Like it or Not, MPN Usage is Up

Tuesday, December 27, 2011 | 0

Like it or not, the trend in California is toward increasing usage of medical provider networks (known as MPNs).

That trend is confirmed in the findings of research by the California Workers Compensation Institute, which issued a Nov. 29 bulletin documenting network usage from 2004 to 2010.

Network utilization rates for all "first year medical services" increased from 51.1% in 2004 to 75.3% in 2009. In accident year 2009 networks had an 81% share during the first 30 days and a 71.4% during the first year after the first 30 days. "First year medical services" was defined to include evaluation and management, anesthesiology, surgery, medicine, lab and pathology, radiology, physical medicine, chiropractic, special services, othotics/prosthetics, pharmacy, med-legal reports and other miscellaneous categories.

The trends were similar when CWCI looked at the percent of first-year workers' comp physician-based outpatient service payments to network providers for all services. By accident year 2009 the percent for the first year was 65.5% (i.e. 74.5% for services during the first 30 days post-accident and 61% for services post 30 days).

The CWCI broke out results in several categories. Take surgery for example: Network usage for surgery climbed from 56% in accident year 2004 to 75% in accident year 2009.

But increased usage of medical networks has not kept medical treatment costs from outstripping other system costs. Along with medical cost containment expenses, treatment costs have escalated sharply.

And since indemnity costs have been relatively stable, this raises the question: if indemnity benefits can only be raised by systemic cost reductions (a position apparently being taken by the Brown Administration), then how can medical costs be tamed while ensuring worker access to prompt and adequate medical care?

One would think that any "grand bargain" type of comprehensive reform that does not look at this issue is doomed to failure.

Former Insurance Commissioner Poizner noted during several rate hearings that insurers had achieved only limited success with cost reduction tools at hand, i.e. medical networks and UR. At the time, he refused to endorse
requests for a substantial increase in the workers' comp advisory premium rate.

This is the conundrum with faces employers and labor, insurers and applicant attorneys, doctors and hospitals. How can we deliver quality medical care at a reasonable price to California's injured workers and still have money left over to adequately compensate injured workers who have had their earning capacity diminished?

Julius Young is an attorney for Boxer & Gerson, an applicants' law firm in Oakland. This column was reprinted with his permission from his blog, http://www.workerscompzone.com