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Workers compensation system explanatory note September 2019

Accessible version

About this month’s system performance results

Effectiveness

Return to work (RTW) rates continue to deteriorate in September 2019

RTW is a key indicator of the Workers Compensation system performance and health. Research has indicated that returning to work makes an important contribution to a worker’s recovery, it is important to employers and it is important for a viable and sustainable Workers Compensation system.

Across the system the RTW rate is measured using work status codes at 4 weeks, 13 weeks and 26 weeks. As shown in the following table the RTW rate at 4 weeks has dropped by 6.8 percentage points since September 2018. Similarly, the RTW rate at 13 weeks for the same period deteriorated by 6.5 percentage points and at 26 weeks by 7 percentage points.

Table 1 - RTW performance across the system

RTW rates

September 2018

September 2019

Percentage points change between September 2018 and 2019

4 weeks

68.9%

62.1%

-6.80%

13 weeks

82.2%

75.7%

-6.50%

26 weeks

88.4%

81.4%

-7.00%

The deterioration in RTW across the system is largely driven by the performance of the NI and has been the subject of a compliance and performance review.

The self-insurers RTW performance is deteriorating to a lesser degree and SIRA is currently analysing this. While at a very preliminary stage, initial exploration reveals the RTW performance is impacted by several variables including data quality and completeness from insurers. Once SIRA has completed the analysis we will report more fully on this aspect of the system performance.

In addition to RTW rates being calculated using work status code data, SIRA has analysed the number of workers who are receiving weekly benefits and the costs for each month. The results show a diminished RTW rate and increasing weekly payments across the system in September 2019.

The average duration (in days) a worker was receiving weekly benefits in the first six months following an injury in 2013/14 was 23.3 days. This has steadily increased to 27.8 days in 2018/19 as measured at 30 September 2019.

There is an increasing trend in both the amount of weekly payments and the number of active claims (see below). The amount of weekly payments in the 12 months to September 2019 increased by 20% relative to the preceding 12 months. The specialised insurers (weeklies increase of 18%) and the TMF (weeklies increase of 17%) are both showing a similar trend.

There is also a trend in increasing costs for weekly payments made per month, which is consistent with declining return to work rates.

Viability

Claim payments and active claim numbers are increasing – driven by weekly payments and increased medical costs and payments.

Claim numbers and active claims

The stability of claim numbers and claim costs is an important measure of the Workers Compensation system stability and viability. An indicator of this stability is the number of active claims in the system (where an active claim is defined as a claim with payment activity within the last three months).

The number of claims reported shows no strong upward trend for the quarter however active claim numbers have increased. Despite claim numbers having no strong upward trend, the number of active claims has increased materially in the September quarter. The NI increase is a 7% increase (September to September) however between March 2019 and September 2019 this increase has been nearly 20%. The annual increase for specialised insurers has been 10% (6% for TMF and 3% for self-insurers). The increase since March has been approximately 5% for the TMF, self and specialised insurers which indicates that the NI data at March was possibly understated (this possibly may be due to the introduction of the NI Guidewire (Nominal Insurer icare Single Platform). There has been a step jump in the number of active claims between June 2019 (about 60,000) and July 2019 (about 65,000). August and September show a continued upward trend.

Claim payments

The payments data is also relatively volatile on a month to month basis. While SIRA values the transparency and timeliness of reporting, there may be payments reported which are understated. SIRA retrospectively adjusts data submissions and/or corrections in insurers subsequent month’s reporting.

Overall claim payments continued to increase with payments totalling $3.3B for the rolling 12 months to September 2019. Total claim payments increased by $296M year on year from September 2018 to September 2019. The primary drivers for this increase were the weekly payments (as referenced above) and the medical payments with total medical spend increasing by 10% ($84M) over the previous period.

Further analysis of medical payments shows that private hospital expenditure increased to $140M ($10M or 7% increase in claims), while surgery expenses increased to $ 110M (an additional $6M in payments). Orthopaedic surgery (excluding spinal surgery) constituted 58% of the total surgery expenses. In addition, the payments for allied health expenses increased with physiotherapy services increasing 13% ($9M in additional payments with service being provided for 8% more claims). Similarly, psychological services increased by 33%, ($8M in additional payments with service being delivered for 24% more claims). The payments for exercise physiologists’ also increased by 23% ($6M in additional payments with service being delivered for 19% more claims).

