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Proactive data management key to handling EDI reporting challenges

Whenever there are changes to industry regulations or compliance standards, there’s always a degree of uncertainty about how they’ll affect insurers. But when IAIABC published its newest standard for workers’ compensation EDI data reporting, Release 3.1, one thing was certain—compliance would get a lot more complex.

Insurers already face several challenges when it comes to EDI compliance reporting: states use different EDI releases, each jurisdiction has its own unique requirements for data submissions, and many insurers lack resources and proper personnel to manage reporting effectively.

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A new release just adds to an already difficult process.

Managing multiple release standards and state requirements

It’s no secret that workers’ compensation is complex: varying standards and requirements can cause administrative hardships and higher costs, according to an IAIABC report.

Currently, 38 states use EDI data reporting. Of those, 15 use Release 1, one uses Release 2, and 22 use Release 3. Add to that the four states planning to transition to Release 3.1 this year (Oklahoma, Georgia, Kansas, and Iowa) and three more next year (Indiana, Illinois, and Maine), and many insurers will be managing reporting requirements across three different major EDI releases.

Not only do different jurisdictions use different releases, they also have unique nuances for data submissions. Changing legislation in each state may exacerbate those nuances. For example, in the first quarter of last year alone, there were 640 pending workers’ compensation bills and 27 enacted, according to an IAIBC report.

The burden of rejected reports

The process of handling compliance has its own challenges. For many insurers, when a jurisdiction rejects a report, they must undergo a time-consuming manual process to identify the errors before resubmitting EDI data.

Unfortunately, this laborious task only addresses errors on an individual claim, but not on an aggregate level. Therefore, the error may reoccur on other claims if the root cause isn’t identified and corrected globally.

Experienced staff set to exit

One of the key challenges of addressing these compliance issues is having the time and resources to find and fix errors. Taking a manual approach is counterintuitive because it ties up adjusters’ time.

Most insurers don’t have the staff resources to keep up with EDI compliance effectively, and the experienced adjusters they have will soon depart. Nearly 50 percent of insurance professionals are nearing retirement age, meaning there’s an impending loss of institutional knowledge in the industry.

Some insurers are taking a more proactive approach to managing reporting challenges. They’re tapping into data analytics and business intelligence to manage EDI reporting, which provides two key solutions: they address the root cause of reporting errors and remove the labor-intensive task from adjusters.

A proactive approach helps simplify compliance

Automated business intelligence software provides a practical solution to the complexities of EDI reporting. These types of tools analyze your claims data state by state and compile errors, evaluating your compliance on an aggregate level instead of by individual claim. The data analysis allows you to better allocate your resources to areas that need improvement.

These solutions also save adjusters time because they don’t have to search for errors and deal with the complexity of varying state requirements. Overall, the tools streamline the reporting process, improve business strategy, and boost acceptance rates.

ISO workers’ comp solutions offer such tools to meet your EDI reporting needs. Our suite of products helps you identify gaps, measure your compliance performance, and improve reporting practices. For more information on how to manage your compliance data proactively, contact Jovan Aguilar at 201-469-229 or jovan.aguilar@verisk.com.


Jovan Aguilar

Jovan Aguilar is a product manager at Verisk. You can reach Jovan at jovan.aguilar@verisk.com.


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