REGULATION OF SERVICE PROVIDERS IN THE NSW WORKERS COMPENSATION SYSTEM. Submission to WorkCover March 2011

Transcription

1 REGULATION OF SERVICE PROVIDERS IN THE NSW WORKERS COMPENSATION SYSTEM Submission to WorkCover March 2011

2 Executive Summary In many regards, the interests of employers and workers as key stakeholders in the workers compensation scheme are aligned. Both groups want timely and effective treatment available to injured workers, to ensure a return to work is possible. Both groups also benefit from ensuring costs are well-managed and the Scheme remains affordable. There is no doubt there are examples of abuse of the workers compensation system by some service providers. Such abuse can result not only in unwarranted costs to the system but may create distress and suffering by injured workers. The NSW Business Chamber is aware that WorkCover has identified several service providers who have administered inappropriate treatment and/or submitted incorrect invoices and welcomes recovery action taken by WorkCover. The Policy Context The Discussion Paper outlines behaviours by service providers, specifically inappropriate treatment and incorrect billing practices, which WorkCover aims to address. Isolated cases of inappropriate behaviour by service providers should not be used as a basis to increase the regulatory burden. Before a proposal to increase the level of regulation of service providers can be considered, the extent of the problem and need for action by WorkCover must be established. It is stated in the Discussion Paper that aggregate level trend data, complaint investigations and advice from industry indicates the problem of overservicing and incorrect billing exists across several other classes of workers compensation service, yet no further evidence is provided to support this claim. The nature and scale of the problem must be more clearly identified and understood before action is taken. WorkCover submits that such investigations are extremely costly and ineffective in comparison to the benefits of implementing a proactive approach to service provider management that would prevent these practices. This assertion may be accurate but it not supported by any evidence in the Discussion Paper. Furthermore whilst a proactive approach which increases regulation may reduce costs for WorkCover, it is also necessary to consider the costs which may be imposed on service providers and the impact on both competition within the industry and the availability of services for injured workers. In summary, the pressing need for increased regulation to prevent inappropriate servicing and provider fraud should be more clearly established. Furthermore, the impact of Government action should be properly understood by considering the costs and benefits of a range of options, including non regulatory options. 1

3 Proposal 1: Power to approve service providers Service providers who repeatedly provide inappropriate services or abuse the billing process should be excluded from the workers compensation system. As the scheme is funded by employers, keeping scheme costs down and ensuring workers are treated appropriately is a key concern. Whilst instances of service providers providing inappropriate or unnecessary treatment have occurred, as highlighted above there is insufficient evidence to suggest this practice is widespread. Enacting mechanisms to prevent service providers from operating in the scheme should be balanced against minimising bureaucracy and red tape in the workers compensation scheme. Specifically, it is necessary to consider who is affected by the proposed solution as well as the problem of inappropriate servicing and billing. Proposal 1 aims to give WorkCover the power to approve service providers, including a capacity to review, restrict, suspect or cancel such approval. No further detail is provided, making it difficult to evaluate how the process would work, however it is acknowledged that Proposal 1 is likely to result in complex administrative arrangements and an increase in the regulatory burden. This proposal immediately raises a number of questions. Does the nature of the problem warrant imposing regulation on the entire industry? Would increased regulation (through an approvals process) limit competition and consumer choice? The arguments stated in the Discussion paper in favour of Proposal 1 confuse the desired outcome with the method of achieving it. Employers also support timely, appropriate and cost effective treatment for injured workers and the exclusion of service providers who are not providing appropriate services or billing correctly. However, it appears WorkCover has failed to consider other options which could also achieve these objectives. In the Discussion Paper WorkCover claims conducting investigations into allegations of inappropriate treatment and billing is a high cost and difficult exercise. Whilst this may be the case, this alone is not a sufficient rationale to justify increasing regulation. There is no evidence provided that demonstrates WorkCover has undertaken a cost benefit exercise to determine that the investigation costs borne by WorkCover currently are greater that the cost that would be imposed in the service provider industry under proposal 1. In other words there is no evidence that the nature of the problem (inappropriate provider behaviour and costs borne by WorkCover) warrant imposing regulation (an approvals system) on the entire service provider industry. In the absence of this analysis, Proposal 1 appears to be a simple cost shifting exercise. The NSW Business Chamber submits that any additional powers granted to WorkCover should not be used to limit the entry of service providers to the system but to exclude those who have been proven to be inappropriately using the system. In other word, properly qualified serviced providers should be presumed to be operating in the system 2

