Understanding Compliance and Regulatory Trends in Workers’ Comp Costs

As the regulatory landscape continues to shift at both the federal and state levels, understanding how these changes influence workers’ compensation costs is no longer optional, it's essential. From increased transparency mandates to accelerated artificial intelligence (AI) oversight, the intersection of legislation, compliance, and cost containment is changing rapidly. Forward-thinking organizations will understand this environment and identify opportunities to mitigate risk and unlock strategic value.

The Compliance Ripple Effect

Legislative reforms are driving structural shifts that directly impact payers, providers, and workers’ compensation stakeholders. A prominent example is the overhaul of the Department of Health and Human Services (HHS), which includes the formation of the Administration for a Healthy America (AHA) agency tasked with tackling the root causes of injury and chronic conditions like obesity. While preventive care is a long-term cost reducer, the immediate funding realignment introduces short-term pressure, particularly as significant budget cuts hit the Centers for Disease Control and Prevention (CDC) and National Institutes of Health (NIH).

Meanwhile, new federal work requirements and changes to coverage policies (such as expanded eligibility for Health Savings Accounts (HSAs) are reshaping workforce participation and coverage dynamics. These shifts impact claim volume, utilization rates, and ultimately, cost projections.

Price Transparency Moving from Range to Reality

A recurring theme in regulatory reform is price transparency. While hospitals were previously allowed to publish cost ranges for procedures (e.g., hip replacements ranging from $3,000 to $30,000), new mandates require them to post exact prices tied to revenue codes and diagnostic groupings. This move toward true price clarity will enable more accurate forecasting, benchmarking, and cost containment strategies especially as states begin to harness commercial health data to enforce accountability.

Where AI Opportunity and Oversight Collide

The federal government’s $25 million investment in AI to detect improper Medicare and Medicaid payments reflects a larger trend: AI is no longer emerging—it's embedded. The recently introduced Health AI Act proposes grants and initiatives to modernize diagnostics, mine electronic health records, and reduce administrative friction. However, with innovation comes regulation. Increased federal and state scrutiny is underway to ensure AI decisions are explainable, ethical, and transparent. Case in point: a national payer's alleged algorithmic denials have already prompted regulatory backlash—underscoring the importance of having auditable algorithms, real data inputs, and human oversight.

Organizations looking to scale AI for cost containment must not only train staff and modernize systems—they must also be prepared for increased documentation and compliance checkpoints.

A Patchwork of State Policy

At the state level, more than 900 AI-related bills have been introduced across all 50 states, Puerto Rico, and Washington D.C. Legislators are prioritizing:

• Workers’ compensation direction of care
• Behavioral health access and social worker licensure
• Drug pricing
• Consumer privacy
• Fraud detection

States like California and Texas have shown double-digit increases in medical charge inflation from 2020 to 2024, suggesting that cost pressures are intensifying in high-claim regions. Due to the latency of updating fee schedules in P&C, the provider charge is the one true identifier of future payment assumptions. Understanding how each jurisdiction enforces new compliance rules is critical to staying ahead of rising costs.

Prepayment and Network Compliance

One emerging challenge is providers requesting pre-pay agreements outside of standard network or contract terms. In states like Florida, these practices can lead to overpayment of claims, compliance violations, lack of reporting, and administrative strain. Regulators have begun investigating these practices more seriously—but enforcement is still catching up. In the meantime, payers must closely track these occurrences, escalate when necessary, and ensure bill review systems like SmartAdvisor are equipped to flag inappropriate agreements.

The Bottom Line: Compliance Drives Cost and Opportunity

With so much in motion, cost containment is no longer about reacting to claims. It’s about proactively aligning with regulatory trends. From federal price transparency laws to state-level AI mandates, compliance is a new lever in managing costs, reducing risk, and driving performance.

Organizations that elevate compliance from a reactive obligation to a strategic pillar will be best positioned to navigate the future. That means investing in smarter systems, embracing transparency, and building agility into your operating model. Because when regulation becomes the norm, compliance becomes your competitive advantage.

To learn more about what the Enlyte government affairs team is working on, and stay up to date on this and other regulatory issues, sign up to receive our monthly Compliance Connection Newsletter.