Workers Comp Insurance Could Work On Federal Exchanges

September 25, 2013 By JL Risk Management Consultants

Workers Comp Insurance on Federal Exchanges – A Future Possibility?

Would Workers Comp Insurance work on Federal exchanges? Workers Compensation has followed health insurance with an approximately 10-year lag.

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Obamacomp was a term first coined on this blog a few years ago. One has to wonder how much of a stretch it would be to also include WC in the federal insurance exchanges once they are properly established this and next year. Could we be discussing Obamacomp right alongside Obamacare in the near future?

The Federalization of Workers Comp has already begun with the CMS approving the settlement of claims that reach certain thresholds. The Federal Insurance Office (FIO) has already started analyzing the Workers Comp markets.

One twist on this would be to have only the medical portion of the claims to be included in some type of medical treatment insurance exchange with the indemnity portion of the claim left to the states to handle. After all, there are already interstate Experience Mod ratings. There are endless variations and possibilities once the state or federal exchanges are working properly.

Federal Workers Comp Insurance headquarters

Wikimedia Commons – Tony Webster

Would this cause the death of Workers Comp as we know it? That is not a likely possibility, however, it could be one of the factors that would cause a very large change in the way that WC is underwritten and handled today.

The House of Representatives has been pushing for a federal insurance license procedure for a few years. The procedure that the House is now considering also includes adjusters and risk managers in its language. Could an agent cherry-pick certain states that were more profitable by having a federal license?

There are so many questions without a good answer yet. Considering the likelihood that changes are coming to most insurance systems is one way to prepare along with being flexible.

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Federal/State Health Exchanges Could Be Used For Workers Comp

December 13, 2012 By JL Risk Management Consultants

Federal/State Health Exchanges Could Become Modified PPO

Could Health Exchanges be used for Workers Comp markets? The Death of Workers Comp is one of the most read posts on this blog. I still receive a few emails disagreeing with it in total. The Federalization of Workers Comp was a term that I pieced together over five years ago. The main theme is that employers, insurance personnel. agents, vendors, and any type of person or entity that are related to Workers Comp should be very flexible over the next few years.

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The Federalization of Workers Comp and the subsequent changes may sound like rubbish or outlandish thinking on my part. To that, I say – could you have seen a federalized healthcare system 10+ years ago? The answer for the majority would be a resounding – No. The failure of Hillary Clinton’s healthcare package seemed to answer the question.

I wrote this comment over 3 years ago – “With the advent of a federal healthcare system, nationalizing Workers Comp progressed from crossing a wide river to stepping across a small stream.”

Health insurance has always been the leader in claims processing techniques,; PPO medical treatment networks; claims information systems; market reactions; and of course adjusting premiums to fit the market. Property Casualty insurance , especially Workers Comp, has lagged behind health insurance approximately seven to 10 years. Health insurance provided quite a large amount of the blueprint for Workers Comp.

No one knows exactly how the health exchanges will work. Some states have opted out while some have decided to pursue partnerships with the Federal exchanges. Theory is one thing, application is another.

How much of a change would be necessary for a state or federal health insurance exchange to just add Workers Comp in as a coverage or 24 hour healthcare? Twenty four hour healthcare has been attempted in a few states with very negative results. In my opinion, the resulting failures were due to a violation of the Law of Large Numbers.

Unless I am mistaken, the state/federal exchanges would provide the large numbers needed to sustain 24 hour healthcare or a Workers Comp market. The small stream to cross would not be that difficult to envision.

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One of the emails I received on this subject was that Congress does not consider that a large enough subject to even attempt to legislate. I agree with that statement. However, your State Legislature may be a different matter. As we all know Workers Comp is still ruled by laws that are specific to each state.

What conclusions do I draw from the upcoming exchanges? I have one main one. If you are not willing to be flexible and further your insurance knowledge, you may be left behind in the very near future. I have stated that Workers Compensation is a stable market. The stability could end up in a different area of Workers Comp from where you are now. This also applies to employers.