Rehabilitation services payments show a decline in payments of 18% ($33M less in payments with services being provided to 10% fewer claims).

Customer experience

Enquiries, complaints and disputes were slightly down for September 2019

SIRA and WIRO received 3,177 enquiries and complaints about the NSW Workers Compensation system in September 2019, with a dispute rate of 0.6% on all 99,698 active claims in the system.

Feedback on these reports

This monthly dashboard includes several enhancements. Feedback and comments on the dashboard reports are welcome.

Please email us at: WCRSystemperformance@sira.nsw.gov.au.

About the data in this report

The dashboard reports data from multiple sources to provide insights into the system performance of the NSW Workers Compensation system. The report is structured on SIRA’s performance framework, reporting on performance measures of effectiveness, efficiency, viability, affordability, customer experience, and equity.

SIRA as the regulator of the NSW Workers Compensation system monitors the system regularly and defines parameters of the system in alignment with the glossary and descriptions in the attached table. From time to time there are discussions and presentations from providers within the Workers Compensation ecosystem including insurers, medical and allied health providers etc about these metrics. One such discussion currently within the landscape is that of the definition of active claims.

Methodology, data notes and data sources

The data presented in this report are derived from monthly claims submission data, annual declarations provided to SIRA from NSW workers compensation insurers, the Workers Compensation Commission and the Workers Compensation Independent Review Office.

The financial and cost information in this report is presented in original dollar values with no indexation applied. Costs in the workers compensation scheme are subject to a variety of potential inflationary factors including wage and salary rates, medical fee schedules, statutory benefit indexation and general price inflation. As there is no single index which adjusts for all potential factors, costs have been shown in their original dollar values for simplicity.

The premium value used for the Nominal Insurer in this report is calculated as total premium payable net of GST and levies, such as the dust disease levy and mine safety levy. Premium for self-insurers is deemed premium, calculated as wages covered multiplied by the premium rate applicable for the appropriate industry class. Premium for Government self-insurers (TMF) is the value of the deposit contributions made by each member agency. Premium for specialised insurers is the gross written premium, net of GST and levies, such as the dust disease levy and mine safety levy.

Insurers regularly update claims data based on the progression of a claim. This may result in changing claim details month on month.

Additional efficiency information

System costs – weekly payments

SIRA in the previous reports offered additional data on the Workers Compensation system performance. These additional data sets have been included at the end of the dashboard report to show the following.

  1. The cost to the system of weekly benefits paid per month.
  2. The number of workers receiving weekly benefits per month.
  3. The average duration of weekly benefits paid to workers in the first six months following their injury.
  4. The percentage of workers who have returned to work (including those who received medical benefit only with no lost time), at 4, 13 and 26-week intervals.

As indicated above, analysis of this additional information reveals an upward trend for both the costs associated with deteriorating RTW rates and the number of workers receiving weekly benefits.

The “Claim payment development” chart has again been developed for the August 2019 dashboard. The chart shows claim payments by accident year. That is, comparing payments of accidents occurring in the 2019/20 financial year with the prior accident period at the same stage of development. This chart allows for like for like comparisons across financial years and presented in original dollar values with no indexation applied.

Data source information

Effectiveness

Reported claims

Standard terms

Definitions

Active claim

An active claim is defined as a claim with any payment within a three-month period.

Reportable claims

A reportable claim for workers compensation or work injury damages is a claim that a person has made or is entitled to make under the Workplace Injury Management and Workers Compensation Act 1998. Claims become reportable once they meet certain liability conditions and/or have received payments. For example, the injury or illness may be physical or psychological and employment must be a substantial contributing factor to injury, except for those claims made by police officers, paramedics, fire fighters, volunteer bush fire fighters and emergency and rescue services volunteers for injuries suffered during journeys to and from work or place of volunteering.

Reportable claims include claims from workers whose employer is uninsured. Where a split by insurer segment is shown, claims of uninsured employers are included with the Nominal Insurer segment.

Exclusions

Reportable claims exclude administration error claims, claims closed with zero gross incurred cost, claims shared between two or more workers compensation agents/insurers and the agent/insurer is not responsible for the management of the claims, and claims with payments only for recoveries, vocational programs or invalid payment classification numbers.

