PRESENTATION ON THE ACTION PLAN OF THE COMPENSATION FUND

PRESENTATION ON THE ACTION PLAN OF THE COMPENSATION FUND PORTFOLIO COMMITTEE 15 NOVEMBER 2017 15 NOVEMBER 2017

CONTENTS • BACKGROUND • OBJECTIVES OF THE ACTION PLAN • PILLARS OF THE ACTION PLAN • SUMMARY PROGRESS • PROGRESS REPORT ON ACTION PLAN • HIGHLIGHTS OF ACTIVITIES • PROGRESS ON CLAIMS PROCESSING

BACKGROUND • The Compensation Fund (the Fund) has been receiving negative spotlight from media and other key stakeholders due to its service delivery record. • In order to restore its reputation and improve the service delivery record, the Fund has developed an Action Plan which will serve as a blue print for the service delivery improvement initiatives • Action Plan was developed by management of the Fund in June 2015 and implementation started on 01 July 2015 • The Action Plan was submitted to the Standing Committee on Public Accounts as resolved during the appearance of the Fund at the committee in June 2015 • The Action Plan is not a replacement for the current Strategic Plan and Annual Performance Plan of the Fund but will enhance the pursuit of the objectives as outlined in these documents.

OBJECTIVES OF THE ACTION PLAN The main objectives of the Action Plan are to put in place basics that will assist in : • Improving the service delivery performance in the Fund • Increasing the efficiency of the Fund‘s overall administration, financial management and operations • Restoring the reputation of the Fund

PILLARS OF THE ACTION PLAN

Summary Progress

PROGRESS – Financial Administration Financial Administration

PROGRESS – Financial Administration 1. Revised Employer Assessment Model • The Revised Assessment Model document is finalised, Actuarial Assessment and SEIAS completed. . Concurrent consultation process at NEDLAC has commenced and the policy will be published for comments in January 2018. • The position paper was developed and adopted as an accounting policy for revenue. This was reflected in the annual financial statements of 2015/16, and 2016/17. 2. Loading and reduction of assessment tariffs (Sec 85 of COIDA) • The initial ICT intervention to deal with loading and reduction of assessments has been revised due to further research. An Actuarial model is developed to achieve the same objective. 3. Implementing employer discounts • Employer discounts were calculated and applied against employer account. R211 million has been refunded back to qualifying employers. 4. Improving debt collection • Enhancements on key-offs and batch processing has been completed. Debtors records now reflect correct balances allowing for correct debt collection

PROGRESS – Financial Administration • Total of R2.4billion worth of Interest and Penalties incorrectly charged have been identified for possible correction as prior year errors. • Reinstatement of provisions of section 86(2) and 87 of COIDA reinstated 01 April 2017. 5. Correction of interest and penalties • Total of R2.4billion worth of Interest and Penalties incorrectly charged have been identified for possible correction as prior year errors. An approval to write off the R2.4 billion has been granted. • The prior year inaccurate interest penalty have been written off. The correction of prior errors on interest and penalty and prior impairments correction of errors have also been completed. 6. Completeness and accuracy of revenue • The system enhancement on completeness and accuracy of revenue has been signed off. • An actuarial model for determination of loading and reduction of tariffs. Suspension on the implementation of section 85(2) will be lifted prior to the end of 2017/18 financial year.

PROGRESS – Financial Administration 7. Approval of Financial Policies • 20 Policies were approved by the Director-General and have been implemented in the Fund. • Number of findings reduced from 141 to 89 in the 2015/16 and 2016/17 financial years. 8. Clarification (Suspense) Account • The system enhancement to deal with clarification accounts was found not to be possible. The Fund developed a manual process to clear long outstanding reconciliation items in the clarification account. The reconciling items have reduced by 78%. • Concurrently system architectural limitations that were causing the problems was rectified on SAP to ensure these reconciling items don’t occur in future.The Fund has gone- live on the clarification.

PROGRESS – Financial Administration 8. Implementation of algorithm checks for the Fund’s deposits. • MOU’s were signed with four banks and a database of all the employers was submitted to the banks. All deposits are validated against the database to ensure employers use correct reference numbers. 9. Improve bulk payment processes on Umehluko • In order to improve the process of benefit payments, Ability system module was decommissioned as a claims payment and reporting module. New licences for SAP FSCD acquired and implemented. • The Legal Case Management System went live on the 3rd of November 2017. 10. Clearing of long outstanding reconciliation items R62 million out of the R96 million of unclaimed merit rebates have been identified in SAP FS-CD and cleared to employers. A process is underway to identify long outstanding deposits as well as overpayments. 11. Automate Ability Bank Reconciliation process The automation of payment process was done in the SAP and Ability decommissioned to improve bank reconciliation processes.

