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CWCI Study Finds Use of Physician Networks in California Workers' Comp Is at a Record High

The use of network physicians to provide medical care to injured workers in California rose sharply in 2005 -- immediately after Medical Provider Networks (MPNs) first became available in California workers' compensation, expanding employer medical control from 30 days to the life of the claim, but a new California Workers' Compensation Institute study shows network utilization has continued to grow over the past five years and now stands at a record high.

Using first-year medical visit data from more than one million California workers' compensation claims with injury dates from 2004 through the 3rd quarter of 2010, the authors measured the percentage of outpatient services delivered by network providers before and after MPNs began operations in January 2005. The results show the network utilization rate for first-year physician-based outpatient services rose from 51 percent for accident year (AY) 2004 claims (the final year before MPNs became available) to more than 64 percent for AY 2005 claims - the first claims for which treatment in the initial 12 months could have shifted to MPNs. Network utilization has continued to grow since then, with the latest data showing that network providers accounted for more than 75 percent of all first-year, physician-based outpatient services rendered on AY 2009 claims.

To assess how much of the increase in first-year network utilization was tied to the expansion of employer medical control, the study measured changes in the proportion of services rendered by network providers within and beyond 30 days of injury. In AY 2004, before MPNs became available, networks -- in the form of preferred provider organizations -- accounted for just over 70 percent of physician-based inpatient medical services in the first 30 days post injury, while after MPNs took effect in 2005 that rate rose slightly to about 74 percent. In contrast, the network utilization rate for services beyond 30 days post-injury registered a much bigger increase, jumping from about 39 percent for AY 2004 claims to 57 percent for AY 2005 claims, suggesting that initially, the MPNs' expansion of medical control beyond 30 days was the key factor leading to increased network utilization in California worker's compensation. Since that initial surge, however, the study found comparable growth in the network utilization rate for services within and beyond the first 30 days, a sign that use of MPNs has now become widespread, and that injured workers are now typically channeled to network providers at the outset of their claims.

The growth in network utilization is also evident in the payment data, which shows that reimbursements to network providers climbed from about 39 percent of the total paid for first-year physician-based services for 2004 injuries to nearly 52 percent for 2005 injuries, then continued to rise in subsequent years, accounting for nearly two-thirds of the payments for first-year services in AY 2009. Again, the initial jump in the percentage of dollars paid to network providers was spurred by a sharp increase in the proportion of payments to networks for treatment more than 30 days after the injury, but the latest data show that since AY 2006, payments to network providers for treatment both within and beyond the first 30 days have risen at a similar pace.

The Institute has published the results of the study, including data tables showing the AY 2004 - 3Q 2010 network utilization rates and the proportion of payments for physician-based treatment services within and beyond 30 days of injury for three key categories of treatment (Evaluation and Management, Surgery excluding injections, and Physical Therapy) in a CWCI Research Update report, "Medical Benefit Delivery in California Workers' Compensation: Changes in Network Utilization and Reimbursement, AY 2004-2010." The report is available in the Research section of the Institute's website, www.cwci.org.