2015 Second Injury Board Assessment Rate Increases to 5.95 Percent

The Office of Workers’ Compensation Administration’s Second Injury Board met Thursday, November 12th, 2015 and approved the assessment rate of 5.95 percent for the 2015 Second Injury Fund assessment, according to Second Injury Board Director Dan Lastrapes.

In emailed comments to Louisiana Comp Blog, Lastrapes stated that the rate is slightly higher than 2014’s rate of 5.75 percent, because the assessment base (defined as all reported medical and indemnity expenses, plus a portion of vocational rehabilitation costs) dropped from a 2014 level of $879 million to a 2015 level of $841 million. He added that assessment letters have been mailed to all carriers, group self-insured funds and permissibly self-insured employers that paid workers’ compensation benefits in 2014, and that the assessments are due and payable by December 24th of this year.

Gary Kern, a risk and claims management consultant with RiskSAVERS LLC in Metairie who specializes in Second Injury Fund reimbursement, said that the rise in the assessment rate seems justified given the drop in the assessment base, but that the lingering issue on workers’ comp payors’ minds is still the slow reimbursement schedule for approved Second Injury Fund claims.

“The good news is that the Louisiana Legislature is now allowing the Second Injury Board more access to the assessments,” Kern said, in reference to the $10 million appropriations increase successfully procured by the SIB in the 2015 Legislative Session this past Spring. “[However], the slow reimbursement rate suggests that the actual assessment should be higher than 5.95 percent…How many SIB assessment dollars are currently being held back? What assessment rate would be necessary if the SIB goal was to pay all claims in full over a three year cycle?”

On the positive side, Kern believes that the assessment process, and the SIF itself, conceptually promotes active management of claims. “Employers and insurers that effectively manage the cost of their claims pay less than employers who mismanage claims [under the assessment system]. An employer/insurer with an average claim cost of $10,000 will pay an assessment of $595 per case, while an employer or insurer with an average cost of $20,000 will pay $1,190 per case,” Kern explained.

But, Kern also notes that he has witnessed a pattern of decreasing approval rates from the Second Injury Board, which, coupled with the reimbursement rate issues, can be discouraging. “The proper use of the Second Injury Fund makes returning high risk workers to the workplace and retaining them an acceptable risk, but only if the SIB’s behavior rewards the hiring practice. The marked decline in the approval rate, the increase in the reimbursement threshold, and the slow reimbursement pattern (the October 2015 agenda shows that the SIB is still reimbursing claims from 1988) have an adverse net effect upon the employer community and may cause them to question the value of the program,” Kern said.

In reference to these oft-cited criticisms, Dan Lastrapes (who took the SIB Director post a couple of months ago) and Pauline Williams (former SIB Director, now Deputy Director of the Office of Workers’ Compensation Administration) have stated in the past that the agency is working constantly to address the schedules.

Williams, in a July interview with Comp Blog addressing the passage of the appropriations increase in HB1 explained, “Basically, [the Legislature] gave us the increase we desperately needed. It’s going to allow us to pay reimbursements much faster and help us get caught up.”

On catching up and moving the schedules forward, Lastrapes, also in separate interview, explained that the appropriations increase will be felt, especially as the SIB pursues new technological avenues to improve the submission, communication and reimbursement processes. “The RFP is out and we are within the vendor selection process of developing a software solution to make us more efficient and allow our stakeholders to interface with us electronically,” he said. “It will be a positive change in the way we do things and will mean shorter turnaround times and less handling of bulky paper submissions.”

The Louisiana Workforce Commission/OWCA is expected to provide further information and a potential timeline for those improvements soon.

 

Image Credit: Richard Harris Law Firm LLC

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