Medical Cost Containment under Workers' Compensation

Abstract

Using data from an extensive sample of insurers' claim reports for the years 1979–87, the author evaluates the effectiveness of medical cost containment policies traditionally used in workers' compensation—namely, fee schedules and limits to choice of provider. She also examines the indirect impact on medical benefit costs of rules governing the availability and amount of workers' compensation income benefits. Contrary to the expectations of policy makers and the findings of some other researchers, the results of this paper suggest that medical cost containment policies and statutory provisions regulating levels of, and eligibility for, indemnity benefits do not effectively contain medical costs.