Putting you first at the centre of what we do. Keeping you healthy and safe at work. Supporting you when you are harmed at work. Ensuring your scheme works and is sustainable.

Report of operations 7

CLAIMS MANAGEMENT

Output 1.3 – Management of premium claims

Output 1.4 – Management of pre-premium claims

Overview

Comcare provides workers’ compensation coverage to over 175,000 Australian and ACT Government employees in around 170 agencies covered by the Safety, Rehabilitation and Compensation Act 1988 (SRC Act).

Comcare’s claims workload is divided into two main groups — premium claims (post July 1989)
and pre-premium claims (pre-July 1989). This division is based on funding arrangements and provides the delineation for Outputs 1.3 and 1.4.

Comcare has staff in two major offices undertaking claims and injury management functions.
The offices are in Canberra and Melbourne, with Canberra managing new Australian Government claims (up to four years old) and all premium ACT Government claims and Melbourne handling all
of the older Australian Government claims and ACT Government pre-premium claims.

Success factors which form the focus of claims management operations include

appropriately skilled staff
effective stakeholder communication
building Comcare’s claims management capabilities
targeting and meeting customer needs
identifying and controlling internal and external cost drivers
maintaining and enhancing a Management Systems Review and Improvement Programme.

Claims Management Principles

The main principles espoused in the SRC Act and supported by Comcare’s management systems
are that for a claim to be accepted

there must be a diagnosed medical condition
the medical condition must be linked to employment
the exclusionary provisions of the Act do not apply.

Injuries are covered where they have arisen out of, or in the course of, the injured employees’ Commonwealth employment. In the case of a disease, Commonwealth employment must have materially contributed to the disease in order for a workers’ compensation claim to succeed.

The SRC Act contains a number of exclusionary provisions. Claims for workers’ compensation and rehabilitation are not accepted where the injury, disease or aggravation is suffered by an employee

as a result of reasonable disciplinary action taken against the employee
as a result of a failure to obtain a promotion, transfer or benefit in connection
with his or her employment
through intentional self-infliction
as a result of serious and wilful misconduct.

The Act also includes other exclusionary provisions that may apply to certain circumstances.

Workers’ compensation expenditure

In 2003 – 04, total workers’ compensation expenditure for premium and pre-premium claims was $227.27 million. This includes an estimated $7.53 million paid by employers directly from their budgets for rehabilitation case management.

Table 11: Premium claim costs

Premium claims expenditure	2002–03 $’m	2003–04 $’m
Incapacity	70.36	76.92
Medical	31.47	37.03
Legal, common law and lump sums	25.37	22.10
Other	0.85	1.09
Administrative costs	16.64	17.42
Sub total	144.69	154.56
less third party recoveries	(5.50)	(3.57)
Total premium expenditure	139.19	150.99

Table 12: Pre-premium claim costs

Pre-premium expenditure	2002–03 $’m	2003–04 $’m
Incapacity	46.75	42.89
Medical	8.04	8.59
Legal, common law and lump sums	6.92	8.76
Other	0.63	0.26
Administrative costs	7.84	8.28
Sub total	70.18	68.78
less third party recoveries	(0.08)	(0.03)
Total Pre-Premium Expenditure	70.10	68.75

Table 13: Total workers’ compensation expenditure by payment type

Total program expenditure	2002–03 $’m	2003–04 $’m
Incapacity	117.11	119.81
Medical	39.51	45.62
Legal, common law and lump sums	32.29	30.86
Other	1.48	1.35
Administrative costs	24.48	25.70
Sub total	214.87	223.34
Less third party recoveries	(5.58)	(3.60)
Add estimated amount spent by Agencies on Rehab	9.20	7.53
Total	218.49	227.27

Note: That the figures in tables 11, 12 and 13 for 2002 – 03 incapacity expenses and legal, common law and lump sums expenses differ from those published in the 2002 – 2003 annual report due to the reclassification of certain categories of redemption payments.

