Physical Therapy Case Management Under New Jersey Workers Compensation


Spiraling physical therapy costs in New Jersey workers’ compensation system were recognized by a major client, New Jersey Manufacturers Insurance Company (NJM) and confirmed by a Workers’ Compensation Research Institute(WCRI)  study entitled; “Cost drivers in New Jersey” (1994). This program is described in detail in Physical Rehabilitation’s Role in Disability Management by David W. Clifton, PT, 2004


NJM retained the services of David Clifton, PT and his staff at Disability Management Associates/DMA to develop a physical therapy case management program that incorporated pre-authorization with a strong concurrent telephonic review component. The program was developed as a turnkey program to be turned over to NJM after a two-year period. NJM to this day continues to operate a successful turnkey physical therapy case management program. 

Most importantly, NJM physical therapy providers were approached by DMA on a non-adversarial basis and over the first several months earned the respect of providers because of the fair and balanced approach.  Our peer reviewers were viewed as “consultants” not, bill slashers. This led to a surprising finding, which will be discussed under “Results/Outcomes”  

Our approach to peer review resulted in a non-adversarial relationship between providers and reviewer/consultants. This observation was validated when David was invited by the New Jersey chapter of the American Physical Therapy Association/APTA to provide the keynote presentation at annual conference and he was subsequently invited to serve as APTAnj’s first ever Reimbursement  Specialist. David also authored a “Peer & Utilization Review” column for the national APTA appearing in PTMagazine. A number of these articles are published on APTA’s website under “Peer Review”. (

Physical therapy providers routinely called to speak with consultants about especially complicated cases and to inquire about evidenced-based practice standards. 

David’s peer review company from its inception in 1982 exercised a “true” peer-to-peer review process, long before most states and URAC requirements.  Another differentiator of our approach was the premium we placed on using the peer review process as an opportunity to educate all stakeholders regarding medically necessary physical therapy. Our consultants routinely provided treating therapists and claims adjusters with evidence-based data.

Although, the initial motive was to restrain cost, our consultants were unfettered in their case management responsibilities. NJM’s staff respected that we were the “physical therapy experts”, and did not interfere with the program.  Rather than use disability duration tables, a frequently employed “off-the-shelf”/”one-size-fits-all” approach, we examined each and every cases on its own merits or lack thereof.   

Our peer reviewer consultants were highly experienced with an average of 20 years in clinical practice and 5-12 years in peer review.

As in all peer review decisions, NJM possessed the final authority and fiduciary duty for care reimbursement decisions.


This two-year program resulted in the following cost savings without any impact on clinical outcome measures:

  1. Mean cost per physical therapy case $981 +/- 9.20 (this compared to $1,401.00 and $1,164.00 for similar cases in two national databases)
  2. Post-program physical therapy cases represented 12.9% of total medical costs compared with 17.3% pre-program
  3. Nearly 67% decrease in physical therapy cost per case
  4. Pre-authorized visits represented 64.8% of provider requested visits.
  5. Now for the most interesting finding of all; Although providers were authorized for an average of 18 visits per case; therapists used only 13.8 visits. Yes, this was an astounding finding to claims staff however, it was of no surprise and was actually predicted by our consultants for several reasons; the vast majority of physical therapists were well intended however, they were influenced by physicians who “over-prescribed”.  This program provided evidence that the “sentinel effect” serves to curb excesses especially, when evidence-based clinical decision making is required.   


  • Peer & Utilization Review can be conducted in a non-adversarial manner when providers and reviewer/consultants engage in data disclosure, reciprocal education, and employ evidence-based review methodology.
  • A non-adversarial peer review process potentially inures benefits to the patient/injured worker.
  • A reduction in workers compensation visits does not necessarily result in inferior clinical outcomes and in fact, may be serve to reduce the likelihood of psychosocial issues becoming disability prognosticators. 
  • A “true” peer-to-peer review process overcomes many obstacles in a utilization review and case management program.
  • Pre-certification of physical therapy provides benefits to both payers and providers when medically necessary and reasonable care is identified. Payers are assured that appropriate treatment is rendered/proposed and therapists avoid costly retrospective denials of care. 

For a more detailed examination of this overwhelmingly successful program please review Jan Tecklin’s chapter “Descriptive Study of Physical Therapy Case Management” in Clifton, David, Physical Rehabilitation’s Role in Disability Management, 2004, St Louis: MO, Elsevier/Saunders