The New Mandate for State Funds: Turning Medical Record Review into a Measurable, Auditable Process

State funds have always operated under a unique mandate: to protect injured workers while remaining accountable to the public. Unlike private carriers, they must deliver both operational efficiency and public transparency—and that tension is showing up most acutely in medical record review.

The hidden drag on performance

Across the country, medical record volume continues to grow. The National Council on Compensation Insurance (NCCI) projects that average claim severity will rise by roughly 6% in 2024, driven by medical inflation and longer treatment durations.¹ Meanwhile, overall claim frequency remains high—nearly 4.9 million workers’ compensation claims are filed each year across public and private insurers.²

For most state funds, the downstream effect is familiar:

Claims generate hundreds of pages of records per injury.
Adjuster staffing hasn’t scaled accordingly.
Review cycles stretch from days into weeks.

In an era where every dollar of loss adjustment expense is scrutinized, the manual copy-and-paste review model is no longer sustainable—or measurable.

The compliance and transparency layer

Unlike private insurers, state funds are subject to open-records and audit requirements. Every decision can be questioned—by auditors, claimants, or even journalists. Yet most medical chronologies are still built by hand in Word or Excel, often without traceable references to the source documents.

That lack of auditability isn’t theoretical. A national study of 83 top U.S. hospitals found significant inconsistencies in how organizations disclosed medical records, including formats, turnaround times, and adherence to state deadlines.³ If the healthcare industry itself struggles to produce defensible record histories, insurers handling thousands of medical attachments per week face an even steeper compliance challenge.

Boards and general counsels increasingly ask not just, “Did we complete the review?” but “Can we prove how it was completed?”

That’s the shift from efficiency to defensibility.

From speed to defensibility

The next phase of modernization for state funds isn’t simply faster processing—it’s provable processing.
Forward-looking funds are redefining medical record review as a quantifiable, auditable workflow, built around metrics like:

Days-to-review completion
First-pass completeness
IME packet turnaround
Audit response time

AI-assisted tools now make it possible to automatically split, deduplicate, and summarize medical records while preserving page-level provenance for every extracted data point.
That provenance—knowing exactly which document and page each finding came from—is what transforms automation into a compliance and governance advantage.

When an auditor or public-records officer asks for evidence, adjusters can export the supporting pages in minutes instead of days.

And given that over 11,000 workers’ compensation claims exceeded $2 million in incurred losses between 2001 and 2021,⁴ the stakes for accuracy and traceability are enormous.

Pilots over procurement

Modernization doesn’t have to wait for a multi-year RFP. Many state funds are beginning with 30-day pilots—read-only, low-risk tests that measure outcomes before a formal procurement cycle begins.
The KPIs are board-friendly and immediately visible:

Reduce review time by 40–50 %.
Improve first-pass completeness to > 90 %.
Cut IME packet turnaround from 10 days to ≤ 4.
Enable full audit export for every reviewed claim.

When those numbers move, leadership doesn’t need convincing—the results make the case.

A moment of opportunity

Medical complexity, claim severity, and transparency demands are all rising. But state funds that move first—shifting from manual review to measurable, auditable workflows—can set a new operational standard for public insurers.

AI isn’t replacing adjusters. It’s giving them an audit-ready foundation to work faster, with greater accuracy and accountability.

Closing thought

The future of claims isn’t about speed alone—it’s about provable integrity.
For state funds, turning medical record review into a measurable, auditable process isn’t just innovation—it’s compliance, governance, and leadership.

Sources

National Council on Compensation Insurance (NCCI), 2024 State of the Line Guide.
SimplyInsurance, “How Many Workers’ Comp Claims per Year” (2024).
Yale University / JAMA Network, Assessment of Patient Access to Medical Records, 2018.
PropertyCasualty360, “20-Year Study: The State of Mega Claims in Workers’ Compensation,” 2024.