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Obama or Romney – Vote For Workers Compensation?

November 6, 2012 By JL Risk Management Consultants

Workers Compensation Vote – Obama or Romney

Workers Compensation – would a vote for Obama or Romney be a vote for our industry? Well, we are finally here. I will miss the droning on off all the commercials. I live a battleground state so they airwaves and internet were flooded with so many irritating advertisements.

Wikipedia – The White House

In my humble opinion, there will be no difference if Obama retains or Romney acquires the Presidency. The main races that will heavily affect your Workers Compensation rates, laws, etc. are in the state races.

Workers Comp is a very individualized insurance offering. We can see that phenomenon when we compare , for example, California to Nevada or Oklahoma to Texas. One size does not fit all. I think that Workers Comp could be regionalized across zones of a type, but not across the United States.

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I coined the term – and it has been copied by other bloggers – on the Federalization of Workers Compensation. I had thought that the current administration would march over the top of WC and make it a federal program. That was not necessarily an error on my part.

Obamacare does not directly affect the Workers Comp industry. However, what was a wide river to cross is now a small stream. In my opinion, 24 hour healthcare (including Workers Compensation) could be easily attained by using the AFLAC model with some type of partial payment by the employee and a subsidy by the employer.

Often I am asked by many investing companies on consultations what would be the unknown factor that could cause Workers Comp market to change. I think it COULD be the healthcare companies absorbing the Workers Comp market.

I am often asked as to why this would happen. As well all know, the healthcare companies will now be limited as to profit in the health insurance market, but not Workers Comp or even the Property & Casualty markets.

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I am still under the impression that your State Senate, House, and Governors’ races will be the ones that will map out the Workers comp markets in the future. That is why I recommend looking into the candidates’ prior voting records on any bills that involved any type of insurance matter.

The bottom line is that whether President Obama or Governor Romney wins the election will not matter to Workers Comp except possibly to a very small degree. Your local state races will make the difference.

I have consulted on all states Workers Comp in the nation. Each state is unto itself on Workers Compensation. The one word to watch out for is reform as most of the time this means a major change to how you will do business in the WC industry.

Even though Workers Comp is the silent budget buster, for some reason it does not draw enough attention. On the Federal level, that may be a blessing in disguise.

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Medicare Set Asides – Call In Today at 1PM Town Hall

June 19, 2012 By JL Risk Management Consultants

Workers Comp Medicare Set Asides Town Hall Today

If you handle any type of liability claim including Workers Compensation, you may want to call in today at 1 PM on Medicare Set Asides. The info is here to join in on the CMS Set Aside Town Hall.

The call-in is at 1 PM Eastern today. Please note the call-in is just not for WC. It is for all liability claims.

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Even though I am under the impression that WCMSA’s are just another step in the Federalization of Workers Compensation, the rules have been published many years ago. If your company or your insurance carrier or TPA is not submitting in your claims data to the CMS, you should expect a spike in the federal fine activity. Some of the fines could be extreme.

The Federal Government usually will have a few companies they use for sacrificial lambs, so to speak. These companies are going to be heavily fined for not properly reporting their claims activity. There will likely be a flurry of press releases on these fined companies to move everyone into compliance (i.e. Willie Nelson and the IRS)

If, you, as the employer are unsure whether or not your claims are being reported properly to the CMS, I know of three companies that are very good at assisting in these matters. In my opinion, this is not the time to be complacent. If you need help, let me know.

The call into the Town Hall meeting is toll-free. The CMS has performed a series of these calls in 2012. This is the last one on their schedule.

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WCMSA – So This Is Not Federalization of Workers Comp ?

July 7, 2011 By JL Risk Management Consultants

WCMSA = Federalization of Workers Comp?

The CMS WCMSA requirements could be the first steps in federalization of Workers Comp. The last paragraph should be of concern to any carrier, employer or TPA. CMS can change the rules as they see fit as I read it. What happens if they decide to review, for instance, ALL claims over $25,000 regardless of status? That development would send shockwaves through the Workers Comp and the insurance industry overall.

