Reorganizing Care: Workers' Compensation

An Example from Washington State Workers' Compensation

July 9, 2009


By Gary M. Franklin, MD, MPH

Crossing the Quality Chasm, the 2002 report from the Institute of Medicine (IOM), identified the most serious quality problems facing the United States' health care system.1 This report focused on the quality side of the value equation: The US is spending 50 percent more than the next closest country on health care, yet it is not reaping the benefit in terms of key measures of improved health status (for instance, lifespan, infant mortality, etc.). The report identified in particular the need to make evidence-based decisions as to which health care services are worthwhile. The estimate is that up to one-third of the health care currently purchased in the US is not improving quality of life or health outcomes—and some purchased services may be causing harm.2 Such issues as comparative effectiveness are now prominent in the Obama administration's efforts on both health care reform and stimulus-related research.

One of the key quality problems identified in the IOM report relates to an absence of care coordination, particularly for management of complex or chronic diseases. Too often, one provider doesn't know what the other provider is doing, and important details fall through the cracks. This problem is heightened by the dearth of use of electronic health care records across health care systems and providers. Other problems relate to severe delays (e.g., "Your electrodiagnostic test for possible carpal tunnel syndrome will be scheduled eight weeks from now. . . .") and inefficiencies in service delivery, often made worse by insurance company barriers related to utilization review.

Washington state (WA) workers' compensation program can innovate in ways other states cannot, because it is a single payer system with extensive computerized data. This allows for program evaluation and outcomes research. In addition, as a public system, its values are balanced by fair application of the laws and regulations to the interests of both business and labor.

Figure 1 below summarizes the key health care issue for workers' compensation systems. Approximately five percent of injured workers account for 80 percent of the cost and disability in the system.3 Of those workers enrolled in the system, the vast majority become disabled following a non-catastrophic injury. Thus, a relatively minor injury can lead to sustained disability. This then leads to lost productivity, oftentimes the breakup of social networks and marriage, and a spiral of decline. In addition, most patients become disabled due to chronic pain. Many also end up on Social Security Disability. The magnitude of this loss is enormous to both the individual and to society, a public health problem of the first magnitude.

Figure 1: Disability Prevention is the Key Health Policy Issue
Adapted from Cheadle et al.

Disability prevention (secondary prevention) should be made the first priority of workers' compensation systems in order to address this problem. It is likely that at least half of the long-term disability in the system is preventable. The risk factors leading to disability for low back injuries and carpal tunnel syndrome have been identified in population-based prospective studies.4,5 Contrary to older psychosocial models of disability, the data suggests that factors both intrinsic and extrinsic to the worker are principally responsible. The key extrinsic dimensions of risk include factors specific to the health care system (e.g., delays in treatment), to administrative systems (e.g., inappropriate claim rejection), and to job-related factors (e.g., no offer of job accommodation). Washington has focused on innovations related to incentivizing improved health care delivery in the WA workers' compensation system with the principal goal of preventing disability.

Centers for Occupational Health and Education (COHEs)

The Washington State Department of Labor & Industries (DLI), in partnership with business, labor, and evaluation experts from the University of Washington, designed and implemented a new pilot program for delivering "best practice" occupational health care to injured workers for the first 12 weeks following the injury.6 DLI (the insurer) is funding but not directly participating in the community-based health care systems that are incentivized to deliver higher quality occupational health care. All of the important functions (health care leadership, care coordination) of the Centers reside within the health care system. The workers' compensation agency provides the financial and nonfinancial incentives, but all the health services are provided from within the health care system. This is contrary to the usual insurance model where nurse case management, at substantial hourly expense, is imposed on the health care delivery system. There is no evidence that such imposed case management improves health care outcomes.

In the developmental phase of the program, quality indicators for three key conditions (low back, carpal tunnel, fractures) were developed through a formal Delphi process using panels of clinical experts. Submission of the Report of Accident within two business days, for example, was aimed at improved timeliness of appropriate care immediately after injury. Delays in receipt of care, or in receipt of benefits, relative to the disability curve in Figure 1, can substantially contribute to prolonged disability.7 Similarly, payment for proper communication between the attending provider and the employer (e.g., phone call, activity prescription) can substantially contribute to earlier return to work and prevention of long-term disability. In recent surveys of participating COHE physicians, many have stated that the care of the injured worker in the community actually now feels more like a team approach, and that they would look forward to caring for more injured workers in the future.8

More detailed quality indicators related to carpal tunnel syndrome (CTS) were also developed. Table 1 summarizes the indicators; they would be applicable to both primary care and neurology practitioners, for which additional payment incentives could be developed by insurers. These quality indicators of care for CTS have now been incorporated into a treatment guideline for the care of workers with CTS in WA state workers' compensation.

