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Step-downs reduce workers’ compensation payments to encourage return to work: are they effective?
  1. Tyler J Lane,
  2. Luke Sheehan,
  3. Shannon E Gray,
  4. Dianne Beck,
  5. Alex Collie
  1. School of Public Health and Preventive Medicine, Monash University, Melbourne, Victoria, Australia
  1. Correspondence to Dr Tyler J Lane, School of Public Health and Preventive Medicine, Monash University, Melbourne, VIC 3004, Australia; tyler.lane{at}


Objective To determine whether step-downs, which cut the rate of compensation paid to injured workers after they have been on benefits for several months, are effective as a return to work incentive.

Methods We aggregated administrative claims data from seven Australian workers’ compensation systems to calculate weekly scheme exit rates, a proxy for return to work. Jurisdictions were further subdivided into four injury subgroups: fractures, musculoskeletal, mental health and other trauma. The effect of step-downs on scheme exit was tested using a regression discontinuity design. Results were pooled into meta-analyses to calculate combined effects and the proportion of variance attributable to heterogeneity.

Results The combined effect of step-downs was a 0.86 percentage point (95% CI −1.45 to −0.27) reduction in the exit rate, with significant heterogeneity between jurisdictions (I 2=68%, p=0.003). Neither timing nor magnitude of step-downs was a significant moderator of effects. Within injury subgroups, only fractures had a significant combined effect (−0.84, 95% CI −1.61 to −0.07). Sensitivity analysis indicated potential effects within mental health and musculoskeletal conditions as well.

Conclusions The results suggest some workers’ compensation recipients anticipate step-downs and exit the system early to avoid the reduction in income. However, the effects were small and suggest step-downs have marginal practical significance. We conclude that step-downs are generally ineffective as a return to work policy initiative.

Postprint link:

  • regression discontinuity
  • workers' compensation
  • return to work

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  • Correction notice This article has been corrected since it published online to reflect the correct link to the datat in Data availability statement.

  • Contributors TJL and AC conceived the study. TJL conducted analyses with input from LS and DB. TJL drafted the manuscript with input from all authors, and all authors approved the final manuscript.

  • Funding This study was funded by an Australian Research Council Discovery Project Grant (DP190102473), as part of the Compensation and Return to Work Effectiveness (COMPARE) Project, and by Safe Work Australia, a government statutory agency that develops national work health and safety and workers’ compensation policy.

  • Competing interests The authors previously received salary support from funding provided by the workers’ compensation systems investigated in this study.

  • Patient consent for publication Not required.

  • Ethics approval This study received ethics approval from the Monash University Human Research Ethics Committee (CF14/2995 – 2014001663).

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Data availability statement All data relevant to the study are included in the article or uploaded as supplementary information. Data and analytical code are available on Bridges:

  • Preregistration This study was pre-registered on the Open Science Framework