Louisiana’s Reimbursement Scheme Drives High Medical Costs

Your employer or your employer’s workers’ compensation insurer are obligated to cover any medical care for your workplace injury.  In addition to medical expenses, any out-of pocket expenses, including mileage and prescriptions, must be reimbursed.  For outpatient services, however, Louisiana law sets out a specific reimbursement scheme that has contributed to driving high medical costs following a workers’ compensation award.

Costs Have Stabilized at a High Level

Recently, the Assistant Secretary of Labor for Occupational Safety and Health commented on the steady nationwide decrease of workplace injuries and illnesses over the last few years.  Nevertheless, medical costs for workers’ compensation remain higher in Louisiana than in other states.  This October, the Workers’ Compensation Research Institute updated its Medical Benchmarks for Louisiana, which noted that Louisiana’s workers’ compensation medical costs soared with an unusually high 8% growth over the five years prior to 2011.

Despite this growth, the Institute reported that Louisiana medical payments per claim stabilized in 2012, albeit remaining at a high level.  Hospital outpatient payments per service decreased, and medical treatment guidelines may have contributed to decreasing the number of visits per claim.  Overall, medical payments per claim decreased for both hospital and non-hospital outpatient care, but hospital outpatient care became a more significant percentage of total medical payments per claim.

Even though Louisiana medical costs have stabilized, outpatient payments per claim still average around $8,075, which is $3,000 higher than the mean of the other states studied, and $6,000 higher than the state with the lowest average payment.  Louisiana also claimed a higher number of prescriptions per claim, and a higher price per pill, resulting in more than twice the median prescription cost per claim.

Percentage-Based Reimbursement Drives High Costs

The report identified Louisiana’s hospital outpatient reimbursement scheme as a key driver of high medical costs.  In Louisiana, employers only have to pay the “usual and customary” amount for outpatient charges, as opposed to the amount actually charged.  Fortunately, Louisiana also provides a fee schedule that, in practice, stipulates that 90% of the billed charges should be reimbursed.

One result of this scheme is that employers are pressured into reimbursing at least 90% of billed charges, or risk litigation.  In other words, if an employer refused to reimburse 90% of your workers’ compensation outpatient charges, your experienced workers’ compensation attorney can help ensure that the amount your employer paid reflects the “usual and customary” charges.

However, another result of this reimbursement scheme is to drive up the number of medical payments per claim.  Because Louisiana employees receive 90% of outpatient costs for each visit, the scheme incentivizes more visits.  In comparison, a recent study found that medical costs were lower in jurisdictions where the employer was required to pay a fixed amount per claim.  The fixed-amount system does not incentivize increased visits, and the lack of vague guidelines like “usual and customary” discourages litigation.

Many view outpatient procedures as a lower-cost alternative to inpatient procedures.  However, in Louisiana, outpatient costs remain high, along with prescription costs.  An experienced New Orleans workers’ compensation attorney can help you ensure that your employer has reimbursed your medical expenses to the fullest extent that the law requires.

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