Evaluation of the Washington State Workers' Compensation Managed Care Pilot Project II - Medical and disability costs

OBJECTIVES. This study examined the effect of managed care on medical and d isability costs as part of an evaluation of the Washington State Workers' C ompensation Managed Care Pilot (MCP). METHODS. One hundred twenty firms (7,041 employees) agreed to have their in jured workers treated in managed care plans. Managed care introduced two ch anges from the fee-for-service (FFS) delivery system currently used by inju red workers in Washington State: experience- rated capitation and a primary occupational medicine delivery network. The FFS control group included inj ured workers employed at 392 firms (12,000 employees). Medical and disabili ty costs were compared for 1,058 injuries in the managed care group and 1,1 59 injuries in the FFS group occurring between April 1995 and June 1996. Un ivariate and multivariate statistical methods were used to analyze the effe cts of managed care on medical and disability costs. RESULTS. The mean unadjusted medical cost per injury ($587) for the managed care group was 21.5% lower (P = 0.06) than for the FFS group ($748). Adjus tment for differences in worker and firm-level characteristics through mult ivariate analysis had little effect on the unadjusted results, except that the difference in costs between managed care and FFS groups became statisti cally significant (P < 0.01). The major cost differences were for outpatien t surgery (cost per surgery) and ancillary services (pharmacy, x-ray, physi cal therapy, and all other costs). In addition, disability costs, particula rly percent on time loss and time-loss cost per injury, were significantly lower (P < 0.01) in the managed care group. CONCLUSIONS. The results from the MCP suggest that substantial savings in w orkers' compensation medical and disability costs may be realized using the type of managed care intervention designed for this study. Delivering occu pational health services through managed care arrangements whose design is based on an integrated, occupational health-centered delivery model may off er a viable approach for improving delivery systems, reducing costs and enc ouraging greater attention to disability prevention.