Wikimedia – Centers for Medicare and Medicaid Services

I was going to rewrite these sections on Workers Comp Medicare Set Asides (WCMSA) from the Center for Medicaid/Medicare Services (CMS). I thought I would leave them intact and not link you to the webpage and then have you search for them. This info is confusing enough without having to dig for it.

The following is verbatim from the CMS website. I will write more on this in my next post.

CMS Review Threshold

It is not in Medicare’s best interest to review every WC settlement nationwide in order to protect Medicare’s interests per 42 CFR 411.46. (Ref: 7/23/01 Memo Q1(c)) A WCMSA is not necessary when resolution of the WC claim leaves the medical aspects of the claim open.

A WCMSA may be submitted to CMS for review in the following situations:

The claimant is currently a Medicare beneficiary and the total settlement amount is greater than $25,000; OR
The claimant has a “reasonable expectation” of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.

Computing the Total Settlement Amount

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The computation of the total settlement amount includes, but is not limited to, wages, attorney fees, all future medical expenses (including prescription drugs), and repayment of any Medicare conditional payments. Payout totals for all annuities to fund the above expenses should be used rather than cost or present values of any annuities. Also, any previously settled portion of the WC claim must be included in computing the total settlement amount. (Ref: 4/25/06 Memo)

In order to determine the total settlement amount when using an annuity, please be advised that Medicare determines the value of the annuity based on how much the annuity is expected to pay over the life of the settlement, not on the Present Day Value (PDV) or cost of funding that annuity. (Ref: 4/21/03 Q17)

Example: A settlement is to pay $15,000 per year for the next 20 years to an individual who has a “reasonable expectation” of Medicare enrollment within 30 months. This settlement is to be funded with an annuity that will cost $175,000. The RO will review this settlement because the total settlement to be paid is greater than $250,000 ($15,000 per year x 20 years = $300,000). It is immaterial for Medicare’s purposes that the PDV or cost ($175,000) to fund this settlement is less than $250,000. (Ref: 4/21/03 Q17)

Current Medicare Beneficiaries

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Injured individuals who are already Medicare beneficiaries must always consider Medicare’s interests prior to settling their WC claim regardless of whether or not the total settlement amount exceeds $250,000. That is, ALL WC PAYMENTS regardless of amount must be considered for current Medicare beneficiaries.

However, CMS no longer reviews new WCMSA proposals for Medicare beneficiaries where the “total settlement amount” is $25,000 or less (i.e., low dollar threshold Medicare beneficiaries). In order to increase efficiencies in our process, and based on available statistics, CMS instituted this workload review threshold. However, CMS wishes to stress that this is a CMS workload review threshold and not a substantive dollar or “safe harbor” threshold. Medicare beneficiaries must still consider Medicare’s interests in all WC cases and ensures that Medicare is secondary to WC in such cases. In other words, if the total settlement amount is $25,000 or less, the parties to the settlement are still required to consider Medicare’s interests. The recommended method to protect Medicare’s interests is to enter into a Medicare Set Aside arrangement to protect Medicare’s interests, even though CMS will not review the proposal. (Ref: 7/11/05 Memo Q1 and 2)

Settlements Greater than $250,000 where the Claimant is “Reasonably Expected to Become a Medicare Beneficiary”

(Ref: 4/21/03 Memo Q2)

An individual has a “reasonable expectation” of Medicare enrollment if any of the following situations apply:

Wikimedia Commons – Kaiseng98

(a) The individual has applied for Social Security Disability Benefits;

(b) The individual has been denied Social Security Disability Benefits but anticipates appealing that decision;

(d) The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or

(e) The individual has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

To the extent a WC settlement meets both of the criteria (i.e., the settlement is greater than $250,000 AND the claimant is reasonably expected to become a Medicare beneficiary within 30 months of the settlement date), then a CMS-approved Medicare set-aside arrangement is appropriate.

