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Treatment by network physicians is becoming increasingly prevalent in California workers’ compensation, with new data showing that nearly 80 percent of first-year physician-based outpatient medical services for 2010 California work injuries was provided by physicians who are part of a medical network – up from just over half of the services in 2004 – a trend that has grown steadily since 2004 legislative reforms extended medical control for employers that offer Medical Provider Networks.

Looking at first-year medical service data from more than one million claims for California work injuries occurring between 2004 and the third quarter of 2011, the authors calculated and compared the percentage of injured worker outpatient treatment visits to network providers before and after MPNs began operating in January 2005. The results show that the use of network providers for first-year physician services increased from 51 percent for 2004 work injuries to nearly 2/3 of the services for 2005 injuries – indicating an initial surge as first-year treatment shifted to MPNs. The latest figures confirm that the trend has continued, with networks accounting for 8 out of 10 physician-based services for 2010 injuries.

Prior to MPNs, employers usually controlled their injured workers’ treatment for 30 days after the injury, but with the advent of MPNs, medical control was extended to the life of the claim for employers that offered these networks. To determine how much of the increase in first-year network physician use is associated with the expansion of employer medical control, the study measured changes in the percentage of services by network providers within and beyond 30 days of injury. For pre-MPN (accident year 2004) claims, network providers rendered about 70 percent of physician-based outpatient medical services in the first 30 days post injury, while the latest data (claims for injuries from the first three quarters of 2011) show that rate is now 86.5 percent. At the same time, however, the network provider utilization for services beyond 30 days post-injury has nearly doubled from around 39 percent for AY 2004 claims to about 76 percent for AY 2010 claims, suggesting that the expansion of medical control under MPNs has been the primary factor behind the growing use of network providers in California worker’s compensation.

The research also shows that overall, the increasing share of first-year treatment payments to network providers has tracked with the growth in utilization. Payments to network providers rose from less than 40 percent of total reimbursements for first-year visits for 2004 injuries to nearly 54 percent for 2005 injuries, then continued to trend up, increasing to nearly 72 percent of the payments for first-year services for 2010 injuries.

Again, this growth was primarily driven by payments to network providers for services after the first 30 days, which more than doubled from less than 32 percent of the payments on AY 2004 claims, to more than 67 percent of the payments for AY 2010 claims.

The Institute has published the results of the study in a Research Update, which includes data tables showing AY 2004 – 3Q2011 network provider utilization rates and the proportion of payments for physician-based treatment within and beyond 30 days of injury. Results are also broken out separately for three major treatment categories: Evaluation and Management; Surgery Services (excluding injections); and Physical Therapy.