Reportable claims also exclude claims for:

  • dust diseases (administered by the Dust Diseases Authority)
  • workers who are self-employed
  • employees of the Australian Government
  • a member of the NSW Police Force who is a contributor to the Police Superannuation Fund under the Police   Regulation (Superannuation) Act 1906.

Records submitted

All records received from insurers across NSW.  This data excludes administration errors.

Lost time

Monthly average, over the last 12 months, of workers who had lost time.

Claim types

Standard terms

Definitions

Claim types

Claims reported in the reporting month, classified as either 'psychological injuries' for mental disorder claims or 'all non-psychological injuries' for all other claims

Psychological Injury (ies)

The range of psychological conditions for which workers compensation may be paid, including post-traumatic stress disorder, anxiety/stress disorder, clinical depression and short-term shock from exposure to disturbing circumstances.

Return to work

Standard terms

Definitions

Return to work rate

The Return to work (RTW) rate is the percentage of workers who have been off work as a result of their employment-related injury/disease and have returned to work at different points in time from the date the claim was reported (i.e. 4, 13 and 26 weeks for the SIRA Stats report).

RTW rates are calculated monthly for the last 13 months up to the date of data. The cohort for each RTW measure is based on claims reported in a 12-month period, with a lag to allow for claim development (i.e., the lag for the 4-week measure is 28 days; the lag for the 13-week measure is 91 days; and the lag for the 26-week measure is 182 days).

Calculation method for 4-week measure for November 2018 is given below as an example:

  1. Total number of time lost claimants = Claims   reported from November 2017 to October 2018
  2. Total number of claimants back at work in 28   days (based on work status codes 1, 2, 3 & 4) with any capacity

RTW Rate=b/a multiplied by 100

SIRA identified data quality issues with the accuracy and completeness of data submitted by the Nominal Insurer (NI). The data revealed a significant deterioration in the NI’s RTW performance. To address the data quality and potential performance concerns with the NI, SIRA carried out a Data Quality audit in December 2018 and commenced a Compliance and Performance Review in February 2019. SIRA published the Review and associated documents in December 2019 and the reports are available here.

Claims by body locations

Standard terms

Definitions

Bodily location of injury / disease

The bodily location of injury/disease classification is intended to identify the part of the body affected by the most serious injury or disease. Only 1-digit bodily location of injury is used.

Mechanism of incident

Mechanism of incident applies to claims entered into the insurer’s system on or after 1 July 2011 and uses the Type of Occurrence Classification System, 3rd Edition (Revision 1) Australian Safety and Compensation Council, Canberra 2008.

Nature of injury /disease

The nature of injury/disease classification is intended to identify the type of hurt or harm that occurred to the worker. The hurt or harm could be physical or psychological.

Efficiency and viability

Claim payment types

Standard terms

Definitions

Payment data

Payments made are based on the transaction date. Payments with payment date within the reporting period.

Common Law (WID) payments

Lump sum payments for damages and common law legal expenses incurred by the worker or agent/insurer, pursuant to Part 5 Common Law remedies, Sections 149 to 151AD, Workers Compensation Act 1987 and Section 318H, Workplace Injury Management and Workers Compensation Act 1998.

WID stands for ‘Work injury damages’ and this term is used interchangeably with ‘common law’

Commutations

The actual gross amount of commutation awarded or agreed upon for the claim. This refers to compensation where a commutation of the claimant's right to compensation has been made by the insurer. The up-front lump sum payment is made to an injured worker in place of continuing weekly compensation award and future medical and hospital expenses, pursuant to Part 3, Division 9 Commutation of compensation, Sections 87D to 87K, Workers Compensation Act 1987.

Death payments

Funeral expenses, weekly payments for dependent children and lump sum payments paid to the dependants or estate of the deceased worker, pursuant to the Workers Compensation Act 1987 No. 70 and Workers Compensation (Dust Diseases) Act 1942.

Injury Financial year

The financial year in which the injury occurred. Starts on 1st July and ends on 30th June the following year

Investigation payments

Payments for insurer and worker investigation expenses, pursuant to Sections 9A, 11A and 44A, Workers Compensation Act 1987 and Sections 45A, 330, 331, 337, 339 and 376, Workplace Injury Management and Workers Compensation Act 1998.

Number of workers receiving weekly benefits per month

Number of injured workers receiving weekly benefit payments excluding Section 39 claimants that exited the system until June 2018.

