California: Provider networks cause spike in medical services

The percentage of medical services to injured workers delivered by network physicians in California jumped sharply after medical provider networks were introduced into the workers' compensation system in 2005.

The recent study by the California Workers' Compensation Institute also found that both the network utilization rate and the percentage of workers' comp medical dollars paid to network providers have continued to climb over the past five years.

Using first-year medical service data from nearly 900,000 California workers' comp claims with 2004-09 injury dates, researchers 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 two-third of the services for 2005 injuries -- the first claims in which treatment in the initial 12 months could have shifted to MPNs. Furthermore, researchers said the data show that the trend toward the use of networks has continued with network providers accounting for nearly three-quarter of physician-based services for 2008 injury claims.

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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 two-third of physician-based services in the first 30 days postinjury. By accident year 2005, after MPNs became available, that rate rose to 74.2 percent. In contrast, the study found that 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 accident year 2005 claims -- indicating that at least initially, the expansion of medical control under MPNs was the key to increased network utilization in California workers' comp.

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 accident year 2009, and 67.4 percent of the post-30 day services rendered on accident year 2008 claims.

Read more at the WorkersComp Forum homepage.

July 1, 2010

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