Review Thresholds are Subject to Adjustment

(Ref: 7/11/05 Memo Q2; 4/25/06 Memo)

Both the beneficiary and non-beneficiary review thresholds are subject to adjustment. The CMS reserves the right to modify or eliminate its review criteria if it determines that Medicare’s interests are not being protected. Claimants, employers, carriers, and their representatives should regularly monitor this website for changes in policies and procedures.

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Federalization – Is Workers Comp Next Line of Insurance?

April 13, 2011 By JL Risk Management Consultants

Is Workers Comp Next For Federalization?

The Federalization of malpractice makes one think that Workers Comp is the next step. Federal medical malpractice reform hit the insurance airwaves very heavily last week. The bill is named HR5 – “Help Efficient, Accessible, Low-Cost, Timely Healthcare (HEALTH) Act of 2011.”

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The bill sharply limits all civil suits against health care providers, including nursing homes, hospitals, and insurance companies. If this is not the federalization of insurance, I must have missed something. It even says insurance companies would have a limit on the amount of the lawsuit.

I have written often about the high probability of at least a partial federalization of Workers Comp insurance. HR5 seems to be another step in that direction. The nonpartisan National Conference of State Legislators (NCSL) has informed Congress of its “strong, bipartisan opposition” to the enactment of H.R. 5″. A letter was written to the House subcommittee to voice strong bi-partisan opposition to enacting the bill. You can see the letter here.

The excerpts are:

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Medical malpractice, product liability and other areas of tort reform are areas of law that have been traditionally and successfully regulated by the states. Since the country’s inception, states have addressed the myriad of substantive and regulatory issues regarding licensure, insurance, court procedures, victim compensation, civil liability, medical records and related matters. In the past two decades, all states have explored various aspects of medical malpractice and products liability and chosen various means for remedying identified problems. Over the past several years, states have continued to revise and refine their medical malpractice laws and procedures…

Federal medical malpractice legislation inappropriately seeks to preempt various areas of state law. All 50 states have statutes of limitations for medical malpractice suits. All 50 states have rules of civil procedure governing the admissibility of evidence and the use of expert witnesses. Many states have caps on noneconomic damages and limitations on attorney’s fees in medical malpractice cases…

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NCSL’s opposition will extend to any bill or amendment that directly or indirectly preempts any state law governing the awarding of damages by mandatory, uniform amounts or the awarding of attorney’s fees. Our opposition also extends to any provision affecting the drafting of pleadings, the introduction of evidence and statutes of limitations. Furthermore, NCSL opposes any federal legislation that would undermine the capacity of aggrieved parties to seek full and fair redress in state courts for physical harm done to them due to the negligence of others.”

I think the NCSL is saying what we will be commenting on in reference to Workers Compensation in the future. I have underlined what sounds very similar to Workers Compensation. Even the State Legislators are concerned on a bi-partisan basis about the reach of Federal legislation.

I will keep posting articles when I see one that seems to be a step towards insurance Federalization. Thanks to 7th Amendment Advocate for their assistance.

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Federalization Of Workers Compensation – Another Opinion

March 31, 2011 By JL Risk Management Consultants

Federalization Of Workers Compensation From Peter Rousmaniere

One of the more astute Workers Comp authors/bloggers recently wrote an article on The Federalization of Workers Compensation. I have been writing on this subject for over a year and it is good to see other opinions on what I think will be a major Workers Comp development.

Peter Rousmaniere Federalization Of Workers Compensation Picture

Peter Rousmaniere wrote a great article on the possibility of the Federal Government becoming more involved in Workers Compensation. As the Feds expand their “web of control”, I think there will be more monitoring of Workers Comp on a Federal level. Peter’s article can be found here.

