WCRI Hosts Webinar on Provider Choice Study which Found Little Difference Between Employer and Employee Choice States

The Workers’ Compensation Research Institute (WCRI) hosted a webinar on its recent provider choice study, which on the surface found no statistically significant difference in costs between employee versus employer provider choice states.

According to the study, The Effects of Provider Choice Policies on Workers’ Compensation Costs, there was little evidence of differences in average costs per claim between states where policies give employers control over the choice of provider and states where policies give workers the most control of the choice of provider. This is especially true for medical costs, where average cost differences were near zero.

As lead study author Bogdan Savych explained in the webinar, “When workers choose providers, they tend to choose someone they trust and that can increase compliance. But there’s more to the story than just costs. We looked at cost because it was an accurate way to compare study states, but other outcomes are very important. For example, satisfaction with care and return-to-work.”

This overall finding runs distinctly counter to the general narrative among payers – especially in Louisiana, which is an employee-choice state – that allowing workers to choose their doctors inspires malingering, or at least, reduced emphasis on keeping costs down. The evidence, however, masks important differences across injury types. Policies that give workers the most control over the choice of provider are associated with higher medical and indemnity costs among the small share of the most expensive back-related injuries and, more generally, higher indemnity costs for the costliest cases overall. Back-related injuries appear to at least partially account for higher indemnity costs, overall, among the most expensive cases in states where policies give workers the most control over the choice of provider.

Asked about the results of this study, Patrick Cronin, District Manager with CorVel Corporation, ran a review of his own numbers in three states with three different provider choice policies. In one example, the employer directed the medical treatment (Alabama). In the other two examples, the employee selected the medical treatment (Mississippi) or the employee was presented with a panel of physicians from which to select medical treatment (Tennessee). The review encompassed the three jurisdictions in which the client had the exact same exposure.

“My review indicated that the average medical costs associated with employer choice states exceeded that of employee choice states,” Cronin said. “I would contend, however, that duration of time from work has a better potential to be decreased in an employer choice situation, as has been my experience. The employer’s medical provider is more familiar with the potential for modified duty accommodations available in the work environment.” Further, Cronin echoed Savych’s thought about trust, adding that “there’s a good bit to be said for the injured worker’s familiarity and trust in their treating physician.”

From the provider-side, the reaction was qualified surprise. “My gut reaction to the study is that I am very surprised that employer-directed care is not cheaper. When I think more about it though, I think the vast majority of docs, regardless of referral sources, don’t actually treat patients any differently medically based on who refers them business,” said Douglas Lurie, orthopaedic surgeon with Orthopaedic Associates of New Orleans.

However, Lurie, like Cronin, does see problems with return-to-work. “I think with respect to return-to-work that there probably is a dichotomy that exists in that doctors who get employer referrals are more sensitive to those issues and lost time, while doctors who get referrals from employees, unions, and plaintiff attorneys might be more willing to keep patients out of work,” he explained. “In fact, many unions actually negotiate in their contracts that their members only have to do their own occupation and no others so that when they are out of work they aren’t required to do any form of light duty or transitional job.”

Given these results, a nuanced picture of the choice of physician debate emerges. For its part, WCRI states in the study that policy choices that limit workers’ ability to choose providers across the board likely won’t work. Instead, they suggest that “policymakers in states where policies give workers control of choice of provider [like Louisiana] might focus on how to reduce the incidence of high-cost cases that arise for a narrow set of injuries.”


Purchase a copy of this study via WCRI here.



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