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Related Experiment Videos

Workers' compensation cost shifting: an empirical study.

C Zwerling1, J Ryan, E J Orav

  • 1Boston Postal Service Medical Unit, MA.

American Journal of Industrial Medicine
|January 1, 1991
PubMed
Summary
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Health maintenance organizations (HMOs) do not overdiagnose work-related injuries. This study found similar injury rates but lower medical costs for HMO enrollees compared to fee-for-service plans.

Area of Science:

  • Occupational Health
  • Health Services Research
  • Healthcare Economics

Background:

  • Concerns exist regarding potential overdiagnosis of work-related injuries by health maintenance organizations (HMOs) to inflate income.
  • This study investigates the financial and incidence implications of HMO enrollment versus traditional fee-for-service plans for work-related injuries.

Purpose of the Study:

  • To compare the incidence of work-related injuries and associated costs between employees enrolled in an HMO and those in a fee-for-service plan.
  • To determine if HMOs engage in cost-shifting or overdiagnosis practices for work-related conditions.

Main Methods:

  • A comparative study of Workers' Compensation claims was conducted.
  • 2,176 Boston postal employees in an HMO were compared with 3,473 employees in a fee-for-service plan.

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  • Analyses controlled for age, gender, job classification, injury type, and employment duration.

    • Main Results:

    • No significant difference in injury incidence was observed between HMO (5.93%) and fee-for-service (6.25%) enrollees.
    • Average medical costs were substantially lower for HMO enrollees ($475) compared to fee-for-service enrollees ($838, p = 0.018).
    • Total costs showed a trend towards lower expenses for HMO enrollees ($109) versus fee-for-service ($1388, p = 0.063), with no evidence of cost shifting.

    Conclusions:

    • The study found no evidence that HMOs overdiagnose work-related injuries.
    • HMOs appear to provide less expensive medical care for injured postal workers compared to fee-for-service plans.
    • Findings suggest that HMOs can offer cost-effective care for occupational injuries without compromising injury reporting.