Workers’ compensation is one of the most highly-regulated lines of insurance. This session at WCI’s 2016 Workers’ Compensation Educational Conference reviewed how these state variations are impacting employers today and some of the solutions being considered to reduce this seemingly excessive bureaucracy plaguing the system.
- Todd Brown, Practice Leader Compliance and Regulatory, Medata
- Francine Johnson, Senior Director of State Programs and Product Strategy, FairHealth
- Jon Wroten, Senior Vice President, Regulatory Compliance Quality, Sedgwick
- Mark Walls, Vice President – Communications and Strategic Analysis, Safety National
Statutory requirements vary across all 50 states are causing payers added expense as they strive to sort through the jurisdictional layers and requirements. There are approximately 150 different regulators with 150 different viewpoints on how we should administrate the system. There are different motivations that do not always put the injured worker first.
There is also a lot of complexity occurring in workers’ compensation. Implementing these complex rules, like adopting portions of Medicare, is hard for many states that do not have the staff to handle this. There are also several stakeholders in the system. Lack of understanding on how the players interact creates unforeseen circumstances.
In addition, systems vary from state to state. Each state has it’s own requirements and it is very complex to navigate the various forms and change is constant. The regulators do not take the organizational cost into consideration when they make these changes. Also, penalties can be stiff and wording associated with requirements can be vague, often forcing unnecessary litigation.
From a carrier standpoint, carriers are held accountable for their actions and the actions of those they work with in all 50 states. The carrier can be fined for late first report that the policyholder sent late. Ensuring 100% compliance is virtually impossible.
We aren’t focusing on outcomes. Sometimes you have to spend a little money to get things right on the front end, to get the results we want, which is getting the injured employee back to work.
Also, regulators must clearly define requirements to make compliance easier and reduce a large amount of unnecessary litigation. Some states try harder than others at this. Clear standards would cut a significant amount of costs.
Finally, we need to remember that employers and employees are truly the stakeholders in this process. If we can involve them in regulation development, their depth of knowledge about the system could cut a large amount of costs and unintended consequences associated with it.