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Big News: ACC Boss Misleads Public Again

Big News with Dave Crampton

ACC Boss Accused Of Misleading The Public Over Rehabilitation Costs

A few weeks ago ACC CEO Gary Wilson was crowing about the great faith he has in his case manager’s decisions and the increased amount the Corporation spent on rehabilitating ACC claimants, particularly as compensation costs have reduced. He said, “Five years ago 60% of our money went into compensation and only 40% into rehabilitation. Now these percentages have switched – we now spend 60% on rehab and 40% on compensation.

Wilson told a select committee that ACC spent 38% of the scheme costs - $606m from a pool of $1,579m - on compensation. No amount was given on rehabilitation, but a quick glance at the Corporation’s annual report tells the true picture. ACC also supplied figures to both Scoop and the Sunday Star-Times on Friday afternoon, two weeks after initial queries, showing rehabilitation costs were actually $865m and compensation costs were $715m. That is closer to a 45/55 compensation/rehabilitation split – not the 40/60 split quoted by Wilson. So Wilson has inflated rehabilitation costs by a massive $82 million.

The ratio difference arises as a result of how the figures are presented. ACC provides figures for “income maintenance” (ie compensation payments such as weekly benefits), but this does not include compensation payments such as independence allowances, death benefits and lump sum payments. Wilson lumps these costs with rehabilitation expenditure, contrary to the corporations annual report. It may only be a small percentage difference, but in a scheme of this magnitude, $82 million is a lot of money.

Lump sum payments fell dramatically due to legislation changes, but costs associated with Independence Allowances and death benefits increased 25 percent since 1998. So it is interesting that the 60/40 split promoted by Wilson does not include the compensation payments that actually increased.

Scoop has previously reported that ACC’s latest accountability documents show that the Corporation was to spend over $960m in rehabilitation. That’s from a pool of $1825m. Yet even that is $131m short of the 60% quoted by Wilson.

The amount spent on rehabilitation would have been less had medical costs not risen significantly. The increase in rehabilitation costs was more to do with the increased cost of medical treatment than active case management intervention. So Mr Wilson should not be too hasty in crediting staff for increasing the proportion of rehabilitation costs. Credit must be given to the medical profession for relying on ACC for much of their income and increasing their prices. Credit must also be given to the many claimants kicked off ACC who didn’t bother gong to review.

The amount spent on public health costs alone increased 150 percent - $143m - since 1988, accounting for much of the increase in rehabilitation. Yet the number of long-term claimants has fallen dramatically. One of the reasons is that case managers are more ruthless when exiting claimants from the scheme. Apparently they are not ruthless enough as there are more long term claimants – on the scheme more than a year – than originally forecast. This ruthless approach is one main reason why compensation related costs are lower – if you put a bit of effort in an attempt to exit claimants successfully, compensation costs will minimise and rehabilitation costs will increase.

ACC may be spending more on rehabilitation, but the money goes toward medical specialists. Case managers merely refer claimants on and pay the bills. The direct involvement of ACC in rehabilitation is in the area of social and vocational rehabilitation. Much has been made of ACC’s concerted effort to improve social and vocational rehabilitation, and there has been an improvement.

There has to be, as Mr Wilson admitted that the reason half all long term claimants – or “stock” – are currently receiving compensation is because they are not getting sufficient rehabilitation. ACC case managers claim to work harder in rehabilitating claimants and although the proportion of rehabilitation costs in the scheme has increased markedly, the proportion of social and vocational rehabilitation costs has hovered around the 20 to 25% mark since 1988.

You would think that if ACC was putting in the effort in both social and vocational rehabilitation, more people would be fully fit when leaving the scheme as they would have received what they are entitled to – and when they were entitled to it.

Yet Scoop has seen cases where medically unfit claimants have been “exited” from the scheme as a result of dodgy medical reports. In one medical misadventure case, a medical report was obtained from a specialist who never examined the claimant, but when providing his report to ACC, relied on notes from the specialist who caused the medical misadventure in the first place. That is as dodgy a situation as an ACC complaints officer investigating a complaint of a case manager who happens to be his wife.

All other specialist reports on the claimants file supported ongoing entitlements, yet ACC disregarded these, primarily due to the seniority of the specialist relied on, and the backing of the specialist’s view by the corporations own branch medical adviser. The adviser noted, “ I think there is strong enough evidence to act on alone,” (cut the claimant off the scheme). Expect more dodgy exits to occur in the lead up to Christmas. Scoop will be keeping tabs on the problem. If it occurs to you or anyone you know, make Scoop aware of it.


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