Regulatory requirements for health care arrangements

This consultation seeks views to inform revised regulatory requirements relating to the healthcare arrangements within the NSW Workers Compensation and Compulsory Third Party systems, to manage costs and improve outcomes for injured motorists and workers.

  • The Issue

    Consultation period: 23/09/2019 8:00 am to 01/11/2019 11:59 pm

    Purpose

    The purpose of this consultation is to seek views to inform revised regulatory requirements relating to the healthcare arrangements within the NSW workers compensation and compulsory third party systems, to manage costs and improve outcomes for injured motorists and workers.

    Introduction

    Submissions to this consultation will inform SIRA’s consideration for revised regulatory requirements. Ultimately SIRA would like to ensure that health care arrangements within the personal injury schemes in NSW promote safety and quality in services provided to injured motorists and workers and reflect the principles of value-based care.

    SIRA is the NSW Government agency responsible for regulating workers compensation (WC) insurance and related activities, motor accidents/compulsory third party (CTP) insurance, and home building compensation in NSW. In stewarding these schemes, it is our mission to ensure they are:

    • equitable and fair
    • efficiently delivered
    • affordable for the community
    • sustainable and viable for generations to come
    • delivering scheme outcomes effectively
    • providing positive experiences.

    Why is SIRA doing this?

    The health care expenditure in SIRA-regulated schemes accounts for over $1 billion annually. While it represents a small overall component of the healthcare market for some segments SIRA-regulated schemes commission a significant proportion of healthcare expenditure.

    Scheme performance monitoring activity has highlighted escalating healthcare costs, particularly in the workers compensation scheme. Preliminary analysis by Ernst & Young (EY) conducted over the past couple of months has indicated some trends that may warrant further investigation across the key categories of expenditure including private and public hospital fees, ambulance; surgery and diagnostics; medical attendance; and allied health. A summary of EY’s findings is available in support of this public consultation.

    SIRA has also undertaken consultation with a range of insurers to further inform the range of issues canvassed in this consultation.

    A broader range of views is now sought on how we can improve outcomes and the value provided to injured motorists and workers in NSW through health care expenditure within the personal injury schemes.

    Key challenges and trends

    The dimension of medical spend

    • Health care costs are rising. Medical spend represents more than 30% of the cost of NSW CTP and WC schemes, and continued growth could pose a risk to workers compensation scheme sustainability
    • Current data collections do not contain sufficient information to analyse health outcomes within the schemes
    • The WC scheme is undergoing faster medical spend growth, particularly in recent years, than either Private Health Insurers in NSW, or Medicare.
    Percentage change in costs year on year
    Nominal Insurer
    (managed by icare)
    Treasury Managed Fund
    (managed by icare)
    Self and specialised insurers
    FY16FY17FY18FY16FY17FY18FY16FY17FY18
    % increase in medical Total 5% 12% 11% 0% 4% 11% 1% -1% 6%
    GP attendances 1% 6% 5% -1% 3% 6% -2% -2% 0%
    Allied health services 3% 14% 22% 1% 9% 19% -1% -7% 5%
    Surgery 4% 15% 17% -3% 8% 12% 3% 1% 7%
    Diagnostics 3% 13% 13% -2% 6% 7% -5% -1% 5%

    Note: this table relates to the workers compensation scheme only. Trend analysis is not yet available for the new CTP scheme.

    Medical cost dynamics

    • There has been consistent year-on-year increases in spend on surgery across both schemes. The growth includes increases in items billed and earlier approvals of surgery
    • Increased service utilisation has been observed in both schemes
    • There are variations in billing practices including how codes are used
    • There is Increased utilisation of some technologies, such as imaging, that the evidence suggests may be contra-indicated
    • Clinical pathways are not always available to guide leading practice and evidence-based medical care.
    Percentage change in utilisation year on year (number of service payments)
       Nominal Insurer
    (managed by icare)
    Treasury Managed Fund
    (managed by icare)
    Self and specialised insurers
      FY16FY17FY18FY16FY17FY18FY16FY17FY18
    % increase in medical Total* 0% 8% 12% -9% -4% 9% -3% -5% 1%
    GP attendances -2% 2% 3% -9% -7% 3% -4% -5% -1%
    Allied health services 1% 12% 17% -9% 0% 15% -1% -7% 2%
    Surgery 4% 13% 21% -7% -7% 11% 0% -1% 6%
    Diagnostics 2% 13% 16% -7% 1% 3% -5% -3%
     
            5%

    Note: this table relates to the workers compensation scheme only. Trend analysis is not yet available for the new CTP scheme.

    Interjurisdictional comparison of medical cost regimes

    • NSW medical fees reference Australian Medical Association (AMA) rates (with loadings for some practitioners). Other jurisdictions use AMA rates without loadings, or Medicare Benefits Schedule (MBS) rates.

    Regulatory requirements

    Regulatory requirements could include the following areas, among others:

    • health provider fee regulation
    • clinical safety and quality
    • cost-efficiency and cost-effectiveness of care
    • insurer performance monitoring
    • provider performance monitoring
    • patient experience and health outcomes monitoring
    • coding and billing system improvements

    There are also controls available to other participants in the schemes. For example, insurers can implement controls to manage health care cost ‘leakage’, that is an overpayment that could have been prevented. Leakage can arise from inadvertent administrative errors by providers as well as potential over-servicing or overcharging.

    Adequate systems are needed to support the implementation of these controls and support the achievement of improved health outcomes for injured motorist and workers.

    It’s likely that there will be further opportunities to have your say on health care arrangements in the WC and CTP schemes as the review progresses.

  • Milestones

    Stage of consultationKey date
    Consultation opens23 September 2019
    Consultations closes01 November 2019
     

    It’s likely that there will be further opportunities to have your say on health care arrangements in the workers compensation and compulsory third party (CTP) schemes as the review progresses.

Have your say

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We invite you to tell us your views by using our online form. You don't have to answer every question but your submission needs to address the specific issues raised in the documents and where possible provide evidence to support your feedback (eg are there any reports or papers you can refer to?).

Use our online form

If you can't use our online form, you can email your submission to consultation@sira.nsw.gov.au. We will publish your submission if not told otherwise.

If you can't provide your submission electronically, you can send your submission by mail to:

Regulatory requirements for health care arrangements consultation
SIRA
Level 6
McKell Building
2-24 Rawson Place
Sydney NSW 2001