I was the first one to coin the term Federalization of Workers Compensation. This started a trend of articles on the Federalization issue. I still think the Feds will look to control what happens with Workers Comp. As I have posted before, let’s examine what has happened over the last few years. The developments are:

The CMS (Medicaid/Medicare) wants all Workers Compensation data
The authority of the FIO or Federal Insurance Office is placed under CMS
The CMS will be providing the FIO will all pertinent data
By 2014, we are supposed to have nationalized health care, with national insurance
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exchanges.
Most insurance licenses are renewed on a nationalized basis even though they are state-based. The NIPR http://www.nipr.com/ has most state’s licenses processing.
The Internet with such sites as Linked, Jigsaw, ZoomInfo, etc have insurance personnel from all states discussing varied topics. Not long ago, other than intra-company and at conferences, how often did we all communicate with insurance personnel across state lines?

I could list many bullet points, but my goal is to be concise as possible. I am not saying that Workers Comp on a state basis will cease. I think that being very adaptive right now in Workers Comp is the best idea.

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Health Insurance Feds Give $46 Million To Police Rates

August 19, 2010 By JL Risk Management Consultants

Will Workers Comp Premiums Be Monitored Like Health Insurance

Most Health insurance regulation always predates actions in Workers Comp. I usually do not add in governmental press releases verbatim to the blog. This should be of concern to all in the Workers Comp arena. Substitute in Workers Compensation wherever you see the word health.

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I have written quite a few posts and have spoken at conferences on the Federalization of Workers Compensation.

Some of the reactions are of disbelief bordering on ridicule. Copy this post to a word processor. Substitute in Workers Comp for health. It is chilling. Please remember the Feds are already heavily involved in Workers Comp due to the policing of Medicaid Medicare Set-asides (MSA’s).

$46 Million in Grants to Help States Crack Down on Unreasonable Health Insurance Premium Hikes

45 States and the District of Columbia to Receive $1 Million Each to Make Health Insurance Markets More Consumer-Friendly and Transparent

HHS Secretary Kathleen Sebelius today announced grant awards of $46 million to 45 States and the District of Columbia. These Affordable Care Act grants will be used to help improve the oversight of proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.

Wikipedia – Jeff the quiet

For too long, insurance companies in many States have increased health insurance premiums with little oversight, transparency, or public accountability. Health insurance premiums have doubled on average during the last 10 years, much faster than wages and inflation, putting health coverage out of reach for millions of Americans and business owners. Today, just 26 States and the District of Columbia have the authority to reject a proposed increase that is excessive, lacks justification or otherwise exceeds State standards. Many States that have the authority lack resources to exercise it meaningfully. This lack of authority and resources for States has unfortunately contributed to unjustified premium increases in some States.

“The Affordable Care Act puts in place critical market reforms to improve quality and reduce the cost of health care for employers and individuals. Increased competition, lower insurance overhead, and better risk pooling in health insurance Exchanges in 2014 are expected to reduce premiums in the individual market by anywhere from 14-20 percent according to the Congressional Budget Office,” said Secretary Sebelius. “Between now and then, we will continue to work with States to ensure consumers are receiving value for their premium dollars and to avoid the kind of double digit premium increases seen recently. The State proposals approved today demonstrate the need and desire for new resources and tools to help them protect against unjustifiable premium increases.”

The Affordable Care Act provides States with $250 million in Health Insurance Premium Review Grants over five years to help create a more level playing field by improving how States review proposed health insurance premium increases and holding insurance companies accountable for unjustified premiums increases. Applications for the first round of Health Insurance Premium Review Grants were made available on June 7.

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The grants build on the Obama Administration’s work with States to implement the Affordable Care Act. Earlier this year, Secretary Sebelius called on certain insurance companies to justify large premium increases and encouraged State and local officials to obtain stronger health insurance premium review authorities under State laws. This increased scrutiny by the Administration and by several States has led to the withdrawal or reduction of several proposed health insurance premium increases that in some cases turned out to be based on faulty assumptions and data.

States have proposed to use this funding in a variety of ways.