The overall COHE effort led to substantial disability prevention and reduced cost in the workers' compensation system. Among cases with any lost work time, disability was reduced by approximately 17 days/case, and costs were reduced (medical and disability) by approximately $450/case in one year. Over 5,000 days disability/1,000 workers treated were avoided from the COHE approach. With a three-to-four year follow-up, the amount saved ballooned to nearly double the amount of savings seen at one year. The longer term follow-up also saw quite dramatic reductions or improvements in other correlates of long-term disability in the system, such as the frequency of permanent total disability.9

Table 1: Occupational Health CTS Quality Indicators

Clinical care action


Early screen for presence/absence of CTS

First health care visit

Documented history of physical work and nonwork exposures and determination of work relatedness

First or second health care visit

Communication with employer re: return to work via Activity Prescription Form, provider's return-to-work (RTW) form, or phone call

Each visit

Referral to specialist if no RTW or clinical improvement

If > two weeks of time loss occurs or no improvement of symptoms within six weeks

Specialist visit

Within one to three weeks of referral

Nerve conduction studies

If the diagnosis of CTS is being considered, schedule studies ASAP; if time loss will extend beyond two weeks, or if surgery is being considered, these tests are required

Referral for assessment of RTW impediments

If time/loss four to six weeks

Surgical decompression

Within four to six weeks of determination of need for surgery

Ergonomic assessment of worksite

Within two weeks of first health care visit to

  1. assist with work modification and
  2. determine if physical hazards may put other workers at risk for CTS

* The Timeframe column is anchored in time from claim filing, or first provider visit related to CTS complaints.

"A" Docs and Specialty Incentives

The WA DLI has also developed two additional pilots: one related to nonfinancial incentives in utilization review, and a second related to financial incentives for improved surgical practice. The innovative utilization review project rewards surgeons requesting nonspinal surgical procedures who have had a two-year track record of 100 percent compliance with DLI surgical treatment guidelines. These "A" surgeons are allowed to submit requests for procedures in a much more efficient manner, receiving approval within four hours without any requirement for additional paperwork. Retrospective review of a random sample of cases is performed annually, and, since the program was initiated five years ago, none of the "A" surgeons has lost his or her status.

A second pilot aimed at improving outcomes of surgical care for WA injured workers provides incentives for a suite of six best practices and efficiencies.10 The key best practices relate to timeliness of service and to pre-surgical planning for reactivation and return-to-work following surgery.

Incentivizing Care in the Future

It is clear that reorganizing care on a community-wide basis with appropriate financial and nonfinancial incentives, and with care coordination as a critical component, is one of the most viable mechanisms to improve quality, efficiency, and outcomes for complex conditions.11 Longer term plans in WA workers' compensation include developing similar incentives to improve quality for workers with chronic pain, both in communities and through multidisciplinary pain centers.


  1. Institute of Medicine, Committee on Health Care in America. Crossing the quality chasm: a new health system for the 21st Century. Washington, DC: National Academy Press; 2001. Accessed 2/15/2009.
  2. Schoen C, Guterman S, Shih A, et al. Bending the Curve: Options for Achieving Savings and Improving Value in U.S. Health Spending. The Commonwealth Fund, December 2007. Accessed 2/15/2009.
  3. Cheadle A, Franklin G, Wolfhagen C, et al. Factors influencing the duration of work-related disability: a population-based study of Washington State workers' compensation. Am J Public Health 1994; 84: 190-196.
  4. Turner JA, Franklin GM, Fulton-Kehoe D, et al. ISSLS Prize Winner: Early Predictors of Chronic Work Disability: A Prospective, Population-Based Study of Workers with Back Injuries. Spine 2008; 33: 2809-2818.
  5. Turner JA, Franklin GM, Fulton-Kehoe D, et al. Early predictors of chronic work disability associated with carpal tunnel syndrome: a longitudinal workers' compensation cohort study. Am J Ind Med 2007; 50: 489-500.
  6. Wickizer TM, Franklin GM, Mootz RD, et al. A communitywide intervention to improve outcomes and reduce disability among injured workers in Washington State. Milbank Quarterly 2004; 82; 547-567.
  7. Stover B, Wickizer TM, Zimmerman F, et al. Prognostic factors of long-term disability in a workers' compensation system. J Occup Environ Med 2007; 49: 31-40.
  8. Wickizer TM. Report on the health care provider, office staff and employer focus groups. The Occupational Health Services Project. July 2008. Accessed 2/16/2009.
  9. Wickizer TM. Long-term follow-up of original COHE cohorts. The Occupational Health Services Project. Accessed 2/16/2009.
  10. The Ortho Neuro Quality Pilot. Accessed 2/15/2009.
  11. Bodenheimer T, Fernandez A. High and rising health care costs. Part 4: can costs be controlled while preserving quality? Ann Int Med 2005; 143: 26-31.

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Author Disclosure

Within the past five years, Dr. Franklin has received a grant from the National Institutes of Health (NIH).