Regulatory requirements for health care
We're seeking your views to inform revised regulatory requirements relating to the healthcare arrangements within the NSW Workers Compensation and CTP systems.
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The Issue
Consultation period: 23/09/2019 8:00 am to 29/11/2019 11:59 pm
Notice
The consultation has been extended until Friday 29 November 2019.
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 FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18 % 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 FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18 % 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.
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Milestones
Stage of consultation Key date Consultation opens 23 September 2019 Consultations closes 01 November 2019
29 November 2019It’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.
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Outcomes
What’s driving escalating healthcare costs in the NSW Workers Compensation scheme?
Healthcare costs account for more than $1 billion each year in personal injury insurance schemes in New South Wales. In recent years, the costs have grown faster in the NSW workers compensation scheme than in Medicare and private health insurance.
SIRA Chief Executive Carmel Donnelly said, “While health care fees in SIRA-regulated schemes are in some cases higher than other states, this has been the case for many years. The recent changes in healthcare expenditure relate primarily to increases in service utilisation – not medical fees.”
To better understand and address the drivers of escalating healthcare costs and service utilisation, SIRA is leading a Review of Regulatory requirements for health care arrangements in the NSW Workers Compensation and CTP schemes. Under the review, SIRA is considering the full range of healthcare arrangements in the Workers Compensation and CTP schemes, including fees, clinical quality, data and reporting, monitoring and compliance and regulation.
“Since 2016 we’ve seen increases in healthcare utilisation among some insurers, without a corresponding improvement in return to work outcomes. The review is not about reducing expenditure or the treatment available to injured people. SIRA’s objective is to make sure that every dollar spent delivers quality and value and optimises recovery,” Ms Donnelly said.
Submissions and themes
SIRA received 53 submissions to the review, 43 of which have now been published (see link below). SIRA also held a series of stakeholder briefings. A final report will be published in the second half of 2020. In the meantime, SIRA is working with insurers to tighten controls around treatment payments and approvals and with the medical community on value-based care and fees models.
The submissions include the following themes:
- the importance of strengthening insurer controls over health provider billing
- the need for insurers to more closely scrutinise proposed treatments
- the importance of early treatment in medical costs across the life of a claim
- the need for insurers to better identify injured people at risk of not returning to work
- a link between adversarial claims and disputes and non-medically appropriate care
- an increase in degenerative, rather than traumatic injuries
- health providers seeing patients for long periods without clinical justification
- the need for increased data publication
- consideration of outcome-based fee models
- the need for SIRA to set clinical frameworks and standards
Changes in service utilisation
Increased service utilisation accounts for around 61 percent of the total growth in workers compensation medical expenditure between 2016/17 and 2017/18. By comparison, increases in the unit cost (i.e. the fee paid per service) accounts for around 5 percent of the total growth in healthcare expenditure. Other contributing factors include growth in active claims.