Titles of Regulations: 16VAC30-90. Procedural Regulations for Filing First Reports Under the Virginia Workers' Compensation Act (repealing 16VAC30-90-10 through 16VAC30-90-80).

16VAC30-91. Claims Reporting (adding 16VAC30-91-10, 16VAC30-91-20, 16VAC30-91-30).

Statutory Authority: §§65.2-201 and 65.2-900 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comments: Public comments may be submitted until 5 p.m. on November 14, 2008.

Agency Contact: Matthew Bryant, Director, Technology Alignment Program, Virginia Workers' Compensation Commission, 1000 DMV Drive, Richmond, VA 23220, telephone (804) 367-2253, FAX (877) 432-5423, or email matthew.bryant@vwc.state.va.us.

Basis: The commission is an independent, nonexecutive branch agency, governed by three commissioners elected by the General Assembly. The commission is charged with carrying out the provisions of the Virginia Workers' Compensation Act (§65.2-100 et seq. of the Code of Virginia). The commission is authorized to promulgate rules and regulations, and to examine the "books and records" of parties to proceedings relating to compensation pursuant to § 65.2-201 of the Code of Virginia. The commission is authorized to collect specific accident data, as well as "such other information as may be required by the Commission" concerning injuries, and to regulate this activity (§65.2-900 of the Code of Virginia). The commission is required to notify injured workers of their rights and also to provide reports to other state agencies concerning accidents (§§65.2-201 and 65.2-900 of the Code of Virginia). Any voluntary agreements as to compensation, falling outside the dispute resolution authority of the commission must be filed with the commission in the form prescribed by the commission (§65.2-701 of the Code of Virginia). Also, several of the commission’s dispute resolution rules concern data reporting, including rules requiring agreements, denial, and medical reports to be filed with the commission (16VAC30-50-50).

Purpose: Since the adoption of 16VAC30-90 in 1996, pertaining to the electronic filing of accident reports with the commission, technology and data standards have changed significantly. The commission desires to conform its electronic data collection methods to current industry practice, and provide its customers that are required to submit reports to the commission pursuant to the Virginia Workers' Compensation Act electronic methods that are simple, efficient, and effective. Accordingly, the commission proposes adopting 16VAC30-91, which seeks to conform its electronic data reporting methods to those of the nationwide workers' compensation community standards-setting organization, the International Association of Industrial Accident Boards and Commissions, or IAIABC.

Substance: This action is related to how organizations report certain data to the commission. There are no substantive changes to what the law requires to be reported, only to how the reports are transmitted to the commission. Thus, the substance of the action is this: effective July 1, 2009, such reports shall be filed electronically with the commission.

Issues: The primary advantage to the public and to the Commonwealth is the consistent, efficient and accurate electronic collection of data required by law. In this way the public can better comply with current reporting laws and the commission can better collect such reports. Of particular importance is the standard being proposed, which is industry-created, tested, and controlled, through the International Association of Industrial Accident Boards and Commissions, or the IAIABC. Most workers’ compensation jurisdictions, including the Virginia Workers’ Compensation Commission, are members of the IAIABC, in addition to a vast array of private industry carriers, administrators, and workers’ compensation vendors.

The primary disadvantage to the public is that the reporting methods currently in operation (primarily paper submission) will be changing, and thus operations accustomed to reporting by hand, on paper, or through the mail, will be moving to an electronic system. It is believed that the available alternatives, including web-based submissions available through an Internet browser, will over time virtually eliminate any disadvantage this action might cause, and instead provide tremendous value to the public. There is no disadvantage to the Commonwealth other than in its role as an employer subject to workers’ compensation reporting requirements.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Regulation. The Virginia Workers’ Compensation Commission (commission) proposes to repeal the existing regulations on claims reporting and promulgate a new replacement regulation to conform its electronic data reporting methods to the industry standard. The proposed regulation requires that the claims reports be filed with the commission through Electronic Data Interchange (EDI) or through the internet portal established by the commission effective July 1, 2009.

Results of Analysis. There is insufficient data to accurately compare the magnitude of the benefits versus the costs. Detailed analysis of the benefits and costs can be found in the next section.

Estimated Economic Impact. Adopted in 1996, the existing regulation allows both paper submission of the claim reports and electronic transmission via a non-standardized format developed specifically for the commission, with paper submission being the primary data transmission method. In order to conform to the significant changes in technology and data standards that have occurred over the years, the commission proposes to repeal the current regulation and promulgate a replacement regulation. The proposed regulation will require that effective July 1, 2009, all claims reports shall be filed electronically either through Electronic Data Interchange (EDI) or through the internet portal established by the commission. This proposed action will only change the way the claims reports are transmitted to the commission without making any substantive changes to the content of data to be reported. The commission will describe the technical specifications and update any changes to the technical formats in the "implementation guide" which will be published by May 1 of each year.

The proposed regulations will provide a consistent, efficient, and accurate electronic collection, based on the standard that is industry-created, tested, and controlled, through the International Association of Industrial Accident Boards and Commissions (IAIABC). According to the commission, using EDI within the workers’ compensation community has been a long established practice. Currently thirty states use an IAIABC data standard for transacting EDI. Four states, including Virginia, are using a "proprietary" EID format to some degree¹ and are moving to an IAIABC format.

