Variation in Medical Prices and Outcomes of Injured Workers

Medical prices for workers compensation are set by medical fee schedules, and these fee schedule rates vary substantially across states (Fomenko and Liu, 2016). This large variation in fee schedule rates leads many policymakers and system stakeholders to express the following concerns about prices for medical care—when medical fee schedules are low and leading to relatively low prices for medical care, workers may have harder time finding desired medical providers. This may lead to problems getting access to timely care, prolonged recovery, lower rates of return to work and worse outcomes for injured workers.

This study is a first comprehensive attempt to empirically examine relationship between prices of medical services and the outcomes that workers experience after a work-related injury. This study combines multiple sources of data on medical prices and outcomes of injured workers. We use medical billing information from Truven MarketScan® to determine prices for office visits for group health payors, and information from Workers Compensation Research Institute DBE databate to determine prices for office visits for workers’ compensation payors at MSA level. This helps describe an economically relevant variation in group health and workers’ compensation medical prices across different areas—when workers compensation prices are lower than prices paid by other payers, these providers may have fewer incentives to provide care to injured workers and instead focus their practice on patients with more generous insurance coverage. We then link this information to more than 6,600 surveys of injured workers collected by WCRI for injuries covering 2010 through 2013 across 14 states. We use these surveys to examine the relationship between medical prices and the outcomes including workers’ speed and sustainability of return to work, reported problems getting desired medical provider and desired medical care, and recovery of health and functioning. We supplement this analysis with the information from administrative records on the time to first non-emergency visit, mix of services provided (e.g. conservative versus specialty invasive care) and duration of disability payments.

We find that that workers’ compensation prices are strongly associated with measures of access to care and nature of care received. Workers in areas with lower prices were more likely to report “big problems” getting the primary provider that they wanted, had longer time to first non-emergency office visit for evaluation and management services, higher likelihood of a surgery, and smaller in the number office visits. At the same time, we find that prices were not strongly related to recovery of health and functioning, measures of speed and rates of return to work, and measures of duration of temporary disability benefits.