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Bureaucracy in workers’ compensation


On Wednesday, August 24 at 10 a.m., at the upcoming Workers’ Compensation Institute’s 71st Annual Workers’ Compensation Conference in Orlando, Florida, I will serve as one of four panelists on a Centers for Excellence forum discussion on bureaucracy in workers’ compensation. The session promises to be a lively discussion of the issues and causes of this bureaucracy and an examination of some possible solutions to rising workers’ compensation costs across the country.

Joining me on the panel will be three distinguished thought leaders from our industry:

  • Todd Brown, practice leader, compliance and regulatory, Medata.
  • Francine Johnson, senior director of state programs and product strategy, Fair Health.
  • Mark Walls, vice president, communications and strategic analysis, Safety National.

It is worth noting that two members of the panel are former regulators. Todd Brown previously served as executive director of the Texas Workers’ Compensation Commission, and before joining Sedgwick I was chief of the California Office of Self Insurance Plans, overseeing and regulating the nation’s largest self-insurance marketplace.

Workers’ compensation is one of the most highly regulated lines of insurance. The bureaucracy surrounding this statutory system is driving up costs while arguably offering no real benefit to those injured on the job. Statutory requirements vary across all 50 states, causing payers added expense as they try to sort through the jurisdictional layers and requirements. Moreover, each form filed and payment made is subject to penalty for non-compliance. Compensation levels vary by state, as do information-reporting requirements. There is variation among the forms that must be filed and the notices that must be posted. Penalties can be stiff and the wording associated with the requirements vague, often forcing unnecessary litigation. The WCI discussion forum is designed to look at how these state variations affect employers today, as well as some of the solutions being considered to reduce the seemingly excessive bureaucracy plaguing the system.

In a recent conversation I had with Todd Brown he stated that a key solution to addressing the burden of regulatory compliance is to “refocus on the primary stakeholders and the primary purpose of the compensation system: employers and employees and the safeguarding of dispensing the appropriate benefits.” In his view, the greatest unnecessary cost driver in the system is “medical cost containment regulations that do not deliver quality care.”

Among the biggest challenges and cost drivers in workers’ compensation regulatory compliance are the many overlapping regulatory agencies, combined with a lack of consistency between jurisdictions in the reporting and forms used. There is also an ever-growing desire to collect more data to understand or justify regulatory actions and results.

The existence of overlapping regulatory agencies with no consistency in required data requirements or reporting formats between jurisdictions creates a very heavy burden and adds tremendous costs to the system. In many other aspects of our lives, there are uniform standards on which different jurisdictions can agree. For instance, electrical plugs are identical and work the same way across all 50 states; there’s no need to have a different type of plug in each state.

The WCI session also will examine some key tactics for improving and streamlining the regulatory systems, which would, in turn, reduce frictional costs associated with workers’ compensation. Attendees are encouraged to bring their best ideas for improving the workers’ compensation system and actualizing our shared vision for the future: a regulatory framework that makes sense and benefits injured worker outcomes.

I hope to see you there. If you have questions please leave them here and I will address at the conference.

Jon Wroten, senior vice president, regulatory compliance and quality

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