Comcare bases its budgets each year on information gained from its consultant actuary. The actuary produces two major sets of reports – one outlining predictions for the following year’s premium pools and the other outlining outstanding scheme liabilities.

Performance against budget

Premium expenditure

Workers’ compensation payments and administration costs associated with premium claims was $151.0 million in 2003 – 04. This expenditure is $3.6 million higher than the $147.4 million contained in the 2003 – 04 Portfolio Budget Statement but is slightly lower than the $152.4 million in the Mid-Year Economic and Fiscal Outlook.

The estimate of outstanding liabilities for premium claims as at 30 June 2004 is $808 million.
The increase in outstanding liabilities of $21 million is 2.7% higher than the estimate as at 30 June 2003 and is marginal given the uncertainty involved in the estimates. Even with these increases, the premium funded part of the jurisdiction remains in a healthy financial situation with assets exceeding liabilities by $107 million, an improvement over the $81 million last year.

Pre-premium expenditure

Workers’ compensation payments and administration costs associated with pre-premium claims was $68.8 million in 2003 – 04. This expenditure is $3.6 million lower than the $72.4 million contained in the 2003 – 04 Portfolio Budget Statement and also lower than the $72.3 million in the Mid-Year Economic and Fiscal Outlook.

The estimate of outstanding liabilities for pre-premium claims as at 30 June 2004 is $619 million.
The increase in outstanding liabilities of $13 million is 2.1% higher than the estimate as at 30 June 2003 and is marginal given the uncertainty involved in the estimates.

Payment elements

The major areas of expenditure for 2003 – 04 reflect

payments to injured employees for time off work (incapacity payments) of $119.81 million
or 53% of total expenditure
medical costs (including Comcare funded rehabilitation and travel) of $45.62 million
or 20% of total expenditure
legal, lump sum and common law costs of $30.86 million or 14% of total expenditure
administrative costs of 25.7 million or 11% of total expenditure.

These figures confirm that we need to continue to focus on reducing the time off work taken
by injured employees.

CLAIMS MANAGEMENT

Output 1.3 — Management of premium claims

Key points

The focus of this output in 2003 – 04 was on

ensuring that claimants receive appropriate entitlements consistent with the Safety, Rehabilitation and Compensation Act 1988 (SRC Act)
working with agencies to ensure that injured or ill employees return to work as quickly
and safely as possible.

Activities

A range of activities were undertaken during 2003 – 04 against this output.

Return to work

Increasing numbers of complex claims for conditions such as psychological injury and increased time off work per claim continue to be a concern and have been a major area of focus in 2003 – 04.

Comcare claims management staff assisted the rehabilitation process and agency case managers
in ensuring the early return to work of injured employees by

identifying cases requiring return to work intervention
providing expert rehabilitation guidance
ensuring quick registration of return to work plans
undertaking high cost claim reviews
participating in case conferences.

During 2003 – 04 Comcare rehabilitation advisers assisted in the on-site implementation of the Return to Work Management Systems Assessment tool with the following agencies

ACT Emergency Services Bureau
ACT Health
ACT Department of Justice and Community Safety
Department of Health and Ageing.

The Return to Work Management Systems Assessment tool (based on Victorian Workcover Injury MAP) allows agencies to undertake a thorough and strategic review of their return to work systems. Assessment is based on the consideration of documentary evidence and performance information for an agency or workplace against 25 criteria grouped into five elements, reflecting better practice approaches to return to work management and legislative requirements. The five elements are

commitment and policy
planning
implementation
measurement and evaluation
review and improvement.

Information on the assessment tool was included in the Leadership and Accountability Kit that was distributed in July 2003. The tool is available on Comcare’s website.

Claims management

Comcare established Claim Management Action Plans on the majority of active and accepted workers’ compensation claims in 2003 – 04. These Plans document the ongoing claims management strategy for each claim. They include

a desired outcome
a communication strategy for the claim which includes informing key stakeholders of action (injured employee, the employer, case managers, rehabilitation providers, GP etc)
tasks for Comcare, including the need to gather further medical evidence and whether
an independent medical review is or will be required
tasks to be communicated to the employer or injured employee
further consultation requirements including the requirement for case conferences and,
where appropriate, the need for medical or legal advice.

