Disability Risk Management and Postinjury Employment of Workers With Back Pain

• Date: 01 March 2012
• DOI: http://doi.org/10.1111/j.1540-6296.2011.01201.x
• Published date: 01 March 2012

Risk Management and Insurance Review

C

Risk Management and Insurance Review, 2012, Vol.15, No. 1, 35-55

DOI: 10.1111/j.1540-6296.2011.01201.x

FEATURE ARTICLES

DISABILITY RISK MANAGEMENT AND POSTINJURY

EMPLOYMENT OF WORKERS WITH BACK PAIN

William G. Johnson

Richard J. Butler

Marjorie L. Baldwin

Pierre Cˆ

ot´

e

ABSTRACT

Weanalyze the outcomes of occupational back pain among four large employers

that use one or more of the following disability management practices: aggres-

sive return to work, claims management, medical management, or time-limited

job accommodations. Outcomes measured at 6 and 12 months postonset in-

clude: duration of initial work absence and the probability of returning to stable

employment. Employment outcomes are better in firms with more proactive

return-to-work policies than in firms with more restrictive policies. We devise

a statistical test for attrition bias and conclude that sample attrition does not

significantly alter our results.

INTRODUCTION

Occupational back pain is one of the most prevalent and most costly work-related

health conditions. In 2005, back claims accounted for 21 percent of 1.2 million workers’

compensation lost-time claims. (BLS, 2006). Approximately 83 million workdays are lost

annually because of back pain (Druss et al., 2002). A recent study of the health-care

costs of four large corporations finds back and neck pain are second only to cancer in

costs of employer-paid medical claims ($170,000 per 1,000 employees), and first when

productivity costs are included ($525,000 per 1,000) (Loeppke et al., 2007).

William G. Johnson works at the Department of Biomedical Informatics, ASU Biomedicine, Ari-

zona State University,phone: 602-496-2010; fax: 602-496-2020; e-mail: william.g.johnson@asu.edu.

Richard J. Butler works at the Department of Economics, Brigham YoungUniversity. Marjorie L.

Baldwin works at the School of Health Management and Policy, W. P. Carey School of Business,

Arizona State University. Pierre Cˆ

ot´

e works at the Toronto Western Research Institute, Toronto

WesternHospital. This research was supported by a grant, with full freedom to publish, from the

National Chiropractic Mutual Insurance Company,a national insurer of doctors of chiropractic.

Industry and Institutional funds were also received in support of this work; we are especially

grateful to the Office of the Vice President for Research and Economic Affairs, Arizona State

University, as well as the College of Family, Home, and Social Sciences at Brigham Young Uni-

versity. We thank the referees for their insightful comments and suggestions. The data and SAS

programs used to generate these results are available from the correspondingauthor. This article

was subject to double-blind peer review.

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36 RISK MANAGEMENT AND INSURANCE REVIEW

Finding ways to reduce the heavy cost burden of occupational back pain is challenging

because there is no consensus on optimal treatments or risk management strategies. Em-

ployers use a variety of strategies to minimize work absences but there is no systematic

evidence regarding which strategies are effective in improving long-term employment

outcomes.

This study analyzes the outcomes of occupational back pain among four large employers

that use different strategies to manage workers’ compensation claims. The results are

based on a prospective analysis of incident occupational back claims between January 1,

1999 and June 30, 2002 among workers in 37 states. Workers were interviewed upon

filing of a claim and followed for up to 1 year. The outcomes of interest are duration of

initial work absence following onset of back pain, and employment stability after return

to work.

The results suggest that the employment outcomes of workers with occupational back

pain are better in firms with proactive disability risk management strategies than work-

ers from firms that primarily rely on simply managing medical care. The differences

persist for up to 1 year after filing a claim. In other words, differences in disability man-

agement strategies can, all else equal, significantly affect the productivity losses and

disability costs associated with occupational back pain.

BACKGROUND

Workers’ compensation insurance pays the health-care costs of work-related illnesses

and injuries, with no deductibles or copayments, and pays workers a portion of lost

wages during injury-related work absences. Benefit payments for lost work time begin

after a waiting period that varies from 3 to 7 days across states. Claims with work

absences shorter than a state’s waiting period are medical-only claims. Workers with

medical-only claims receive coverage for health-care expenses but do not receive cash

benefits. Claims with benefit payments for lost work time are known as indemnity claims

and can be either temporary or permanent disability claims, depending on the extent of

residual impairment.

State workers’ compensation laws are based on the early 20th-century work environ-

ment in which covered injuries were typically caused by well-defined accidents in the

workplace. Back pain is more similar to chronic health problems than to injuries be-

cause it can be progressive and is often difficult to associate with a discrete event. The

difference is reflected by the fact that a substantial proportion of workers with lost-time

back claims experience one or more spells of work absence after an initial return to work

(Butler et al., 1995; Baldwin et al., 1996; Johnson et al., 1999). Within this multiple-spell

framework of back pain, health care can alleviate pain and improve functionality, but

returns to work and the maintenance of stable employment are contingent on a number

of other factors, including the disability management policies of the employer.

Social science research on work-related back pain has focused on the influence of work-

ers’ characteristics and the disincentive effects of workers’ compensation payments on

lost work days but relatively little is known about the effects of employers’ disability

management policies on postonset employment. (Schultz et al., 2002; Hogg-Johnson and

Cole, 2003; Schultz et al., 2004; Butler et al., 2007).

The strategies analyzed in this article include aggressive returns to work policies, man-

agement of medical care, claims management, and job accommodations. Although the