter of AY 2009, and 67.4 percent of the post-30 day services rendered on AY 2008 claims.

The data also reveal the increasing share of first-year medical service dollars paid to networks, a finding that dovetails with the growth in network utilization. Overall, payments to network providers for first-year physician-based services increased from about 1/3 of the dollars paid for AY 2004 injury claims to more than half of the dollars paid for first-year services on AY 2005 claims, and that proportion has continued to climb, hitting 61.5 percent of the dollars paid for first-year services on AY 2008 claims. Again, that growth was led by a sharp increase in the proportion of payments to networks for services more than 30 days after injury, which more than doubled from 26.7 percent for the AY 2004 (pre-MPN) claim sample to 55.6 percent for the AY 2008 injury claims.

In addition to examining workers’ compensation medical services overall, the Institute study also isolates network utilization and payment results for six major types of services covered by the workers’ compensation Official Medical Fee Schedule: Evaluation and Management; Surgery; Radiology; Medicine Section services; Physical Therapy; and Chiropractic Manipulation. The Institute has published these results, along with data on the use of networks for medical legal reports and for medical services in six other fee schedule categories, in a CWCI Research Update report, "Medical Provider Network Utilization in California Workers’ Compensation." Data tables for each specific category show the AY 2004-2009 network utilization rates and the proportion of payments for physician-based treatment services within and beyond 30 days of injury. The report is available to the public in the Research section of the Institute’s website www.cwci.org.