Other payments

Payments for repair to or replacement of artificial limbs and clothing because of the workplace injury, amounts paid to any approved interpreter service for English language assistance to the claimant, transport and maintenance expenses related to travel costs incurred by the worker and shared claim payments.

Lump sum (S66 and S67)

Section 66 payments are lump sum payments for the permanent loss or impairment of a specified bodily function or limb, or severe facial or bodily disfigurement, including interest, pursuant to Section 66, Workers Compensation Act 1987 and as provided by the Table of Disabilities or whole person impairment (WPI) and Ready-reckoner of Benefits Payable.

Rehabilitation payments

Payments for a single workplace rehabilitation service, a suite of services provided to assist a worker to RTW with the same employer, a suite of services provided to assist a worker to RTW with a different employer or travel costs of the workplace rehabilitation provider in the delivery of rehabilitation services, pursuant to Sections 59, 60 and 63A, Workers Compensation Act 1987.

Rehabilitation treatment includes the initial rehabilitation assessment, workplace assessment, advice concerning job modification, and rehabilitation counselling. Rehabilitation treatment does not include medical, hospital, physiotherapy or chiropractic treatment.

Weekly benefits paid per month

Weekly benefit payments paid to injured workers for incapacity excluding Section 39 claimants that exited the system until June 2018.

Weekly payments

Weekly payments paid to an injured worker for incapacity.

Compliance and enforcement

Standard terms

Definitions

Compliance promotion and assurance

The count of individual cases within the reporting period that SIRA has undertaken a compliance assurance activity. These include proactive compliance assurance activities and assessments of referred cases of alleged non-compliance.

Escalated enforcement and fraud

The count of individual cases within the reporting period that SIRA has undertaken an assessment or investigation of alleged fraud or escalated matters consideration for an enforcement response.

Penalties and prosecutions

SIRA enforcement actions undertaken with the reporting period, including the issuing of infringement notices, recoveries of avoided premiums and prosecutions.

Benefits paid to and for workers as a percentage of total claims expenditure

Standard terms

Definitions

Benefits paid directly to workers

Includes weekly payments, common law, s66, death benefits, commutations and miscellaneous payments.

Benefits paid for services for workers recovery and return to work

Includes medical costs, allied health services e.g. rehabilitation payments to support claimants.

Insurer expenses

Includes administration and operating expenses, regulatory costs, investigations, insurer’s legal fees etc.

Affordability

Insurance affordability

Standard terms

Definitions

Affordability

A reflection of the cost of premiums for workers compensation as a percentage of the reported NSW wages bill.

The premium value used for the Nominal Insurer is calculated as total premium payable net of GST and levies, such as the dust disease levy and mine safety levy. The premium for self-insurers is deemed premium, calculated as wages covered multiplied by the premium rate applicable for the appropriate industry class.

The premium for Government self insurers (TMF) is the value of the deposit contributions made by each member agency. The premium for specialised insurers is the gross written premium, net of GST and levies, such as the dust disease levy and mine safety levy.

Premium information is updated annually.

Customer experience and equity

Enquiries, complaints, and perceptions of equity

Standard terms

Definitions

Enquiry

An enquiry is defined as a customer call regarding information or advice that is general in nature.

The number of enquiries received in the reporting period.

Complaint data

Is derived verbatim from reports from customers. Whilst some data cleansing processes are undertaken by SIRA the reporting is verbatim from customers and may from time to time reference an incorrect insurer and/or insurer type.

The number of complaints received in the reporting period.

Level 1 complaints

A level 1 complaint is defined as a complaint received by frontline staff where an insurer is notified (via email) by the Customer Advisory Service on behalf of the complainant.

Level 2 complaints

A level 2 complaint is an escalation of an unresolved level 1 complaint.

Justice

The Perceived Justice of the Compensation Process series of measures is a scale used to measure workers perceptions of fairness of their workers compensation experience.

The Abridged Return to Work Outcomes Survey: NSW Workers Compensation System (October 2019) included three dimensions (procedural justice, information justice, and interpersonal justice).

