Seven actions completed or completed and ongoing and 14 actions in progress
icare actions required by SIRA
1. Business Plan resubmission
SIRA will require icare under Division 4 of the Workers Compensation Act 1987 to revise and re-submit to SIRA its FY19/20 business plan by 28 February 2020 to address key issues and findings from the review. The revised Business Plan is to include appropriate targets for return to work at 4, 13 and 26 weeks and action to deliver performance at the targeted levels as well as comprehensive plans to improve claims management by the Nominal Insurer (NI) including:
- Scheme agent capability, resilience, staff turnover and resourcing
- Ongoing review and refinement of claims management including agent arrangements, triaging of claims and provision of dedicated case managers to significantly injured workers
- Claims management for workers with psychological injuries or mental illness
- Systems for ensuring reasonably necessary healthcare services are provided appropriately, at the appropriate time for optimal recovery and return to work, and with high levels of regulatory compliance
- Compliance with the Market Practice and Premiums Guidelines and review and refinement of the NI premium methodology
- Compliance with mandatory data reporting and data quality requirements
- Risk management, internal audit planning and risk mitigation reporting
- Stakeholder engagement
(Expected financial savings should be reported on a net basis – requirement from SIRA CE letter dated 16 January 2020)
Status: No further action for the FY 19/20 Business Plan given elapsed time. SIRA is currently reviewing icare’s submitted FY 20/21 Business Plan.
SIRA comment: icare provided an update to its FY19/20 Business Plan that was not considered satisfactory by SIRA. In particular SIRA remained concerned that icare Business Plan performance targets for Return to Work rates are too low: 39 per cent at 4 weeks, 75 per cent at 13 weeks and 80 per cent at 26 weeks. Given the elapsed time SIRA took no further action on the deficient FY 19/20 Business Plan but expected icare to comply with the above requirements for the upcoming FY 20/21 Business Plan.
In the preparation of the FY 20/21 Business Plan SIRA and icare regularly communicated to ensure clarity of expectations. icare submitted the Business Plan on time and this is currently under review by SIRA.
Business Plans are submitted pursuant to section 202B of the 1987 Act. Licensed insurers are required to prepare and deliver to SIRA a business plan for its workers compensation business that is in accordance with the legislation.
2. icare is required to urgently address data quality and timeliness issues and provide monthly data in accordance with regulatory requirements.
SIRA recommends icare work with an ICT assurance specialist agreed with SIRA to ensure adherence to data provision requirements.
SIRA comment: SIRA has requested icare to provide a comprehensive plan to address data quality concerns and icare is required to continue to provide SIRA regular updates on progress to data improvement plan.
SIRA and icare have been engaging closely on resolving data quality issues. SIRA has provided clarity as to expectations of action point.
3. Review of icare Workers Insurance Premium Calculation Model
icare will undertake a comprehensive review of the icare Workers Insurance Premium Calculation Model, including:
- detailed assessment of all components of the existing premium calculation methodology against the principles of the Market Practice and Premium Guidelines (MPPGs)
- detailed analysis of longitudinal impacts for employers and any consequential or perverse impacts for the broader workers compensation system
- development of alternative options with the objective of improving consistency with MPPGs
icare will provide SIRA with a report on its review of the Workers Insurance Premium Calculation Model as part of the 2020 NI premium filing.
Status: This was initially completed to a satisfactory standard for implementation with revised premiums for the 20/21 year, however with icare withdrawing the 20/21 filing due to COVID-19 and continuing with the previous premium model, the improvements to the premium methodology have been delayed.
SIRA comment: SIRA and icare are continuing Joint Premium and Prudential Oversight Committee meetings to monitor further premium calculation reforms.