4 appropriately until proven otherwise. In principle the NSW Business Chamber would support a change to WorkCover s powers provided the chance is expressed in terms of a power to exclude rather than a power to approve. While dependent on the availability of timely and accurate data, this approach avoids the need to establish gateways for entry into the system as well as costly review mechanisms. Proposal 2: Powers to decline specific types of services In principle the NSW Business Chamber supports WorkCover being able to issue treatment guidelines and proscribe certain types of treatment. Whilst the ability to decline specific types of services would provide clarity to service providers, it would also require WorkCover to commit to regularly reviewing the treatment guidelines to ensure it remains medically accurate and current. WorkCover should be required to undertake these reviews regularly and seek the advice of the relevant profession in doing so. Given the cost and effort required to undertake these reviews, the NSW Business Chamber supports the adoption of the Medicare Benefit Schedule in this regard. The Discussion Paper states the test of reasonably necessary is broad and subjective. However when considered in conjunction with the established criteria, the term provides a workable framework for assessing medical treatment. The WorkCover document entitled Service Providers in the NSW Workers Compensation System states intervention by service providers must be: appropriate for the injury and relieve the effects of the injury effective in promoting recovery outcome based, demonstrating the results to be achieved from the intervention cost effective the best option compared to other forms of treatment available accepted by the professional body in achieving optimum recovery and return to work. Proposal 2 would create an additional test of in the best interests of the worker to be met before the treatment could be found to be reasonably necessary. It is submitted that the term in the best interests of the worker is similarly subjective and it is unclear how proposed treatment which meets the criteria listed above could fail to be in the best interests of the worker. Proposal 3: Payment of fees for services The workers compensation scheme is funded by employers in NSW and should ensure injured workers receive prompt and effective treatment for their injuries. It follows that injured workers should be protected from service providers seeking payment for services delivered under the Scheme. The NSW Business Chamber supports the creation of an offence against seeking payment for service from injured workers directly. 3

5 Ensuring services provided are reasonably necessary is crucial to maintaining scheme affordability. The proposed changes to enable WorkCover to prohibit service providers from billing for services provided where treatment was not necessary or inappropriate and to undertake recovery action are also supported. Setting maximum fees for services is at first sight an attractive proposal however it has the potential to reduce the level of service to the lowest common denominator. The key issue for the scheme and for the employer, where their premium is experience rated, is the total cost of the claim. A more highly skilled surgeon may charge a higher fee for services provided but also have better post operative results than others, with higher return to work rates and shorter recovery times. The cost of the initial medical treatment may be higher but the total cost of the claim, in both economic and personal terms, is lower. If the fees set by WorkCover are too low, high quality service providers may exit the workers compensation scheme. In the alternative, if set fees are introduced or the Medicare Benefits Schedule adopted, there must be some mechanism by which better performing providers can be appropriately recognised and remunerated. Payment for services provided under the workers compensation system should be geared to reward those who achieve good outcomes and penalise those who abuse the system. Proposal 4: Establish WorkCover consultative mechanisms It is essential WorkCover work in conjunction with service providers and their professional associations and the NSW Business Chamber welcomes the consultative approach expressed in Proposal 4. Expert consultative committees should be primarily used to provide advice to WorkCover where a service provider or group of service providers is considered to be acting against the best interests of the injured worker or the workers compensation scheme generally. Unless misuse of the system is endemic, the risk that there will be delays in the delivery of services or diminution in services and providers are minimal, provided the processes are not seized upon by some as a means of controlling markets. Proposal 5: Establish panels of service providers for specific service types As stated above, employers support the provision of high quality treatment and rehabilitation for injured workers being delivered in a cost effective manner. However, WorkCover should not, unless it is absolutely necessary, seek to limit who can provide services. The principal applied with respect the Proposal 1 should be applied here as well. Providers who are properly qualified should be presumed to be competent until proven otherwise. 4