Additional Legislative Authority: 15 States and the District of Columbia will pursue additional legislative authority to create a more robust program for reviewing or requiring advanced approval of proposed health insurance premium increases to ensure that they are reasonable;
Expand the Scope of Health Insurance Premium Review: 21 States and the District of Columbia will expand the scope of their current health insurance review, for example by reviewing and requiring pre-approval of rate increases for additional health insurance products in their State.
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Improve the Health Insurance Premium Review Process: All 46 State grantees will require insurance companies to report more extensive information through a new, standardized process to better evaluate proposed premium increases and increase transparency across the marketplace;
Make More Information Publicly Available: 42 States and the District of Columbia will increase the transparency of the health insurance premium review process and provide easy-to-understand, consumer friendly information to the public about changes to their premiums; and
Develop and Upgrade Technology: All State grantees will develop and upgrade existing technology to streamline data sharing and put information in the hands of consumers more quickly.

“States will use these grant dollars in the way that makes the most sense for their insurance consumers,” said Jay Angoff, Director of the Office of Consumer Information and Insurance Oversight. “As we continue to implement the new health insurance reform law, we will continue to work with States to ensure they have the tools they need to ensure the stability of the marketplace, keep costs low and provide consumers with increased transparency, choice and quality they need to make the best health care decisions for their businesses and families.”

A chart summarizing how each State will use the new resources can be found athttp://www.healthcare.gov/news/factsheets/rateschart.html.

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The Health Insurance Premium Review Grants are one element of a broad effort under the Affordable Care Act to reduce the unreasonable premium increases proposed by some insurers today. Additional resources from this $250 million program will be available in subsequent years to further strengthen State health insurance premium review procedures. Other statutory provisions designed to improve affordability include:

In 2011, the Affordable Care Act allows the Secretary of the U.S. Department of Health and Human Services toreview justifications for unreasonable increases in premiums and make them public;
In 2011, insurers will generally be required to spend at least 80 percent of premium dollars on medical care services and quality-improvement activities and limit their spending on overhead, marketing, CEO salaries, and profits; and
In 2014, the Affordable Care Act empowers States to exclude health plans that show a pattern of excessive or unjustified premium increases from the new health insurance Exchanges.

The Affordable Care Act includes a wide variety of provisions designed to promote a high-quality, high-value, health care system for all Americans and to make the health insurance market more consumer-friendly and transparent. Some of the provisions that take effect by the end of next year, or are already in effect, include prohibitions on pre-existing condition exclusions for children; prohibition on lifetime dollar limits in all health plans; extended access to insurance for many young adults; and an unprecedented level of transparency about health insurance through www.HealthCare.gov

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Federalization Of Workers Compensation – Starts Now – Warning

June 15, 2010 By JL Risk Management Consultants

The Federalization Of Workers Compensation

I had coined the phrase Federalization of Workers Comp a few months ago. I was told that I was a tea leaves reader; black swan proponent; and other choice terms. No one would believe me when I warned the new Healthcare Legislation would be the start of the feds controlling Workers Comp. I had one fellow blogger post a blog that Workers Comp would never be federalized – period.

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Well, it is now here. Senator Robert Byrd (WV) included language in the Senate measure passed last month that would make it easier for miners to receive benefits through the national black lung program. Currently, miners must prove that black lung significantly contributed to their disability. Byrd’s provision would instruct administrative law judges to presume that miners with 15 or more years in the mines who are suffering from a totally disabling lung disease would qualify for benefits unless there’s evidence they don’t have the disease or that it came from somewhere other than the mine.

The provision would also automatically allow a surviving spouse to continue receiving benefits after a miner’s death rather than having to reapply, a process that can take years.

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I am not saying that this was bad legislation. I am just pointing out this was FEDERAL LEGISLATION, not state legislation. This is not going to be the last foray by Congress to insert its powers into what should be left alone to be administered by the states.

The CMS’s Medicare Set-aside rules are not far behind. I had read in John Gelman’s blog the CMS may consider their rules as having no statute of limitations.

