AIA: Ky. Office of Workers’ Claims Drops Mandatory Insurer Reporting

Kentucky’s Office of Workers’ Claims (OWC) has struck a blow for regulatory efficiency with its recent decision to discontinue mandatory insurer reporting of medical claim information, according to the American Insurance Association (AIA).

Although not driven by any specific need or statutory requirement, the electronic reporting of detailed medical claim data proved costly to insurers and went unused by OWC. Because of the level of detail required, many carriers had to outsource the data-gathering and compilation, with the resulting additional costs ultimately passed on to policyholders via higher premiums.

“Kentucky’s experience is the clearest example yet of how states choose to require insurer reporting of data simply because they can, with no clear benefit in mind,” said Raymond Farmer, AIA assistant vice president, Southeast Region. “But with much of the reported data not even being accessed by the state, OWC Executive Director Bill Emrick recognized a perfect opportunity to get rid of a burdensome and useless regulatory requirement when the state government adopted a requirement to eliminate paperwork.”

AIA urges other states to follow Kentucky’s lead. According to AIA, unfortunately, there has been a troubling, recent trend in the opposite direction, with several states showing interest in collecting detailed medical claims data from insurers without a realistic understanding of cost or a clear, practical plan for using the data. “Unfortunately, such misguided regulation simply increases costs without producing any demonstrable benefit for the system as a whole,” Farmer noted.