Louisiana State Agencies’ Workers’ Comp Costs Rising

The number of workers’ compensation claims filed by Louisiana state employees dropped by nearly one-third over the last eight years, but claims costs for state agencies continued to surge higher, according to an audit released Monday.

Legislative Auditor Daryl Purpera’s office reviewed claims and costs for state employees from the 2006 through 2013 budget years. The audit shows that even as the number of claims fell 30 percent during the period, the workers’ compensation costs grew from $44.3 million a year in 2006 to $66.2 million eight years later, a more than 49 percent jump.

“We found that the high cost of workers’ compensation is due, in part, to unlimited temporary total disability benefits, an increase in the amount of time workers are off the job, the use of an outdated fee schedule to reimburse medical providers, the lack of a prescription drug formulary and a costly dispute resolution process,” auditors wrote.

Louisiana’s rules governing workers’ compensation are looser than other states’ regulations, according to the audit. Purpera’s office recommended shrinking state agency costs for workers’ compensation by adopting policies used by private businesses and reworking the reimbursement schedule.

Jindal administration officials agreed and say they have been working to put those changes in place.

Louisiana’s labor department, known as the Louisiana Workforce Commission, oversees workers’ compensation, which pays for lost time at work, medical costs and expenses related to managing and litigating claims. The audit says the cost of each of those categories grew for state government over the years it reviewed.

Among several issues outlined, the audit says Louisiana hasn’t regularly revised the reimbursement rates paid to doctors and other health care providers. The workers’ compensation program pays higher reimbursement rates than Medicare.

Meanwhile, Louisiana allows reimbursements outside of the existing fee schedule for outpatient procedures, so the charges are higher than what other states or commercial insurance cover, according to the audit.

Curt Eysink, executive director of the Louisiana Workforce Commission, said in a written response that his agency is working to update the fee schedule – and require that outpatient costs follow that schedule.

In addition, Louisiana’s workers’ compensation program doesn’t contain the prescription drug limitations that most health care plans use to control costs, and the audit says lawmakers may want to consider requiring the use of such limitations.

Auditors suggested workers’ compensation costs for state agencies could be lowered if the departments required drug testing when an employee is injured on the job. State law doesn’t allow compensation if the worker was intoxicated at the time of the accident.

The Jindal administration said it has started requiring post-accident drug testing by state agencies, as the audit recommended. “We expect a positive impact on our costs over time,” Bud Thompson, state risk director, wrote in a response to the audit.