What happened to the Workers Comp rates for coal mine related companies? The NCCI was going to revise the advisory rates for coal companies in West Virginia and the insurance carriers were going to revise their rates. As of the time of this post, I think the revisions have been delayed.

Death of Workers Comp – Have We Seen Beginning?

March 22, 2010 By JL Risk Management Consultants

The Death of Workers Comp – Cometh?

Have we seen the beginning of the Death of Workers Comp?I have posted many times on the term that I coined – The Federalization of Workers Compensation.

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The recent House vote on healthcare could be the first step to 24-hour health coverage. Traditional Workers Comp insurance would not survive if the federal government decided to experiment with covering individuals under a modified health plan that would also pay monetary benefits.

Is this possible? It exists today and is known as AFLAC. The AFLAC model could be applied to health insurance and therefore alter the Workers Compensation markets greatly. I am looking at a 7 – 10 year time frame.

If anyone does not feel that the federal government could move into the Workers Comp space so quickly, one only has to be reminded of how fast CMS and the Medicare Set-asides have changed the Workers Comp landscape.

I do not necessarily think Workers Comp will be wiped out completely. However, I think that anyone that has Workers Compensation at the core of their career should remain very flexible over the next 10 years.

Increasing your knowledge and education in Workers Comp will pay off in a huge way. The designations that one can acquire are almost endless. Check out this page to find one that fits you or try The Institutes website

Federal Control of Workers Comp Takes Another Step With New FIO

December 4, 2009 By JL Risk Management Consultants

Another Step In Federal Control Of Workers Comp

Workers Comp Federal Control takes another step. Recently, a bill was passed by the House that establishes a Federal Insurance Office (FIO) for international insurance transactions. As I had predicted numerous times in the last few months, the insurance – and in turn – Workers Compensation insurance landscape is slowly but radically changing.

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In a large % of phone consultations that I perform for our investor clients, I am often asked what major development would change the “playing field” for Workers Comp over the next seven to ten years. I always answer that the slow but steady progression of the government’s attempt to regulate insurance almost makes any forecasting by me nearly impossible after five years into the future.

The Professional Insurance Agents Association (PIA) has commented that they are very concerned the bill would allow proponents of federalizing insurance to advance their agendas. I could not agree more. As we all know, federalizing any type of insurance would lead to more paperwork, control, and inefficiencies.

The first business conducted by FIO would be a study of federal insurance regulation. This seems to be a conflict of interest as the FIO itself is in the position of recommending to Congress whether the power to regulate insurance should be removed from the states and made into another federal bureaucracy. My concern is that if any government agency produces a report that justifies it existence and allows expansion, the report may be biased towards expanding its duties.

Can you already see the results of the report? I can.

Update – As of today, nothing has really been heard from the FIO on workers compensation insurance matters. The FIO has stayed under the radar with any of its efforts to expand any type of federal control.

Federal Government Heavily Involved in Workers Comp For Years

October 5, 2009 By JL Risk Management Consultants

Federal Government and Workers Comp Insurance

I have posted often in the last few weeks in reference to how and why the Federal Government has been pushing to enter more regulations on Workers Compensation insurance including 24-hour healthcare coverage and a federal insurance office.

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I have not commented on how the Federal Government has affected almost all Workers Comp claims that have a settlement value of more than $25,000. A few years ago, the CMS (Centers for Medicaid and Medicare Services) issued a regulation that all Workers Compensation settlements of more than $25,000 have to be APPROVED by their offices. This caused an incredible logjam on getting cases finalized.

There are at least 10 major companies that have entrepreneured the business of assisting claims offices in getting the CMS to approve the Workers Compensation settlements. I have assisted no less than 15 investment companies in examining this market as a place to invest large amounts of cash. This is one of the hot ancillary service marketing areas in Workers Compensation today.

