chris koutoulas & gary jeffery - workcover nsw - nsw workers’ compensation legislative change

Safety, Return to Work and Support Division

NSW

Workers Compensation

Legislative Change

National Workers Compensation

Summit 2014

27 February 2014

Gary Jeffery, A/General Manager Workers Compensation Insurance

Chris Koutoulas, A/Director Claims

1


• Reasons and intent for workers compensation legislative changes

• Overview of legislative changes and implementation

• Focus of the changes

• Outcomes and emerging claims experience

• Opportunities and challenges ahead

Outline

2


Performance and impacts

• The Scheme was in deficit of $4 billion

• The Scheme was financially unsustainable

• Funding it would have required a 28% increase in employer premiums

• Employers were already paying premiums between 20 and 60 percent

higher than Victoria and Queensland

The Workers Compensation Legislation Amendment Act 2012

implemented reforms designed to address all of these serious

shortcomings

Reasons for legislative changes

3


1. Enhance NSW workplace safety by preventing and reducing

incidents and fatalities

2. Contribute to economic and jobs growth by ensuring premiums

are comparable with other states and there are optimal insurance

arrangements

3. Promote recovery and the health benefits of returning to work

4. Guarantee long-term medical and financial support for seriously

injured workers

Intent of the legislative changes

4


5. Support less seriously injured workers to recover and regain their

financial independence

6. Reduce the high regulatory burden and make it simple for injured

workers, employers and service providers to navigate the system

7. Strongly discourage unnecessary treatments and services that

do not contribute to recovery and return to work

Intent of the legislative changes

5


Key features of the legislative changes i. Changes to weekly benefits

• Aligning weeklies with earnings, particularly for long term claims

• Step downs from day 1 and complete cutoff after 5 years

• Work capacity assessments introduced

ii. New thresholds and limits on lump sum benefits and medical

benefits

iii. High WPI claimants exempt from limits and thresholds

iv. Introduction of new decision review process and WIRO

v. No direct change to WID (common law)

vi. Exclusion of journey claims and claimant legal costs

Snapshot of the Changes

6


Key Milestone Dates

Implementing the changes

7

19 Jun 2012

Immediate claims changes: - Disease injuries - Nervous shock - Heart attack and stroke - Journey claims

17 Sep 2012

Seriously injured workers transitioned to new legislative arrangements

1 Oct 2012

New claims managed under the new legislative arrangements

1 Jan 2013

Begin transition of all existing claims (pre 1 Oct 2012) to new legislative arrangements

31 Dec 2013 Complete transition of existing claims (in the Scheme)


• Smooth transition to new legislation – “planned approach”

• Consistency in approach and implementation

• Foster a system around “work capacity” not “incapacity”

• Facilitate cultural as well as legislative reform

• Build and support capability across the system


8


The Transition Process

• Transition required for approximately 30,000 existing claims (at December 2012) onto new weekly benefits, with the introduction of work capacity assessments.

• Completed by the end of calendar year 2013.

• WorkCover’s approach was to:

build knowledge and capacity of Scheme Agents and insurers to transition claims according to the legislative intent

promote consistency and sound decision making to minimise risk of disputes

ensure all opportunities are provided to support return to work

plan communication approach to manage stakeholder expectations


9


10

Additional funding allocated for rehabilitation services to

injured workers to support return to work

NSW Return To Work rates improved by 3% and ahead of

the national average

Better Return To Work outcomes on long term claims

Sustainable return to work, health & recovery outcomes

Outcomes for NSW


8884

8882

87 88 87

62

86 85

0

10

20

30

40

50

60

70

80

90

100

NSW VIC QLD SA^ WA TAS COM SEA* AUS NZ

%

Return To Work

11

• NSW RTW rate

increased by 3% from

85% in 2011/12 to 88%

in 2012/13

• NSW’s RTW rate at 88%

is higher than the

national average at 86%

• NSW result among the

highest in Australia

Safe Work Australia – National Return To Work Survey Results 2013

Return To Work Rate • Proportion of injured workers with 10 or more days off work who returned to work for any period of time at

some stage since they had their first day off work

Outcomes for NSW


Return To Work Safe Work Australia – National Return To work Survey Results 2013

Current Return To Work Rate (durable RTW) • Proportion of injured workers with 10 or more days off work who were working at the time of the survey

12

• NSW current RTW rate

the equal highest in

Australia in 2012/13

• NSW’s current RTW rate

at 80% is 3% higher

than the national

average at 77%

Outcomes for NSW

8077 75

7075

79 80

59

77 78

0

10

20

30

40

50

60

70

80

90

100

NSW VIC QLD SA^ WA TAS COM SEA* AUS NZ

%


Focus on Workers

13

• Claims Model adopts intent of the legislative changes and is designed to provide tailored

support to all classes of claims

• Promoting the health benefits of Recovery at Work for new claims

• Driving industry to provide upfront support to injured workers

• Bringing together employers, workers, doctors and insurers for collaborative approach to reach outcomes

