Louisiana: Costs per claim show fastest growth in 16-state WCRI study

Louisiana has the dubious distinction of having the fastest growing costs per workers' comp claim from 2007 to 2009 in a multistate study.

The Massachusetts-based Workers Compensation Research Institute said a variety of factors likely caused the increases.

"Louisiana workers were off the job longer than in other wage-loss study states, the major factor in higher-than-typical indemnity benefits per claims," the report says. "The total indemnity benefits per claim received by the average worker was higher than in other states, even though the workers' weekly benefits were capped at lower levels in Louisiana than in other states."

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The findings are included in WCRI's CompScope Benchmarks 12th edition. The annual analyses provide comparisons for more than 60 system performance measures for 16 large states.

Among the key points reported for Louisiana were:

Costs per claim per year increased 11 percent with increases in all major components -- medical, indemnity, and expenses per claim.
Indemnity benefits rose nearly 11 percent per year.
Medical payments per claim during the period increased by 26 percent compared to about 16 percent in the typical state studied.
Benefit delivery expenses per claim were among the highest of the states studied, especially defense attorney payments.
Medical cost containment expenses and medical-legal expenses were higher than the average state studied.

Indemnity costs. The increase in the average duration of temporary disability of nearly two weeks accounted for the overall 23 percent increase in indemnity costs, according to the authors. The duration was larger than in the other states with a wage-loss benefit structure.

An increase in the percentage of claims with lump-sum settlements, as well as an 8 percent increase in the average lump-sum settlement amount also contributed to the indemnity cost increase. The researchers said they found a large increase in the average lump-sum amount in 2009, but not in the typical or median case, "suggesting a change in the mix of lump sums. We did find a change in the mix, notably an increase in the share of lump sums greater than $50,000."

Medical costs. Medical costs per claim were 14 percent higher in Louisiana compared with the median state for 2007 claims with more than seven days of lost time, the authors said. Among the factors was that the state had the highest prescription payments per claim due to higher utilization and higher prices paid.Previous research had also reported that Louisiana had more frequent narcotics use and at a higher amount than typical.

Louisiana stakeholders are somewhat hopeful of seeing reduced costs for payers and improved medical care for injured workers with the recent implementation of evidence-based medical treatment guidelines. Earlier studies had suggested higher medical payments per claims resulted from higher utilization and/or higher prices paid for some frequently delivered services.

Additional expenses. Defense attorney payments per claim with more than seven days of lost time were the highest among the study states with an average of about $7,100 per claim for cases with defense attorney payments greater than $500, the report said. "This suggests that dispute resolution may be more complex or more prolonged in Louisiana compared with other study states."

Read more at the WorkersComp Forum homepage.

January 12, 2012

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