Calculator And Financial Bill Federal Government On Table

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The rejection rate was supposedly calculated by the CMS at 28%. The CMS even issued a recent guide on how to get the Medicare Set Asides (MSA’s) approved by their offices. I do not fault the CMS for being more involved as quite often there is an interfacing of Social Security/Medicare benefits and Workers Comp settlements.

The main reason I posted on this situation is to let all my blog and newsletter readers that the FEDERAL GOVERNMENT IS ALREADY HEAVILY INVOLVED IN WORKERS COMP today. I have heard some of the Workers Comp pundits say that there is a long leap between the current Workers Comp system and a federalized one.

One does not have far to leap if one is already there. CMS’s MSAs are the route into Workers Compensation currently taken by the Federal Government.

Senate Bill – Workers Compensation Could Be In Trouble

October 2, 2009 By JL Risk Management Consultants

Federalization Of Workers Comp Senate Bill

The Senate bill to Federalize insurance and Workers Comp appeared on the radar this week.

Painted Red of House of Court with Icons background Senate Bill Federalize Insurance

. Last week, I posted on 24 hour coverage and its negative effects on the Workers Compensation process. I had thought that bill would be the last we would hear of any federalization of Workers Comp and that the bill would not even make it to a vote. I was wrong as the following came across the wire yesterday evening.

The chairman of a key House subcommittee has released draft legislation that would establish a new Federal Insurance Office within the Treasury Department. Rep. Paul Kanjorski, D-Pa., who chairs the House Financial Services Committee’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, unveiled the Federal Insurance Office Act of 2009 on Thursday.

According to the draft language, the Federal Insurance Office (FIO) would have the authority to monitor all aspects of the insurance industry and assist the Treasury secretary in administering the federal terrorism insurance program.

Wikimedia Commons – Scrumshus

In addition, the new office would coordinate federal efforts and establish federal policy “on prudential aspects of international insurance matters” and determine whether the International Insurance Agreements on Prudential Matters pre–empt some state insurance measures. The document resembles earlier bills introduced by Rep. Kanjorski to set up a Federal Insurance Office within Treasury. The full committee is slated to hold a hearing Oct. 6 on the draft legislation and other regulatory reform draft bills.

With bills being introduced over and over again to federalize Workers Compensation and all insurance lines, the subject is just not going to drop. I suggest contacting your Senators and State Representatives as this legislation could harm the Workers Comp landscape that is handled very well on a state-level basis.

Obama Administration Final Countdown For State Run Workers Comp?

June 30, 2009 By JL Risk Management Consultants

Obama Administration Looking To Federalize Workers Comp?

The Obama Administration may begin Workers Comp federal program. In the past few months, I have performed a large number of phone consultations on Workers Compensation claims and premiums. One of the most common questions that I receive is what would be the largest shakeup in the Workers Compensation world in the next five years.

Graphic of Healthcare Obama Administration Icon

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As the title of this post indicates, the federalization of Workers Comp – and it is in process as I write this – would make Workers Comp not look anything like it does today. If we examine what was once state administered and then converted to a federal administration, one can see great changes. Workers Comp would be no different.

From my viewpoint, if health care becomes nationalized, then it will be a very small leap to have 24 hour coverage. This is especially true if employers are tagged with administering the national health part of the plan. How many times have we seen states say that 24 hour coverage could grow from the health insurance as a modified carve out program? I have never seen the states say we can expand Workers Comp coverage to include health. Once again, nationalized health converted to 24 hour coverage would obliterate the Workers Comp infrastructures of each state. I am not intending to say this would be a positive or negative occurrence.

Shield Of Health Icon Obama Administration Vector Image

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How well would the program run? I do not want to pick on the TSA, so I will point out the digital TV transition that was federalized. I will register no opinion. It is a great example of a federalized program.

The whole transition may not take place for 20 years. I am still trying to fathom what the system would look like overall. The main concern would be if the federal government becomes a Workers Comp insurer that could charge less than the competition for the same coverage, what would happen to the current Workers Comp carriers?

I am not making a political statement.