Activities were also undertaken during the year to improve initial liability decisions and ongoing
claim management processes. These included

ongoing pilot implementation and management of a fact finding model designed to improve
the level of information gathered on complex claims at the decision making stage
enhancing liability procedures for psychological injury claims and the review of past decision making processes
applying the Safety, Rehabilitation and Compensation Commission’s audit programme (MSRIP)
to core operations within Claims Management.

Fact finding model

Comcare’s approach to determining complex claims, and psychological injury claims in particular, includes piloting of a fact finding model. This model streamlines the collection and documentation
of facts, promotes better informed decisions on claims and aims to reduce disputation.

The process requires the agreement of both the injured employee and their employer to be involved
in the application of the model. Once agreement is obtained, a consultant engaged by Comcare contacts both the employee and employer to arrange separate interviews to discuss, clarify and confirm the claim facts. The consultant documents the claim facts, clarifies any inconsistencies and confirms the accuracy of the report with the employee and employer. The fact finding report is then provided to Comcare to assist in determining the claim.

The pilot is continuing. Comcare will use the findings of the pilot to decide whether or not the model should be applied in the future.

Psychological injuries review and guidance material

During 2003 – 04, a guide was developed to provide stakeholders with an overview on how Comcare determines claims for psychological injury. The guide was published on Comcare’s web site. To provide assurances about the transparency and quality of Comcare’s decision making in relation to the field of psychological injury, a review of claim decisions was also undertaken.

Phillips Fox, one of Comcare’s legal panel firms, was commissioned to undertake a review of the determination of psychological injury claims at the initial liability stage during 2003 – 04. A random sample of cases was selected with determination dates between January 2003 and October 2003. This sample represented approximately 10% of all psychological injury claims determined over the twelve months. The report stated

‘We found that Comcare is now making the correct or preferable decision when accepting liability for stress claims. While Comcare appears to be accepting liability for more claims (particularly since June 2003) it is doing so for the right reasons and in accordance with the legislation and the relevant case law. We did not find any instances where Comcare inappropriately accepted liability for a claim.’

Management Systems Review & Improvement Program (MSRIP)

Since 2000 – 01 Comcare has audited the delivery of its claims services using the Safety, Rehabilitation and Compensation Commission’s methodology known as MSRIP. Audits have been carried out by Comcare’s contracted internal audit service provider. The Executive Summary of the 2003 – 04 Audit states

‘Our main conclusion is that Comcare is managing claims within the requirements of the Safety, Rehabilitation and Compensation Act 1988...and within associated ...SRCC requirements.’

The four main positive messages are that Comcare has

a good decision making framework for claims management and is, in the majority of cases,
making accurate determinations
good mechanisms in place for communication and access to information
an intranet that is an excellent source of policy and procedural information
(albeit needing refining)
good measurement and evaluation processes to monitor and evaluate claims management performance against program objectives.

Claimant Satisfaction

During 2003 – 04 Comcare considered a report on claimant satisfaction with its service, informed by Return to Work Monitor data for premium paying agencies for 2002 – 03. The data (refer to page 90 on the RTW Monitor) indicated that

