There is one industry that’s more highly regulated than workers comp – nuclear power.
Other than that, and perhaps commercial airline travel, comp is it. Sure, there’s varying degrees of regulatory control, there’s no getting around the fact that most of what happens in and around work comp is driven by regulations. Often, the regulators are tasked with developing rules and regs based on legislation written by (speaking generously) non-expert elected officials. This isn’t to slam state legislators, but rather to recognize that they are part-time elected officials working with very limited resources and support who have to develop and vote on legislation that in many cases is far outside their area of expertise.
The legislation on which regulators base their rules may be pretty broad, thereby leaving the rule-writers with a lot of discretion – and potentially opening the door to legal challenge by stakeholders disagreeing with the regulators’ interpretation of the law.
It may also be written with a lot of detail, thereby challenging regulators to develop regulations that will actually work in the real world (which is a different world than the one in which some non-expert legislators operate).
Which puts a LOT of responsibilty on – and vests a lot of authority in – regulators. In my experience, most of the folks tasked with developing and implementing work comp regulations are pretty reasonable, open-minded, and highly knowledgeable. They aren’t looking to antagonize or frustrate stakeholders, but rather take the legislation and laws they are handed and figure out how they can develop regs that a) abide by the intent of the lawmakers and b) can actually work to enhance the quality of care and reduce costs.
That’s harder than it may seem.
For example, let’s say a state legislature passes a law designed to reduce workers comp expenses, and that law includes a requirement to reduce medical expenses. This type of legislation may well include a cut in the fee schedule, as that looks to be a pretty straightforward way to reduce medical costs – if you cut the price, then you cut the cost.
However, there are several studies that show there’s a tenuous connection at best between low fee schedules and low medical costs, and quite a few people think reducing reimbursement can actually lead to higher costs due to increased utilization and decreased quality of care (this is a complex issue that can’t be adequately addressed in this post). Regulators, who understand this issue, are faced with a no-win situation – they’re tasked with figuring out how to reduce costs but are forced to use a tool that may well have the opposite effect.
Sort of a damned if they do situation…
There’s an enlightening piece in Risk and Insurance about the interaction between regulators and stakeholders that provides good perspective on this issue.
Sep
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