Review of the Natural Consequences Model: Impacts and Future Steps (SISA General Meeting, 2007)

2. SISA General Meeting – 10 August 2007 Review of the Natural Consequences Model (NCM) – how the changes may impact you James Large, Manager Self Insured Operations & Systems

3. Agenda • Background • Why undertake a review • Performance to date • The Review • Current shortcomings of the NCM • Performance measures • A revised model • Next Steps • Questions

4. Background

5. Background • The NCM was signed-off in September 2005. • Commenced on 1 January 2006 and first applied to September 2006 renewals. • Agreed with stakeholders to review after 12 months of its implementation.

6. Performance under the NCM to date • Prior to the NCM, 64% of private employers achieved a 3 year renewal. • Since its introduction, 40% of private employers have been reviewed under the NCM. • Results are: • 28 employers (85%) achieved a Level 3 (meeting the standards and all the measures); • 1 employer achieved a Level 1 (not meeting all the measures), and • 4 employers achieved a Level 0 (not meeting the standards). • However currently an “all of nothing” situation – Level 0 or Level 3

7. The Review

8. Working Party and its representatives • Reviewed by the stakeholder working party, who helped first develop the model. • Working Party representatives are: • Steve Standen and Robin Shaw, SISA • Trish Bowe, PSWD • Nadia Zivkovic, SA Unions • Robert Byrne and James Large, WorkCover. • First meeting, Friday 4th May. Delays experienced since due to unavailability of employee stakeholders. • Latest meeting held on 9 August.

9. Terms of Reference • The review will consider: • The appropriateness of WorkCover’s current approach to the NCM and how levels are currently applied within the model; • The current shortcomings identified and recommendations for overcoming them; • The proposals outlined by SISA in its submission; • The need to update the existing measures and the standards, and • Whether there is an opportunity to streamline audit requirements for employers who undergo multiple audits or accreditation requirements. • It is not intended to undertake a significant re-write of the standards.

10. Current shortcomings of the NCM • There are a number of shortcomings in how the model currently operates. These are: • The number of employers with small claim samples; • One claim failure on a measure can potentially impact on the renewal period well beyond the extent of the breach; • Difficulty in clearly differentiating performance between levels 1, 2 and 3; • The performance measures are process related, whilst the standards are systems based; • The ‘stigma’ of Level 0, and • A number of the performance measures are duplicative of legislative requirements and / or the standards.

11. Performance Measures • WorkCover supports SISA’s view that the majority of the current measures should be removed, as they: • Are already adequately covered in the standards or the legislation, and / or • Cannot be easily measured, and / or • Cannot be appropriately assessed as they are impacted by small claim samples, and • Do not differentiate real performance.

12. A revised model • All existing performance measures should be removed and the focus on measurement should be on the standards and legislative requirements. • Threshold for entry to or renewal of self insurance is to remain as conformance with the standards. • Revised model to better align renewal terms with the employer’s system maturity. • A small number of indicators that differentiates performance between the levels.

13. Next Steps

14. Next Steps • Develop indicators with stakeholders that differentiates a ‘Level 3’ employer. • Change the Code, any existing tools, reports or the Evaluation Practice Manual to reflect the review outcome. • Integrate 58B/C requirements. • Obtain sign-off of the WorkCover Board Self Insured Committee. • Transition to the implementation of any changes, will be agreed with SISA – earliest commencement of any changes on renewals to be 1 January 2008.

15. Questions