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Physicians’ practices have profound effect on claims’ costs

Establishing relationships with doctors and clinics is one of the major tenets of the L5 injury management process for controlling claims costs. Even when the physician is an expert in the field of diagnosis and treatment of occupational disease, it’s critical that the employer maintain contact with the treating doctor, provide essential information about workplace policies and philosophies and transitional work opportunities and monitor the progress of the treatment so that the injured employee is safely returned to work as quickly as possible.

A recent study by Johns Hopkins study published in the January 2010 edition of the Journal of Occupational and Environmental Medicine reinforced the importance of understanding the practices of physicians. The study concluded that the practice patterns of physicians participating in a Workers' Compensation system had a profound impact on the ultimate cost of claims.

Analyzing five years of claim data from the Louisiana Workers' Compensation Corp., or LWCC, from 1998 to 2002, the researchers found that a small group of physicians, only 3.7%, accounted for more than 72% of the Workers' Compensation costs. These were termed cost-intensive providers, or CIPs. Recognizing that severity is an indicator of high claims costs, the analysis controlled for potential surrogates for severity such as claims duration and disease classification. The analysis concluded that CIP status had a significant cost impact that is independent of severity.

According to the article published in the Insurance Journal, the findings are consistent with previous research by the Hopkins team.

In a 2005 study, a statewide group of 2,000 medical providers, called the OMNET Gold Network, showed significant cost-savings by treating patients effectively and closing claims quickly, significantly reducing overall costs.

A 2007 study found that the involvement of an attorney and the duration of the claims greatly impacted overall claim cost. After analyzing 36,329 claims over five years, the study found that 2% of claims accounted for 32% of claim costs.

A 2008 study found that attorney involvement led to consistently higher medical, indemnity and claim handling costs. Approximately 10% of the 7,000 claims studied involved an attorney. By the study closure, 97.7% of claims without attorneys had been resolved, but of those with attorney involvement, only 57.5 % had been closed. The study found attorney presence on a claim correlated with duration, and the duration correlated with higher cost.

Advisor Insight: The most effective way to reduce the costs of a claim is to return an injured employee to work as quickly as safely possible. A strong influencer in this process is the treating physician. Your involvement and cooperation with the physician and injured employee will accelerate informed, return-to-work decisions.