NSW state insurer icare wants to introduce a “fee for outcome” system that would remunerate service-providers on the rehabilitation or return to work outcomes of injured workers.

The system would be established to improve the workers’ compensation scheme, icare says in a submission to the State Insurance Regulatory Authority (SIRA).

It says implementing a new definition that supports value-based care for assessing and approving medical treatment is also of vital importance.

“Such a system helps encourage injured workers to recover at work and/or return to work as soon as it is safe to do so, in order to protect their financial, emotional, physical and social well-being,” the submission says.

“This approach also helps prevent injuries deteriorating into chronic conditions where possible.”

The current approach, the “reasonably necessary” test, is not appropriate, icare says.

“It allows all types of treatments to be approved, including those considered as being of low value or potentially harmful. This has contributed to an increased medical spend, and persistent non-improvement in injured worker outcomes.”

icare tabled the suggestions and a raft of other recommendations, ranked according to importance.

The submission is in response to a discussion paper released by SIRA last September which sought feedback on ways to improve the workers’ compensation and compulsory third party schemes amid escalating healthcare costs.

Medical spend accounts for more than 30% of the cost of both schemes, with the sustainability of the workers’ compensation system seen as particularly at risk if the trends persist, the discussion paper says.

The icare submission addresses the workers’ compensation setting and contains six recommendations around fee schedules and indexation, setting up a robust clinical governance framework and improving healthcare data and coding.

According to icare, medical costs in the workers’ compensation scheme rose an average 12% annually from 2015 to 2018.

SIRA says the discussion paper has received 53 submissions.

“The review is not about reducing expenditure or the treatment available to injured people,” CEO Carmel Donnelly said.

“SIRA’s objective is to make sure that every dollar spent delivers quality and value and optimises recovery.”

Click here for the icare submission.