Louisiana has among the highest workers’ compensation costs per claim in the nation, and those costs are rising at a faster rate here than in other states, according to a recent Workers Compensation Research Institute study.
The WCRI study and local workers compensation groups point to a few reasons for Louisiana’s high costs: the state’s outdated fee schedule and increasing hospital outpatient payments as well as Louisiana’s high rate of attorney involvement, which prolongs the duration of claims and increases costs.
“LUBA operates in other states so we see firsthand with neighboring states—Mississippi, Texas and Arkansas—attorney involvement is greater in Louisiana,” says LUBA Workers’ Comp COO Michael DePaul. “Clearly that has driven up costs and led to claims staying open a little longer than in other states.”
DePaul and LUBA claims manager Russell Michiels also say rising costs are a result of Louisiana’s outdated workers compensation fee schedule, which sets rates for health care provider reimbursement. The fee schedule has not been updated in decades. What’s more, Louisiana has high rates of diabetes and obesity, which also drive up duration and costs.
The WCRI study, which included 18 states, found that total costs per claim with more than seven days of lost time were highest in Louisiana, and the average total cost per workers’ compensation claim in Louisiana has risen from 4% to 10% per year since 2012.
“The 4.4 percent annual growth rate in Louisiana from 2012 to 2016 for claims at 12 months of experience was faster than the rate in the median state at 2.9 percent per year,” said Ramona Tanabe, WCRI’s executive vice president and counsel, in a news release.
Increases occurred in the three major cost categories: medical payments, indemnity benefits and benefit delivery expenses. The WCRI study included the following findings:
- Growing hospital outpatient payments were a main driver of higher-than-average medical payments per workers’ compensation claim in Louisiana.
- Benefit delivery expenses in Louisiana were among the highest of 18 states, notably for payments to defense attorneys.
- Duration of temporary disability accounted for part of Louisiana’s indemnity benefits per claim, increasing about one week since 2011 at all claim maturities. Duration was nine to 16 weeks longer in Louisiana than in other states.
- Lump-sum settlements were also a factor in increasing indemnity costs per claim.
Years of reporting by WCRI and the National Council on Compensation Insurance (NCCI) have exposed Louisiana’s problem with rising costs, says LCTA Workers’ Comp Executive Vice President Troy Prevot, adding that disability duration is driving the trend.
“The longer an employee is out of work the more money is spent, but the employee doesn’t benefit from increased duration,” Prevot says. “The concern with this report is we are seeing an uptick in the trend, which will ultimately cost more to do business in Louisiana and no improvement in worker healthcare. There’s no reason Louisiana should rank this high with continued trends in decreased injury rates, which is well documented.”