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Workers Compensation Budget Impact

By Mike Betron, Infoglide Software Director of Marketing

A recent article written by IAIABC Executive Director Greg Krohm does a great job of analyzing the effects that the Patient Protect and Affordable Health Care Act of 2010 (aka Obamacare) and the American Recovery and Reinvestment Act of 2009 are expected to have on the cost and administration of workers’ compensation programs. The indirect impact of the budgetary pressure put on state government budgets by the new federal requirements is troubling:

So bad is the state budget pressure that some state workers’ compensation agencies have had to freeze hiring and sharply limit training and travel. This clearly hurts the efficient administration of workers’ compensation laws.

The increased costs come in several forms, all driven by the need to comply with the new laws. One example is the move toward a universal Electronic Health Record that dictates a standard medical record format that any agency touching the healthcare system must support. Workers’ compensation agencies aren’t explicitly called out since “medical bill payers are not covered entities under HIPAA” yet “they will be required to have ‘business associate agreements’ with HIPAA covered entities for the electronic exchange of patient health information.  It remains to be seen how this will force workers’ compensation payers to modify their business practices.”

What is clear is that there will be a financial impact on state workers’ comp agencies, and no provision was made in the legislation to cover increased costs necessitate by the new rules. Despite the impending pressure on state agencies, they will be expected to continue efficiently administering the system in the face of budget and personnel cuts. Increasing efficiency by doing more with less will lead to an increased usage of advanced technology such as entity resolution.

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