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Digital EditionWorkers’ Comp Provider Networks Cut Total Claim Costs by 26%, Drive Faster Access to Care
Medical provider networks in workers’ compensation deliver broad benefits across nearly every measure of claim performance, from medical payments and return-to-work timelines to litigation expenses, according to research by the Workers’ Compensation Research Institute.
The study, which examined more than seven days of lost-time claims from 34 states with experience through March 2024, estimated that networks lower medical payments by 27% — roughly $3,500 per claim at 12 months of maturity — while also shifting the mix of services toward more conservative care and away from surgeries and pain management injections.
Compared with out-of-network claims, the average total cost per claim for in-network claims is 26%, or $11,820, lower for claims at 36 months of maturity, WCRI said.
Faster Treatment, Shorter Disability
One of the study’s most significant findings is the link between network use and speed of care. Workers treated within networks received their first office visit nearly three days sooner than those treated outside networks for a 20% reduction in wait time, the report said. Networks also shortened the time to initial physical medicine services by 13 days and to radiology services by about three days.
That faster access appears to translate into quicker recoveries, the report said. At 36 months of claim maturity, the average duration of temporary disability for in-network claims was 15.8 weeks, compared with 17.4 weeks for out-of-network claims, for a reduction of 1.5 weeks, or 9%, WCRI found. Earlier research cited in the study suggests that shorter time to first medical treatment tends to correlate with faster physical recovery and faster return to work.
The downstream cost effects are substantial. Indemnity benefits per claim were 23% lower for in-network claims, and benefit delivery expenses fell by 29%. In-network claims were also 12% less likely to involve litigation expenses, and when litigation did occur, those costs averaged 39% less than for out-of-network claims, according to the report.
Network Effects Vary by Geography and Fee Schedule
The WCRI study found that network performance is not uniform across all settings. In rural areas, the effects of networks moved in the same direction as in urban areas but were notably smaller in magnitude. Medical payment savings reached 28% in urban areas but only 20% in rural communities. The reduction in time to a first office visit was 22% in urban areas but just 6% — and not statistically significant — in rural areas.
Rural workers also showed increased use of hospital outpatient facilities when treated in network, the opposite of the pattern in urban areas, reflecting rural communities’ greater reliance on hospitals for a broad range of medical services, the report said. The researchers characterized the weaker rural network effects as “another vulnerability that workers with injuries in rural communities face.”
Fee schedule levels also shaped network effectiveness, WCRI said. States without fee schedules or with relatively higher fee schedule rates saw the largest absolute dollar savings from networks. Meanwhile, states with relatively lower fee schedule rates — where access-to-care concerns are most pronounced — saw the biggest network-driven improvements in access and utilization measures, according to WCRI. In those states, networks shortened time to the first office visit by 27% and increased the likelihood of physical medicine services by 30%.
Managed Care Regulations Amplify Network Benefits
State policy choices play a meaningful role in how well networks perform, the study found. Managed care regulations requiring specific time frames for providing care and mandating specialty coverage were associated with larger network effects on access and utilization measures. States with requirements for utilization review and treatment guidelines saw enhanced compliance with those guidelines: Notably, networks in those states did not increase early MRI use, while networks in states without such requirements did, WCRI reported.
Provider choice regulations also mattered. States where workers choose their own provider had higher medical payments per claim for both in-network and out-of-network claims, but networks generated larger relative savings in those states — a 34% reduction in medical payments compared with 23% in states with employer-directed provider choice.
The typical network participation rate across the study states was 76% of medical payments in 2023, up from 56% two decades earlier but slightly below the 79% peak reached in 2018. Participation varied widely, ranging from 43% in Louisiana and Minnesota to 90% in New Jersey, the report said.
Obtain the full report here. &