4. icare’s premium review arrangements
icare will review and formally advise SIRA of its premium review arrangements under Section 8.5 of the Market Practice and Premiums Guidelines issued by SIRA under Division 2 of the Workers Compensation Act 1987
icare will report to SIRA quarterly on premium complaints received and premium reviews and other actions taken as required.
icare actions recommended by SIRA
5. Dedicated case manager
Noting icare has advised SIRA that icare and its agents now allocate a dedicated case manager where an injured worker is away from work for 2 weeks. SIRA recommends icare consider a further enhancement to allocate a dedicated case manager whenever an injured worker is likely to be (or has been) incapacitated for work for a continuous period of more than 7 calendar days. This would include any injured person meeting the definition of a worker with a significant injury as defined by s42 of the Workplace Injury Management and Workers Compensation 1998 Act (1998 Act) and would strengthen delivery of appropriate injury management as required by s45 of the 1998 Act.
SIRA comment: icare wrote to SIRA requesting feedback on proposed alternatives to action that would see an increased number of injured workers allocated a case manager earlier. SIRA has responded requesting further detail and discussions continue.
SIRA notes that over the last 3 years about 30 per cent of injured workers with claims with the NI have more than 14 calendar days on weekly benefits and 40 per cent have more than 7 calendar days. SIRA continues to recommend that all injured workers with more than 7 calendar days on weekly benefits have a dedicated case worker, noting that this would still leave about 60 per cent of injured workers without a dedicated case manager and SIRA will closely monitor outcomes for each cohort.
6. Remuneration incentives for 4, 13, 26 weeks
icare should review RTW remuneration incentives for scheme agents and relevant icare employees to ensure focus on return to work outcomes at 4, 13 and 26 weeks.
7. Small business employers claim management provider
Noting the announcement of the extended Authorised Provider Model will increase choice of claims management service for large employers, it is recommended icare also enhance the NI operating model to provide small business employers with greater choice of claim management service provider. Options would be developed by icare in consultation with SIRA.
SIRA comment: icare has commenced RFP process to consider an enhanced operating model to cater for small business employers and will continue to progress in future months due to current COVID-19 response.
8. SIRA Tripartite Reference Group
SIRA will invite icare to attend SIRA Tripartite Reference Group meetings at least once per quarter to outline progress on actions arising from the Review and on the performance of the NI. It is recommended the icare CEO attend whenever possible to engage with peak business organisations and unions.
Status: Completed and ongoing
9. Independent Review of culture, governance and accountability
SIRA recommends icare commission an independent review into the culture, governance and accountability in the icare team and agents managing the NI.
Status: icare advise this is progressing
SIRA regulatory actions related to the NI
10. Quarterly Compliance and Performance Audit
During 2020, SIRA will conduct and publish a quarterly compliance and performance audit of claims management by the NI, under Division 4 of the Workers Compensation Act 1987, including file reviews utilising an enhanced methodology. Audit reports will be provided to the SIRA and icare boards
The first audit has commenced in February 2020 and is being undertaken by EY in accordance with Terms of Reference to be finalised by January 2020.
SIRA comment: The final report of the first quarterly review is available here. Auditors have completed the second quarterly review and are now drafting the audit report.
The third quarterly review is to commence as soon as possible to realign with original planned scheduling following the delays due to the COVID-19 pandemic.
11. Independent Audit of NI’s medical services
Noting that the NI has experienced a higher rate of increase in utilisation of medical services than other providers, without improvement in return to work outcomes, under Division 4 of the Workers Compensation Act 1987, SIRA will commission an independent audit of the NI’s approval and payments process for medical and related treatment expenses to monitor compliance with regulatory requirements.
This audit will commence in the April quarter of 2020.
SIRA comment: Commencement of audit has been delayed due to impacts of COVID-19. SIRA has undertaken a review of the reasons for rising health care costs and commissioned an independent analysis of medical billing controls across the workers compensation system. This is informing the methodology for the audit of medical payments processes.
SIRA is establishing an insurer working group with the aim to minimise leakage through building increased capacity, billing literacy and enhancing medical payment governance.
12. SIRA advice to Government on prudential supervision
SIRA will provide advice to Government on prudential supervision options for the NI. SIRA will continue its monitoring focus on capital adequacy. SIRA will continue to work with NSW Treasury in line with the NSW Treasury/SIRA Memorandum of Understanding.
