WORKERS’ COMPENSATION COSTS PER CLAIM IN LOUISIANA HIGHER THAN MOST OTHER STUDY STATES, FINDS NEW WCRI STUDY

CAMBRIDGE, MA, May 8, 2008 – Workers’ compensation costs per claim in Louisiana were 28 percent higher than the median of 14 study states for a similar set of 2003/2006 claims, according to a new study by the Cambridge, Mass.-based Workers Compensation Research Institute (WCRI).

All components of overall costs per claim were higher in Louisiana than in the other study states – medical payments per claim, indemnity benefits per claim with more than seven days of lost time, and benefit delivery expenses per claim.

The average medical payment per claim in Louisiana was 44 percent higher than the 14-state median for claims arising in 2003 with experience through the first quarter of 2006. This was largely due to higher-than typical prices for nonsurgical physician services and for hospital outpatient services, as well as more-frequent physician office visits and diagnostic tests, and more visits to physical/occupational therapists, according to another WCRI study, The Anatomy of Workers’ Compensation Medical Costs and Utilization in Louisiana, 6^th Edition.

Indemnity benefits per claim with more than seven days of lost time in Louisiana were 19 percent higher than the 14-state median for 2003/2006 claims. This was driven by longer average duration of temporary disability, as might be expected in a wage-loss state. Under a wage-loss benefit system, workers are compensated only if they experience wage-loss or loss of earning capacity, and most indemnity benefits are paid as temporary disability benefits. Permanent partial disability benefits are paid only for injuries listed on the state’s schedule.

Expenses per claim for delivering medical and indemnity benefits to injured workers in Louisiana were among the highest of the 14 study states, the WCRI study reported. One of the major drivers of this result was that the average payments per claim to defense attorneys in Louisiana were among the highest of the 14 states in the study. This suggests that Louisiana may have a more complex or lengthy dispute resolution process. Another factor was that the average medical cost containment expense per claim was 39 percent higher than the 14-state median.

Despite the higher average cost per claim in Louisiana, growth in total costs per claim moderated in the latest three study years, averaging about 2-4 percent per year after growth of 10-11 percent per year in the two previous years, the WCRI report said.

This finding of continuing, albeit slower, growth in cost per claim is consistent with the recent NCCI double-digit decrease loss cost filing for Louisiana because of falling claim frequency. That is, the number of claims per 1,000 workers in Louisiana has been falling, but the average cost per claim has been rising. A smaller number of claims means that overall benefits paid decreased, yet the average cost per claim was still increasing. The loss cost filings reflect the net effect of these two opposing trends.

The study, CompScope Benchmarks for Louisiana, 8^th Edition, provides a meaningful comparison of the workers’ compensation systems in 14 key states on key performance measures such as benefit payments and costs per claim, timeliness of payments, and defense attorney involvement by analyzing a similar group of claims and adjusting for interstate differences in industry mix, wage levels, and injury type.

The other states in the study were Arkansas, California, Florida, Illinois, Indiana, Maryland, Massachusetts, Michigan, North Carolina, Pennsylvania, Tennessee, Texas and Wisconsin.

The Workers Compensation Research Institute is a nonpartisan, not-for-profit membership organization conducting public policy research on workers’ compensation, healthcare and disability issues. Its members include employers, insurers, insurance regulators and state regulatory agencies in the U.S., Canada, Australia and New Zealand as well as several state labor organizations.