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Thought Leadership in Action

Challenges in Managing Worker’s Comp EDI

Worker’s compensation reporting requires massive coordination between health plans, state jurisdictions, health care providers and other stakeholders. Regulations, health and data privacy laws, and lack of consistent standards across jurisdictions can make reporting a hassle; that increases costs to the system while making it difficult for people to get the help they need.

Worker’s comp electronic data interchange (EDI) provides a standard to keep all the information in the same format and flowing smoothly. “It’s an invaluable resource to have the ability to compare data nationwide and be able to understand how we can be more efficient and effective with the worker’s comp system,” says Gregg Lutz, director of standards development and outreach for the International Association of Industrial Accident Boards and Commissions, which looks for ways to increase standardization of worker’s comp EDI across jurisdictions while maintaining data privacy under the law.

Here’s Lutz’s take on the challenges in the system.

Standards Have Fallen Behind the Technology Curve

The technology stakeholders use to share worker’s comp EDI has advanced over the years, but the standards haven’t, Lutz says. For example, most jurisdictions are using version 3 of the claims release, which was created in the mid-1990s and hasn’t changed significantly since then. Other jurisdictions use even older standards.

This means most jurisdictions are using cumbersome standards that mean they can’t store as much data as they need to about worker’s compensation cases. Every time a version is updated, Lutz says, every stakeholder must weigh whether it’s worth it to update its technology. “If they have to program everything, it can be costly,” he says. At the same time, increased data means more efficient and accurate tracking; it’s a balancing act across the board.

Demand Is Growing for Increased Flexibility

Current standards call for claims information to be batched and sent in one file to jurisdictions, Lutz says, but the lag, combined with the number of claims, can create delays and backlogs. Many jurisdictions have been expressing an interest in web-based real-time reporting that could process claims within seconds.

“I think that’s a big disruption to our industry that’s going to be transformational,” Lutz says of real-time options. Increased flexibility could also mean sending information electronically to injured workers and mobile reporting options. “We’re working on version 4.0 and will recommend some of these newer technologies to build upon,” he says, adding that the new standard is still two to three years away.

There’s a Lack of a National Standard

While the Department of Health and Human Services offers some national standards and guidelines regarding worker’s comp EDI, there are no requirements for code-sharing, national databases or other standardization that could make sharing information easier. And that raises costs, Lutz says. “If there aren’t standards, insurance carriers and claim administrators are having to report this information 50 different ways, and that just drives the cost of the system itself,” he says. “It’s an invaluable resource to have the ability to compare data nationwide and be able to understand how we can be more efficient and effective with the worker’s comp system.”

Under the Obama administration there was some talk from the Labor Department about mandating a standardized approach to reporting, Lutz says. However, that possibility has been “greatly reduced,” he says, adding that the Trump administration isn’t likely to want to add oversight to an already heavily regulated system.


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