PROGRESS – Customer Focus and Service Delivery Improvement Customer Focus and Service Delivery Improvement

PROGRESS – Customer Focus and Service Delivery Improvement 1. Participation on the Department of Health contract to supply chronic medication • The Chronic Medication Dispensing service provider has been appointed in September 2016 and the service provider has commenced with distribution of medication. • Since inception of the contract in September 2016, the Fund dispensed medication to 664 clients for the period up to October 2017. 2. Engagements with Hospitals and Health Associations • Regular monthly meetings are held with Hospitals, organised Industry bodies and other related stakeholders in an effort to improve relations 3. Develop and implement RTW programme • Rehabilitation Policy has been developed and going through the approval processes • Rehabilitation and Return to work Strategy have been developed • Pilot projects are being identified to partner with public health facilities in rolling our rehabilitation facilities. A rehabilitation and reintegration Unit has been established and posts advertised to capacitate the unit

PROGRESS – Customer Focus and Service Delivery Improvement 4. Establishment of the Panel of experts for PTSD (Post Traumatic Stress Disorder) • A PTSD panel was appointed and a Regulation on Compensation for Post Traumatic Stress Disorders has been developed by the panel. The Regulation will be published for public comments prior to implementation in Quarter 3. • Restructuring of the query resolution process (Call Centre, Walk In and Written) • Reorganised query resolutions process has been implemented and the Fund has filled all vacant posts in the call centre. • A new and modernised call centre system went live on 10 July 2017. • The Directorate is visiting provinces where there is a huge volume of queries and in addition, the Directorate has deployed Customer Care agents in hotspot Labour Centres to assist and focus on COID service delivery issues.

PROGRESS – Internal Business Process /Administration Internal Business Processes

PROGRESS – Internal Business Process/Administration 1.Restructure the employer registration and compliance functions to align core business • The Minister of Labour approved a new structure for the Fund that realigns the core business functions of the Fund. • The move of the employer registration and compliance function from Chief Directorate: Financial Management to Operations Management is part of the Reviewed CF Organisational Functional Structure and this has been done as of 01 October 2017. • The new organisational structure is being implemented and vacant senior management posts have been advertised. Core business posts will be prioritised for filling before he end of the calendar year 2017. 2. Eradication of backlogs at Operations Management • There is ongoing progress to eradicate backlogs on both medical and compensation claims. • System enhancements have been implemented to address system challenges preveting speedy adjudication of claims • Skilled medical and claims personnel in Labour Centres and provincial offices are being filled .

PROGRESS – Internal Business Process/Administration The Fund has finalised the appointment of senior medical personnel in 7provinces and junior positions in most provinces. WC and EC planed for the 17th November 2017 3. Processing of open items 382 open vouchers TTD’s to the amount of R2 390 951 from 09/11/2016 to 14/11/2016. The payment of TTD’s has not changed since November 2016. With the integration of SAP and uMehluko this project will re -commence. 1039 Permanent Disability ’s amounting to R20 668 037.44 were paid to as at 31.10.2017 4. Filling of Medical posts in Provinces The process to appoint medical service personnel in all provinces and head office is at an advanced stage. The Fund has finalised the appointment of senior medical personnel in 7provinces and junior positions in most provinces. WC and EC planed for the 17th November 2017

PROGRESS – Internal Business Process/Administration 5. Independent quality assurance of Umehluko system to ensure that it meets business requirements • Quality assurance has been done and the results have been implemented in order to improve the systems used for processing and paying claims. 6. Improve Hospital Case Management • There was no suitable service provider; specifications have been reviewed and the new bid will be advertised during the third quarter. • In the interim in-house case management process has been developed and was implemented in the second quarter of 2017/18 by the Medical Case Coordinators in the provinces.

PROGRESS – Internal Business Process/Administration 7. Implementation of the CCMA case management system for hearings and objection matters • The Legal Case Management System went live on the 3rd of November 2017. 8. Implementation of the Fraud Prevention Plan • Declaration of financial interest is implemented for SMS members. The Policy for non SMS members has been approved but not yet implemented. • Security background screening of officials is being done regularly. • The ethics survey has been completed and recommendations are being implemented. • Fraud and ethics training has be conducted to all COID officials.

PROGRESS – People Management People Management

PROGRESS – People Management 1. Project on Skills Audit for staff performing CF functions at both national and provincial levels • The skills audit was conducted and training plan has been developed and being implemented were skills gaps have been identified. This entails a combination of traiing and appointment of skilled personnel 2. Adhere to performance management • The provision of support, training and development interventions, coaching and mentoring are being undertaken as part of the implementation of the recommendations of the Skills Audit project. • Performance Management policy is being strictly implemented and all staff have performance agreements and are assessed bi-annually. 3. Improving communication • The Change Management project has been completed, report produced and survival guide for staff with regards to future change interventions has been developed. • Al new projects are following a formal change management process

PROGRESS – People Management 4. Assess the impact of decentralisation on staff • Investigations on decentralisation issues conducted, report produced and recommendations implemented. 5. Project on Organisational Structure Review • The Compensation Fund Organisational Functional Structure has been finalised and approved by the Minister on 31 March 2017. The structure is being implemented during the 2017/18 Financial Year.

PROGRESS ON CLAIMS PROCESSING

Thank You… 28

PRESENTATION ON THE ACTION PLAN OF THE COMPENSATION FUND