  • procedural justice, about the fairness of the procedures used   to determine the outcomes.
  • informational justice, in receiving accurate and timely information about the   rationale for decisions
  • interpersonal justice, on whether they were treated with respect and sensitivity

For each dimension, respondents were asked to rate their level of agreement with a series of statements using a 5-point Likert type rating scale. A higher score denotes a higher level of agreement, or a higher perceived sense of justice / fairness.

Complaints theme

The top five complaint themes may vary month by month.

Standard terms

Definitions

Complaint types reported to SIRA

Complaints received in the reporting period, split by complaint type.

Case Management Practice: Insurer conduct / behaviour

Where there is a general enquiry or complaint about insurer behaviour or conduct e.g. poor communication, or the way the claim is managed by the insurer.

Communication

Clarity of insurer information. When an insurer has made a request of a worker, and the worker doesn’t understand the request, or why the request was made.

Customer Service: Behaviour

Where the customer is dissatisfied with the behaviour of any stakeholder involved in management of the claim, e.g. insurer or provider.

External Decision: WCC Determination

Enquiry or complaint about a determination not being applied or complied with, e.g. consent orders not being paid

Independent Medical Examination: Guidelines

Where there is an enquiry or complaint regarding Independent Medical Examination (IME) guidelines, that is, where a worker believes the insurer is not adhering to the guidelines e.g. not being given 10 days’ notice to attend an appointment.

Licensed Insurers: Claims Lodgement

Any enquiry about how to lodge a claim.

Medical: Liability

Process /communication to determine liability including any reference to reasonably necessary treatment and s59A entitlement periods e.g. medical entitlements have not been approved and the worker believes they have not received the relevant communication.

Medical: Payments

Delay in payments to the provider or reimbursement to worker.

Medical: Timeframes

A worker has made a claim for medical treatment, but the request has not been responded to within legislated timeframes i.e. a decision has not been made within 21 days.

Weekly payments: Payments

Enquiry or complaint about delays in payments to the worker or reimbursement to the employer

Weekly payments: Calculations

Enquiry or complaint about the calculation of pre-injury average weekly earnings e.g. the worker not receiving correspondence detailing the calculation. Enquiry or complaint from exempt workers about their current weekly wage rate or average weekly earnings.

Weekly payments: Liability timeframes

Enquiry or complaint about the relevant timeframes to determine liability, e.g. when a worker has lodged a claim form, but a decision has not been made within 21 days.

Dispute rate

Standard terms

Definitions

Disputes lodged/finalised

Disputes lodged/finalised in the reporting period.

Dispute rate

The number of disputes lodged (internal review, merit review, procedural review and workers compensation commission disputes) in the reporting month divided by the number of active claims as at the end of the same reporting month.

Active claim

An active claim is a claim that has had any payment activity in the three months as at the end of the same reporting month.

Internal review

An internal review is a review of the work capacity decision by someone within the insurer other than the person who made the decision. The source of information for the number of internal reviews is the insurers’ submission data to SIRA.

Merit review

A merit review is undertaken by an independent decision maker at SIRA who conducts a merit review of the insurer’s work capacity decision and outlines findings and recommendations. These reviews are binding on the insurers.

Procedural review

A review by the Workers Compensation Independent Review Office (WIRO) can follow a merit review by SIRA and is a procedural review of the insurer’s work capacity decision.

Workers compensation commission

The WCC is an independent statutory tribunal that has jurisdiction to deal with a broad range of disputes. Most of the compensation dispute applications are Applications to Resolve a Dispute (Form 2) and may involve claims for more than one type of compensation benefit, including weekly payments, medical and related treatment, and permanent impairment.

Data disclaimer

Disclaimer

The NSW Government is committed to producing data that is accurate, complete and useful. Notwithstanding its commitment to data quality, the NSW Government gives no warranty as to the fitness of this data for a particular purpose. While every effort is made to ensure data quality, the data is provided “as is”. The burden for fitness of the data rests completely with the user.

The NSW Government shall not be held liable for improper or incorrect use of the data.

Please note, this data is an accurate reflection of the information provided by each insurer, to SIRA, however this data may change due to the progression of data and the application of regular data quality reviews. There are several areas where SIRA is actively working on the methodologies and data sets with the view to improving the measures and the capability to monitor the system.

Would you like additional data?

There is additional data from the NSW Government on the following sites:

If you cannot find the information you require, then complete the external data request form and email to the DFSI Ministerial team at gipa@finance.nsw.gov.au or phone 13 10 50.