Texas: Network Report Card Published by the Division for 2010




   By Stuart D. Colburn, Shareholder, Downs Stanford

The Division published its network report cards for 2010.  Not surprisingly, non-network medical care continued to be less expensive than medical care delivered through a network.

Direct contract networks, currently offered to potential subdivisions only, outperform all other networks across the board and may offer a model for all employers.

The 2010 report card conclusions included:

   All networks have higher medical utilization than non-networks.

   Private networks have worse patient satisfaction scores than non-networks.

   Networks have poor access to medical care when compared to non-networks.

   Somewhat surprisingly, most private networks had worse return-to-work results than non-networks.

In 2010, the average overall medical costs per claim six months after the injury for non-networks is $2,217.  The most expensive network (Coventry) experienced average medical costs of $3,530, 37% higher.  The median overall medical costs per claim six months post injury is $565 for non-network claims.  The Coventry network had the overall highest median medical costs per claim six months post injury.

Professional medical costs generally increased for network and non-network claims.  The average hospital costs per claim have improved in non-network and most networks.  Pharmacy costs have increased for non-network and some of the networks.  Many networks experienced a decrease in the average pharmacy costs per claim six weeks after the injury from the 2009 study.

Networks have higher utilization of pharmaceutical services and professional medical services than the non-network medical claim six months after injury.

Higher costs and higher utilization are surprising since the Legislature created networks in part to reduce medical costs.

Non-networks generally outperformed networks in getting and keeping claimants working.  Again, networks were expected to fare much better.

One type of network is outperforming all others.  The state legislature allowed public entities to privately contract with healthcare providers.  The Alliance, a group of intergovernmental pools (including Texas Association of School Boards, Texas Association of Counties, and Texas Municipal League) seems to achieve a balance of reduced costs, better medical outcomes, better return to work, and patient satisfaction than their network brethren.  Some suggest the legislature should allow other types of employees to benefit from the same rules governing networks for political subdivisions.  Privately contracting with healthcare providers seems to be working for the Alliance (it also seems to be working for non-subscribers).  Other political entities such as the state and institutions of higher learning are studying the Alliance's success.  Perhaps, large employers or self-insureds would greatly benefit from the direct contract model.  To date, the report card makes it clear that joining a network does not reduce medical costs, increase return to work, or improve patient satisfaction.  Employers may ask the legislature to expand on the success the Alliance has experienced.


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