The organizations that are required to file workers’ compensation claims reports to the commission include the insurance carriers and the self-insured employers. According to the commission, about 80-90% of the insurance companies and self-insured employers either use a workers’ compensation vendor or purchase a claim management system from the vendors to do the reporting. Currently most of the vendors and the multi-state insurance companies are performing EDI reporting in some other jurisdictions. This proposed action will allow them to utilize their existing resources in a more efficient way and will likely generate economy of scales. The commission reports that it will cost these organizations a one-time expense ranging from $2,300 to $6,150 to modify their current data transmission systems to conform to Virginia’s specifications. Part or all of the costs on the vendors may later be passed on to the insurance companies and self-insured employers they serve in the form of higher prices. The other 10-20% of the insurance companies and self-insured are mostly small volume reporters that submit fewer than 100 claims annually. They may use the commission’s free internet-based submission method as an alternative to EDI processing. The use of alternative data transmission method will keep reporting consistent among all filers while minimizing the negative impact on small filers.

The commission will incur a one-time cost of about $3,537,772 to implement the new claims management system, half of which is attributed to electronic reporting. The commission will also spend $95,000 annually for using a data ingestion and cleansing service.

Moving from paper reporting to EDI processing will likely save the amount of time spent on transmitting the claims reports. The commission reports that on average each claim requires 2 claims reports², which may take 180 minutes to complete. EDI processing will replace these two paper reports with four EDI reports which will take 60 minutes to finish. Therefore, switching to EDI processing may cause an approximate saving of 120 minutes for each claim. The savings in time may reduce the service fees charged by the vendors. The commission estimates that approximately 200,000 claims are filed every year.

Businesses and Entities Affected. According to the commission, there are approximately 215 affiliated insurance companies and self-insured companies. Approximately 80-90% of them use vendors to do the reporting. Currently there are four reporting vendors and about 14 vendors who develop and sell the claims management systems.

Localities Particularly Affected. The proposed regulations will affect all of the localities in the Commonwealth.

Projected Impact on Employment. Moving from paper reporting to EDI processing will likely save the amount of time spent on transmitting the claims reports. For organizations that already perform EDI processing in other states, it may take a full-time employee two to four weeks to adjust their existing systems to Virginia’s specifications.

Effects on the Use and Value of Private Property. Moving from paper reporting to EDI processing will likely save the amount of time spent on providing the claims reports for the reports, which may have a positive impact on the value of filers. Filers who are currently conducting EDI processing in some other jurisdictions will incur a one-time cost ranging from $2,300 to $6,150 to modify their current data transmission systems to conform to Virginia’s specifications. This cost may slightly reduce their profit and may have a slight adverse impact on the value of their properties.

Small Businesses: Costs and Other Effects. There are approximately 25 insurance companies or self-insured companies who are small businesses. They may use the free internet-based submission method as an alternative to EDI processing. Therefore, they will not be significantly affected by the proposed regulations.

Small Businesses: Alternative Method that Minimizes Adverse Impact. Small businesses will likely not be significantly affected by the proposed amendments.

Real Estate Development Costs. The proposed amendments are unlikely to significantly affect real estate development costs.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 36 (06). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB’s best estimate of these economic impacts.

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¹ The "proprietary" EDI format means that basic, fundamental data elements common to every workers’ compensation report, such as employee name and address, employer name and address, policy number, date of injury, etc., result in programming that is unique.

² Each claim will also require on average five other paper reports which will not be affected by this regulation.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis: The commission has no objection.

Summary:

This action repeals 16VAC30-90 and promulgates 16VAC30-91 to conform the electronic filing method for mandatory reports to the commission to the industry standard for such reports.

CHAPTER 91
CLAIMS REPORTING

16VAC30-91-10. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Claims reports" means FROI and SROI reports concerning an injury filed by or on behalf of an insurer or self-insurer with the commission pursuant to the requirements set forth in the implementation guide.

"Commission" means the Virginia Workers' Compensation Commission.

"EDI" or "electronic data interchange" means the method used to exchange data electronically between the commission and those organizations submitting claims reports to the commission.

"Filed electronically" means filed with the commission through EDI or through the Internet portal established by the commission for submission of claims reports, pursuant to the requirements set forth in the implementation guide.

"First report of injury" or "FROI" means the initial claims report filed with the commission concerning an injury.

"Implementation guide" means the Electronic Data Interchange (EDI) Implementation Guide, May 1, 2008 Edition, which contains requirements published and updated by the commission to be followed when claims reports are filed electronically with the commission.

"Insurer" means a company licensed to write workers' compensation coverage in Virginia.

"Minor injury" means an injury that meets none of the following seven reporting criteria:

1. Lost time or partial disability exceeding seven days.

2. Medical expenses exceeding $1,000.

3. Any denial of compensability.

4. Any disputed issues.

5. An accident that results in death.

6. Any permanent disability or disfigurement.

7. Any specific request made by the commission.

"Self-insurer" means an entity providing workers' compensation coverage directly to its employees based on formal approval by either the Virginia Workers' Compensation Commission or the State Corporation Commission.

"Subsequent report of injury" or "SROI" means a claims report filed with the commission after a FROI, which reports medical or indemnity payment activity about an injury or a decision to deny or no longer make payment on an injury.

16VAC30-91-20. Procedures for filing claims reports.

A. By no later than July 1, 2009, all claims reports must be filed electronically with the commission.

B. The commission shall publish an implementation guide describing the requirements to be followed when claims reports are filed electronically with the commission. Any changes or updates to the implementation guide shall be published by the commission on an annual basis on or about September 1.

C. A FROI must be filed on all injuries in accordance with the implementation guide.

D. SROI reports concerning denials, indemnity payments, medical payments, and suspensions must be filed on all injuries that do not meet the definition of a minor injury in accordance with the implementation guide.

E. An injury that meets the definition of a minor injury may be reported as such to the commission on a FROI in accordance with the implementation guide. If an injury that is reported to the commission as being a minor injury subsequently fails to meet the definition of a minor injury, then an updated FROI on that injury, followed by required SROI reports, must be filed with the commission immediately, in accordance with the implementation guide.

FORMS

First Report of Injury (rev. 5/1/08).