The 130th Annual Meeting of APHA

Abstract #42161

Marjorie L. Baldwin, PhD, School of Health Administration and Policy, ARizona State University, Box 874506, Tempe, AZ 85287-4506, 4809657868, marjorie.baldwin@asu.edu, William G Johnson, PhD, School of Health Administration and Policy and Department of Economics, Arizona State University, Box 874506, Tempe, AZ 85287-4506, and Steven C. Marcus, PhD, University of Pennsylvania, 215 South 24th Street, Philadelphia, PA 19103.

INTRODUCTION: The generous health care coverage provided by workers’ compensation is one reason why health care for work-related injuries costs substantially more than health care for similar injuries covered by regular health insurance. Insurers have responded to the relatively high costs, in part, by contracting with managed care networks to offer health care services to injured workers.

METHODS: We examine the effects of preferred provider networks on health care costs and service utilization in treating work-related injuries. We study three workers’ compensation insurers who contracted with eight different networks over the study period in three states. Medical only claims treated entirely in network are matched with similar claims treated entirely out of network on characteristics that directly affect the demand for care to control for differences in case mix and severity.

RESULTS: For all injury groups, average costs are lower for cases treated in network than for cases treated out of network. The average cost of a network back case is $59 less than the average cost of a non-network back case or a $500,000 cost reduction over the entire sample. For other injury groups, network cost reductions range from $42,000 for fractures to $480,000 for inflammations, lacerations and contusions (ILC).

CONCLUSIONS: Price discounts are the primary source of savings for ILC, fractures, and non-back sprains, strains and dislocations. Both price discounts and service utilization are important for back cases and cumulative injuries. The results provide evidence that treatment of work-related injuries can be provided in a more cost-effective way.

Learning Objectives:

• § Understand a unique method of controlling for case-mix and severity
• § Explain the different methods that health care networks use to control health care costs
• § Identify the predominant methods used by health care networks to control health care costs by type of injury

Keywords: Workers' Compensation, Medical Care

Presenting author's disclosure statement:
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.