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Report · November 2005

The Impact of Provider Choice on Workers’ Compensation Costs and Outcomes

David Neumark, Richard A. Victor, and Peter S. Barth

Medical payments for workers’ compensation are rising rapidly in many states. Exploring options to control costs, some states have passed laws permitting employers, rather than employees, to choose the medical provider in these cases. This study analyzed data from California and three other large states to see if costs and outcomes differ when employers or employees choose. It found that satisfaction with care is much higher when employees make the choice. However, there is little difference in medical and income-replacement costs, time away from work, and recovery of physical health when an employer chooses the provider or when an employee chooses a prior provider, one who has treated the employee before. In contrast, when an employee chooses a new provider, one who has not treated the employee before, costs are much higher, time away from work is longer, and physical recovery is no different than when the employer makes the choice. The results suggest that a balance can be struck between employee and employer choice. California’s recent legislation, which gives employees the right to be treated by their own (i.e., prior) physician, under certain circumstances, may have struck that balance.

This report is a joint publication of the Public Policy Institute of California and the Workers Compensation Research Institute.


Economy Jobs and Employment