Status: Completed and ongoing
13. SIRA and icare board engagement
SIRA will engage constructively with the icare board and senior executives on the NI management and improvement plans; SIRA will retain its independent approach on compliance and enforcement matters.
Status: Completed and ongoing
14. SIRA will provide advice to Government on legislative policy matters as required
SIRA Regulator commitments
15. SIRA to review performance indicators and compliance benchmarks
SIRA will review definitions and strengthen key performance indicators and compliance benchmarks for workers compensation insurer performance over 2020 and will publish the results at least quarterly. SIRA will consult widely on the development of the indicators and benchmarks.
SIRA comment: SIRA has developed a range of measures and metrics to inform monitoring and supervision. Consultation on improvement metrics will be staggered in recognition of the priority for consultation on COVID-19 related adaptation. SIRA is currently consulting on a framework for health outcomes measurement and will soon have results from its new independent rolling survey of customer experience and outcomes.
16. RTW measurement framework
As a priority, SIRA will lead consultation on measurement of return to work outcomes for injured people and is working with Safe Work Australia on its national RTW measurement framework.
SIRA comment: Effectively measuring return to work is critical to understanding the performance of the workers compensation scheme. As the regulator, it is SIRA clear role under the legislation to determine how return to work will be measured. In New South Wales and insurers are required to measure and report on actual return to work – not cessation of benefits.
In addition to this central measure, there are ways in which the drivers and barriers to return to work can be measured. SIRA is actively contributing to the national return to work strategy and is also leading a process in NSW to enhance metrics.
SIRA has considered the submissions to the ‘Measuring RTW’ discussion paper and has undertaken a series of subsequent digital roundtable consultations with stakeholders. A report will be published later this year.
SIRA has also established a dedicated RTW Team to work with employer and worker representatives and providers to drive system wide action to improve return to work.
SIRA will lead a NSW Return to Work Strategy as part of the COVID-19 recovery phase.
17. Medical partnerships
SIRA will partner with professional medical colleges to increase awareness of the Health Benefits of Good Work initiative amongst GPs and other health providers.
SIRA comment: SIRA is actively engaging with professional medical colleges to plan for broader GP and health provider education activities, though the immediate focus is adaptation to the impacts of COVID-19 pandemic.
18. Reviewing health costs
SIRA is currently undertaking a review of health care arrangements for the workers compensation and CTP schemes in response to rising health care costs. Over 2020, this review will result in improved regulatory and fee setting approaches to ensure injured people have access to the right healthcare at the right time for optimal recovery and return to work, and so the schemes provide value-based healthcare.
SIRA comment: SIRA is developing improved reporting on health care costs and outcomes in the CTP and workers compensation personal injury schemes. A market pricing review including research of options for fee reform has commenced and a draft health outcomes framework is now available for public consultation.
A final report will be published in the second half of 2020.
SIRA is working with insurers to improve administration of medical treatment payments and approvals.
19. Customer survey
SIRA will conduct a rolling survey to measure the customer experience of injured people and policy holders across workers compensation and CTP. The first survey will commence by March 2020 and will be published by June 2020.
A second survey of injured people is scheduled to commence by the end of 2020.
The employer survey program is to be recommenced at a time when the impacts of the COVID-19 pandemic have lessened.
Agreed joint SIRA/icare actions
20. Half-yearly board meetings
SIRA and icare boards will meet half-yearly. The SIRA Chief Executive and icare CEO will meet monthly with a more detailed quarterly review meeting in line with quarterly audit processes.
Status: Completed and ongoing
21. Monitoring (JPPOC and JCAC)
SIRA and icare will continue, until at least December 2020, the current level of escalated monitoring and communication provided by the SIRA/icare NI Joint Premium and Prudential Oversight Committee (JPPOC) and Joint Claims Assurance Committee (JCAC).
Status: Completed and ongoing