OVERVIEW

INTRODUCTION

The Colorado Division of Workers’ Compensation (DOWC) started its Electronic Data Interchange (EDI) program using the IAIABC standard format for Proof of Coverage  in 1994.  In 1997, DOWC began to accept EDI submissions of the First Report of Injury (FROI).  The DOWC’s EDI program continues to evolve and the rate of EDI submissions continues to grow as DOWC encourages the business community to operate in an increasingly paperless environment.

The EDI program at DOWC has streamlined the submission of First Report of Injury data from our many trading partners; eliminating their need for paper FROI forms, while sharply reducing the number of paper forms processed by the DOWC.  Our recent statistics show that approximately 42 percent of the initial First Report submissions and 100 percent of policy information are received via EDI.  DOWC now accepts Medical/Bill Payment Records and will begin to accept Subsequent Report of Injury (SROI) in January 2003. 

The DOWC invites you to participate in EDI and profit from its many benefits.  EDI allows for superior communication between the DOWC and our trading partners, thereby increasing accuracy, improving timeliness, and reducing costs.

EDI CONCEPTS

Electronic Data Interchange or EDI is defined as a computer-to-computer exchange of data in a standardized format.  EDI enables a commonly understood and standardized format of the relevant data to be transmitted.  Transactions are structured for highly automated processing.  Each trading partner must agree to use the standardized format and set of rules in order to participate in EDI. 

EDI is widely used in industry to transmit traditional “documents,” such as invoices and purchase orders, between companies.  Standardized transaction sets have been developed so that hundreds of different “documents” now can be electronically exchanged.  The result is a highly efficient means of conducting business.

There are several transmission methods in use today.  One mechanism is a Value-Added Network or VAN.  A VAN can be thought of as a post office that allows an entity to send EDI formatted data to a trading partner’s electronic mailbox.  The VAN will hold the file of transmitted transactions until the trading partner to whom it is addressed retrieves it later.

The Internet has increased the efficiency of EDI even more.  It provides business and government agencies an environment that is open, fast, cost effective, and widely used.  It is anticipated that the Internet will lead to even greater use of EDI in the future. 

ABOUT THE IAIABC, INTERNATIONAL ASSOCIATION OF INDUSTRIAL ACCIDENT BOARDS AND COMMISSIONS

The International Association of Industrial Accident Boards and Commissions (IAIABC) is a private association of workers’ compensation professionals from public and private sectors with a basic objective to strengthen and improve the administration of workers’ compensation laws.  On a national level, the IAIABC has spearheaded a program to use EDI for workers’ compensation.  State jurisdictions, insurance carriers, self-insured employers, third-party administrators, vendors and the IAIABC have formed national EDI Committees to develop, implement and maintain EDI formats for the workers’ compensation system.

ADVANTAGES OF EDI

The electronic submission of workers’ compensation claim information has many advantages over the submission of paper claims.  Benefits for both DOWC and its trading partners include:

• Improved reporting performance
• Time savings
• Cost savings
• Improved accuracy
• Enhanced flexibility

Improved Reporting Performance

Electronic submissions are a much more efficient way to transmit the legally required information related to workers’ compensation claims.  EDI eliminates any need to prepare and send a paper document to the DOWC through the traditional mail system.  Typically, the electronically submitted EDI data are received, processed, and acknowledged within hours of its submission, rather than the several days it takes through the postal system.

The timely submission of claim information is of primary importance to both the DOWC and the claim administrators.  EDI allows claim administrators to meet their reporting deadlines in a timely manner. 

Time Savings

EDI provides an efficient means of getting the correct information to the DOWC as quickly as possible.  It saves time by eliminating the processing of paper documents that would otherwise be required for both the trading partner and the DOWC.  Submitting data by EDI also streamlines error reporting by eliminating the phone calls that might otherwise be necessary to ensure that information is reported accurately.

Cost Savings

Although there are initial costs involved with designing, developing and implementing a new EDI system, these costs can be recouped and the system can pay for itself many times over by the efficiencies associated with EDI.  Sending documents electronically completely eliminates the costs of mailing and handling paper documents.  In addition, fewer people are required to monitor and administer the EDI system than are needed to process paper documents.  Thus, personnel at both ends of the electronic transaction who would otherwise be involved in handling paper claims can be assigned to other tasks.

Improved Accuracy

EDI reduces the redundant and error-prone entry of the same data into multiple computer systems.  Further, by immediately verifying and validating the sender’s transaction, the electronic acknowledgement process improves efficiency and accuracy, reducing the time it takes for the trading partner to correct invalid or inaccurate information.

Enhanced Flexibility

Electronic data can be sent anytime, day or night, ensuring the efficient and timely delivery of accurate information.  EDI transmissions can be scheduled during non-peak periods when demand for computing resources is lower.

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