Satisfaction and service expectation: Injured employees continue to be moderately satisfied with Comcare’s customer service; 66% of injured employees reported that Comcare’s customer service had met their expectations. However, two in ten injured employees indicated that Comcare’s customer service was worse than expected. During 2003 – 04 Comcare allocated additional resources to improve its complaint handling service and fully implemented a quality service program.
Satisfaction by service attribute: On a scale of 1 to 5 where 1 is poor and 5 is excellent, injured employees covered by the scheme gave average ratings to all aspects of Comcare’s service ranging from 3.1 to 3.5. Aspects of customer service that injured employees covered by Comcare rated highest were accuracy (3.5); advising of rights (3.4); attitude to claim (3.4) and the responsiveness to the injured employees’ enquiries (3.4).
Receipt and clarity of information: The proportion of injured employees who reported that information about what to do if they thought a decision was unfair or wrong was received by them and was clear increased from 74% in 2001 – 02 to 83% in 2002 – 03. Injured employees covered by Comcare reported that the provision of information about employer obligations in relation to return to work showed room for improvement, with 36% indicating they had not received this information and 7% indicating that they had received the information but that it was neither clear nor easy to understand. To assist in role clarity and service improvement in this area Comcare
included additional information on employer roles and responsibilities in the redesigned claim form
updated external training courses for employers to reflect key obligations and key injury trends
drafted rehabilitation case manager competencies
distributed the publication Return to Work – Key Steps for Supervisors and Line Managers
issued an easy reference guide for supervisors and line managers on how to assist an employee
to return to work.
Ease of claiming: More than eight in ten injured employees surveyed indicated it was easy to get the information needed to make a claim. The proportion of injured employees covered by Comcare who reported that lodging their claim was simple has been lower than the national rate for each year of the RTW Monitor. This was addressed with the redesign of the claim form in 2003 – 04.

Performance

Output description

This output encompasses activities carried out by Comcare in relation to the management of premium funded claims under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act).

Output performance measure

Quality/Quantity/Timeliness

Total Assets (including notional surplus) exceed total liabilities
Premiums reflect sound actuarial assessment of costs of claims
Reducing the average time for rehabilitation intervention
Reducing the average weeks lost time per 1000 employees
Performance meets Safety, Rehabilitation and Compensation Commission
(the Commission) requirements

Throughout the year, the Commission considered performance against a range of specific measures that underpin this indicator. While the Commission expects to see further improvement in scheme performance, it considers that the Commonwealth scheme is performing well overall. The scheme is fully funded and the Commission has in place a well developed system for monitoring scheme performance. In addition, the Commission is satisfied that strategies are in place to address issues
that are adversely affecting scheme performance. The scheme compares favourably with other OHS and workers’ compensation schemes in Australia.

Price

Budget estimate $147.4 million

Adjusted at Mid-Year Economic Fiscal Outlook to $152.4 million

The actual price for delivering Output 1.3 was $151.0 million

Assets exceed liabilities

As at 30 June 2004, notional funds in the Consolidated Revenue Fund ($914.6 million) exceeded the estimate of outstanding liabilities ($807.6 million). This means that the scheme remains fully funded with a notional reserve of $107 million (or 13%). Comcare has added to the consultant actuaries’ estimate of outstanding liabilities a 10.6% prudential margin which the actuaries estimate increases the probability of the estimate being sufficient from 50% to 85%.

Premiums reflect estimated costs of claims

Under the SRC Act, annual premiums fund the costs of claims for workers’ compensation for injuries suffered after 30 June 1989.

Before setting the total of all premiums that it will collect each year, Comcare considers advice from consultant actuaries on the overall amount that should be collected in premiums. The actuaries estimate the total for Australian Government agencies separate from a premium for the ACT Government.

To fund claims for injuries that may be suffered in 2004 – 05, the actuaries advised Comcare that, in response to claim trends, Comcare must increase the 2004 – 05 premium pool for Australian Government agencies. Comcare obtained independent advice from a second firm of consultant actuaries that confirmed the need for the increase.

Comcare set the 2004 – 05 premium pool for Australian Government agencies at 1.67% of payroll, compared with 1.43% for 2003 – 04. Comcare set the 2004 – 05 premium for the ACT Government
at 3.07% of payroll, compared with 3.13% for 2003 – 04.

Managing workers’ compensation claims

Key data

In 2003 – 04, Comcare

managed a total of 18,650 claims
received 6,644 new claims and determined 6,364 — of these, 5,749 were accepted
decided 1,768 requests for reconsideration
received 693 appeals to the Administrative Appeals Tribunal (AAT) — 699 matters were decided
took, on average, 18 days to determine new claims and 37 days to decide reconsiderations.