6 The establishment of selection panels is opposed for three reasons: The creation and maintenance of selection panels places an un-necessary regulatory burden on service providers A service provider selection panel would limit the ability of injured workers to select the provider of their choice A service provider selection panel limits competition within the industry As noted above, the nature and extent of the problem which WorkCover seeks to address has not been sufficiently articulated. Unless inappropriate treatment and fraudulent billing practices are endemic through out the industry, a regulatory solution which targets the entire industry should not be considered. The administrative and regulatory burden on both WorkCover and service providers is not warranted. Furthermore the Discussion Paper provides no detail on the criteria which would be used to establish the selection panel or how frequently it would be refreshed, making it difficult to assess the red tape burden it would place on service providers. The establishment of service provider panels has the potential to limit the availability and quality of services to injured workers. It is not clear from the Discussion Paper whether the selection panels would limit the number of providers offering a particular service to injured workers, it can be assumed that this has the potential to limit the ability of injured workers to select the provider of their choice and may act as disincentive for service providers to perform services for workers within the Scheme. Finally it is not clear how the establishment of service provider panels would enable WorkCover to negotiate competitive costs for services without compromising the quality of those services. Once service provider panels are established and WorkCover has set fees for all services provided to injured workers (as per Proposal 3), competition to provide high quality services in the most cost effective way would be limited. This proposal may also act as distinctive for new service providers entering the workers compensation scheme. Alternative Model: Adopt the Medicare model Clear and unambiguous guidance in relation to acceptable treatment should be given to service providers. As stated above, the NSW Business Chamber supports WorkCover being able to issue treatment guidelines and proscribe certain types of treatment, to provide this certainty to industry. Issuing treatment guidelines and regulating pharmaceutical prescription and costs would require Work Cover to commit to regular reviews to ensure the guidelines remain relevant and up to date. As noted in the Discussion paper, the Medicare scheme and the workers compensation scheme share similar objectives. Given the Medicare Benefits Schedule is subject to review and regularly updated, it seems prudent and efficient for WorkCover to adopt the Medicare Benefits Scheme. Alignment with the Medicare scheme would also 5

7 simplify arrangements for service providers who operate in both schemes. Consistency with the Victorian scheme is also considered desirable. In relation to Proposal 3 and the alternative model, the circumstances described where the use of Medicare Benefits Schedule may lead to complexity are clearly articulated in the Discussion Paper. How many additional treatments might be allowed and how many services are likely to be paid at a higher rate? It is acknowledged that WorkCover would be required to establish different regulatory regimes for non-medical service providers. However in the circumstances where the Medicare Benefit Schedule is not adopted, WorkCover would still be required to undertake this process. As such, it should not be considered as an impediment to adopting the Medicare Benefit Schedule for medical service providers. Cooperation between WorkCover and the Commonwealth Government could be further expanded, beyond the adoption of the Medicate Benefits Schedule. WorkCover has previously demonstrated its ability to work collaboratively with the Commonwealth Government. In September 2008 WorkCover finalised a Memorandum of Understanding (MoU) with the Department of Immigration and Citizenship, to formalise information sharing arrangements. The MoU included information relation to the number of 457 visa workers in NSW, the nature of the work they are undertaking and sponsorship arrangements as well as provisions to ensure WorkCover is notified in the event of a workplace incident involving workers on a 457 visa. This cooperative information sharing arrangement allows both WorkCover and the Department of Immigration to achieve their objectives. WorkCover should considering entering into a similar information sharing Memorandum of Understanding with the Commonwealth Department of Health and Ageing in relation to the performance and behaviour of service providers. If a service provider is providing inappropriate treatment to injured workers or deliberately billing incorrectly, it is reasonable to assume they may exhibit the same behaviour within the Medicare scheme and visa versa. Where WorkCover is investigating the behaviour of a service provider and considering action to restrict a service provider from the Scheme, it would be beneficial to know whether the provider had previously committed Medicare fraud. Medicare Australia has investigators in NSW who investigate fraud by practitioners and the general public against Medicare, the Pharmaceutical Benefits Scheme and other government programs administered by Medicare Australia. The sharing of this information with between the two levels of government has the potential to result in cost savings to both schemes and would create a strong incentive for service providers to work within the limits of the Schemes. 6

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