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Services use driving up workers’ comp costs, SIRA says

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The NSW State Insurance Regulatory Authority (SIRA) says rising services use is driving surging healthcare costs in the workers’ compensation scheme.

The rising number of services and providers accessed was responsible for 61% of a $72.3 million increase between the 2017 and 2018 financial years, it says in an update on its healthcare costs review.

The fee per service accounted for 5% of the increase, while growth in active claims also contributed to the overall gain.

“SIRA is actively working with insurers and health practitioner groups on understanding and responding to the causes of these trends and on improving quality and outcomes,” it said in a regulation bulletin released last week.

“The review will result in improved regulatory and fee-setting approaches to ensure injured people have access to the right healthcare, at the right time, for optimal recovery and return to work, and so the schemes provide value-based healthcare.”

Utilisation of allied health services by the Nominal Insurer, managed by icare, rose 17% in fiscal 2018, while surgery use rose 21%, diagnostics 16% and general practitioner attendances 3%.

Allied health services costs jumped 22%, while surgery costs rose 17%, diagnostics 13% and general practitioner costs 5%.

Submissions to the review, which also includes compulsory third party healthcare costs, closed on Friday, but SIRA says there will likely be further opportunities for parties to have their say.

SIRA has warned workers’ compensation cost increases are outpacing private health insurance and Medicare gains, and could pose a risk to the scheme’s sustainability if not reined in.

A consultation paper and preliminary analysis by EY says fee schedules in the NSW workers’ compensation scheme are linked to Australian Medical Association (AMA) rates with loadings, while other states use AMA rates without loadings or Medicare Benefits Schedule rates.

The NSW scheme also reimburses for “reasonably necessary” costs whereas other schemes use differing tests.