Use of network physicians to manage California injured workers’ medical care rose from just over half of all claims prior to the introduction of medical provider networks (MPNs) to nearly 80 percent of all claims after MPNs were fully implemented according to a new CWCI study that tracks network utilization over an 11.5 year span and examines their impact on workers’ compensation medical costs.

Using data from 1.8 million claims from accident year (AY) 2000 through June AY 2011, the authors measured the percentage of claims in which the primary treating physician (PTP) was a network provider, and compared the risk-adjusted average medical payments at 24 months post injury for those claims to average payments on claims where the PTP was a non-network provider. Payments were compared for three distinct time frames within the study period: the Preferred Provider Organization (PPO) era of AY 2000-02; the MPN transition era of AY 2003-07; and the full MPN era of AY 2008 through June 2011. The study also examined the changing nature and characteristics of claims in which treatment was managed inside and outside of networks. Among the findings:

• Use of network PTPs increased from 55.4% of all claims in the PPO period to 79.5% after MPNs were fully implemented; among indemnity claims, use of network PTPs rose from 44.2% in the PPO era to 77.2% in the full-MPN era.
• Network indemnity claims had a lower attorney involvement rate than non-network claims, but the attorney involvement rate on these claims rose from 38.1 percent in the PPO period to 44.6 percent in the full MPN period.
• Network claims had higher claim closure rates, however the claim closure rate for network claims at 12 months post-injury decreased from 72.7 percent in the PPO period to 61.2 percent in the full MPN period.
• The percentage of network indemnity claims with at least one opioid prescription increased from 39.1 percent in the PPO period to 54.5 percent in the full MPN period.
• Average risk-adjusted medical payments on indemnity claims at 24 months post injury were 16 percent less for network claims in the PPO period, but only 3 percent less in the full MPN period.
• Differences in average risk-adjusted medical payments between network and non-network claims varied greatly by region, ranging from no difference in Los Angeles County to a 20 percent difference in San Diego County in the full MPN period.

The study confirms that while the vast majority of California workers’ comp primary treating physicians are now part of a network, in recent years it has started taking longer to close claims; the percentage of network claims with opioid prescriptions is up; and overall medical cost savings associated with network-managed claims have dwindled (and have completely evaporated when an attorney is involved), though for claims with opioid prescriptions, medical cost savings associated with network managed claims have increased. Despite the reduction in cost savings associated with network managed claims overall, the study did find considerable variation among individual networks in the study sample, with just as many networks generating lower costs per claim as higher costs per claim when their results were compared to those of claims with non-network PTPs. This suggests not only variations among network physician rosters, but in the medical management and reimbursement systems used by the various networks, as well in the populations and regions served.

CWCI has published results of the study, including graphics and additional analyses, in a Research Note, “PPO to MPN: Impact of Physician Networks in the California Workers’ Compensation System.” Institute members and subscribers may log in to the CWCI website (http://www.cwci.org/) and access the report in the Research section.