ACC levy cuts mustn’t be at expense of access to surgery
October 9, 2013
MEDIA RELEASE – FOR IMMEDIATE USE
ACC levy cuts mustn’t be at expense of access to surgery: HFANZ
Health insurers want ACC to add a principle to its levy-setting process to ensure adequate access to surgical treatment in rehabilitation, reducing the number of surgery claims being rejected and appealed.
In its submission on the setting of ACC’s 2014-15 levies, made today, the Health Funds Association (HFANZ) said that while proposed reductions in levies would be welcomed by many, there was a concern that ACC’s cost-saving agenda had “been too aggressive and gone too far” in the area of rehabilitative surgery post-accident.
Insurers noted that since 2008, ACC’s number of elective surgical declines had doubled from around 10 percent to 20 percent of claims made. HFANZ chief executive Roger Styles said he believed many more potential claims had been deterred through an aggressive focus targeting medical specialists as gatekeepers.
“This doubling of the rate of declines means around 1000 New Zealanders are having an ACC claim for surgery declined each and every month,“ he said.
“A big reason we have insurance is to provide peace of mind. What good are lower premiums – or levies – if when it comes to claim time you are left out in the cold?”
Mr Styles said fixing the problem would cost ACC less than $50 million annually – or about 1 percent of ACC levy income – so would not jeopardise significant levy reductions.
HFANZ members believed ACC had a bias against older claimants, and had seen an increasing number who had had their claims denied by ACC on the basis of gradual process injury when the surgery need was clearly the result of an accident.
Mr Styles said health insurers were funding millions of dollars annually in post-accident surgery, because ACC had declined to fund the treatment despite having a legal obligation to do so. Insurers were then in a position where they had to assist people in taking their claims to review through the dispute resolution process.
Where HFANZ members had assisted policyholders in taking take their ACC claim declines to review, approximately 70 percent of resolved cases were resolved in favour of the claimant.
“It is the unacceptable level of declines which has led to an unacceptable level of reviews, which in turn has led to the high number of declines being overturned.”
HFANZ suggested that ACC consult with consumer groups and other stakeholders to set benchmarks for ensuring it behaved in a fair and just manner in relation to claims involving rehabilitative surgery. It suggested suitable targets might be getting the number of declines going to review down below 1000 each year, with the number of reviews going against ACC down to 10 percent.
“This would give some reassurance that ACC was endeavouring to fairly discharge its legal obligations in the area of rehabilitative surgery post-accident,” the submission said.
Submission to ACC: Levy consultation 2014
This submission seeks that a further principle be added to ACC levy setting to ensure adequate access to surgical treatment in rehabilitation and that levy rates reflect this
HFANZ is the industry body representing New Zealand’s health insurers. Its 11 members account for over 99% of the 1.34 million lives covered by health insurance. A full list of members is attached to this submission.
HFANZ has a key role in advocating for health outcomes, both for health insurance policyholders and more broadly for New Zealand.
HFANZ has historically worked closely with ACC, with ACC being a previous associate member of HFANZ. Most recently, engagement has focused on the review of elective surgery and development of surgical guidelines.
While the proposed reduction in levies can be welcomed from the perspective of those paying, one of the fundamental principles of insurance is that it actually offers peace of mind when it comes time for people to make a claim.
HFANZ is concerned that the levy reductions have been premised too heavily on cost containment, particularly in relation to the provision and funding of elective surgery as part of rehabilitation post-accident.
While some of ACC’s broader strategies for cost-containment may have been welcome and arguably overdue, there is a perception that cost savings made in the area of rehabilitative surgery post-accident have been too aggressive and gone too far.
HFANZ notes that since 2008, the number of elective surgical declines has doubled from around 10% to 20% of claims made. HFANZ believes that many more potential claims have been deterred through an aggressive focus targeting medical specialists as gatekeepers. This doubling of the rate of declines actually means around 1,000 New Zealanders are having an ACC claim for surgery declined each and every month, or 12,000 each year.
Bias against older New Zealanders
Because ACC’s focus has targeted the gradual process injury as a means by which liability for elective surgery post-accident can be avoided, there is a tendency for ACC’s cost-containment focus to impact much more harshly on older New Zealanders.
HFANZ members have noted an increasing number of older policyholders who have had their accident insurance claims denied by ACC when the surgery need is clearly the result of an accident and they have had the initial claim approved by ACC.
Appropriate legal responsibility
HFANZ is concerned that the liability for cost of surgery should fall where appropriate from a legal perspective. It also makes no sense to have access to surgery delayed for those who clearly require it and will benefit from it.
HFANZ members will always fund treatment claims, however in far too many instances, these are cases where the legal liability is actually an ACC one, and HFANZ members are therefore in a position of assisting policyholders to take their ACC claim declines to review.
In these review cases involving health insurance policyholders, it is noted that approximately 70% of these are resolved in favour of the claimant and just 30% in ACC’s favour.
Disappointingly, this has shown no improvement despite a recent ACC review of elective surgery and engagement with HFANZ and other stakeholders from a claims policy perspective.
This failing on ACC’s part affects thousands of claimants and has cost millions of dollars. While ACC considers this to be a cost-saving which permits levy reductions, it misses the point that it is simply shifting the cost to other parties – either to individuals, health insurers, or the public health system.
More importantly, ACC is abrogating its legal responsibility in the area of rehabilitation following accident where this requires surgery, as evidenced by the sheer volume of cases and millions of dollars where ACC’s decision to decline a claim is overturned.
HFANZ proposes that ACC add to its principles for levy setting a sixth principle that seeks to ensure appropriate provision is made for surgical treatment where appropriate in post-accident rehabilitation.
We suggest an appropriate measure of this would be the number and percentage of declined claims for surgery which are overturned on review. It is the unacceptable level of declines which has led to an unacceptable level of reviews, which in turn has led to the high number of declines being overturned.
HFANZ members are part of the Insurance and Savings Ombudsman Scheme. This scheme provides a good benchmark in relation to the level of insurance disputes, and ACC could usefully benchmark its own performance against this. If it did so, ACC would find it grossly exceeds the industry benchmark in terms of both volume of disputes and the number of decisions not found in its favour.
By way of comparison, ACC is presently averaging about 60 declined claims being overturned on review each month – around 30-40% of cases going to review.
Across the combined insurance sector, the ISO found in the complainants favour just 20 times in the past two years – an average of just 4% of the 500 or so complaints investigated over the period.
HFANZ suggests that ACC adopt benchmarks for these metrics following consultation with consumer groups and other stakeholders and use these as a basis for ensuring that it is behaving in a fair and just manner in relation to claims involving rehabilitative surgery.
HFANZ suggests suitable targets might be getting the number of declines going to review down below 1000 each year, with the number of reviews going against ACC down to 10%.
This would still fall well short of the ISO scheme benchmark, but would be a big improvement on present performance. It would also give some reassurance that ACC was endeavouring to fairly discharge its legal obligations in the area of rehabilitative surgery post-accident.
HFANZ appreciates the opportunity to make this submission to ACC on the setting of 2014-15 levies and is happy to provide any further input as appropriate.
Attachment: HFANZ members
- Accuro Health Insurance
- AIA New Zealand
- EBS Health Care
- Manchester Unity Friendly Society
- OnePath Limited
- Partners Life
- Police Health Plan Ltd
- Southern Cross Healthcare
- Sovereign Assurance Company Limited
- Tower Medical Insurance Limited
- Union Medical Benefits Society Ltd (Unimed)