The State Insurance Regulatory Authority (SIRA) has given surgeons and medical groups until the end of next month to respond to plans to reduce fees charged in the NSW workers’ compensation scheme.

SIRA plans to remove loadings paid on top of Australian Medical Association (AMA) rates to bring arrangements more into line with the compulsory third party (CTP) scheme and workers’ compensation in other jurisdictions.

“Rising costs in the scheme are ultimately borne by NSW employers through higher workers' compensation premiums,” SIRA said on Friday. “The savings from changes to surgical fees will put around $40-55 million back into the scheme each year.”

Under the proposal, loadings from surgical fee orders would be removed and surgeons would be paid in line with the rates included in the November 2020 AMA list and paid in the CTP scheme. They would still be among the highest in all Australian jurisdictions.

A recent benchmark study found surgeon fees for the NSW scheme are between 50-400% higher than in other person injury schemes, CTP, and the broader market. The Nominal Insurer for the scheme is managed by state-owned icare.

The regulator says removing the loading is part of a broader package of initiatives to address escalating healthcare costs in workers’ compensation, with measures also including improving insurer controls around treatment payments and approvals.

“SIRA intends to co-design value-based models of care with surgeons and medical groups, commencing with a roundtable in late March,” it says.

The models will be used in developing future fee methodologies and SIRA says it will work with insurers to monitor participation in the workers’ comp scheme by surgeons and orthopaedic surgeons.