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A Few Physicians Account for a Lot of Workers’ Comp Spending

By January 15, 2010Commentary

Workers’ compensation began as a system primarily focused on lost wage income.  In the last two decades, medical costs have become the majority of expense and continue to grow more rapidly than wage loss costs.  Although well behind general health insurers in addressing the management of medical costs, workers’ compensation payers have begun to adopt a number of the innovations developed in the managed care world.  One of the areas beginning to be examined in workers’ compensation is variation in physician practice and its relationship to costs.  A recent study finds that a few physicians account for a great deal of medical expense.  (WC Article) (Abstract Only)

The study looked at several years of claims for a large Louisiana workers’ compensation insurer.  The researchers wanted to identify physicians that appeared to have unusually large claims for similar injuries and to find characteristics of those physicians.  They found that a small group of physicians, around 3%, handled a relatively large number of workers’ comp claims and tended to generate much higher costs for those claims.  In addition to higher medical costs, these claims had higher wage indemnity costs and the claimant spent more time out of work.  The inability to return the injured person to work faster is likely to be an indicator of poorer quality.  These high-cost physicians had indemnity costs over four times higher than other doctors and medical costs over 3 times larger.  Physicians specializing in pain medicine were over-represented in this high-cost group, but interestingly, occupational medicine doctors were underrepresented.

While it is possible that this small number of physicians just happens to see much more severely injured workers, the methodology of the study all but rules this possibility out.  It is common knowledge that there are physicians who work closely with some claimants’ attorneys to abuse the system.  And it is likely that these same physicians would profile as high-cost for commercial health insurance, Medicare and other payers.  Systems need to be put in place that routinely and in real-time scrutinize claims, identify likely abusive physicians and force them to either change their practice patterns or lose the right to be reimbursed by the payer.  The patients are not well-served by these physicians either, as they likely have worse health outcomes and are endangering their careers by lengthy absence from the work force.

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