Introduction Considerations when assessing reasonable cost

Introduction

Comcare has a responsibility to ensure value for money in the expenditure of Commonwealth funds. When approving payments for aids, appliances and alterations a Claims Services Officer (CSO) needs to consider whether the amount invoiced/quoted is a 'reasonable' amount (for section 39 aids) or 'appropriate' amount (for section 16 aids) to pay for that product.

There are a large variety of items for which Comcare may be liable under either section 16 or 39 of the Safety, Rehabilitation and Compensation Act 1988 (SRC Act) to assist an employee with their medical or rehabilitation needs. Comcare supports a flexible approach to assessing reasonable cost that allows the CSO, with the knowledge of the individual circumstances of each claim, to decide on the best approach.

This topic provides guidance on what strategy to use when assessing reasonable or appropriate cost.

Considerations when assessing appropriate/reasonable cost

In making an assessment of reasonable cost, the CSO would have already made a decision that the aid, appliance or alteration is reasonably required (based on the evidence provided). The CSO now assesses whether the cost of the aid, appliance or alteration is reasonable.

Section 16 of the SRC Act provides that where an employee suffers an injury Comcare is liable to pay, in respect of the cost of medical treatment obtained in relation to the injury (being treatment that it was reasonable for the employee to obtain in the circumstances), compensation of such amount as Comcare determines is appropriate to that medical treatment. 

Section 39 of the SRC Act provides that where an employee suffers an injury resulting in an impairment; and the employee is undertaking, or has completed, a rehabilitation program or has been assessed as not capable of undertaking such a program the relevant authority is liable to pay compensation of such amount as is reasonable in respect of the costs, payable by the employee, of:

• any alteration of the employee's place of residence or place of work
• any modifications of a vehicle or article used by the, or
• any aids or appliances for the use of the employee, or the repair or replacement of such aids or appliances

being alterations, modifications or aids or appliances reasonably required by the employee, having regard to the nature of the employee's impairment and, where appropriate, the requirements of the rehabilitation program.

In all circumstances an employee must provide a quote or invoice for the aid, appliance or alteration they wish to purchase before appropriate/reasonable cost can be considered.

The CSO will then need to determine if the quote or invoice provided is enough to make a decision or if they need to investigate further.

In order to determine what is a reasonable or appropriate amount of compensation, Comcare's practice has been to direct the employee to obtain multiple quotes or invoices.  However, the SRC Act gives the choice of provider/supplier to the employee and permits payment of compensation of less than the cost of the aid, alteration or appliance, where alternative supply was reasonably available at a lesser cost.  If compensation payable is less than the cost of the aids, appliances and alterations, the employee is personally liable to the supplier for the difference.

Requesting an employee to obtain alternative quotes is a convenient mechanism to determine what amount is reasonable and lessen the likelihood of an employee sourcing a good that is not reasonably priced. 

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Made Live 20 December 2011