Early Intervention

• Working with insurers to provide enhanced rehabilitation to support workers who have been out of the workforce for an extended period due to workplace injury

• Identification of barriers preventing workers from regaining independence

Long Term Claims

• Providing individual case management planning to seriously injured workers to allow for appropriate support and maximum levels of independent living

• Alignment to NIIS model to support those workers with the most serious disability into the future

• Promote community participation

Complex & Serious Injury

Claims

Improved health

and social

outcomes for

injured workers

Outcomes for NSW


Claims

• NSW return to work rate improved by 3% to 88%

• Higher than the national average

• Durable return to work rate in NSW equal highest at 80% Return to Work

• Return To Work Assist Program for employers with <5 staff who can access work-trial funding for their injured workers

• 10% Return To Work Incentive for Small Employers who achieve RTW outcomes within 13 weeks

Employer Incentives

• Most seriously injured workers receiving 70% more in benefits

• Focus on capacity for work for less seriously injured workers

• Higher average weekly & rehabilitation payments per claim

Implementation of Reforms

• Return To Work Engagement with Workplaces Program

• Expanded vocational programs – 88% increase in utilisation

• Specialist case managers for Severe Injury claims in the NSW Scheme

Other Claims Initiatives

Better

outcomes for

Injured Workers

Scheme Outcomes


Underwriting

• Average up to 12.5% rate reduction in 2013 premium cycle

• About $330m returned to NSW business

• Up to 200,000 employers will benefit from reductions

• Without reforms, premiums may have increased up to 28%

Premium reductions

• Employer Safety Incentive premium discount of 10%

• Return To Work Incentive for RTW outcomes in 13 weeks

• Increased discount to 5% for premium paid in full

Small Employer Incentives

• Expanded definition of Small Employer

• Easier policy renewals with removal of 260,000 wages forms

• Renewal date rationalisation – aligned with month end

• Extended period for submitting wages

Small Employer Initiatives

Better

outcomes for

Employers”

Scheme Outcomes


What are we seeing in the Scheme?

Emerging claims experience as at 30 June 2013

16

•Reduction in total number of claims reported

•Partly attributed to elimination of journey claims

•Likely attributed to increased focus on recovery at work and return to work outcomes

Claims reported

•Lower number of active weekly claims

•Higher average weekly payments per claim

•More benefits to seriously injured workers

Weekly benefits

•Reduction of total medical payments

•Favourable experience in the period likely attributed to increased return to work outcomes on claims

•Not attributed to 12 month medical limit

Medical benefits

•More funding allocated for rehabilitation to support injured workers to return to suitable employment

•Higher average payments for rehabilitation per claim

Other benefit types

Improved

claims

outcomes &

Scheme

valuation


Uncertainties

Key uncertainties about the impact of legislative changes

Work Capacity Assessments

Effectiveness unclear

Most claims that ceased receiving weekly benefits not due to work capacity assessments

Work Injury Damages

Increased utilisation in recent years

Not directly affected by the reforms

Almost a fifth of total Scheme liabilities and still increasing

WPI Assessments

Reform thresholds for WPI and caps on weekly benefits may impact experience

Stability in assessments unknown

What does a

sustainable

system look like

in the post-

reform

environment?


Opportunities and challenges

The road ahead

– Uncertainties

• The behaviours of system participants

• Common law / Work Injury Damages

• ‘Bracket creep’ for impairment thresholds

• Work capacity assessments

• Alternative interpretations of the legislation

– Opportunities

• Building industry capability and capacity – opportunity for new case management approach

• Cultural change across the system

18


What to expect

The new operating model for WorkCover remains committed to:

Ensuring sustainable outcomes for injured workers and employers in NSW

Providing injured workers with the support they need and deserve to

recover from their injuries and return to work

Providing seriously injured workers with increased support to improve

health outcomes and community participation

Ensuring our insurance product is affordable, fair and competitive for NSW

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Opportunities and challenges

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Safety, Return to Work and Support Division 21

Disclaimer

This presentation may contain work health and safety and workers compensation information. It may include some of your obligations

under the various legislation that WorkCover NSW administers. To ensure you comply with your legal obligations you must refer to the

appropriate legislation in its most current form.

Information on the latest laws can be checked by visiting the NSW legislation website (www.legislation.nsw.gov.au) or by contacting the

free hotline service on 02 9321 3333.

This presentation does not represent a comprehensive statement of the law as it applies to particular problems or to individuals or as a

substitute for legal advice. You should seek independent legal advice if you need assistance on the application of the law to your

situation.

Although all care has been taken to ensure that the information is correct at the time of publication, the laws change over time and you

need to ensure that you are accessing the most current legislation to ensure that the information is up to date.

The information contained in this presentation is provided as a guide and it does not necessarily represent the views of WorkCover. You

may use this presentation for educational purposes in your organisation for internal training and development however, you are not

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http://www.legislation.nsw.gov.au/

chris koutoulas & gary jeffery - workcover nsw - nsw workers’ compensation legislative change

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