MPN Means Managed

Medical Provider Networks, introduced into the California workers' compensation system around 2003, are one form of managed care.

The purpose of MPNs was to reduce medical treatment costs.

But like anything "managed," success depends upon the actual management.

In particular management for the right reasons.

In the case of MPNs in workers' compensation, management just to reduce medical costs isn't a sufficient end goal because the medical component of workers' compensation affects all of the other components such as disability, indemnity, return to work, etc.

The California Workers' Compensation Institute has just released a report on MPNs that essentially concludes that well managed MPNs work, and those that aren't, don't.

Image from Total Managed Care, Inc.

The study reviewed claims pre-MPN (the Preferred Provider Organization model period), the period of transition around 2003-04, and then the period when full MPN implementation was realized (Accident Year 2009 and beyond).

In summary the researchers found:

• Overall, network utilization increased from 55.4 percent in the PPO model period (AY 2000 – AY 2002) to 79.5 percent in the full MPN period (AY 2009 – June AY 2011), while for indemnity claims it more than tripled from 24.4 percent to 77.2 percent.

• The proportion of all network claims with attorney involvement increased from 12.2 percent in the PPO period to 17.4 percent in the full MPN period.

• The claim closure rate for network claims measured at 12 months post-injury decreased from 72.7 percent in the PPO period to 61.2 percent in the full MPN period.

• The percentage of network claims with at least one opioid prescription increased from 39.1 percent in the PPO period to 54.5 percent in the full MPN period.

• Differences in average risk-adjusted medical payments between network and non-network claims varied greatly by region, ranging from no difference in Los Angeles County to a 20 percent difference in San Diego County in the full MPN period.

• Average risk-adjusted medical payments on indemnity claims at 24 months post injury were 16 percent less for network claims than for non-network claims in the PPO period, but were only 3 percent less in the full MPN period. 

• Average risk-adjusted medical payments on indemnity claims with attorney involvement were 14 percent less for network claims than non-network claims in the PPO period, but were 2 percent more in the full MPN period.

• Average risk-adjusted medical payments on network claims with opioids were 16 percent less for network claims than non-network claims in the PPO period, but were 20 percent less in the full MPN period.

So, while the use of networks to medically manage treatment of work-related injuries has fulfilled the legislative intent to encourage network use (which increased from 55 percent of work injuries prior to MPN implementation to 80 percent in the fully implemented MPN period), over time the MPNs has not lowered the cost of medical care.

But this is on an overall model assessment. The researchers point out that there was considerable variation across the individual MPNs sampled, and that just as many networks had lower cost per claim outcomes as higher cost per claim outcomes.

What seemed to affect many MPNs are access requirements controlled by law and regulation - the more geographically diverse MPNs have a more difficult time fulfilling those mandates, and, ergo, experience greater diversity in outcomes.

In other words, the success of any one single MPN is highly dependent on how well managed it is - cutting medical treatment payments is not, and can not be, the sole reason for an MPN. Other outcomes need to be considered when a claims payer goes shopping, or decides to create their own, MPN.

This is evident in the findings that claim closure rates with MPNs takes longer, and that opioid prescription was higher - these are findings that are contradictory to good claims management and positive outcomes.

CWCI's Research Note, “PPO to MPN: Impact of Physician Networks in the California Workers’ Compensation System,” is available to members and subscribers in the Research section of the CWCI website.

WorkCompCentral will have a more detailed story on the report, with commentary, in the coming days.