A recent National Council on Compensation Insurance study indicates that a higher workers' comp medical network penetration rate results in a higher rate of utilization. 

James Moore

The study reads as a little complicated, but bear with it. The details are worth the read and your patience.

Blog and newsletter readers will benefit from reading the whole study and drawing conclusions from it. NCCI verified what I had been saying for over a decade: When the prices of workers' comp treatment decrease such as an adjustment in a state fee schedule, utilization increases.  

The definition of network utilization is the quantification or description of the use of services by persons for the purpose of preventing and curing health problems, promoting maintenance of health and well-being, or obtaining information about one’s health status and prognosis.

The focus word here is "quantification."

Previous studies had same conclusion  

Many articles have appeared in our blog over the years on this subject. I have performed studies for physical therapy groups, medical networks, carriers, third-party administrators and investment groups on the use of medical networks. One of the by-product conclusions was that utilization offsets price when comparing the two variables. 

According to NCCI, "a higher proportion of in-network claims in a state relates to comparatively greater utilization of services for in-network claims. In turn, this associates greater network penetration with greater utilization of services to treat in-network claims, compared with out-of-network claims."

Missouri has highest network use at highest cost?

What is each state’s workers' comp medical network penetration rate? One of the more interesting states in this chart is Missouri.

Recently, J&L produced an article on the extremely high costs of medical care in the Show Me State. Missouri has the highest use of medical networks in the nation. Why are the costs so high if the Missouri medical network penetration rate is the highest?

My best estimate would be that the medical costs are so high in Missouri (304% above the median state) that the medical network price may still be high, and the use of the medical network is very high due to carriers and employers attempting to reduce the medical costs.

The chart and the one in the previous article on Missouri medical costs point this out exactly.     

The bubble charts on pages 28 and 29 of the NCCI study on workers' comp medical network penetration summarize the points very well.  

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.