Workers’ comp rehab costs spiral
The cost of services from NSW’s 105 approved workplace rehabilitation providers has soared 68% over three years amid a rise in psychological injury claims and referrals.
Rehab services cost $180 million from July-December last year, up from $107 million in the same period of 2021, according to research commissioned by the State Insurance Regulatory Authority.
“Workplace rehabilitation provider claim costs are rising substantially, including as a proportion of total claim costs,” the report by Urbis and Monash University says.
“This increase has been greater than the rise in the cost of medical treatment, wage replacement and claims overall.
“Workplace rehabilitation provider service costs also grew as a proportion of other costs, from 4.7% to 5.3%.”
The financial sustainability of rehab services is “a key risk for the future of the NSW workers’ compensation scheme”, according to the researchers.
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They say scrapping underperforming rehab providers could save $61 million a year through lower costs and more claimants achieving sustained return to work. The report recommends embedding gazetted fee terms more consistently and making it tougher to be approved.
SIRA says it will develop a plan this year in response to report’s recommendations, which also include embedding best practice, managing underperformance and improving data systems for performance monitoring.
One-third of workers’ compensation claims in NSW involve a rehab provider, with 75% of claimants achieving a “durable” return to work for at least 13 weeks.
“This is a strong result that reflects the important role rehab providers play in helping people get back to work,” regulator SIRA said.
The average cost of each durable return involving rehab services in the year to June 2023 was $8471. It was higher for psychological injury claims, probably due to their longer duration and greater complexity.
The researchers say there is an opportunity to improve value, consistency and outcomes across the sector.
See the report here.
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