AcademyHealth Annual Research Meeting June 26, 2005 Tricia Johnson Rush University

1. Do Physicians in Managed Care Networks Respond to a Regulatory-Based Increase in Clinical Autonomy? The California Primary Treating Provider Experience AcademyHealth Annual Research Meeting June 26, 2005 Tricia Johnson Rush University Thanks to Alex Swedlow and the California Workers’ Compensation Institute for providing the data and helpful comments and discussion throughout the project.

2. Background Changes to the autonomy of the primary treating provider in California have come almost full circle between 1993 and 2005

3. Workers’ Compensation Health Care in the 1990s • Providers were required to • Offer first dollar coverage with no copayments or deductibles • Cover all costs of care to treat the injury • Allow workers to select their own providers after 1st 30 days • California workers’ compensation managed care networks • Included both HMO and PPO-type products

4. Research Goals • Examine whether managed care network and non-network providers responded differently to the regulatory-based increase in clinical autonomy • Explore whether the managed care-based constraints on utilization were binding • Characterize the types of services most likely to be affected by an increase in clinical autonomy

5. Methods • Random sample of claims from the California Workers’ Compensation Institute • Dates of injury between January 1993 and December 2000 • Closed claims with durations of medical treatment through December 2001 • Permanent disability claims • Back injuries only

6. Methods • Independent variables: • Legislative period (baseline, IRP, SRP) • Network care (75% or more network care) • Demographics, claim characteristics and job characteristics • Three time periods, based on 1st date of medical treatment Baseline 1993 –1994 Initial Reform 1995 –1996 Secondary Reform 1997 –2000 Full realization of 1993 reforms Full realization of appeals board decision

7. Estimation Methods • Service intensity • Non-linear system of equations to test for structural change in the quantities of services, using generalized methods of moments • Methods of treatment • Multinomial regression model to test for structural change

8. Office visits Surgery (with anesthesia) Diagnostic radiology Diagnostic testing – MRI, CT scan Medical-legal consultations Physical medicine Physical medicine – passive Physical medicine – active Chiropractic Other physical medicine treatments Physical medicine assessments Service Intensity Models • Predict service utilization for ten key service groups:

9. Methods of Treatment

10. Methods of Treatment Results NOTES: Changes significant at 0.05 or better

11. Service Intensity Results NOTES: changes reported if significant at 0.05 or better; NS = insignificant

12. Service IntensityNon-Network versus Network, PD Claims NOTES: changes reported if significant at 0.01 or better; NS = insignificant

13. Conclusions • Utilization increased for both network and non-network providers after the relaxation of regulatory constraints • But managed care networks appeared to mitigate the increases observed in non-network physicians – with no demand-side cost sharing • Treating non-network claims with SRP levels of network care in the SRP would have saved $7.5M ($1374/PD claim) • Treating non-network claims with Baseline levels of network care would have saved $11.5M ($2122/PD claim)

14. Conclusions • Increase in the use of chiropractic care was largest change in treating occupational back injuries • Non-network and network claims were approximately 25 percentage points more likely to receive chiropractic treatment method • Changes in the quantities of services were pervasive • Physical medicine procedures increased consistently • Changes large in absolute and percentage terms

15. Limitations • No information on changes in the managed care networks’ utilization management procedures during the time period • No controls for different types of managed care plans • All back injuries – no controls for the types of back injuries and crude measures of severity