Managed care for workers' compensation: Three years of experience in an 'employee choice' state

Edward J. Bernacki, Shan P. Tsai

Research output: Contribution to journalArticlepeer-review


Managed care techniques are becoming increasingly available to manage the medical and indemnity losses associated with injuries paid for under the workers' compensation system. The authors describe 3 years' experience of identifying and abating workplace hazards and medically managing cases utilizing a preferred provider organization established solely for workers' compensation cases. In the model described, the occupational physician/nurse case-management team coordinates the entire process, from prevention of accidents to facilitated return to work. During the study period (1992 to 1995), per-capita losses were reduced by 23%, from $241 in fiscal year 1992 (the year before the managed care initiative), to $185 in fiscal year 1995. (Hereafter, each year referred to indicates that fiscal year.) In 1992, 22 lost-time cases per 1000 employees occurred, whereas the number of lost-time cases in the years 1993 to 1995 averaged 12 to 14 per 1000 employees. The rate of 'medical only' cases dropped significantly from 155 per 1000 in 1992 to 96 per 1000 in 1995. The per-capita amount of monies spent on medical care decreased from $81 in 1992 to $63 in 1995. The most significant savings in medical costs related to claims associated with new occupational injuries, injuries that occurred during the fiscal year. In 1992, the per-capita loss on such cases was $23 and in 1995 it was $13, a 43% decrease. The number of temporary/total days dropped significantly from 163 per 100 employees in 1992 to 70 days in 1995. Concurrently, the per-capita loss for temporary total disability was reduced from $53 in 1992 to $26 in 1995. Per-capita administrative costs, as well as other indemnity losses (predominately permanent partial disability), decreased only slightly over the study period ($58 to $54 and $60 to $51, respectively). We feel that these results indicate that environmental-risk management and medical-care management can be integrated to produce substantial savings. It also suggests that managed- care techniques, which are becoming more available to employers, can even be applied in states that do not have managed care legislation.

Original languageEnglish (US)
Pages (from-to)1091-1097
Number of pages7
JournalJournal of occupational and environmental medicine
Issue number11
StatePublished - Nov 1996

ASJC Scopus subject areas

  • Public Health, Environmental and Occupational Health

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