S.2364 (Onorato)


S.2364 (Onorato)


Workers' Compensation Medical Diagnostic Networks



The Business Council opposes S.2364, which would allow “any medical provider authorized by the workers' compensation board to treat injured workers” to provide diagnostic testing “under all circumstances” if they agree to a carrier's “published fee.” 

We have several reasons for opposition:

  • This bill reverses a cost-savings component of the 2007 comp reform act, which codified the ability for carriers to establish diagnostic networks - a reform valued at between $15 million and $30 million per year in savings.  These savings are based on negotiated fees, and achieve savings through volume discounts – discounts that would be reduced if the provider's contract with a carrier was open to any diagnostics provider.
  • In addition to negotiated cost savings, diagnostic networks provide important quality control and utilization review abilities that would be impaired by this legislation as well.
  • It is important to note that the 2007 reform act did not restrict claimant choice for medical treatment, and they can continue to choose any Board-authorized provider for medical treatment.  The medical provider chosen by the claimant will be responsible for reviewing and interpreting diagnostic tests, and basing medical care on their assessments.
  • We are also concerned that medical providers will have a conflict of interest in performing diagnostic tests when they have a financial interest in conducting tests, leading to an increase in the number of unnecessary tests performed.  In addition to the financial conflict of interest, the treating physicians are submitting evidentiary reports on behalf of the claimants, and thus, the physicians may be compromised in their objectivity with respect to the interpretation of these tests.
  • The bill refers to “carrier's published fee for [diagnostic] services.”  Neither insurance carriers nor self-insured employers publish fees for services.  Diagnostic networks are established on a contractual basis.  This bill seems to impose a new obligation for the publication of contractual rates for diagnostic services.

In summary, The Business Council sees no compelling policy reason to undue this important cost savings measure included in the 2007 reform act.  Mandatory networks save reduce costs in the workers' compensation system, produce more objective test results, and remove the financial incentive for treating physicians to perform unnecessary tests.

For these reasons, The Business Council opposes approval of S.2364.