Medical Networks, Cost Containment Strategies Help Control Growth in Medical Payments to Injured Workers in New Jersey

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The extensive use of medical networks and other cost containment strategies helped control the costs of medical care provided to injured workers in New Jersey despite the lack of price regulations, according to a new study from the Workers Compensation Research Institute (WCRI).

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Although there are no price regulations in the New Jersey workers’ compensation system, the costs of medical care for workplace injuries is typical of other states we have studied due to high medical network penetration and cost containment strategies.

The extensive use of medical networks and other cost containment strategies helped control the costs of medical care provided to injured workers in New Jersey despite the lack of price regulations, according to a new study from the Workers Compensation Research Institute(WCRI).

Overall the study, Medical Benchmarks for New Jersey, CompScope 11th Edition, found that medical costs per workers’ compensation claim in New Jersey were typical to higher among 16 study states. The new edition is the first time that New Jersey has been included in the study.

“Even though there are no price regulations in the New Jersey workers’ compensation system, the costs of medical care for workplace injuries is typical of other states we have studied,” said Ramona Tanabe, Deputy Director and Counsel for the Cambridge, Mass.-based WCRI. “That’s the result of high medical network penetration and cost containment strategies.”

The study noted that the percentage of medical payments to networks in New Jersey was typical of the study states, but this varied by provider – lower than typical for physicians and higher for physical therapists and hospitals. From 2003 to 2008, the percentage of medical payments to networks fell, driven by nonhospital providers, especially physicians.

From 2003 to 2008, medical cost containment expenses per claim grew 88 percent in New Jersey, expenditures on medical cost containment there is among the highest of the 16 study states.

Medical costs per claim grew more slowly in New Jersey than in other states with no significant reforms, 6 percent per year on average from 2003 to 2008, despite no price regulation.

At an average of $12,969, medical costs per claim in New Jersey were close to the median study state for 2006 claims with more than seven days of lost time at an average 36 months of experience.

To order this report, go to the WCRI web site: http://www.wcrinet.org.

ABOUT WCRI:

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Since 1983, WCRI has been a catalyst for significant improvements in workers' compensation systems around the world with its objective, credible, and high-quality research. WCRI's members include employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia and New Zealand.

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Andrew Kenneally
Workers Compensation Research Institute
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