AIA: Illinois Workers’ Compensation Reform Legislation Represents a Modest Approach

Steve Schneider, Midwest region vice president for the American Insurance Association (AIA), issued the following statement before testifying today before the Illinois Senate Executive Committee on SB 12, workers’ compensation reform legislation. Mr. Schneider will represent an industry group that includes: AIA, the Illinois Insurance Association (IIA), the National Association of Mutual Insurance Companies (NAMIC) and the Property and Casualty Insurers Association of America (PCI).

Mr. Schneider’s statement follows:

“The reforms contained in SB 12 represent a mixed bag of modest reforms to the state’s workers’ compensation system. While we support the effort to reform Illinois’ workers’ compensation system, SB 12 has the potential to be counterproductive. We believe that there are four provisions which need to be addressed if they are to truly be beneficial.

First is the medical fee schedule, which has been the constant focus of additional work and reductions over the last decade ever since its original enactment in 2005. We suggest setting aside the awkwardly developed schedule contain in SB 12, adopting one base upon the federal Medicare reimbursement standard but at a substantially higher rate.

Second, the SB 12 calls for the adoption by regulation of a closed drug formulary, which insurers typically support. However, the drug formulary proposed needs further specificity and clarity in order to be effective in addressing the costs of prescription drugs. Third, SB 12 calls for the electronic transmittal of certain claim information and payment of medical bills within an extremely short time frame. This raises the potential for penalties with little benefit to others. We recommend leaving the statue as is.

Finally, SB 12 calls for the creation of the Workers’ Compensation Edit, Alignment and Reform Commission, with no representation from the insurance industry. Insurers pay seventy-five percent of the workers’ compensation claims in the state and should have a seat at the table. We question why trial lawyers have a seat, but the industry does not.

We thank the Senate for the opportunity to present our concerns at today’s hearing and look forward to working with them in a constructive manner that benefits Illinois.”

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